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ANNUAL REPORT •of.the :SECRETARY OF THE-TREASURY
oEfhe STATE-OF'THE FINANCES
for Fiscal Year ended June 305.1932

http://fraser.stlouisfed.org/
/
Federal Reserve Bank of St. Louis

•'

ANNUAL REPORT OF THE
SECRETARY OF THE TREASURY
ON

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

1932

UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON: 1932

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

Price 50 cents (Paper cover)

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€3t

TREASURY DEPARTMENT
DOCUMENT N O .

Secretary

3049

CONTENTS
Page

^j
^
^^
~^
_^
^^

Summary of the year
.Review of economic cpnditions
Budget results.:
Receipts
Comparison of the fiscal years 1931 and 1932
Income taxes
Statistics of individual incomes
Miscellaneous internal revenue
Customs
Miscellaneous receipts
Collections under the revenue act of 1932
1932 estimates and results.
Expenditures
Comparison of the fiscal years 1929 and 1932
Comparison of the fiscal years 1931 and 1932_
The deficit
Revenue act of 1932-.
Summary of provisions of the act.
Condition of the Federal
finances
.
Estimates of future revenues
'.
Fiscal year 1933
.
.
..
Fiscal year 1934
*__.
Recommendations
.
Budget
Expenditures
Revenue
^
Public d e b t . . .
Banking reform
____..____
,
United' States bonds—Circulation privilege
German special deposit account
Railroad obligations
,
Obligations of foreign governments
Ppstponement of payments on intergovernmental indebtedness
Payments due July-December, 1932
.
Greece
^.
Estonia, Latvia, and Poland
Germany
,
^
Requests for suspension
:
Hungary
Payments due
^ __.i_....
Funding of optional payments due by Poland
.
...
Czechoslovakia
World War Foreign Debt Commission
Receipts from Germ£Lriy____
_'
Army costs
._
'..
Mixed claims
.
Treasury administration of alien and mixed claims
Mixed Claims Commission
Claims against Germany

1
1
6
6
7
8
9
11
12
12
13
13
13
14
17
18
19
20
22
23
24
26
28
28
28
29
29
30
32
32
32
34
34
35
35
36
36
36
36
37
37
38
38
38
39
40
41
41
41

CONTENTS

Treasur}^ administration of alien and mixed claims—Continued.
•
Page
War Claims Arbiter
.__:..^_...__^
.
45
Claims of German nationals.'.
45
Claims of Austrian and Hungarian nationals
1
46
Expenses of administration
47
German special deposit account
•.
^
47
Tripartite Claims Commission
.
.
50
Claims against Austria
50
• Claims against Hungary
51
'Condition of the Treasury..
J..
51
The public debt
.
.
51
General Fund of the Treasury
.•.__..!_.
.._._
54
The currency trust fund and the gold reserve fund
^
55
Gold held for the Federal Reserve Board
._
56
Interest on Government deposits
.. ..
56
Public debt operations
".
..___ — .
1
._
1
56
General review of public debt operations.
__.
i.yi
'.
56
Operations, June through August, 1931.1
.._._
60
Operations, September through November, 1 9 3 1 . . .
60
Operations, December, 1931, through February, 19321
• 61
Operations, March through May, 1932
62
Operations, June through August, 1932^
63
Issues in September and October, 1932
...
.
63
Credit and money market conditions .
___
64
Cost of Government borrowing
_i
'-..
66
Treasury notes
._.•
.
1... —
69
Special Treasury certificates
.____..._._
69
Reconstruction Finance Corporation
...^
._
69
Adjusted service securities
.__
.
71
Cumulative sinking fund
71
•Extension of the circulation privilege to additional United States bonds
71
Bureau of Internal Revenue
..._.__._
73
Administration of the revenue act of 1932___:
_1
73
Increase in number of tiax returns and administrative work
74
Administrative difficulties with new taxes
.
75
Income tax administration
:
.
77
Summary of audit
:
.
78
Cases closed within the bureau
_:_._._.
•
•
79
Collections of back taxes.
_. _..____
79
Special Advisory Committee
..'.
79
Office of the General Counsel
.
.....
80
Board of Tax Appeals
.
81
Federal public building program
'.
......
81
Status of program
82
Expenditures and outstanding obligations
83
Emergency relief program_
:
__.
—
83
Private architectural services
.
83
Status of work in the Office of the Supervising Architect
84
Federal Farm Loan Bureau
-.
-.:
._
84
Federal land banks
—
84
Joint stock land banks
_..__..
86
Receiverships
_.__
^l._..._
86
Federal intermediate credit banks.
.
87

CONTENTS

Bureau of Customs
I m p o r t s and customs collections
Administration
.
Marking of articles under section 304 of t h e tariff act
I m p o r t a t i o n s by air mail
Domestic goods returned through t h e mails
Customhouse b r o k e r s .
_.
Legal cases
Economy
Other supervisory and nonfiscal activities
Coast Guard
.
Public H e a l t h Service
Bureau of Narcotics
. Bureau of Industrial Alcohol
A D M I N I S T R A T I V E R E P O R T S OF BUREAUS A N D

Page
89
89
90
90
91
91
91
91
91
92
92
95
98
99

DIVISIONS

Page
Accounts and Deposits, Office of the Commissioner of_.
•
..
105
Railroad obligaltions
...^
,
..
105
Sections 204 and 2 0 9 .
105
Section 210
__._..
105
Securities owned by t h e United States Government
.
106
T r u s t funds invested by t h e T r e a s u r y . .
^
^__
. 107
Adjusted service certificate f u n d .
..
107
/ C i v i l service retirement and disability fund
i
,
108
yForeign service retirement a n d disability fund
109
V^ Canal Zone retirement and disability fund
110
District of Columbia teachers' retirement f u n d . .
111
Library of Congress t r u s t fund.._^
..__
„
_;
112
/ U n i t e d States Governfnent life insurance fund
1
115
General railroad contingent fund
.
_.__.
115
National I n s t i t u t e of H e a l t h gift fund
116
•Longshoremen's and harbor w o r k e r s ' c o m p e n s a t i o n f u n d . .
117
Alien property t r u s t f u n d .
..-.
.__._
117
Special funds
.
118
American National Red Cross building fund
118
Colorado River d a m f u n d - .
118
Advances to reclamation f u n d . _
.
..
119
Division of Bookkeeping and W a r r a n t s
120
Duties
.
.__...
120
District of Columbia account
120
Division of Deposits
.
121
Section of Surety Bonds
.
...
122
Appointments, Division of
^'.
123
Number, of employees
1
123
Retirement of employees
'
123
Budget and I m p r o v e m e n t Committee
.124
Chief Clerk and Superintendent, Office of
125
Public buildings
125
Housing of Treasury activities
...
125
Miscellaneous
'
. 126

CONTENTS

Coast Guard
Protection to navigation
.__
.,
Flood relief service
Enforcement of customs and other laws
Communications
i
1
Equipment...
...^
•_
The Academy, stations, bases, repair depot, etc
.
Personnel
Awards of life-saving medals
Comptroller of the Currency
Changes in the condition of national banks
.__
National banks suspended and reopened
Summary of changes in membership in the national banking system_
Customs, Bureau of
._
.
Receipts
Volume of business..
.
Smuggling
._
Antidumping _:__
Convict, forced, and indentured labor under penal sanctions
Investigative activities
.-..
Miscellaneous
Disbursing Clerk
^
Engraving and Printing, Bureau of
._
Enrollment and Disbarment of Attorneys and Agents, Committee on
Federal Farm Loan Bureau
^
Operations of Federal land banks._^__
Operations of joint stock land banks
.
Operations of Federal intermediate credit banks
.
Financial and Economic Research, Section of
General Supply Committee.-..
.L
Industrial Alcohol, Bureau of
Technical activities
-^
.
^
Review of production data
:
_.
Public relations and dissemination of information
Administration
...
Personnel
....'...
Internal Revenue, Bureau of
General
Internal revenue receipts
.
Refunds
.
Additional assessments
Cost of administration
......
Income Tax Unit
Returns audited and closed
Additional revenue
Final notices of deficiency (60-day letters)_..,
Claims and overassessments
Returns on hand
.
.
Audit in Washington
Audit in the
field
Special Advisory Committee
.
MisceUaneous Tax Unit
_..
Estate Tax Division
Sales Tax Division

126
126
127
128
128
129
131
133
134
134
134
135
136
137
137
138
140
140
141
141
142
142
143
146
147
147
148
150
151
151
153
153
155
157
157
158
159
159
159
159
160
160
161
161
162
163
163
164
164
164
165
165
166
167

CONTENTS

VII

Internal Revenue, Bureau of—Continued.
Miscellaneous Tax Unit—^Continued.
Page
Tobacco Division
...
169
Appeals and Review Section
169
Accounts and Collections Unit
169
Collection Accoimting Division
— .
169
Collectors' Pei:sonnel, Equipment, and Space Division.
171
Disbursement Accounting Division
:
171
Office of the General Counsel
171
Civil Division
171
Interpretative Division
173
Review Division
174
Appeals Division
'
174
Penal Division..
.
175
Administrative Division
176
Mint Bureau
.
.
177
Institutions of the mint service
^
177
Coinage
.
177
Bullion deposits
177
Gold and silver operations
177
Refineries
.
178
New design coin_
178
Washington bicentennial medal
..
178
Housing.
.
178
Gold and silver in the United States
179
Appropriatons, expenses, income/etc
.
, 179
Narcotics, Bureau of____
:
180
Activities
180
Extent and trend of narcotic traffic
^
.
182
Personnel
182
Personnel Classification Officer
183
Appeals and classification sheets
183
Efficiency ratings
.
183
Public Debt Service
.183
Division of Loans and Currency
183
; Issue and retirement of securities
184
Individual registered accounts activities
184
daims-..
.
.
185
Safe-keeping of securities
185
Mutilated paper and redeemed currency
185
Publicity
'
185
Register of the Treasury
186
Division of 'Public Debt Accounts and Audit
.
188
Division of Paper Custody
.
189
Destruction Committee
.
190
Public Health Service
191
Division of Sanitary Reports and Statistics
191
Division of Foreign and Insular Quarantine and Immigration
192
Division of Domestic Quarantine
:
;
194
Division of Scientific Research
195
Division of Marine Hospitals and Relief
198
Division of Venereal Diseases
199
Division of Mental Hygiene
200
Division of Personnel and Accounts.^
200

Vlil

CONTENTS
t

' '

Secret Service Division
-..-_'
.
^
:
Supervising Architect, Office of the
Public building program
---Emergency relief program
^
:
General authorizations
.^.:.
.
Specific authorizations of projects
^
Contracts
^
.
Expenditures and outstanding contract obligations
Sites
;
Contracts for outside professional services
Remodeling and enlarging public buildings
•..
Annual appropriations for maintenance, repairs, etc., of public
buildings
._
__._:
...
Total expenditures
;
Personnel
Supply, Division of
_.
Expenditures from various appropriations
_.
'...
Stationery supplies
.
..
Printing and binding
:
-o.
D e p a r t m e n t advertising.
Engraving work
.
Treasurer of t h e United S t a t e s . _ _ :
__.-..__^
.
War Finance Corporation
^

Page

202
203
203
203
204
204
205
206 •
206
206
206
206
207
208
208
208
211
212
214
214
214
217

EXHIBITS
THE PUBLIC DEBT

Issues of Treasury notes and certificates of indehtedness
Exhibit 1. Offering of Treasury notes, Series 1932 (3J4 per cent) a n d
certificates of indebtedness, Series T J - 1 9 3 2 (2% per cent) a n d Series
TS2-1932 (3 per cent) (press release, December 7, 1931, with D e p a r t m e n t Circulars Nos. 451 and 452)
.
.
Exhibit 2. Subscriptions and allotments, Treasury notes, Series 1932, and
certificates of indebtedness. Series T J - 1 9 3 2 and Series TS2-1932 (from
press releases, December 11, 12, and 14, 1931, revised)
L..
Exhibit 3. Offering of certificates of indebtedness, Series A-1932 (3J^ per
cent) and Series A-1933 (3% per cent) (press release, J a n u a r y 25, 1932,
with D e p a r t m e n t Circular No. 454)
.
^_
Exhibit 4. Subscriptions and allotments, certificates of indebtedness.
Series A-1932 and Series A-1933 (from press releases, J a n u a r y 28, 29,
. and 30, 1932)
.
.
Exhibit, 5. Offering of Treasury certificates. First Series (2 per cent)
(press releases, F e b r u a r y 20 and March 6, 1932, and D e p a r t m e n t Circular No. 456, March 5, 1932)
Exhibit 6. Allotments, Treasury certificates, First Series (from press
release, April 12, 1932, and from letter of Under Secretary Ballantine,
April 25, 1932).__.
.
_.__1.Exhibit 7. Offering of certificates of indebtedness. Series TO-1932 (3%
per cent) and Series T M - 1 9 3 3 (3% per cent) (press release, M a r c h 7j
1932, with D e p a r t m e n t Circular No. 458)
.
. —.
Exhibit 8. Subscriptions and allotments, certificates of indebtedness,
Series T O - 1 9 3 2 and Series T M - 1 9 3 3 (from press releases, M a r c h 9, 11,
a n d 12, 1932, revised)
.

221

224

226

227

-228

230

231

232

CONTENTS

IX
Page

Exhibit 9. Offering of certificates of indebtedness. Series B-1933 (2 per
cent) and Treasury notes, Series' A-1934 (3 per cent) (press release,
April 25, 1932, with D e p a r t m e n t Circulars Nos. 460 a n d 461)
Exhibit 10. Subscriptions and allotments, certificates of indebtedness.
Series B-1933, and Treasury notes. Series A-1934 (from press releases,
April 26, 28, and 30, 1932)
Exhibit 11. Offering of certificates of indebtedness. Series T J - 1 9 3 3 (1)4
per cent) and Treasury notes, Series A-1935 (3 per cent) (press release,
J u n e 6, 1932, with D e p a r t m e n t Circulars Nos. 462 and 463)
Exhibit 12. Subscriptions a n d allotments, certificates of indebtedness.
Series T J - 1 9 3 3 , and Treasury notes. Series A-1935 (from press releases,
J u n e 8, 10, and 15, 1932)
.
Exhibit 13. Offering of Treasury notes. Series B-1934 (2>^ per cent) and
Series A-1936 (3% per cent) (press release, July 25, 1932, with D e p a r t m e n t Circular No. 4 6 5 ) .
Exhibit 14. Subscriptions and allotments, Treasury notes. Series B-1934
a n d Series A-1936 (from press releases, July 26 and 28, and August 2,
1932)
Exhibit 15. Offering of Treasury notes. Series A-1937 ( 3 ^ per cent) a n d
certificates of indebtedness. Series TS-1933 (1}^ per cent) (press release,
September 6, 1932, with D e p a r t m e n t Circulars Nos. 468 and 469)
Exhibit 16. Subscriptions a n d allotments. T r e a s u r y notes, Series A-1937,
a n d certificates of indebtedness. Series T S - 1 9 3 3 (from press releases,
September 7, 10, a n d 14, 1932)
Exhibit 17. Offering of Treasury notes. Series B-1937 (3 per cent) (press
release, October 6, 1932, with D e p a r t m e n t Circular No. 4 7 0 ) _ . _
.
Exhibit 18. Subscriptions a n d allotments, Treasury notes. Series B-1937
(from press releases, October 7, 11, a n d 13, 1932, revised)

233

235

236

.238

240

241

243

245
246
248

Issues of Treasury hills
Exhibit 19. Inviting tenders for Treasury bills dated November 9, 1931,
a n d m a t u r i n g F e b r u a r y 8, 1932 (press release, November 2, 1931)
Exhibit 20. Acceptance of tenders for Treasury bills dated November 9,
1931, and m a t u r i n g F e b r u a r y 8, 1932 (press release, November 7, 1931) _
Exhibit 21. S u m m a r y of information contained in press releases issued in
connection with Treasury bills offered from November 9, 1931, to
October 26, 1932-

248
249

250

THE BUDGET

Exhibit 22. The National Budget and the Public Credit, an address by
Under Secretary of t h e Treasury Mills, December 14, 1931, before t h e
Economic Club of New York, New York C i t y .
Exhibit 23. T h e Revenue Bill, a radio address by Secretary of t h e Treasury Mills, March 12, 1932, for t h e Columbia I n s t i t u t e of Public Affairs.
Exhibit 24. S t a t e m e n t by Secretary of the Treasury Mills, April fe, 1932,
before t h e Senate Finance Committee with reference to H . R. 10236,
t h e revenue bill of 1932__
.
Exhibit 25. Letter of Secretary of t h e Treasury Mills to t h e Chairman of
t h e Senate Finance Committee, April 18, 1932, with reference to t h e
Treasury's proposals in connection with t h e revenue bill of 1932.

252
258

262

273

CONTENTS
Page

Exhibit 26. Statement by Secretary of the Treasury Mills before the
Senate Finance Committee, May 31, 1932, submitting further proposals in connection with the revenue bill of 1932
. 276
Exhibit 27. Summary of Treasury estimates of additional revenue for
the fiscal year 1933, prepared May 31, 1932, and released June 4, 1932,
by the House and Senate conferees on the revenue bill of 1932.
277
TAXATION

Exhibit 28. Financial Relations of the Federal and State Governments,
paper read by Secretary of the Treasury Mills, April 29, 1932, before
the Association of the Bar of the City of New York, New York C i t y . .
Exhibit 29. Federal Income Tax Procedure, remarks of Under Secretary
of the Treasury Ballantine, August 1, 1932, at the Symposium on Taxation at Columbia University, New York City

278
284

OBLIGATIONS OF FOREIGN GOVERNMENTS

Exhibit 30. World War Debt Postponement, an excerpt from the message
of the President to the Congress on our foreign affairs, December 10,
1931
...
Exhibit 31. Statement by Secretary of the Treasury Mellon relative to
the foreign debts and the re-creation of the World War Foreign Debt
Commission (press release, December 12, 1931)
Exhibit 32. Statement, by Under Secretaiy of the Treasury Mills concerning the postponement of payments of foreign governments due
December 15, 1931 (press release, December 14, 1931)
Exhibit'33. Joint resolution to authorize the postponement of amounts
• payable to the United States from foreign governments during the fiscal
'year 1932, and their repayment over a. ten-year period beginning July
1, 1933 (Public Res. No. 5, 72d Cong., H. J. Res. 147)
Exhibit 34. Agreement with Finland, May 23, 1932, for the postponement
of the payments due during the fiscal year 1932 on account of its indebtedness to the United States
Exhibit 35. Agreement with Greece, May 24, 1932, for the postponement of
the payments due during the fiscal year 1932 on account of its indebtedness to the United States
Exhibit 36. Agreement with Germany, May 26, 1932, for the postponement of the payments due during the fiscal yesiV 1932 on account of its
indebtedness to the United States
Exhibit 37. Agreement with Hungary, May 27, 1932, for the postponement of the payments due during the fiscal year 1932 on account of its
indebtedness to the United States
.
Exhibit 38. Agreement with Ital}^, June 3, 1932, for the postponement of
the payments due during the fiscal year 1932 on account of its indebtedness to the United States
:
Exhibit 39. Agreement with Great Britain, June 4, 1932, for the postponement of the payments due during the fiscal year 1932 on account
of its indebtedness to the United States
.—
Exhibit 40. Agreement with Lithuania, June 9, 1932, for the postponement of the payments due during the fiscal year 1932 on account of its
indebtedness to the United States
Exhibit 41. Agreement with Belgium, June 10, 1932, for the postponement of the payments due during the fiscal year 1932 on account of its
indebtedness to the United States

286
287
288

289
290
291
292
294
295
296
297
298

CONTENTS

XI
Page

Exhibit 42. Agreement with Czechoslovakia, June 10^ 1932, for the postponement of the payments due during the fiscal year 1932 on account
of its indebtedness to the United States
Exhibit 43. Agreement with France, June 10, 1932, for the postponement of the payments due during the fiscal year 1932 on account of
its indebtedness to the United States
Exhibit 44. Agreement with Poland, June 10, 1932, for the postponement of the payments due during the fiscal year 1932 on. account of
its indebtedness to the-United States
Exhibit 45. Agreement with Estonia, June 11, 1932, for the postponement of the payments due during the fiscal year 1932 on account of
its indebtedness to the United States
Exhibit 46. Agreement with Latvia, June 11, 1932, for the. postponement of the payments due during the fiscal year 1932 on account of
its indebtedness to the United States
Exhibit 47. Agreement with Rumania, June 11, 1932, for the postponement of the paj'-ments due during the fiscal year 1932 on account of its
indebtedness to the United States
Exhibit 48. Statement by Secretary of the Treasury Mills announcing
the postponement for two and one-half years of payment of a bond of
the Greek Government due July 1, 1932 (press release, July 1, 1932) __
Exhibit 49. Agreement with Austria, September 14, 1932, for the post^
ponement of the payments due during the fiscal year 1932 on account
of its indebtedness to the United States
Exhibit 50. Statement by Secretary of the Treasury Mills, announcing
the postponement of certain payments due December 15, 1932, on
account of the indebtedness of Estonia, Latvia, and Poland (press
release, September 15, 1932)
Exhibit 51. Statement by Secretary of the Treasury Mills announcing
the postponement of payments due from Germany on September 30,
1932, on account of mixed claims and army costs (press release, Sep• tember 28, 1932)
MIXED

301
302
303
304
305
307
307

308

CLAIMS

Exhibit 52. Regulations No. 8—Payments to Austrian Nationals on
account of awards of the War Claims Arbiter in respect of patents
(Department Circular No. 449)
Exhibit 53. Joint resolution extending for one year the time within which
American claimants may make application for payment, under the
settlement of war claims act of 1928, of awards of the Mixed Claims
Commission and of the Tripartite Claims Commission (Public Res.
No. 27, 72d Cong., S. J. Res. 97)
__._._
Exhibit 54. Statistical summary of the work of the War Claims Arbiter,
prepared at the expiration of that office on December 15, 1931 (accompanying letter to the Secretary of the Treasury, December 15, 1931) __
FEDERAL

.299

FARM LOAN

309

310
311

SYSTEM

Exhibit 55. An act to amend the Federal farm loan act, as amended, to
provide for additional capital for Federal land banks, and for other
purposes (Public No. 3, 72d Cong., H. R..6172)
. 313
Exhibit 56. Joint resolution making an appropriation to enable the Secretary of the Treasury to pay for subscriptions to the capital stock of
Federal land banks (Public Res. No. 9, 72d Cong., H. J. Res. 261)
314

XII

CONTENTS
Page

Exhibit 57. An act to amend Title II of the Federal farm loan act in regard
to Federal intermediate credit banks, and for other purposes (Public
No. 138, 72d Cong., S. 2409)

315

CIRCULATION .PRIVILEGE OF UNITED STATES BONDS

Exhibit 58. Section 29 of the Federal home loan bank act (Public No. 304,
72d Cong., approved July 22, 1932) extending the circulation privilege
to all United States bonds bearing interest at not exceeding 3% per cent_
Exhibit 59. Opinion of the Attorne}^ General relating' to the circulation
privilege granted certain United States bonds under section 29 of the
Federal home loan bank act of July 22, 1932 (press release, August 13,
1932)
__.

316

MISCELLANEOUS

Exhibit 60. Special deposits of public monej^s under the act of Congress
approved September 24, 1917, as amended (Department Circular No. 92,
revised)
Exhibit 61. An act to amend section 5240, United States Revised Statutes,
as amended in connection with the expense of examination of banks
exercising fiduciary powers (U. S. C , Title 12, ch. 2, sec. 82) (Public
No. 245, 72d Cong., H. R. 8694)
..
Exhibit 62. Statement by Secretary of the Treasury Mills, April 27, 1932,
before the Committee on Ways and Means of the House of Representatives with reference to H. R. 7726, to provide for the immediate payment, in Treasury notes, of the face value of adjusted service certificates
.___:
Exhibit 63. The Financial Reconstruction Program, and address by Secretary of the Treasury Mills, April 25, 1932, before the Associated Press,
New York City
Exhibit 64. The Treasury Department, an address by Under Secretary of
the Treasury Ballantine, September 2, 1932, at the exercises at Federal
Hall, New York City, as a part of the George Washington Bicentennial
Celebration of the 143d birthday of the United States Treasury Department
Exhibit 65. Excerpt from a letter of the Acting Postmaster General to the
Secretary of the Treasury, dated October 24, 1932, certifying extraordinary expenditures contributing to the deficiency of postal revenues for the
fiscal year ended June 30, 1932, in pursuance of Public No, 316, Seventyfirst Congress, approved June 9, 1930 (40 Stat. 523)

319

323

323
326

330

333

TABLES
Explanation of bases used in tables_
Description of fund accounts through which Treasur}^ operations are
effected

337
338

RECEIPTS AND EXPENDITURES

General tahles
Table 1. Receipts and expenditures for the fiscal year 1932, by funds
(warrants, checks issued, and daily statement basis)
.
. . 3,41
Table 2. Details of receipts, by sources and funds, for the fiscal year 1932
(warrants and daily-statement basis)
343
Table 3. Details of expenditures, b)^ organization units and funds, for the
fiscal year 1932 (checks-issued and daily statement basis)
350

^CONTENTS

XIII
Page

Table 4. Ordinary receipts, expenditures chargeable against ordinary receipts, and. surplus or deficit for t h e fiscal years 1916 to 1932 (daily ,
s t a t e m e n t basis)_^
._
^_^_.._
Table 5. Receipts a n d expenditures for t h e . fiscal years 1789 to 1932
(warrants and daily s t a t e m e n t basis)
^__
;
Table 6. S u m m a r y of ordinary receipts, expenditures chargeable against
ordinary receipts, and excess of receipts or expenditures, by months,
from July I, 1931, to October 31, 1932 (daily-statement basis)
>,
Table 7. Expenditures, by months, classified by organization units, for
the fiscal year 1932 (daily s t a t e m e n t basis)

358
362

370
371

Specific receipts and expenditures
Table 8. Comparison of detailed internal revenue receipts .for. t h e fiscal,
years 1931 a n d 1932 (collection basis)
375
Table 9. I n t e r n a l revenue receipts, by sources, for t h e fiscal years 1916 to
1932 (collection basis)
376
Table 10. I n t e r n a l revenue receipts, by m o n t h s , total, a n d by present
major sources, July, 1930, to September, 1932 (collection basis) _ . _ _ . _ ' . 378
Table 11. Internal revenue receipts, by States a n d Territories, for -the
" f i s c a l year 1932 (collection basis)
.
_ 1 _ _ 379
Table 12. Expenses of the Internal Revenue Service for t h e fiscal year
1932 (checks-issued basis)
380
Table 13. Customs duties (estimated), value of imports entered for consumption, and ratio of duties to value of dutiable imports a n d to value
of all imports, for t h e years 1900 to 1931 (on basis of reports of t h e
Bureau of Foreign and Domestic Commerce)
....
^_i
382
Table 14. Customs duties (estimated), value of dutiable imports; and
ratio of duties to value of dutiable imports, by tariff schedules, for the
years 1900 to 1931 (on basis of reports of the Bureau of Foreign and
Domestic Commerce)
i....J
-.o.
_!_____
383
Table 15. Customs receipts and expenditures, by districts, for the fiscal
year 1932 (collection basis)
387
Table 16. P a n a m a Canal receipts and expenditures for t h e fiscal years
1903 to 1932 (warrant basis)
i
388
Estimates of receipts and appropriations
Table 17. Actual receipts
for the fiscal years 1933
reports from the Bureau
Table 18. Appropriations
priations for 1934, by
Bureau of the Budget)

for the fiscal year 1932 and estimated receipts
and 1934, by sources (daily s t a t e m e n t basis and
of the Budget)
.^:
.
.....
for 1933 compared with estimates of approorganization units (basis of reports from t h e
.

389

397

PUBLIC DEBT

Public deht outstariding
Table 19. Public debt outstanding J u n e 30, 1932, by issues (revised daily
s t a t e m e n t basis) . .
399
Table 20. Description of the public debt issues outstanding J u n e 30,
1932 (revised daily s t a t e m e n t basis)
402
Table 21. Principal of the public debt outstanding a t the end of each
fiscal year from 1853 to 1932 (revised daily s t a t e m e n t basis)_____^
• 408
Table 22. Interest-bearing debt outstanding J u n e 30, 1932, by kind of
security and callable period or payable date (revised daily s t a t e m e n t
basis)
.
409

XIV

CONTENTS
Transactions in the public deht during ihe fiscal year 1932

Page
Table 23. Public debt retirements chargeable against ordinary receipts
during the fiscal year 1932, a n d cumulative totals to J u n e 30, 1931 and
1932, by sources a n d issues (revised daily s t a t e m e n t basis)
410
Table 24. S u m m a r y of transactions in interest-bearing a n d noninterestbearing securities during t h e fiscal year 1932 (revised daily s t a t e m e n t
•.basis) _ ! _ _ - . _ . _ ' _ : - _ : :
'
'..--.
______:___
412
Table 25; S u m m a r y of transactions in interest-bearing securities, by
form of issue, during t h e fiscal year 1932 (revised daily s t a t e m e n t b a s i s ) . ' 414
Table 26. Changes in interest-bearing debt, by issues, during t h e fiscal
year 1932 (revised daily s t a t e m e n t basis)
414
Table 27. Transactions in noninterest-bearing securities, by issues,
during the fiscal year 1932 (revised daily s t a t e m e n t basis)
417
Transactions in public deht securiiies hy years
T a b l e 28. Public debt issues for the fiscal years 1931 and 1932 (revised
daily s t a t e m e n t basis)
Table 29. Public debt retirements, by issues, for the fiscal years 1931
and 1932 (warrant basis)
Table 30. Sources of public debt increase or decrease for the fiscal yea;rs
; . 19l5''t6'1932'(daily statenient basis)
.

421
422
423

Cumulative sinking fund transactions
Table 31. Transactions on account of the cumulative sinking fund during the fiscal year 1932 (revised daily s t a t e m e n t basis)
.
Table 32. Transactions on account of t h e cumulative sinking fund for
t h e fiscal years 1921 to 1932 (revised daily s t a t e m e n t basis)
Table 33. Securities retired t h r o u g h t h e cumulative sinking fund, p a r
a m o u n t and principal cost, to J u n e 30, 1932 (revised daily s t a t e m e n t
basis)
.

424
424

425

Interest o n t h e public deht
Table 34. Interest on the public debt payable, paid, and outstanding
unpaid for the fiscal year 1932 (revised daily s t a t e m e n t basis)
._
Table 35. I n t e r e s t paid on t h e public debt, by issues, for t h e fiscal years
1930 to 1932 (warrant basis)
Table 36. A m o u n t of interest-bearing debt outstanding on J u n e 30, t h e
cornputed annual interest charge, and t h e computed rate of interest,
for the fiscal years 1916 to 1932

425
426

426

CONDITION OF THE TREASURY EXCLUSIVE OF PUBLIC DEBT LIABILITIES

Table 37. Current assets a n d liabilities of t h e Treasury a t t h e close of
t h e fiscal years 1930, 1931, a n d 1932 (revised daily s t a t e m e n t basis)___
Table 38. N e t balance in t h e General F u n d a t t h e end of each m o n t h
from July, 1928, to September, 1932 (daily s t a t e m e n t b a s i s ) . .
^..
Table 39,. Securities owned by t h e .United States Government, J u n e 30,
1 9 3 2 . . . . . ___!__. _ _ . _ . . . . . . .

427
428
428

TRANSACTIONS WITH RAILROADS

T a b l e 40. Obligations of carriers acquired p u r s u a n t to section 207 of t h e
t r a n s p o r t a t i o n act, 1920, as amended, receipts on account of principal,
and obligations outstanding J u n e 30, 1932
...

431

CONTENTS

XV
Page

Table 41. Obligations held on June 30, 1931 and 1932, on account of loans
to carriers under section 210 of the transportation act, 1920, as amended,
and repayments on such loans during the fiscal year 1932, together
. with cumulative figures showing the total amount of loans and repayments to June 30, 1932

432

STOCK AND CIRCULATION OF MONEY IN THE UNITED STATES

Table 42. Stock of money, money in the Treasury, in the Federal reserve
banks, and in circulation at the end of each fiscal year from 1913 to
1932
1
Table 43. Stock of mone}^, by kinds, at the end of each fiscal year from
1913 to 1932
Table 44. Money in circulation, by kinds, at the end of each fiscal year
from 1913 to 1932
Table 45. Stock of money, money in the Treasury, in the Federal reserve
banks, and in circulation, by kinds, June 30, 1932

433
434
435
436

MISCELLANEOUS

Table 46. Principal of the funded and unfunded indebtedness of foreign
governments to the United States, the accrued and unpaid interest
,.,ther,eQ,n,,,and, payments, on. account of'.principal 'and interest,. as of
November 15, 1932__1
437
Table 47. Estimated money cost of the World War to tlie United States
Government to June 30, 1932
438
Table 48. Estimated amount of securities outstanding, interest on which
is wholly exempt from normal income tax and surtax of the Federal
Government, by years, on December 31, 1912 to 1931, by type of obligor.
438
Table 49. United States securities outstanding, interest on which is exempt
from normal income tax of the Federal Government, on June 30 and
December 31, 1917 to 1932 (revised daily statement basis)
439
Table 50. Net expenditures for Federal aid to States, on basis of warrants
issued for the fiscal year 1920 and checks issued for the fiscal years 1931
and 1932, and amounts;appropriated'for; the:''fiscal:.yeair.:I-,Q33j<c.l4ss
by appropriations from which direct payments are made to States and
• by the more important of the appropriations providing for expenditures, •
by the Government in cooperation with States, municipalities, and
other civil organizations for investigative, regulator}^, protective, or
construction work
440
Table 51. Expenditures made by the Government as direct payments to
States under cooperative arrangements during the fiscal year 1932
443
PERSONNEL

Table 52. Number of employees in the departmental service of the Treasury in Washington, by months, from June 30, 1931; to June 30, 1932
Table 53. Number of employees in the departmental and field services of
the Treasury on June 30, 1931, and June 30, 1932_i
Table. 54. Number of persons retired or, eligible for retirement, retained
in the departmental and field services of the Treasury to August 31,
1932, under the civil service retirement act and under section 204 of the
economy act of June 30, 1932

447
448

448

SECRETARIES OF THE TREASURY AND PRESIDENTS UNDER WHOM
THEY SERVED
NOTE.—Robert Morris, the first financial officer of the 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 office in 1789.
T e r m of service

Secretaries of Treasury
From—

Sept.
Feb.
Jan.
May
Feb.
Oct.
Oct.
Mar.
Mar.
Aug.
May
Sept.
July
Mar.
Sept.
Mar.
July
Mar.
Mar.
July
Mar.
Mar.
Dec.
Jan.
Mar.

11,1789
3,1795
1,1801
14,1801
9,1814
6,1814
22,1816
7,1825
6,1829
8,1831
29,1833
23,1833
1,1834
6,1841
13,1841
8,1843
4,1844
8,1845
8,1849'
23,1850
7,1853
7,1857
12,1860
15,1861
7,1861

Presidents

To-

Jan.
Dec.
May
Feb.
Oct.
Oct.
Mar.
Mar.
June
May
Sept.
June
Mar.
Sept.
Mar.
May
Mar.
Mar.
July
Mar.
Mar.
Dec.
Jan.
Mar.
June

31,1795
31,1800
13,1801 '
9,1814
5,1814
21,1816
6,1825
5,1829
20,1831
28,1833
22,1833
25,1834
3,1841 •
11,1841
1,1843
2,1844
7,1845
5,1849
22,1850
6,1853
6,1857
8,1860
14,1861
6,1861
30,1864

Alexander Hamilton, New York
Ohver Wolcott, Connecticut
Samuel Dexter, Massachusetts!
Albert Gallatin, Pennsylvania i
George W. Campbell, Tennessee
Alexander J. Dallas, Pennsylvania..
Wm. H. Crawford, Georgia
:..
Richard Rush, Pennsylvania 2
Samuel D. Ingham, Pennsylvania 3.
Louis McLane, Delaware
Wm. J, Duane, Pennsylvania
Roger B. Taney, Maryland *
Levi Woodbury, New Hampshire s.
Thomas Ewing, Ohio ^
Walter .Forward, Pennsylvania ^
John 0. Spencer, New York ^
Geo. M. Bibb, Kentucky
Robt. J. Walker, Mississippi 9
Wm. M. Meredith, Pennsylvania. .
Thos. Corwin, Ohio
James Guthrie, Kentucky
Howell Cobb, Georgia io._
Philip F. Thomas, Maryland
John A. Dix, New York
Salmon P. Chase, Ohio » . .

Washington.
Washington, Adams.
Adams, Jefferson,
JelTerson, 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.
Buchanan.
Lincoln.

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 ofthe Treasury from Apr. 21, 1813, to Feb. 9, 1814.
2 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.
3 Asbury Dickens (chief clerk), ad interim Secretary ofthe Treasury from June 21 to Aug. 7, 1831.
• McClintock Young (chief clerk), ad interim Secretary of the Treasury from June 25 to 30, 1834..
5 McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 4 to 5, 184K
6 McClintock Young (chief clerk), ad interim Secretary of the Treasury Sept. 12, 1841.
7 McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 1 to 7, 1843.
8 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.
9 McClintock Young (chief clerk), ad interim Secretary of the Treasury from Mar. 6 to 7, 1849.
10 Isaac Toucy, of Connecticut (Secretary of the Navy), acted as Secretary of the Treasury ad interim
from Dec. 10 to 12, 1860.
11 George Harrington, District of Columbia (Assistant Secretary), ad interim Secretary of the Treasury
from July 1 to 4, 1864.

141810—32-

-II

XVII

XVIII

SECRETARIES OF THE

TREASURY

Secretaries of the Treasury and Presidents under whom they served—Continued
Term of service
Secretaries of Treasury
From—
July
Mar.
Mar.
Mar.
June
July
Mar.
Mar.
Nov.
Sept.
Oct.
Mar.
Apr.
Mar.
Feb.
Mar.
Mar.
Feb.
Mar.
Mar.
Mar.
Dec.
Feb.
Mar.

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
4.1921

Presidents

To-

Mar.
Mar.
Mar.
June
June
Mar.
Mar.
Nov.
Sept.
Oct.
Mar.
Mar.
Mar.
Jan.
Mar.
Mar.
Jan.
Mar.
Mar.
Mar.
Dec.
Feb.
Mar.
Feb.

3,1865
3,1869
16,1873
3,1874
20,1876
9,1877
3,1881
13,1881
4,1884
30,1884
7,1885
31,1887
6,1889
29,1891
6,1893
5,1897
31,1902
3,1907
7,1909
5,1913
15,1918
1,1920
3,1921
12,1932

Wm. P. Fessenden, Maine »2.:.
Hugh McCulloch, Indiana ^^ i*
Geo. S. Boutwell, Massachusetts
Wm. A. Richardson, Massachusetts.
Benj. H. Bristow, Kentucky is
Lot M. Morrill, Maine
John Sherman. Ohio i6
Wm. Windom, Minnesota i7
Chas. J. Folger, New York is..
Walter Q. Gresham, Indiana
Hugh McCulloch, Indiana i^
Daniel Manning, New York
Chas. S. Fairchild, New York
Wm. Windom, Minnesota i^ i^
Chas. Foster, Ohio
John G. Carlisle, Kentucky
Lyman J. Gage, Illinois
L. M. Shaw, Iowa
George B. Cortelyou, New York
Franklin MacVeagh, Illinois
W. G. McAdoo, New York
Carter Glass, Virginia..
David F. Houston, Missouri
Andrew W. Mellon, Pennsylvania

Lincoln.
Lincoln, Johnson.
Grant.
Grant.
Grant.
Grant, Hayes.
Garfield, Arthur. .
Arthur.
Arthur.
Arthur, Cleveland.
Cleveland.
Cleveland, Harrison.
Harrison.
Harrison, Cleveland.
Cleveland, McKinley
McKinley, Roosevelt.
Roosevelt.
Roosevelt.
Taft.
Wilson.
Wilson.
Wilson.
H a r d i n g , Coolidge,
Hoover.
Hoover.

Ogden L. Mills, New York.

F e b . 13.1932

12 George Harrington (Assistant Secretary), ad interim Secretary of tbe Treasury from Mar. 4 to 8, 1865.
13 John F, Hartley, of Maine (Assistant Secretary), ad interim Secretary of the Treasury from Mar. 5
to 11, 1869.
14 Hugh McCulloch was Secretary from Mar. 9, 1865, to Mar. 3, 1869, and also from Oct. 31, 1884, to Mar.
7, 1885.
'
•
15 Charles F. Conant, of New Hampshire (Assistant Secretary), ad interim Secretary of the Treasury
from June 21 to 30 (July 6), 1876.
16 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. 8,1881, 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.
19 A. B. Nettleton, of Minnesota (Assistant Secretary), ad interim Secretary of the Treasury from Jan.
30 to Feb. 24, 1891.

UNDER SECRETARIES OF THE TREASURY AND PRESIDENTS AND
SECRETARIES UNDER W H O M THEY SERVED
T e r m of service
U n d e r Secretaries i
From—

To—

July
1,1921
N o v . 20,1923
M a r . 4,1927
F e b . 13,1932

N o v . 17,1923
F e b . 1,1927
F e b . 12,1932

S. P a r k e r Gilbert, jr , N e w Jersey
G a r r a r d B . W i n s t o n , Illinois
Ogden L . Mills, N e w Y o r k
Arthur A. Ballantine, N e w York

1 Office established act June 16,1921; appointed by the President.

Secretaries

Mellon
Mellon
Mellon.
Mills

Presidents

H a r d i n g , Coolidge.
Coolidge.
Coolidge, H o o v e r :
Hoover.

ASSISTANT SECRETARIES

XIX

OF THE TREASURY

ASSISTANT SECRETARIES OF THE TREASURY AND PRESIDENTS
AND SECRETARIES UNDER WHOM THEY SERVED
Term of service
Frora—
Mar.
Oct.
Nov.
Mar.

12,1849
10,1849
16,1850
14,1853

Mar. 13,1857

Oct.
Nov.
Mar.
Mar.

9,1849
15,1850
13,1853
12,1857

Jan. 16,1861

Mar. 13,1861 July 11,1865
Mar. 18,1864

June 15,1865

Jan.

5,1865

Nov. 30,1867

July 11,1865

May 4,1875

Dec. 2,1867
Mar. 20,1869

May 31,1868
Mar. 17,1873

Mar. 8,1873

June 11,1874

July

Apr.

1,1874

3,1877

Mar. 4,1875' June 30,1876
Aug. 12,1876 Mar. 9,1885

.\pr. 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.

Mar. 11,1889

6,1887

Assistant Secretaries i

Secretaries

Presidents

Charles B. Penrose, Pennsylvania
Allen A. Hall, Pennsylvania
William L. Hodge, Tennessee
Peter G. Washington, District of
Columbia.
Philip Clayton, Georgia

Meredith
Meredith, Corwin.
Corwin, Guthrie..
Guthrie, Cobb

Taylor.
Taylor, Fillmore.
Fillmore, Pierce.
Pierce, Buchanan.

To-

Apr. 1,1889
Apr. 1,1889
July 22,1890
July 23,1890

July
Oct.
Dec.
June

20,1890
31,1890
1,1892
30,1893

Apr. 27,1891
Nov. 22,1892
Dec. 23,1892

Oct. 31,1892
Mar. 3,1893
Apr. 3,1893

Cobb, Thomas,
Dix.
George Harrington, District of Chase, Fessenden,
McCulloch.
Columbia.2
Maunsell B. Field, New Y o r k . l . Chase, Fessenden,
McCulloch.
William E. Chandler, New Fessenden, McCulloch.
Hampshire.
McCulloch, BoutJohn F. Hartley, Maine
well, Richardson, Bristow.
McCulloch...
Edmund Cooper, Tennessee
WiUiam A. Richardson, Massa- Boutwell
chusetts.
Frederick A. Sawyer, South Caro- Richardson, Bristow.
lina.
Charles F. Conant, New Hamp- Bristow, Morrill,
Sherman.
shire.
Curtis F. Burnam', Kentucky
Bristow
Henry F. French, Massachusetts. Morrill, Sherman,
Windom, Foi' ger, Gresham,
McCulloch,
Manning.
Richard C. McCormick, Arizona. Sherman
John B. Hawley, Illinois
Sherman
J. Kendrick Upton, New Hamp- Sherman,
Windom, Folger.
shire.
John C. New, Indiana
Folger
Folger, Gresham,
Charles E. Coon, New York
McCulloch,
Manning.
Charles S. Fairchild, New York.. Manning
William E. Smith, New York
Manning
Hugh S. Thompson, South Caro- Manning, Fairlina.
child, Windom.
Isaac N. Maynard, New Y o r k . . . Fairchild, W^indom.
George H. Tichner, Illinois.
Windom...
George T. Batchelder, New Yorks Windom
A. B. Nettleton, Minnesota
Windom, Foster..
Oliver L. Spaulding, Michigan... Windom, Foster,
Carlisle.
Foster
Lorenzo Crounse, Nebraska
John H. Gear, Iowa
Foster
Genio M. Lambertson, Nebraska. Foster, Carhsle—

Buchanan.
Lincoln, Johnson.
Lincoln, Johnson.
Lincoln, Johnson.
Johnson, Grant
Johnson.
Grant.
Grant.
Grant, Hayes.
Grant.
Grant, Hayes,
Garfield, Arthur,
Cleveland.

Hayes.
Hayes.
Hayes,
Garfield,
Arthur.
Arthur.
Arthur, Cleveland.

Cleveland.
Cleveland.
Cleveland,
son.
Cleveland,
• son.
Harrison.
Harrison.
Harrison.
Harrison,
land.
Harrison.
Harrison.
Harrison,
land.

HarriHarri-

Cleve-

1 Office established act Mar. 3, 1849; appointed by the Secretary, Act Mar. 3, 1857, made the office
presidential.
2 Act Mar. 14, 1864, provided for an additional Assistant Secretary.
3 Act July 11, 1890, provided for an additional Assistant Secretary.

ASSISTANT S E C R E T A R I E S OF THE

TREASURY

Assistant Secretaries of the Treasury and Presidents and Secretaries- under whom
they served—Continued
Term of service
From—

To-

Assistant Secretaries i

Secretaries

Apr. 12,1893

Apr.

Apr. 13,1893

Mar. 31,1897

Charles S. Hamlin,. Massachu- Carlisle, Gage
setts.
William E. Curtis, New Y o r k . . . Carlisle, Gage

July

1,189^

May

Scott Wike, Illinois

Apr.
Apr.

7,1897
7,1897

Mar. 10,1899
Mar. 4,1903

William B. Howell, New Jersey. Gage
Oliver L. Spaulding, Michigan... Gage, Shaw

June 1,1897
Mar. 13,1899

Mar. 5,1901
Jiine 3,1906

Frank A. Vanderlip. Illinois
Horace A. Taylor, Wisconsin

Gage
Gage, Shaw

Mar. . 6,1901 Apr. 15,1903

Milton E. Ailes, Ohio..

Gage, Shaw

Mar. 5,1903
May 27,1903
Mar. 6,1905

Mar. 5,1905
Jan. 21,1907
Nov. 1,1909

July
Jan.
Apr.
Mar.

Mar.
Feb.
Mar.
Apr.

15,1908
28,1907
6,1909
10,1909

Robert B. Armstrong, Iowa
Charles H. Keep, New York
James B. Reynolds, Massachusetts.
John H. Edwards, Ohio
Arthur F. Statter, Oregon
Beekman Winthrop, New York..
Louis A. Coolidge, Massachusetts.

Apr. 5,1909
Apr. 19,1909
Nov. 27,1909

June 8,1910
Apr. 3,1011
July 31,1913

Charles D. Norton, IHinois
Charles D. Hilles, New Y o r k . . . .
James F. Curtis, Massachusetts...

June 8,1910
Apr. 4,1911
July 20,1912

July 3,1912
Mar. 3,1913
Sept. 30,1913

A. Piatt Andrew, Massachusetts.
Robert 0. Bailey, Ilhnois...
Sherman P. Allen, Vermont

Mar. 24.1913
Aug. 1,1913

Feb. 2,1914
Aug. 9,1914

Oct.
Mar.
Aug.
Apr.
June
Oct.

Sept.
Jan.
Mar.
Aug.
Nov.
Aug.

30,1917
26,1917
15,1917
28,1918
20,1919
26,1921

John Skelton Williams, Virginia.
Charles S. Hamlin, Massachusetts.
Byron R. Newton, New York....
Wilham P. Malburn, Colorado...
Andrew J. Peters, Massachusetts.
Oscar T. Crosby, Virginia..
Leo S. Rowe, Pennsylvania
James H. Moyle, Utah

Shaw..
Shaw..
Shaw, Cortelyou,
MacVeagh.
Shaw, Cortelyou..
Shaw
Cortelyou
Cortelyou, MacVeagh .
MacVeagh
M!acVeagh
MacVeagh, McAdoo:
MacVeagh
MacVeagh
...
MacVeagh, McAdoo.
McAdoo
McA doo

Oct. 30,1917

July

5,1920

Dec. 15,1917
Sept. 4,1918

Jan. 31,1919
June 30,1920

Mar.
Nov.
June
July

5,1919
21,1919
15,1920
6,1920

Nov.
June
Apr.
June

Dec.
Dec.

4,1920
4,1920

1,1906
22,1907
23,1907
17,1908

1,1913
24,1914
17,1914
17,1917
22,1917
5,1917

7,1897

4,1897

Russell C. Leffingwell,-' New
York.
Thomas B. Love, Texas
Albert Rathbone, New York

15,1920 Jouett Shouse, Kansas
14,1920 Norman H. Davis, Tennessee
14,1921 Nicholas Kelley, New York
30,1921 S. Parker Gilbert, jr.. New Jer-

May 31,1921
Mar. 4,1921

Ewing Laporte, Missouri. _
Angus W. McLean, North Carolina.

Carlisle, Gage

McAdoo
McAdoo..
McAdoo
McAdoo
McAdoo, Glass. _.
McAdoo, Glass,
Houston, Mellon.
McAdoo, Glass,
Houston.
McAdoo, Glass _
McAdoo, Glass,
Houston.
Glass, Houston
Glass, Houston....
Houston. Mellon.Houston, Mellon..

Presidents .

C l e v e l a n d , McKinley.
C l e v e l a n d , McKinley.
C l e v e l a n d McKinley.
McKinley.
McKinley, Roosevelt.
McKinley.
McKinley, Roosevelt.
McKinlev Roosevelt.
Roosevelt.
Roosevelt.
Roosevelt, Taft.

Roosevelt.
Roosevelt.
Roosevelt, Taft.
Taft.
Taft.
Taft, Wilson.
Taft.
Taft.
Taft, Wilson.
Wilson.
Wilson.
Wilson.
Wilson.
Wilson.
W^ilson.
Wilson.
Wilson, Harding.

Wilson.
Wilson.
Wilson.
Wilson.
Wilson.
Wilson, Harding.
Wilson, Harding.

Houston, Mellon.. Wilson, Harding.
Houston
Wilson.

1 Office established act Mar. 3, 1849; appointed by the Secretary. Act Mar. 3, 1857, made the office
presidential.
* Ac« Oct. 6, 1917, provided for two additional Assistant Secretaries for duration of war and six months
after.
6 Became Under Secretary July 1, 1921.

ASSISTANT SECRETARIES OF THE

TREASURY

XXI

Assistant Secretaries of the Treasury and Presidents and Secretaries under whom
they served—Continued
Term of service
Assistants Secretaries i
From—
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

Secretaries

Presidents

To—

31,1925 Eliot Wadsworth, Massachusetts.
9,1923 Edward Clifford. Illinois
25,1922 Elmer Dover, Washington
13,1926 McKenzie Moss, Kentucky
19,1923 Garrard B. Winston, Ilhnois ^
5,1927 Charles S. Dewey, Illinois
31,1927 Lincoln C. Andrews, New York..
25,1929 Carl T. Schuneman, Minnesota..
Seymour Lowman, New Y o r k . . .
Sept. 1,1929 Henry Herrick Bond, Massachusetts.
Ferry K. Heath, Michigan
June 26,1929
Nov. 21,1929 Mar. 15,1931 Walter Ewing Hope, New York..
Mar. 16,1931 Feb. 12,1932 Arthur A. Ballantine, New York.
James H. Douglas, jr., Illinois
Mar. 9.1932
Mar.
July
July
June
Nov.
Nov.
July
June

Mellon .
Mellon
Mellon.
Mellon , .
Mellon
Mellon
Mellon
Mellon
Mellon
Mellon
Mellon
Mellon
Mellon
Mills

Harding, Coolidge.
Harding.
Harding.
. Harding, Coolidge,
Harding, Coolidge.
• Coolidge.
. Coolidge.
Coolidge, Hoover.
. Coolidge, Hoover.
.
Coolidge, Hoover.
- Hoover.
Hoover.
Hoover.
Hoover.

1 Office established act Mar. 3, 1849; appointed by the Secretary. Act Mar. 3, 1857, made the office
presidential.
6 Became Under Secretary Nov. 20,1923.

ASSISTANTS TO THE SECRETARY OF THE TREASURY i AND PRESIDENTS AND SECRETARIES UNDER W H O M THEY SERVED
Term of service
Assistant to the Secretary
From—

To-

Sept. 11,1789
Mar. 6,1917

May 8,1792
Mar. 4,1921

Secretaries

Hamilton
Tench Coxe, Pennsylvania...i
George R. Cooksey, District of Columbia. McAdoo, Glass,
Houston.

Presidents

Washington.
Wilson.

1 Office established Sept. 2, 1789; abolished act May 8, 1792; reestablished act Mar. 3, 1917. Appointed
by the Secretary.

XXII

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE
TREASURY DEPARTMENT AS OF NOVEMBER 15, 1932
OFFICE OF T H E SECRETARY
Ogden L. Mills
Arthur A. Ballantine
Seymour Lovs^man..
Ferry K. Heath.
James H. Douglas, jr
John Kieley
W. N. Thompson
Charles R. Schoeneman
H. R. Sheppard
Francis C. Rose.
F. A. Birgfeld
W. R. Stark.
A. S. McLeod-.
W. H. Moran
James E. Harper
L. C. Spangler,
Robert Le Fevre
John L. Summers

Secretary of the Treasury.
Under Secretary of the Treasury.
Assistant Secretary ofthe Treasury.
Assistant Secretary of the Treasury.
Assistant Secretary of the Treasury.
Assistant to the Secretary.
Executive Assistant to the Under Secretary.
Assistant to the Under Secretary.
Assistant to Assistant Secretary.
Assistant to Assistant Secretary.
Chief Clerk and Superintendent.
Chief, Section of Financial and Economic Research.
Government Actuary.
Chief, Secret Service Division.
Chief, Division of Appointments.
Chief, Division of Supply.
Superintendent'of Supplies, General Supply Committee*
Disbursing Clerk.
SPECIAL STAFF ASSISTANTS

John J. Hopkins
B. H. Bartholow
Leo C. M a r t i n . . .
John G. Harlan
Alfred K. Cherry
Elden McFarland

Special Assistant to the Secretary.
Special Assistant to the Secretary.
Special Assistant to Assistant Secretary.
Senior Legal .A.ssistant to the Under Secretary.
Junior Legal Assistant to the Under Secretary.
Junior Legal Assistant to the Under Secretary.

BOARD OF ARCHITECTURAL CONSULTANTS
Edward H. Bennett, Chairman.
Clarence C. Zantzinger.
Louis Ayres.
Louis A. Simon.
Arthur Brown, jr.
John Russell Pope.
William A. Delano.
PUBLIC D E B T SERVICE
William S. Broughton.
S. R. Jacobs
Rene W. Barr
E. E. Jones
Frank A. DeGroot
Marvin Wesley
Melvin R. Loafman
Maurice A. Emerson..:."

Commissioner of the Public Debt.
._._ Assistant Commissioner of the Public Debt
Deputy Commissioner of the Public Debt.
Register of the Treasury.
Assistant Register ofthe Treasury.
Chief, Division of Loans and Currency.
Chief, Division of Accounts and Audit.
Chief, Division of Paper Custody.

OFFICE OF T H E COMMISSIONER OF ACCOUNTS AND DEPOSITS
D. W. Bell
Edward F . Bartelt
Andrew M. Smith
Edward D. Batchelder^..
William T. Heffelfinger

Commissioner of Accounts and Deposits.
Assistant Commissioner of Accounts and Deposits.
Chief, Division of Bookkeeping and Warrants.
Chief, Division of Deposits.
Chief Examiner, Section of Surety Bonds.

OFFICE OF THE COMPTROLLER OF THE CURRENCY
Vacant
F. G. Await
Eugene H. Gough
J. L. Proctor
W. P. Folger
J. E. Fouts
George R. Marble

Comptroller of the Currency.
Deputy and Acting Comptroller.
Deputy Comptroller.
Deputy Comptroller.
Chief, National Bank Examiners.
Supervising Receiver, Insolvent National Bank Division.
Chief Clerk.

PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
OFFICE OF T H E TREASURER OF T H E U N I T E L STATES
Walter 0 . Woods
George O. Barnes
J.C.Wallace...

Treasurer of the United States.
Assistant Treasurer.
Chief Clerk.

OFFICE OF T H E COMMISSIONER OF I N T E R N A L REVENUE
Lavid Burnet
fl. F. Mires
J. C. Wilmer
George J. Schoeneman
R, M. Estes
.—Pressly R. Baldridge
A. R. Marrs
L. C. Mitchell
Clarence M. Charest

Commissioner of Internal Revenue.
Assistant to the Commissioner.
Deputy Commissioner.
Deputy Commissioner.
Deputy Commissioner.
Special E eputy Commissioner.
Assistant Commissioner.
Assistant Commissioner.
General Counsel.

BUREAU OF INDUSTRIAL ALCOHOL
James M. Doran
B. R. Rhees
J. J. Britt...
•_..

Commissioner of Industrial Alcohol.
Assistant Commissioner of Industrial Alcohol.
Chief Counsel.
BUREAU OF NARCOTICS

Harry J. Anslinger...

Commissioner of Narcotics.

Will Sanford W o o d . . . .

Deputy Commissioner of Narcotics.
BUREAU OF CUSTOMS

Frank X. A. Eble
Frank Dow
Vacant
Thomas J. Gorman
Joseph D. Nevius

Commissioner of Customs.
Assistant Commissioner of Customs.
Deputy Commissioner (Administration).
Deputy Commissioner (Investigation).
General Counsel.
M I N T BUREAU

Robert J. Grant

Director of the Mint.

Mary M. O'Reilly

Assistant Director.

FEDERAL F A R M LOAN BUREAU
Paul Bestor..
John H. Guill
Louis J. Pettijohn
A. C. Williams
Vulosko Vaiden
James B. Madison
F. D. Van Sant
Peyton R. Evans
V. R. McHale

Farm Loan Commissioner.
Member.
Member.
Member.
Member.
Member,
Secretary.
General Counsel.
Chief, Division of Examination.
BUREAU OF ENGRAVING AND P R I N T I N G

:...

Alvin W. Hall
Clark R. Long
Jesse E. Swigart

Directoi ofthe Bureau of Engraving and Printing.
Assistant Director (Administration).
Assistant Director (Production).
PUBLIC H E A L T H SERVICE

Hugh S. Gumming
Taliafeno Clark
C. C. Pierce
L. R. Thompson
F. C. S m i t h . . .
C. E. Waller
Francis A. Carmeha..
Ralph C. Williams
Walter L. Treadway
D. S. Masterson

Surgeon General.
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Assistant Surgeon
Chief Clerk,

General.
General.
General.
General.
General.
General.
General.
General.

XXIII

XXIV

PRINCIPAL ADMINISTRATIVE AND STAFF

OFFICERS

UNITEL STATES COAST GUARD
Rear Admiral H. G. Hamlet..
Capt. Leon C. Covell
Commander Russell R. Waesche
A. T. Thorson
Ohver M. Maxam

Commandant.
Assistant Commandant.
Aide to Commandant.
Chief Clerk and Chief, Division of Finance.
Chief, Division of Operations.

OFFICE OF T H E SUPERVISING A R C H I T E C T
James A. Wetmore
Henry G, Sherwood
George 0. Von Nerta

Acting Supervising Architect.
Executive Officer.
Technical Officer.
STANDING DEPARTMENTAL COMMITTEES
BUDGET AND I M P R O V E M E N T C O M M I T T E E

S. R. Jacobs, Chairman.'
F. A. Bhgfeld, Vice Chairman.
W. N. Thompson.
D. S. Bliss.
L. C. Martin.
Edward F. Bartelt.

J. H. Schaefer.
Arthur E. Wilson.
M. E. Slindee.
F. J. Lawton.
E. C. Nussear, Secretary

C O M M I T T E E ON E N R O L L M E N T AND DISBARMENT OF A T T O R N E Y S AND AGENTS
S. R. Jacobs, Chairman.
James B. Corridon, Vice Chairman.
H. C. Armstiong.
P. R. Baldridge.

0 . V. Emery.
James E. Harper.
Lawrence Becker, Attorney.
Lee Brock, Secretary.

C O M M I T T E E ON P E R S O N N E L
F. A. Birgfeld, Chairman.
James E. Earper.
S. R. Jacobs.
C O M M I T T E E ON CIVIL SERVICE R E T I R E M E N T
F, A. Birgfeld, Chairman.
James E. Harper.
W. N. Thompson.
Frank Dow.
C O M M I T T E E ON SIMPLIFIED OFFICE P R O C E D U R E

F. A. Birgfeld, Chairman.
W. T. Sherwood.
J. L. Nuber.
A. W. Starratt.

141810—32-

o r THC

TBEASUaV

UNDER.aECatTA6.Y

ASSISTANT SECfttTARY
IN CHAftQt OF
CUSTOMS-COAST GV»BO
INDUSTRIAL AUCOHOU
AND NARCOTICS

BUREAU

THE FISCAL
ASSISTANT SECBETARY

BUREAU
E._RNAL BtVtNOfc

BUR. EAU

BUHCAU

NAR.COTICS

EM(;RAVmQ•»^'ftl^^•lNq

StCRET SERVICfc

riNANCEb

COMMISSIONER
OP ACCOUNTS
ANO DEPOSITS

aUACAU

DIVISION OF
bOOHKeCP|N&
ANO WARRANTS

DIVISION
OF
0E.POSIT:

o r r i c c OF T H E
TBEASURtR orTHth
UNITED STATES

U.S. COAST GUARD
CUSTOMS

THE

ASSISTANT stcRtTAnY
IN CHARoe or
PUBLIC BUILDINGS
PUBLIC MtALTH
AND MlftCbLL&NtOUS

" BUatAU OFTMfc
PUBUC HEALTH "
StRVICE

OPf ICE OP THE
auPEHvismq
AlCHITtCT

SECTION
FINANCIAL
ECONonic R:

CHIEF CLERK
OF THE
0EPA<JTt1E.NT

COMMISSIONCR.
- . OF THE
PUBLIC DEBT

FFICt b r TMt
REGISTER, or TKE
TREASURY

DEBT
ACCOUNTS
AND AUDIT

CHART l.—Organization of the Treasury Department, November 15,1932

DIVISION
APPOINTMENTS

ANNUAL REPORT ON THE FINANCES
TREASURY DEPARTMENT,

Washington, D, G., November 19, IQS^y
SIR : I have the honor to make the following report:
> •
During the fiscal year ended June 30, 1932, the Federal finances
reflected in a most marked degree the effect of the further development of the depression upon both the revenues and expenditures of the Government. Further decline in receipts, accompanied
by increases in expenditures due chiefly to emergency measures,
resulted in a deficit of $2,885,362,299 for the year, compared with a
deficit of $902,716,845 for 1931. Expenditures on account of sinking fund and other debt retirements chargeable against ordinary
receipts totaled $412,629,750, and the deficit exclusive of this amount
was $2,472,732,549. Th(S latter figure, together with payments in
the amount of $267,735,208 against credits established for the
Reconstruction Finance Corporation through the purchase of its
notes, which are required by law to be treated: as public debt transactions, accounts for an increase during the year of $2,685,720,952
in the gross outstanding public debt and a decrease of $54,746,805
in the Treasury General Fund balance.
Total ordinary receipts at $2,121,228,006 were $1,196,005,488
smaller than in 1931 and about half as large as receipts for 1930. The
drastic decline in receipts reflected the effect of reduced incomes on
income tax collections, of continued decline in industry and trade on
other sources of revenue, and of the suspension of payments on
intergovernmental debts. Expenditures chargeable against ordinary
receipts aggregated $5,006,590,305, and were $786,639,966 larger
than for the previous year. The increase was due chiefly to expanded, governmental construction activities, increase in the postal
deficiency, and payments for capital stock of the Reconstruction
Finance Corporation and the Federal land banks.
I t is particularly desirable under existing conditions to consider
the Federa] finances in the light of economic developments prior to
and during the fiscal year.
,
REVIEW OF ECONOMIC CONDITIONS

The past three fiscal years have witnessed a world-wide depression
of unprecedented severity and duration. In this country decline in
business commenced in the summer of 1929. Slight recovery in the

REPORT OF THE SECRETARY OF THE TREASURY

spring of 1930 gave place to further decline; recovery upon a considerable scale in the spring of 1931 was checked by criticaldevelopments abroad and was succeeded by intensified business contraction.
By the end of the calendar year 1930 a depression of major proportions had been experienced. During the preceding year and a
half the physical volume of industrial production,^ as shown in Chart 2,
had declined by about 33 per cent from the peak reached in the
summer.of 1929. During the same period construction, as reflected
iby the value of building contracts awarded,^ showed a decrease of
®,bout 42 per cent, factory employment ^ a decrease of about 22 per

140

i-so

130

\zo

I 10

A
^ \

100

f\v

\
\

y ^

lap

'X f ^

100

\,
\

(\
\

\ n /

•

1919

1920

1921

1922.

19&"5

1924

1925

1926

19,27

1926

1929

1930

1931

1932

CHART 2.—Federal Reserve Board index of industrial production (adjusted for seasonal variation; .
1923-1925=100), calendar years 1919 to 1932

cent, and the volume of freight car loadings ^ and of department
store sales ^ decreases of 22 and 17 per cent, respectively. Wholesale
commodity prices ^ had declined by nearly 18 per cent, and since the
autumn of 1929 the prices of common stocks ^ had declined by more
than 50 per cent.
From January through April, 1931, the physical volume of industrial production increased more than seasonally, and in some lines of
industry the increase was sustained beyond that time. Easy conditions prevailed in the money market, and short-term money rates
in the open market were at low levels.
» Comparison based on Federal Reserve Board index, adjusted for seasonal variation.
' Comparison based on Bureau of Labor Statistics index.
« Comparison based on Standard Statistics Co. index for 421 issues.

REPORT OF THE SECRETARY OF THE TREASURY

This improvement, however, was sharply arrested as flnancial crises
developed abroad in the summer and autumn of the year, and throughout the fiscal year 1932 there were further marked declines in business
activity.
World-wide depression had borne heavily on the economic condition
of many foreign countries and had given rise to major financial diffi-^
culties which became acute at the end of May, 1931, when the insolvency of the largest bank in Austria became known. An already
serious and increasing apprehension regarding the economic and budgetary condition of Germany was accentuated by the Austrian crisis, and
in June the withdrawal of funds from Germany assumed large proportions. Between the end of May and June 23 gold and foreign exchange holdings of the Reichsbank were reduced close to the minimum
required by law. After the arrangement of a suspension of payments
on intergovernmental debts during the fiscal year 1932, at the suggestion of President Hoover, conditions improved temporarily but
renewed pressure finally necessitated intervention by the German
Government in the banking situation and strict regulation and
restriction of German international financial operations.
In July the center of the international crisis shifted to England and
between the middle of July and September 19 about $1,000,000,000
of funds were withdrawn from the London market. On September
21, after special credits obtained from abroad had been substantially
exhausted, continued withdrawals of funds necessitated the suspension
by England of the gold standard act. This action was followed by
complete or partial suspension of free gold movements by many
other countries.
, After the departure of England and^, other countries from the gold
standard, the loss of confidence in foreign balances and the desire to
strengthen their gold position caused many central banks and others
to withdraw funds from this country, with the consequence that the
United States was in turn subjected to an unprecedented drain on its
banking reserves. In the six weeks following the suspension of gold
payments in England this country's stock of monetary gold was
reduced by $730,000,000. This outflow of gold was the largest
movement of the metal during a similar period in any country at
any time. After a temporary reversal there was a further outward
movement of gold, particularly in May and the first half of June,
which brought the net loss of gold for the nine months to about
$1,100,000,000. Changes in the country's stock of monetary gold
are shown in Chart 3.
Domestic confidence was seriously affected by the drain on our gold
from abroad, and domestic withdrawals of currency for hoarding

REPORT OF THE SECRETARY OF THE TREASURY

were greatly increased. The double impact upon the banking reserves
of the country of the mounting domestic demand for currency and the
heavy outward movement of gold led to a period of acute credit contraction, particularly from September, 1931, through the first quarter
of 1932. The increased intensity of credit contraction after September, 1931, is indicated by Chart 4, which shows the course of member
bank loans and investments from 1919 to 1932. During ihe nine
months from September, 1931, to June, 1932, there was a decline of
$5,000,000,000 in the loans and investments of member banks, as
BlULION
DOLLARS
6.0r-

BIUUIOM
DOLLARS
ife.O

5.0
,A.5
A.O
3.5
S.O
£.5

2.5

2.0

t.5

1919

1920

1921

1922

1923

1924.-

1925

192fc

1927

1926

1929

I 9 3 0 . 1931

1932

CHVRT 3.—Monetary gold stock in the United States at the end of each month, January, 1919, to
September, 1932

compared with a decline of $3,000,000,000 during the preceding
two-year period.
As a result of forces operating both from within and without this
country, the number of bank failures increased sharply in September
and October of last year, declining in November following the organization of the National Credit Corporation, which provided for mutual
support and aid among the banks. Suspensions again increased in
subsequent months until the spring of this year, when confidence was
strengthened by fjrogress in the development of a program of constructive governmental action.
Acute financial disturbance was accompanied by further marked
contraction in production, employment, and prices. Whereas the
physical volume of industrial production had declined by less than

REPORT OF THE SECRETARY OF THE TREASURY

10 per cent.in the nine;months from the end of 1930 through September, 1931, there was a further decline of more than 22 per cent during
the subsequent nine.months through June, 1932. Similar comparisons
for these two nine-month periods show the following declines: 9 and
18 per cent in factory employment, 18 and 25 per cent in total freight
car loadings, 11 and 15 per cent in department stores sales, 19 and 54
per. cent in the value of building contracts awarded, and 11 and 10
per cent in wholesale commodity prices.
The reconstruction program adopted during the last six months of
the fiscal year 1932 included essential budget legislation; the organi-.'BILLION
DOLLARS
.. 4 0

1919

1920 1921

1922

19.23 1924. 1925

1926. 1927

1928

1929

1930

1931

1932

CHART 4.—Loans and investments of all member banks, calendar years 1919 to 1932

zation of the Reconstruction Finance Corporation; the so-called
Glass^Steagall Act, which liberalized certain features of the Federal
reserve act and rendered the resources of the system more readily
available; and other measures.
After the passage of the Glass-Steagall Act, which for a period of
one year gave the Federal reserve banks authority to use United
States Government securities as collateral for Federal reserve notes,
the reserve banks purchased a large volume of United States Government securities in the open market. From the end of February to
the end of June, 1932, their holdings of such securities were increased
by $1,060,000,000. This increase not only offset heavy gold exports
during the peripd but enabled the member banks to reduce their
in deb tedhess at reserve b'anka by aboui $365,000,000. Member
baiik reserve' balances showed aii increase of nearly $160,000,000
during the period and excess reserves increased. After the nliddle of

REPORT OF THE SECRETARY OF THE TREASURY

June gold began to return to this country, and in the subsequent three
months the stock of monetary gold showed an increase of about
$300,000,000. By the end of October short-term money rates in the
open market were below the unusu ally low levels of the summer of 193 L
The domestic business situation has shown some improvement since
last summer. The physical volume of manufacturing and mining
output has increased, as is indicated by a rise in the Federal Reserve
Board's seasonally adjusted index of industrial production, from a low
point of 58 in July to 66 in September. Available information indicates that in October industrial activity was maintained at the September level. TraiEc on the railroads increased more than seasonally in the autumn, while changes in building activity have been
largely of a seasonal character since early spring.
The improvement in manufacturing output and factory employment has been concentrated largely in the light industries, such as
textUes, clothing, shoes, and some of the food products. Production
and employment in these industries increased substantially between
the early summer and September. In the heavy industries, on the
other hand, such as steel, machinery, and automobiles, there was no
improvement in August and only slight improvement in September
and October.
Farm income is smaller than a year ago by a considerable amount,
reflecting lower prices for agricultural products, especially livestock
and dairy products, and in addition smaller crops of cotton, winter
wheat, and tobacco.
Wholesale prices in the United States, after declining steadily until
the middle of June, advanced during the following three months by
about 3 per cent, but by the beginning of November had declined to
approximately the low level of June. The price of cotton, reacting
after the end of August, remained above the lowest levels of the year,
but cattle and hogs again sold at the low prices prevailing in early
summer, and the price of wheat at Chicago, after recovery in July
and August, declined in November to the lowest levels ever recorded.
Prices of other commodities in general maintained the advance since
midsummer rather better than agricultural products. This is true of
certain textiles, some of the metals, particularly lead, tin, and zinc,
and certain products imported from abroad, such as silk, sugar, and
rubber.
BUDGET RESULTS

Receipts
Total ordinary receipts of the Federal Government during the fiscal
year 1932 were $2,121,228,006, as compared with $3,317,233,494 in
1931 and $4,177,941,702 in 1930. The trend m receipts, by major
sources, from 1923 to 1932, is shown in Chart 5.

REPORT OF THE SECRETARY OF THE TREASURY

Receipts during the fiscal yeai-r 1932 reflected the effect of the intensified depression on all sources of Federal revenue. Total tax receipts
of the Federal Government dechned from $3,626,300,000 in 1930 to
$1^888,700,000 in 1932, a decrease of $1,737,600,000, or 47.9 per cent.
About 78 per cent of this decline was due to reduced receipts from
the income taxes, which yielded less than one-half as much in 1932 as
in 1930.
Comparison of the fiscal years 19S1 and 19S2.—The receipts derived
from each of the major sources of revenue in 1931 and 1932 and the
changes in these receipts are shown in detail in the table on page 8,
Receipts from taxation were $919,400,000 less in 1932 than in 1931,
while receipts from all other sources declined $276,600,000. Receipts
BILLION
DOLLARS
5i

A L U OTHER
CUSTOM&
MiacELLANEOUa
INTERNAL,
REVENUE;

IfSCOMEl T A X e 5

192,3

1924

1925

1926

1927

192©

. 1929

1930

1931

1932

CHART 5.—Principal sources of ordinary receipts for the fiscal years 1923 to 1932 (general, special, and
trust funds combined)

from taxation, strictly speaking, represent that portion of Federal
revenues which is derived from /authorized levies upon the people
primarily to secure funds for the conduct of Government activities.
Such levies are composed of customs duties, income taxes, and miscellaneous internal revenue taxes. Nontax receipts consist of amounts
received by the Government incident to the performance of its
various functions. Among these receipts are included the proceeds
from Government-owned securities, Panama Canal toUs, fees, fines
and penalties, rents and royalties, the immigration head tax, tax on
the circulation of national bank notes, seigniorage on coinage of subsidiary silver and minor coins, and receipts from trust funds. The

REPORT OF THE SECRETARY OF THE TREASURY
Ordinary receipts hy major sources for the fiscal years 1931 and 1932 ^
. : [Dollars in millions]

1931

Source

1932

Increase
(+), decrease

(-)

Receipts from taxation:
Customs
Internal revenue—
Income t a x e s Current corporation
Current individual
Back taxes 2

Total income taxes

Miscellaneous internal revenueTax on small cigarettes
.
-All other tobacco taxes,.
Stamp tax on capital stock transfers
Stamp tax on bonds and capital stock issues, etc
All other stamp taxes, including playing cards
Estate tax
All other internal revenue 2
_
Total miscellaneous internal revenue..
Total receipts from taxation
'Miscellaneous receipts:
Proceeds from Government-owned securitiesForeign obligations.
_
All other
_
All other receipts, including trust funds
Total miscellaneous receipts
Total ordinary receipts

_._

Percentage increase '
(+), decrease

(-)

378.3

327.7

-50.6

-13.4

891.5
730.4
238. 5

516.9
351.1
189.3

-374. 6
-379. 3
-49. 2

-42.0
-51.9
-20.6

1,860.4

1, 057. 3

-803.1

-43.2

358.9
85.4
25.5
14.8
6.7
48. 1
30.0

317.5
81.1
. 17.7
9.2
5.3
47.4
25.5

-41.4
-4.3
-7.8
-5.6
-L4
-.7
-4.5

-11.5
-5.-0
-30.6
-37.8
. -20.9
-1.5
-15.0

669.4

503.7

-65.7.

-11.5

2, 808. 1

1. 888. 7

-919. 4

-32.7

236.1
28.3
244.7

22.4
210.1

-236.1
-5.9
-34. 6

-100.0
-.20. 8
-14.1

232.5

-276. 6

-54.3

2,121. 2 -1,196.0

-36.1

509.1
3, 317. 2

1 On basis of daily Treasury statements (unrevised), supplemented by reports of the Commissioner of
Internal Revenue. General, special, and trust funds combined; for description of funds, see p. 338; for
classification by funds, see p. 343.
2 Includes adjustment to basis of daily Treasury statements (unrevised).
3 Amounts postponed under the suspension agreements aggregated about $252,300,000.

changes in 1932 as compared with 1931 in receipts from specific
sources are considered in detail in the following paragraphs.
Income taxes.—Taxes on the income of individuals and corporations
ordinarily furnish more than half of the total receipts. In the fiscal
year 1932 income taxes amounted to $1,057,300,000, as compared
with $1,860,400,000 in 1931, a decline of $803,100,000. The receipts
from back taxes decreased from $238,100,000 in 1931 to $188,800,000
in 1932, or about $49,300,000.^ Back tax collections include payments
on additional assessments, penalties, and interest determined' as a
result of audit and on delinquent returns.
Receipts from current income taxes on corporations were $516,900,000 in the fiscal year 1932 as compared with $891,500,000 in the
fiscal year 1931, a decline of $374,600,000.
Comparison of indicated corporation collections in the full calen^
dar year 1932 with collections in 1931 shows a decline of about 44
per cent in underlying taxable incomes. The low level of business
activity during the calendar year 1932 will be refiected in income
1 These figures for back tax collections are before adjustments made in the above table.

REPORT OF THE SECRETARY OF THE TREASURY

tax collections during the calendar year 1933, and will affect receipts
during both the fiscal years 1933 and 1934, but will be counteracted.
to some extent by the higher rates under the revenue act of 1932.
Current income tax collections from individuals declined from
$730,400,000 in the fiscal year 1931 to $351,10.0,000 in the fiscal year
1932, or $379,300,000.
Indicated current collections of individual income taxes during the
calendar year 1932 show a decline of 47 per cent from the preceding
year. This decline in collections reflects relatively smaller decreases
in amounts of reported incomes, the effect of which was accentuated,
through the operation of progressive tax rates as indicated in the
following summary.
Statistics qf individual incomes.—As individual incomes increased in
years prior to 1930, the additional amounts were subject to progressively higher rates and, as a consequence, the total tax paid increased
more rapidly than the income on which the tax was based. Similarly,
as incomes have declined during the depression, the tax has declined
more rapidly than the income.
The effect of the continued decline in business on incomes for 1930 ^
and 1931 (underlying collections in 1931 and 1932) is indicated by
the following table, which shows the number of returns and the tax
reported for the calendar years 1928, 1930, and 1931, and the percentages of decrease from 1928 to 1930 and from 1930 to 1931, by
major net income classes, as published in the preliminary Statistics
of Income for these years. Comparison is made with 1928 rather
than 1929 incomes because of the temporary rate reduction affecting
taxes on incomes of the latter year.
Comparison of numher of returns arid income tax for the calendar years 1928^ 1930^
and 1931J individual returns of net income of $5,000 and over ^
Number of returns

Percentage decrease

1928

1930

1931

1928-1930 1930-1931

561,114
369,676
15,780

505,715
251,490
6,152

385.837
167,141
3,142

9.9
30.1
6L0

23.7
33.6
48.9

936,470

763.357

556,120

18.5

27.1

Net income classes

$5,000-$10,000
10,000-100,000
100,000 and over.

Total

.
.._

Income tax (thousand dollars) Percentage decrease
Net income classes
1928

1928-1930 1930-1931

1930

1931

21,344
409.058
700,341

16,590
208,134
237,716

11,693
114,344
107,896

22.3
49.1
66.1

29.5
45.1
54.6

1,130,743

462,440

233,933

59.1

49.4

•

$5,00(>-$10,000
10,000-100,000 . .
100,000 and over.
Total

1 Preliminary Statistics of Income; returns filed to Aug. 31,1929,1931, and 1932, respectively. For sake-of
comparability with available figures for.1931, preliminary rather than final figures are used for 1928 and. 1930.

REPORT OP THE SECRETARY OF THE TREASURY

As shown by the table, a decline of 18.5 per cent in the number of
these returns for 1930 as compared with 1928 was accompanied by a
decrease in taxes reported of 59.1 per cent; a further decline for
1931 as compared with 1930 of 27.1 per cent in the number of returns
was accompanied by a decrease in taxes of 49.4 per cent. Taxes for
1931, aggregating $233,900,000, were thus only about one-fifth, of the
total of $1,130,700,000 for 1928. Two-thirds of the decline of about
$896,800,000 in individual income taxes which took place from
1928 to 1931 occurred in the net income classes of $100,000 and over,
due to the shift in taxable incomes from the high income group to
lower income groups. In 1930 the shift in taxable incomes resulted
priiicipally from the decline in profits from the sale of real estate,
stocks, bonds, etc., while in 1931 it reflected decreased income from
all sources, particularly from dividends.
The returns showing net income of $100,000 and over declinied in
number from about 16,000 in 1928 to approximately 6,000 in 1930,
and to about 3,000 in 1931.
The following table shows the principal sources of income in returns
o of net income of $5,000 and over for 1928, 1930, and 1931, and the
decreases from 1928 to 1930 and from 1930 to 1931.
Income and deductions hy major sources for the calendar years 1928, 1930, and 1931,
individual returns of net income of $5,000 and over ^
[In millions of dollars]
Increase i-h),
decrease (—),
1928

Source of income

1930

1931
1928-1930 1930-1931

Net income '

—

Income from sales of real estate, stocks, etc. :
ProfitsReported for tax on sale of capital assets held
more than 2 years
Aiiother
Total .-

>— .

LossesReported for tax credit on sale of capital assets held more than 2 years
Aiiother.
Total
Not profits over losses
Income from other sources:
Salaries, commissions, etc__
Dividends
Business and partnership
Aiiother
Total
Deduct i ons not elsewhere classified

•. . .

.-.

16,299

10,119

.6,489

-6,180

- 3 , 630

1,843
2,649

550
520

166
189

-1,293
-2,129

-384
-331

4,492

1,070

355

-3,422

—715

40
3 130

80
898

191
798

-f40
. +768

+111
-^100

170

978

989

-f808

+11

4,322

-634

- 4 , 230

—726

4,700
3,922
3,291
2,376

4,159
3,622
1,974
1,960

3,164
2,514
1,236
1,437

-541
-300
-1,317
-415

-1,005
— 1,108
-738

14, 288
2,311

11,715
1,688

8,341
1,218

- 2 , 573
-623

-3,374
-470

— 623

1 Preliminary Statistics of Income; returns filed to Aug. 31, 1929, 1931, and 1932, respectively. For the
sake of comparability with available figures for 1931, preliminary rather than final figures are used for 1928
and 1930.
2 Net income Including the excess of capital net gains over capital net losses.
81928 Statistics of Income, final figure. Data for this item not Included in preliminary report.

REPORT OF THE SECRETARY OF THE TREASURY

In 1930 the major portion of the decline resulted from the sharp
: reduction in income from a single source—the net amount from sale?
bf securities, real estate, etc., which decreased by about $4,230,000,000
from 1928. Proflts reported from such sales in 1930 were largely
offset by reported losses. In 1931 a further decline occurred in the
net amount frorn this source and reported losses exceeded profits by
about $634,000,000.
Other,forms of individual income which in 1930 showed considerable stability declined greatly in 1931. Salaries^ commissions, etc.,
decreased $541,000,000 in 1930 as compared with 1928 and showed a
further decline of $1,005,000,000 in 1931; while dividends, for whicii
the decrease from 1928 to 1930 was $300,000,000, declined
MILLION
DOLLARS
I.COOr

7.
4(9

•f.

40
37
40
7o
20

•:"^*:

.•••7.'-:

• •7\ •

•yb.\

%
16

'•:.') y\

•.'.•^.\

:;:a:;:

XI6XJ

i1 i
/OOQv

(^JvC

(XXX)

1923

1924

1925

1926

1927

1928

ar.

•:ii':

M •m
M 'M

1
1929

•'•'e:-:

19^0

I9'3I

ALL OTMte
DOCUMC.NTARV
STAMPS

1932

CHART 6,—Principal sources of miscellaneous internal revenue collections for the fiscal years 1923 lo 1932

$1,108,000,000 from 1930 to 1931. The marked reduction in dividends for 1931 is directly related to the sharply reduced tax yield in
that year because dividends are the major source of income for the
higher income groups.
Miscellaneous internal revenue.—Receipts from miscellaneous internal revenue taxes were $503,700,000 in the fiscal year 1932 as compared with $569,400,000 in 1931, a decline of $65,700,000. The
changes by major sources are presented graphically in Chart 6.
Most of these taxes, with the exception of the estate tax, are based on
current operations of business and therefore promptly reflect any
changes in the sources to which they relate. Over 90 per cent of
miscellaneous internal revenue comes from three sources^—tobacco

12 *

REPORT OF THE SECRETARY OF THE TREASURY

taxes, documentary stamp taxes, and the estate tax. Receipts from
these taxes declined $61,200,000 in 1932, almost three-fourths of
which was due to a falling off in receipts from tobacco taxes. The
remaining sources of internal revenue, which include taxes on distilled
'spirits, admissions, dues,oleomargarine, and narcotics,showed a decline
of $4,500,000.^ Despite reduced collections, tobacco taxes continue
one of the most satisfactory revenue producers, total collections from
this source having declined less during the depression than collections
from any other major source.
Q Revenue from, documentary stamps was $32,200,000 in the fiscal
year 1932, as compared with $47,000,000 in the fiscal year 1931, a
decline of $14,800,000, reflecting the low level of activity in the
security markets. The major part of these receipts in recent years
has been derived from capital stock transfers and capital issues.
Collections from these types of documentary stamps declined
$7,800,000 and $5,600,000, respectively, from the fiscalyear 1931 to
1932.
Customs.—Customs receipts declined from $378,300,000 \ in the
fiscal year 1931 to $327,700,000 in the fiscal yeRv 1932, OT $50,600,000.
The decline was marked throughout the latter part :of the fiscal
year. The first four months of the fiscal year showed signs of
some stability in customs receipts as compared not only with the
immediately preceding months but also with the corresponding months
of the preceding year. Collections for the four months July to October, 1931, inclusive, averaged about $35,800,000, as compared with
average collections of $30,000,000 for the four months immediately
preceding and with average collections of $33,600,000 for the four
months July to October, 1930. The decline which took place during the early winter corresponded largely to past seasonal changes
for that period of the year. During the early spring months, however, the customary seasonal increase failed to materialize; instead,
receipts declined from January to June, reaching the abnormally
low total of $17,400,000 in June.
The decline in customs is to be accounted for by a further reduction
in both volume and value of imports. The value of dutiable imports
for consumption declined about 23 per cent and the value of imports
free of duty 30 per cent in the fiscal year 1932 as compared with 1931.
Miscellaneous receipts.—Miscellaneous receipts from nontax items
decreased from $509,100,000 in the fiscal year 1931 to $232,500,000
in the fiscal year 1932, or $276,600,000. This decline was due
chiefly to the postponement under the House joint resolution approved
December 23, 1931, of the payments of principal and interest due
from foreign governments during the fiscal year 1932 in the amount
1 Includes adjustment between receipts on basis of reports of collectors and of daily Treasury statements
(unrevised).

REPORT OF THE SECRETARY . OF THE TREASURY

.pf;about $252,000,000. The decline in other miscellaneous.receipts
was distributed over a wide variety of small items for the most part
indicating the effect of the depression on receipts from the incidental
activities of the Government.
•.
/r Collections under the revenue act of 1932.—The revenue act of 1932,
i-^'tq provide additional revenue to meet the emergency situation, was
approved June 6, 1932. Collections^during, the fiscal year 1932 were
. .,affected only by the sales, of tax stamps at new rates between June 21
and June 30,1932; these included documentary stamps and a negligible
amount of special tax stamps on the use of certain boats or j^^achts.
In the case of the other increased and new miscellaneous internal revenue taxes, the taxpayer is for the most part required to pay his taxes on
each month's business on or before the last day of the succeeding
month and therefore taxes due for the period June 21 to 30 were not
payable until on or before July 31, or after.the close of the fiscal 3^ear.
1.932 estirnates and results.—The total receipts of the Federal
Goverriment for the fiscal year 1932 were $238,000,000, or about
10 per cent, less than the Treasury estimated, in the fall of 1931.
Income tax receipts fell $83,000,000 short of the estimates; receipts
from back taxes, on incomes being about $31,000,000 less than:estimated, and current income taxes being some $52,000,000 under the
estimates. . This discrepancy is due chiefly to the difficulty of measuring the effect of the continued depression on the distribution of individual incomes between the various income tax brackets. Miscellaneous internal revenue receipts and customs receipts were $40,000,000
and $82,000,000 less, respectively, than estimated, and miscellaneous
receipts were $33,000,000 less. At the time the estimates were
made, uncertainties in business and credit conditions made the task
of forecasting tax receipts exceedingly difficult. The Treasury
believed, however, that early passage of essential budgetar3^ legislation and the enactment of other constructive measures then contemplated would result in early improvement in business and financial
conditions, with some consequent improvement in the latter part of
the fiscal year 1932 for such sources of Federal revenue as respond
promptly to current business conditions, and with better prospects
generally for the following fiscal year. Not only did this improvement fail to materialize, but business declined steadily to lower levels
during the last half of the fiscal year.
Expenditures
Federal expenditures for the fiscal year 1932 reached a new high
level for the postwar period due primarily to the eft'ect of the depression on Government activities. Total expenditures chargeable
against ordinary receipts amounted to $5,006,590,305 for the fiscal

REPORT OF THE SECRETARY OF THE TREASURY

year 1932, as compared with. $4,219,950,339 for 1931, and $3,848,463,190 for 1929. Expenditures for 1932 were thus $786,639,966,
or 19 per cent, larger than for 1931, and $1,158,127,115, or 30 per
cent, larger than for 1929. The trend iri expenditures by principal
classes for the fiscal years 1923 to 1932 is shown in Chart 7.
Comparison of the fiscal years 1929 and 1932.—The general character
of expenditures for 1932 as compared with 1929, the last year for
which expenditures were unaffected by the depression, is shown in

A L L CTHER

A L L OTHE.R
SINKING
^PUBLIC
.FUND
fOEBT

1923
kLL

OTHER

1924

1925

PUBLIC D E B T

1926
LESS

THAN

1927

1925

« 1,000, OOO

CHART 7.—Principal classes of expenditure chargeable against ordinary receipts for the fiscal years 1923
to 1932 (general, special, and trust funds combined)

the table on page 16, and in Chart 8, in which expenditures are classified by certain major functions.
While total Federal expenditures increased $1,158,000,000 from
1929 to 1932, the expenditures for major activities undertaken or
accelerated to afford rehef from the depression and for the postal
deficiency showed a combined increase of $1,189,000,000. The remaining Federal expenditures declined slightly, from $3,555,000,000
for 1929 to $3,524,000,000 for 1932.
In the major expenditures largely attributable to the depression
are included expenditures of $500,000,000 for the capital stock of the
Reconstruction Finance Corporation, $125,000,000 for additional
capital stock of Federal land banks, $136,000,000 for net loans under
the agricultural marketing act, an increase of about $306,000,000 in
expenditures for public works, and an increase of $117,000,000 for
the postal deficiency after deducting about $52,000,000 from the
postal deficit for 1929 for payment of so-called back railway mail pay

REPORT OF THE SECRETARY OF THE TREASURY

to inland carriers under authority of the joint resolution approved
June 6, 1929.
Service of the pubhc debt including sinldng fund and other debt
retirements accounted for $1,012,000,000 ofthe expenditures for 1932,
a reduction of about $216,000,000 from 1929. This decrease resulted,
from reduced paynients for interest, reflecting lower rates on Government issues, and from decreased retirements from repayments
BILLION
DOLLARS
OLFLNSEl AND
VETERANS
DUE. T O OR.
AFFE.CTED BY
DE.PRE.5SION

PUBLIC

VElTEfi A N 5
RETIREMENTS

NATIONAL
DEFENSE.

NATIONAL
DLFENSEL
AND
VE.TE.RANS

1929 1932

INTEREST
1«)29 1932

MAJOR OUTLAYS D U E
2 r T O OR A F F E C T E D BY
DEPRESSION
PUBLIC
DE.BT

ALL
OTHERINCLUDING
NONFUNCTIONAL

RECONSTRUCTION
FINANCE
CORPORATION
AGRICULTURE

ALL

OTHER

1929 1932'

DEBT

PUBLIC

NONFUNCTIONAL

WORKS

POSTAL
P DEFICIENCY
1929 1932

OTHER-LARGELY
DEPARTMENTAL

1929 1932

CHART 8.—Comparison of expenditures for the fiscal years 1929 and 1

of principal from foreign governments owing to the suspension of
foreign debt payments due in the fiscal year 1932.
Another major class of governmental outlay is for national defense
and the care of war veterans. Expenditures under this category
totaled about $1,631,000,000 for 1932, or about $233,000,000 morethan for 1929. All of the increase was in the expenditures for veterans due to increased appropriations for hospitalization and domiciliary care of veterans, for the adjusted service certificate fund
in connection with the financing of increased loans on adjusted serv-^ice certificates under-authority of the act of February 27, 1931, and_
for liberalized provision for military and naval compensation and,
insurance for veterans of former wars.
141810—82—2

REPORT OF THE SECRETARY OF THE TREASURY

Expenditures chargeable against ordinary receipts, hy certain major functions, for
the fiscal years 1929 and 1932^
[In millions of dollars]

M a j o r expenditures d u e t o or affected b y t h e depression:
C a p i t a l stock, Reconstruction F i n a n c e Corporation
Special aids t o agriculture— '
Agricultural m a r k e t i n g fund (net)
Capital stock, Federal land b a n k s
Loans a n d credits to farmers
P u b l i c works 2
._
.
Postal deficiency

6
201
3 86

T o t a l major expenditures d u e to or affected b y t h e depression
_
E x p e n d i t u r e s exclusive of major i t e m s ' d u e to or aflfected b y
t h e depression:
Public d e b t Interest..
Retirements . . .
Total public debt
.
N a t i o n a l defense a n d veterans *—
N a t i o n a l defense
Veterans

+500

136
125
11
507
203

+136
+125
+5
+306
+117
1. 482

678
550

1,012

1,228

• 1,631

129
213
23
52

121
101
2
""38

417

Total all other, including nonfunctional
T o t a l expenditures, exclusive of major items d u e t o or
affected b y t h e depression
T o t a l expenditures chargeable against o r d i n a r y receipts.

16
496

512

-216
-2
+235

• 658
973
1,398

Other expenditures, largely d e p a r t m e n t a l S h i p p i n g Board
. . .
_:...
D e p a r t m e n t a l , etc., n o t elsewhere classified

+1,189

-79
-137

599
413

660
738

Total

500

293-

T o t a l national defense a n d veterans
All other, including n o n f u n c t i o n a l ^
Major nonfunctional—
T r u s t funds
Refunds of tax receipts
Purchases of securities * . .
Back railway mail p a y
S e t t l e m e n t of w a r claims act

Total

( + ) or
1932 • • Increase
decrease (—)

1929'

Class of e x p e n d i t u r e

•

+233
-8
-112
-21
-52
+38

262

-155

-52
667

+36
+71
+107

•619
929

881

3, 555

3, 524

-31

3,848

5,006

+1,158

-48

^ On basis of daily Treasury statements (unrevised), supplemented by certain details on checks-issued
fcasis and public works on basis of Bureau of Budget compilation.
2 Excluding expenditures of District of Columbia government and for maintenance of rivers and harbors,
3 Excluding so-called back railway mail pay to inland carriers under authority of joint resolution approved
June 6, 1929.
* Excluding expenditures under these headings for public works.
8 Including payment of Cape Cod Canal bonds and purchase of foreign obligations for 1P29 and of capital
,stock of Federal intermediate credit banks for both 1929 and 1932.

The balance of the Federal expenditures aggregated about $881,€00,000 in 1932 as compared with $929,000,000 in 1929, a decrease
•oi $48,000,000. Certain expenditures included in this total do not
represent Government activities arid may be classified as nonfunctional. Thus expenditures for trust fund accounts represent moneys
payable to or for the use of beneficiaries of the truBt and'are not
.classified as general expenditures of the Government. These include
.such items as expenditures on account of the Government life insurance fund, trust funds for the benefit of the Indian tribes in connection v;dth the sale of Indian lands, and expenditures of the District

REPORT OF THE SECRETARY OF THE TREASURY

of Columbia government from taxes levied in the District. Refunds
of receipts include repayments of taxes erroneously coUected. Other
expenditures under this general classification include, for both j^ears,
the purchase of certain obligations by the Government; for 1929
payments of so-called back railway mail pay and for 1932 the payments authorized under the settlement of war claims act of 1928.
T h e total of the major nonfunctional items was $417,000,000 in 1929
;and $262,000,000 in 1932, a decrease of about $155,000,000.
Other expenditures, largely for departmental activities, were $619,000,000 for 1932, an increase of $107,000,000 over 1929. Expendi,.tures for the Shipping Board, which include construction loans for
the development of merchant marine, were responsible for $36,000,000
.of. this increase, while expenditures for departments and other accounts
not elsewhere classified were about $71,000,000 larger for 1932 than
for 1929. The latter class of expenditure aggregated about
:$567,000,000 for 1932, or about 16.1 per cent of total Federal expenditures exclusive of the major items due to or affected by the depres•sion. The activities which were supported by this $567,000,000 of
expenditures include the legislative and judicial branches of the
'Government, the fiscal administration and control of banking and
currency, foreign relations, civil pensions and allowances, and other
"governmental activities in connection with conservation of natural
resources, education, promotion of public health, Indian aiflairs, aids
to agriculture, labor, aviation, and industry.
Comparison of the fiscal years 1931 and 1932.—As already indicated,
total expenditures chargeable against ordinary receipts for the fiscal
year 1932, at $5,006,590,305, were $786,639,966 larger than in 1931.
Expenditures for 1931 and 1932, classified largely on the basis of
;governmental organizations, are compared in the table on page 18.
The increase for 1932 in expenditures, exclusive of public debt
charges, was due chiefly to increased outlays of an eriiergency character, including $500,000,000 for the capital stock of the Reconstruction Finance Corporation and $125,000,000 for additional capital
rstock of the Federal land banks, as already brought out in the comparison of expenditures for 1929 and 1932.
General expenditures, classified by departments, show an increase
•of $210,900,000 in 1932 and also reflect expenditures due to the
depression. The principal items of increase were as follows:
$83,200,000 for the Treasury Department, representing payments on
account of the building program and awards of the War Claims
Arbiter under the settlement of war claims act of 1928; $22,100,000
for the Department of Agriculture, reflecting additional outlays for
Federal aiid highway construction and relief loans; and $19,900,000
ior the Interior Department, principally on account of the Boulder
Dam project. Expenditures for the Veterans' Adniinistration showed

REPORT OF THE SECRETARY OF THE TREASURY

an increase of $78,600,000 as the result largely of liberalized provisions for military and naval compensation and insurance of war
veterans. Smaller increases in experiditures were shown as follows::
$3,300,000 for the Legislative establishment; $3,600,000., State Department; $8,000,000, Department of Justice; $2,500,0^0, Department of Labor; and $4,500,000, other independent offices and commissions. Decreases were shown in expenditures for the War
Department of $10,200,000, and for the Commerce Department of
$8,800,000, the latter due to the fact that the decennial census was
practically completed in 1931.
Expenditures chargeable against ordinary receipts, hy major groups, for the fiscat
years 1931 and 1932
{On basis of daily Treasury statements (unrevised), seia p. 337; general, special, and trust funds combined: for description of funds, see p. 338; for classification by funds, see p. 360]
[In millions of dollars]

Class of expenditure

General expenditures:
Legislative-estaMishrnent
Executive Officell.
State Department
Treasury Department
WarDepartment..
,
Department of Justice
Post OflBce Department..
Navy Department..
Interior Department-.
Department of Agriculture
Department of Commerce
Department of Labor
Veterans' Administration
Other independent oflBces and commissions '
District of Columbia
Total general expenditures..
Refunds of receipts
Postal deficiency
Agricultural marketing fund (net)._
Reconstruction Finance Corporation
Subscription to stock of Federal land banks..
Adjusted service certificate fund
All other, including trust funds
, Total expenditures, excluding public d e b t . .
Public debt chargeable against ordinary receipts:
Interest
Retirements..

Increase(+) or decrease ((—);

1931

27.3

+3.. a

24.0.5
15.7
204.6
478.4
44.3
.1
354.1
7L5
296.9
6L6
12.2
729.2
49.7
47,8

19.3
287. a
468.2
52,3
.1
357. a
9L4,
319.0
52.7
14.7
807. 8.
54 2
48.4

2,390. 5.

2,. 601. 4

91.3.
145.6
190.5
224.2
126.2

101.1
202.9
136; 2
600.0
125.0'
194.0
134.1

+9.8
+57. 3:
-64. 3
+600. 0.
-hl26.0
-30, 2
+7.9

3,168.3'

3;, 994. 7

+826. 4

611.6
440.1

699.3
412.6

-12.3
-27. &

.4i

-.1
+3.6;
+83.2.
-10.2;

+8. a

+3. 7+19. 9.
+22.1
-8.8.
+2.5.
+78. 6.
+4. 5.

+.6

+210.9

Total public debt expenditures chargeable against ordinary
receipts

1,051.7

1, Oil. 9

-39. &

Total expenditures chargeable against ordinary receipts.

4,220.0

5,006. 6

+786. e

1 Includes adjustment of unclassified items.

The deficit
In the fall of 1931 the Treasury estimated that the deficit for the
fiscal year 1932 would be about $2,123,000,000. The actual deficit,
at $2,885,362,299, exceeded this estimate by $763,000,000. Expendi-^
tures were $525,000,000 larger than estimated, as a result pf
subsequent authorizations by Congress for the purchase of capital

REPORT OF THE SECRETARY OF THE TREASURY

stock of the Reconstruction Finance Corporation and the Federal
land banks. Receipts were about $238,000,000 less than estimatedi
REVENUE ACT OF 1932

In his annual report to the Congress for the fiscal year 1931 the
Secretary of the Treasury recommended ^'a vigorous and continued
effort to reduce expenditures," and increased taxation with a view to
bringing into balance current receipts and current expenditures, exclusive of the sinking fund and other statutory debt retirements.
The Treasury's revenue program was based in the main upon a
return in principle to the general plan of taxation existing under the
revenue act of 1924.^ The increased income taxes recommended were
to be made effective on incomes for the calendar year 1931 so as to
yield additional revenue in the last half of the fiscal year 1932 and
during the whole of the fiscal year 1933. The Treasury's program
also included revision of the postal rates to meet a greatly increased
postal deficit. ,
The President's Budget message, submitted at the same time,
recommended a reduction of approximately $370,000,000 in expenditures.
In view of the very unusual situation, the Secretary of the Treasury
stated on January 13,1932, on his first appearance before the Ways and
Means Committee, that at a later date he desired to submit revised
estimates of revenue. These were submitted to the Ways and Means
Committee in February. At that time it was estimated that additional taxes, over and above those recommended earlier in the year,
would be necessary and that there must be a further reduction in expenditures. Supplemental recommendations were made by the Treasury accordingly.^
Early in March the Ways and Means Committee reported to the
House of Representatives a revenue bill, the principal features of
which were increased income taxes, first applicable, however, to 1932
rather thari to 1931 incomes; an increased estate tax; a gift tax;
and a general manufacturers' excise tax based on the Canadian model.
The Secretary of the Treasury at once indorsed this bill and gave it
his full support. I t was not accepted by the House of Representatives, however, and in lieu of the general manufacturers' excise tax,
the House adopted a series of special manufacturers' excise taxes.
The Senate did not dispose of the revenue bill until early in June.
In the meanwhile business conditions had grown steadily worse and
it was apparent that the estimates made by the Treasury Department
of what might be expected in the way of revenue during the fiscal
year 1933 could not be realized.
» Exhibits containing the Treasury's original and subsequent proposals appear on pages 270 to 271 and
274 to 275 of this report.

REPORT OF THE SECRETARY OF THE TREASURY

On May 31 the Secretary of the Treasury appeared before the Senate Finance Committee and stated that it would be necessary that
the bill provide for $1,125,000,000 of additional revenue. This was
the same amount recommended to the Ways and Means Committee
iri February, though it had become clear that the measures then
recommended would not produce this amount of additional revenue.
He also stated that in addition it would be necessary to provide by
legislation for further reduction of expenditures by not less than
$350,000,000 below the Budget estimates of December.
The statement reads in part as follows:
The Treasury recoinmended in February $1,125,000,000 in new taxes. That
is the amount needed to-day.
The bill now before the Senate, even with the Finance Committee items still
to be voted on, will bring in but $840,000,000, as compared with the $965,000,000
estimated under the old figures. Thus there is a shortage of revenue between
the amount originally estimated by the Treasury as necessary and the yield of
the bill as it now stands of $285,000,000. * * *
In other words, assuming that the expenditure figures are reduced below those
submitted in the Budget Message by not less than $350,000,000, $285,000,000 of
additional revenue is needed to-day to balance the Budget. In order to bridge
this gap, I unqualifiedly recommend turning to the manufacturers' excise tax
along the lines of Senator Walsh's pending amendment. While the Treasury
Department has hitherto refrained from recommending this tax, I had occasion .
to give it close study during its consideration by the Ways and Means Committee and I unhesitatingly indorse it to-day as the most effective means of
balancing the budget and giving assurance of yielding the needed revenue.

In December, 1931, the Budget for the fiscal year 1933 was submitted with total expenditures at $3,958,000,000,. exclusive of the
postal deficit which was intended to be covered by the postal provisions of the revenue act and other postal legislation. The reduction
of this total by $350,000,000 would have resulted in expenditures
aggregating $3,608,000,000. Expenditures for 1933 are now estimated at $4,135,000,000, excluding the postal deficit. This estimated
total, which includes certain items of additional public construction
provided for in the emergency relief and construction act, approved
July 21, 1932, is thus about $527,000,000 larger than the proposed
total of expenditures on which the recommendations of the Treasury
on May 31 were based.
Summary of provisions of the act
The revenue act of 1932 provides for the following increased and
new taxes:
(1) Increase in the corporation income tax rate from 12 to 13%
per cent, with an additional tax at three-fourths of 1 per cent on
corporate net income for the years 1932 and 1933 reported on consolidated returns, and with no specific credit for corporations with
small incomes.

REPORT OF THE SECRETARY OF THE TREASURE:

(2) Increase in the normal rates on individual income froiri Iji, 3,
aad 5 per cent to 4 and 8 per cent; elimination of tax credit for earned
income; reduction in personal exemptions from $3,500 and $1,500 to
$2,500 and $1,000 for married persons or heads of families and single
individuals, respectively; surtaxes graduated from 1 per cent on net
income in excess of $6,000 and not in excess of $10,000, up to 55 per
cent on net income in excess of $1,000,000; and other income tax
changes, the most important of which limits the deduction of losses
from sales or exchanges of stocks and bonds held for a period of two
years or less to the amount of gains derived from similar transactions
with provision for a one-year carry-over, with certain limitations, of
the excess of such losses over such gains for a given year.
(3) An additional tax on estates at graduated rates, with an exemption of $50,000, the additional tax to be paid to the Federal Government without tax credit for payment of State inheritance taxes; and
a gift tax at rates graduated up to 3 3 ^ per cent on net gifts in excess
of $10,000,000 with an exemption of $50,000.
(4) Manufacturers' excise taxes on numerous articles, including
lubricating oil, brewer's wort, automobiles, trucks, parts and accessories, tires and inner tubes, gasoline, candy, chewing gum, soft
drinks, jewelry, toilet preparations, furs, domestic and commercial
consumption of electricity, radios, mechanical refrigerators, sporting
goods, and cameras.
(5) Other miscellaneous taxes, including new and increased stamp
taxes, increased taxes on admissions, and new taxes on telephone, telegraph, cable, and radio messages, checks, leases of safe deposit boxes^
transportation of oil by pipe line, and the use of boats.
(6) Increases in postal rates.
Increased income taxes were made effective on incomes for the
calendar year 1932, instead of the calendar year 1931 as proposed by
the Treasury. The manufacturers' excise taxes and the other miscellaneous taxes became eft'ective 15 days after the signing of the act,
that is, on June 21, and are limited in application to the period ending
June 30, 1934, with the exception of the taxes on passenger automobiles, trucks, parts and accessories, and tires and tubes, which taxes
remain effective until the end of the subsequent month, and of the
gasoline tax which is levied for one year only, that is, until June 30,
1933.
At the time of its enactment it was estimated that the new revenue
act would yield $1,118,500,000 of additional revenue for the fiscal
year 1933, including additional postal revenue of $160,000,000 which
would be reflected in a reduction in the postal deficit and consequently
in. total expenditures. (See Exhibit 27, page 277.)
; The revenue act of 1932 eft'ected one of the largest increases in
taxes ever imposed by the Federal Government in peace times. In
a year in which the enactment of any new revenue measure presented

REPORT OF THE SECRETARY OF THE TREASURY

jgrave difficulties, the placing on the statute books of an act so subistantial in scope was an impressive achievement.
Viewing the act in relation to the emergency situation which made
i t necessary, there are a number of major accomplishments which
^result from it, aside from the provision of substantial additional
Tevenue. These include the broadening of the base of the individual
income tax through reduction in personal exemptions; the limitation
of deductions from gross income on account of losses from sales of
stocks and bonds held for two years or less; the closing of loopholes in certain other administrative provisions of the income tax
law; and the inclusion among the new taxes of certain taxes which
are levied on a relatively broad base and will yield relatively
large amounts of revenue with little administrative cost. There are a
number of features of the act which were not in accordance with the
Treasury's views. These include the application of a discriminatory
rate to corporation income reported on consolidated returns, and the
inclusion of a number of manufacturers' excise taxes yielding relatively little revenue and involving considerable administrative
difficulty.
CONDITION OF THE FEDERAL FINANCES

At the end of the fiscal year 1932 the Federal revenues had been
€ut approximately in half as compared with the average receipts for
the four years ended with 1930, and expenditures had been greatly
increased by the vast program of emergency relief undertaken to
meet the extraordinary circumstances with which the Nation was
confronted. Thus the depression affected the Federal Budget very
seriously, on both the expenditure and the receipt side. As a result,
we closed the fiscal years 1931 and 1932 with large deficits.
Even so, the finances of the United States Government are in
sound condition.
In the last session of Congress reduction in expenditures by no
means proceeded as far as necessary, yet a beginning was made.
At the same time a very real effort was made to bring the revenues
of the Government up to the requisite level. Receipts from the new
taxes during the first few months in which the new revenue act has
been in effect have been disappointing, but on the whole there can
be no doubt as to their productiveness when business activity rises
to more normal levels. Moreover, it should not be forgotten that
the new law does not become fully effective until after the close of
the fiscal year 1933.
When Congress adjourned the position of the Budget had been
greatly improved.
I must continue to urge, as the Treasury Department did a year
ago, that the Budget be brought into balance at the earliest possible
date. Yet the deficits of the years of depression should be considered

REPORT OF THE SECRETARY OF THE TREASURY

in relation to the record of the entire postwar period. Through
surpluses aggregating $3,460,000,000 during the eleven years ended
with the fiscal year 1930, the Government had in effect accumulated
a reserve, through accelerated debt reduction, which could be drawn
upon in the lean years, and which fortified the position of the Federal
finances.
The war debt reached its peak early in the fiscal year 1920. From
that date to the end of the fiscal year 1930 the debt was steadily reduced. The decrease from June 30, 1919, to June 30, 1930, amounted
to $9,300,000,000. Obhgations in the amount of $4,907,000,000 were
retired from ordinary receipts in fulffilment of statutory requirements, $3,460,000,000 from surplus receipts, and $933,000,000
through reduction in the General Fund balance. The stattitory
retirements included in the Budget for the fiscal years 1931 and 1932
amounted to $440,000,000 and $413,000,000, respectively, representing chiefly retirements through the cumulative sinking fund.
Increases in the total public debt as a result of the deficits of 1931
and 1932 have about offset the retirements from surplus receipts
over the preceding eleven years, but at the end of the fiscal year 1932
the total outstanding debt showed a riet reduction of $5,998,000,000
as compared with June 30, 1919, wliich was about $240,000,000 in
excess of the aggregate statutory requirements for the period.
As contrasted with the financial history of other leading nations
since the war we find that, even after the last two years of heavy
deficits, we had greatly reduced the public debt from the war peak.
The traditional policy of our Government of rapidly reducing the
national debt created during war periods has been maintained.
Moreover in appraising the financial position of the Government it
should be remembered that up to the middle of November the total
amount paid into the Reconstruction Finance Corporation for its
capital stock, and the net advances to the corporation treated as public debt items in accordance with the law, were about $1,150,000,000.
These funds are represented by loans made by the corporation on
security and will at a not too distant date be returned to the Treasury.
Thus, of the amounts added to the public debt during this depression period, beginning with the fiscal year 1931 over a billion dollars
is represented by assets which will be realized on and will furnish
funds which can be applied to debt retirement.
ESTIMATES OF FUTURE REVENUES

There has been so much discussion of Treasury estimates that it
is appropriate to say something in regard to the problem of estimates.
The Treasury is not called upon to make estimates of future expenditures other than those covering the Treasury Department, but receives
the expenditure estimates from the Director of the Budget. The

REPORT OF THE SECRETARY OF THE. TREASURY

Treasury Department is called upon to furnish to the Congress estimates of future revenue. The estimates of future revenue are required
to be presented to the Congress when it convenes early in December
and have to be in final form by the middle of November. They must
cover not only the current fiscal year ending with the succeeding
J u n e but also the fiscal year beginning the following Jul}^^, a twelvemonth period beginning eight months after the estimates are made
up and ending twenty months later.
Future revenue receipts depend directly on future business conditions. In making up future estimates of revenues, what the
Treasury Department is called upon to do, generally speaking, is to
chart the business curve over a period of almost two years. Every
business man knows the difficulty, in such a period as this, of foreoasting with accuracy twenty months in advance the profits or losses
which wdll be sustained in his own particular business. I t can readily
be appreciated, therefore, how great the difficulties are in forecasting,
not only the future of any one business, but of all the businesses in
the United States.
An examination of estimates made by the treasury departments in
other coimtries over a series of years indicates that these difficulties
are by no means peculiar to our country.
The Treasury Department has revised its estimates from time to
time. This is inevitable under rapidly changing conditions. The
past fiscal year is an example. Estimates made at the end of May,
1932^ differed radically from those made in November, 1931, not
because of any capricious change on the part of the Treasury,
but because conditions were radically different. Conditions govern estimates, and all estimates are susceptible to those errors which
inevitably enter into the field of forecasting.
During the calendar year 1929, current collections of individual
income taxes were $1,163,000,000. During 1932 they will be only
$250,000,000. We estimate that during 1933 they wiU be less than
$150,000,000, computed on the basis of the 1928 revenue law. In
the face of such enormous changes the inherent difficulties of forecasting are greatly augmented*
I t seems to me essential that there should be a full appreciation
on the part of the public of the problem involved, for the protection of
those who, in the future conduct of the fiscal affairs of this Government,
will be called upon to face this difficult problem.
Fiscalyear 1933
In the estimates submi'tted to the Finance Committee at the end
of May, the Treasury Depa;rtment estimated the revenue for the
fiscal year 1933, both under the taxes then in existence and the new
taxes about to be iriiposed, at $3,098,000,000. The revenue .for the

REPORT OF THE SECRETARY OF THE TREASURY

fiscalyear 1933 is now estimated at.$2,624,000,000, or approximately
$474,000,000 less than the previous estiinate.
The decline iri the present estimates as compared with those made
in May reflects in part a revision of basic forecasts to take iaccount
of delayed recovery—from a lower level and at a slower rate than
was previously anticipated—with consequent further shrinkage in all
tax bases. In part it has resulted from; the loss of miscellaneous
internal revenue, as indicated by collection reports to date, owing to
heavy sales in.advance of the effective date of new taxes; to difficulties
which inevitably hamper the administration of a variety of scatteredlevies; to particular administrative obstacles affecting, cer tain, of the
new levies as, for example, the tax on brewer's wort and malt sirup;
and to smaller collections than had been anticipated f()r certain taxes —
m'ainly the tax on checks and on admissions—in respect of which
information available prior to the operatiori of the new law afforded
inadequate bases for appraising the probable jdeld.
Customs receipts are estimated at $290,000,000, or $60,000,000
less than the amount estimated in May. Income taxes, which are
estiniated at $860,000,000,-are $176,000,000 less than the previous
•estimate. Of the latter amount, $55,000,000 represents a reduction
in estimated current collections of corporation income taxes and
$81,000,000 a reduction in estimated current collections of individual
income taxes. As already brought out, these decreases largely reflect
readjustments to basic conditions affecting the level of incomes for
the calendar year 1932. A reduction of $40,000,000 in estimated
collections of back taxes on incomes reflects in part the increasing
difficulty, under existing conditions, of effecting collections.
Of the $284,000,000 reduction from the May estimates of miscellaneous internal revenue, $128,000,000 is accounted for as follows:
Reduction in the tax on brewer's wort, etc., from $82,000,000 to
$10,000,000; reduction in the tax on checks from $78,000,000 to
$45,000,000; and reduction in the admissions tax from $44,000,000 to
$21,000,000. The balance of the reduction amounting to $156,000,000
includes a. total of about $60,000,000 representing reductions to take
account of losses in revenue due to heavy sales in advance of the efl'ective date of the taxes, to evasion, and to administrative difficulties.
Under prevailing circumstances the revenue estimates are of
necessity still qualified by major uncertainties. This is the case primarily because there is little to indicate the rate at which recovery
will take place, and little previous experience on which to judge the
effect of certain features of the individual income tax under the new
revenue law, particularly the provision limiting the deduction of
losses from dealings in securities from gross income. Furthermore,
the effect of the reduced personal exemptions under existing conditions
is problematical.

REPORT OF THE SECRETARY OF THE TREASURY

At the time the estimates of revenue were submitted to the Senate
Finance Committee in May, I stated that if the Budget were to be
balanced it would be necessary to reduce expenditures by $350,000,000
below the figures in the Presiderit's Budget Message, in addition to
a reduction in the postal deficit of $160,000,000, which it was then
estimated would result from postal provisions of the revenue act and
other postal legislation. This would have involved a reduction of
expenditures, exclusive of the postal deficit, to about $3,608,000,000As already brought out> present estimates for the fiscal year 1933
indicate expenditures of $4,135,000,000, exclusive of the postal deficit,
or about $527,000,000 more than that amount. Furthermore, it
appears that the reduction in the postal deficit will fall short of the
amount proposed in May by about $139,000,000.
We are confronted with a deficit this fiscal year of approximately
$1,146,000,000, exclusive of statutory debt retirements.
Desirable as it is to make the sinking fund provisions of the law fully
effective, it is apparent that under the difficiflt circumstances in which,
the country now finds itself, we must face the fact that the public
debt can not be reduced for the next year or two. I t should be
pointed out, however, that the new revenue act is only partially
effective in the fiscal year 1933. During the fiscal year 1934, the first
in which the revenue act of 1932 becomes fully effective, if the gasoline tax be continued, the Federal tax revenues under this act will;
show an increase of about $460,000,000 over 1933.
Fiscal year 1934
Total governmental revenues are estimated for the fiscal year 1934
at $2,949,000,000, including only one month of collections from the
gasoline tax which was imposed for one year and which clgarly must
be continued. If the recommendations made by the President in his
annual Budget Message are followed, the expenditures can be reduced
from $4,269,000,000 m 1933 to approximately $3,790,000,000 in 1934,.
or by about $479,000,000. Expenditures include an item of about
$110,000,000 for continuing the construction work provided for in
the so-called emergency relief bill, over the protest of this department,
and a postal deficit of nearly $70,000,000. Expenditures, as sub-^
mitted in the President's Budget Message, exclusive of statutoiy
debt retirements in the amount of $534,000,000 are estimated at
approximately $3,256,000,000. These figures indicate a deficit of
approximately $307,000,000. With the gasoline tax continued the
deficit will amount to about $170,000,000.
I am submitting herewith a table showing receipts and expenditures
for the fiscal year 1932 and estimates for the fiscal years 1933 arid 1934.
Figures for 1934 are presented on the basis of estimates of expenditures as in the body of the Budget and as affected by additidnal
recommendations in the Budget Message.

REPORT OF THE SECRETARY OF THE TREASTJRY

Receipts and expenditures for the fiscal year 1932, on the basis of daily Treasury
. statements (unrevised), and estimated receipts and expenditures for the fiscal
years 1933 and 1934
(Receipts and expenditures are separately presented for general and special funds combined and for
trust funds, to conform to the practice of the Bureau of the Budget, in addition to the custorhary totals
for general, special, and trust funds combined; for explanation of funds, see p. 338]
1934 estimates
1932, actual

1933 estimates

Basic
Budget

Supplemented,
Budget
Message

GENERAL AND SPECIAL FUNDS COMBINED

Heceipts:
Internal revenue$1,057,335,853
Income tax
Miscellaneous internal revenue.—..
603,670,481
Total internal revenue
Customs (excluding tonnage tax)
Miscellaneous receiptsProceeds of Government-owned securities—
Principal—foreign obligations..
Interest—foreign obligations
Railroad securities
All other...
Panama Canal tolls, etc
Other miscellaneous (including tonnage tax)
Total general and special fund
receipts
Expenditures:
Legislative Establishment
Executive Office
Veterans' Administration
Shipping Board
Other independent offices and commissions
Department of Agriculture.
Department of Commerce
Department ofthe Interior
....
Department of Justice
Department of Labor
Navy Department
, Post Office Department
Department of State
--..
Treasury Department
War Department
Add unclassified items.

$860, OCk), 000 $1,010,000,000
981,000,000
900,000,000

1,010,000,000
981,000,000

1, 661,006, 334 1,760,000,000 1,991,000,000
320,000,000
327, 754,969
290,000, ODO

1,991,000,000
320,000,000

1, 695, 570
20,671,931
22,688,375

73,499,881
195,094, 693
918,498
49,963, 686
22, 573, 342

123,018,315
205,724, 562
1,276, 372
44,447,600
21, 617,000

123,018,315
205,724, 562
1, 276,372
44,447,600
21,617,000

72,008,258

75,836,144

84,685,339

2, 005,725, 437 2,467,886,143

2, 791, 769,188 2, 791,769,188

27,318,601
424, 646
784,841,820
61,540,827

24, 675,800
354,100
838,265,000
32,574,000

20,681, 300
378,000
869,886,000
9, 300,000

17,'050, 700
364, 700
739, 986, 000
9, 280,500

52, 645, 271
318,975,817
52,700,200
81,444,996
51, 639,261
14,701,344
357, 617,834
125,899
18,881,864
287, 945,002
466,788, Oil

46,946, 700
314,204,500
44,742, 400
69,865, 300
45,281,300
12, 336, 900
356,178,000
76,000
14,083,000
280, 796,900
426,001,900

41,966,800
144,876,, 400
40,065,000
65, 660,000
43,854,000
13,368,000
329,931,500
76,000
12,533,800
252,473, 900
392,710,400

40, 709, 300
141, 944,800
38, 540,100
64,135,000
42,193, 400
12, 768,300
328,979, 600
75,000
12,030, 600
247, 510,500
389,230,000

2, 567,491, 293 2,505, 380,800
45, 491

2,237, 669,100 2,084, 798,400

2, 667, 636, 784 2,506,380,800 2,237,659,100 2,084, 798,400
Interest on the public debt.
725, 000,000
725,000,000
599, 276, 631
695,000,000
Public debt retirementsSinking fund
439,658,200
439,668,200
412, 554, 750
426,569,600
Purchases and retirements from foreign repayments..
90, 812,100
90,812,100
69,008,800
Purchases and retirements from franchise tax receipts (Federal reserve
and Federal intermediate credit
3,600,000
3, 500, 000
banks)
21,000
3,600,000
Estate tax
1,000
100,000
100, 000
76,000
Forfeitures, gifts, etc
53,000
Refunds of receipts14, 615, 000
14, 516,000
Customs
17, 510,500
17, 202, 968
69, 681, 800
69, 681, 800
69, 723, 400
83, 921, 652
Internal revenue ^
67, 215, 400
97,000,000
134, 000, 000
Postal deficiency.......
202,876, 340
12, 380, 000
12,933,090
13, 421, 800
Panama Canal
10, 661, 805
Stock of Reconstruction; Finance Corporation
500,000,000
Additional stock of Federal land banks..
125,000,000
Distribution of wheat and cotton for
40,000,000
relief...
.:
10,000,000
Agricultural marketing fund (net)
136, 238, 856
100,000, 000
100,000,000
200,000, 000
100,000,000
Adjusted service certificate fund
20,850, 000
20,850,000
20,850,000
20, 850,000
• Civil service retirement fun^i.
»Includes refunds and drawbacks under Bureau of Industrial Alcohol.

REPORT OF THE SECRETARY OF THE TREASURY

Receipts, and expenditures for the fiscal pear 1932, on the basis of daily Treasury
statements (unrevised), and estimated receipts .and expenditures for the fiscal
years 1933 and 1934—Continued
1932, actual

1933 estimates

1934 estimates
SuppleBasic
mented,
Budget
Budget
Message

G E N E R A L AND SPECIAL F U N D S COMBINED—COU.

. Foreign service retiremerrt fund..
District of Columbia
Total general and special fund expenditures
Excess of expenditures

$215,000
1 9, 600,000

$416, 000
7, 775,000

$292,700
7,775,000

4, 885, 909, 686 4,112,230, 900 3,819, 776, 900 3, 636,678, 600844, 809, 4122, 880,184,249 1, 644, 344, 757 1, 028,007, 712

T R U S T FUNDS

115, 602. 669
120. 680, 019
5,178,050

Receipts
Expenditures
Excess of expenditures
Excess of receipts

$292,700'
7,776, 000>

156, 370, 550
156,657, 600
286, 950

157, 393, 525
155, 017, 300

167,393,625
153,846,600-

2,376, 225

3, 546,92&

G E N E R A L , SPECIAL', AND TRUST F U N D S COMBINED

Receipts..
.
. . . . . 2,121,228,006 2,624, 266, 693 2,949,162,713 2,949,162,713
Expenditures
6,006, 590, 305 4, 268,888,400 3,974, 794,200 3, 790, 425, 20a'
Excess of expenditures!
2,885, 362, 299 1,644,631,707 1,025,631,487
841,262,487
Excess of expenditures, exclusive of
307,192,187
debt retirements
2,472, 732, 549 1,146,478, 307
491,661,187
1 Represents the share of the United States charged against the General Fund of the Treasury. The
expenditures chargeable against the revenues of the District of Columbia under "trust funds" amounted
to $39,524,773,60 for the fiscal year 1932.

RECOMMENDATIONS

Budget
Expenditures.—However difficult and painful it may be. Government expenditures must be drastically cut when, owing to extraordinary circumstances, the Government finds that within a comparatively short period its revenues have been cut in half with little prospect of substantial improvement in the near future.
In a period of deep depression, with the income of the people
greatly reduced, with their buying power drastically curtailed, and
with millions deprived of their earning capacity, it is not only unwise
but impossible to bridge the gap in the Budget entirely by increased
taxation. There i s no other cou^rse for the Government to follow but
the one to which individuals and business enterprises are driven under
similar circumstances, that is, to endeavor to live within its income.
As the Secretary of the Treasury stated in his last annual report:
There is a limit to the extent to which the Government, in our social and
economic structure, may wisely divert funds from private employment to governmental use. When we take into consideration the mounting burden of State
and local taxes, it is no exaggeration to say that we are approaching that limit.

A start was made at the last session of the Congress toward reducing the cost of Governmerit.; The economies then effected are not
adequate. Moreover, while substantial cuts were made in a number of appropriations, new or increased appropriations in other
directions offset in part these accomplishments.
"
At the coming session not only must every possible reduction be
made, but there should be unyielding opposition to all increases and
to all new appropriations.

REPORT OF THE SECRETARY OF THE TREASURY

29"

The Congress last spring made a real effort to iricrease the revenues,
and there is no doubt that the revenue act of 1932 represents a substantial accomplishment. The people, recognizing the necessity,
loyally accepted tlie new and heavy burden.
The time has come to make a like effort oh the cost side of the
ledger. There is no more important problem before the Congress
than that of reducing the cost of Government.
Revenue.—As Blresidj stated, the deficit for the fiscal year 1934 is
estimated at approximately $307,000,000, exclusive of statutory debt
retirements and after reductions in expenditures as recommended by
the President. In order that current receipts may cover current
expenditures, exclusive of debt retirements, I recommend:
- (1) T h a t the gasoline tax now in effect and which is effective
only until June, 1933, be continued for another year, providing an
additional $137,000,000 of revenue;
(2) That those excise taxes which experience has demonstrated
are relatively unproductive and give rise to serious administrative
difficulties be repealed, and that there be imposed a general manufacturers' excise tax substantially in the form appearing in the bill
originally reported by the Ways and Means Committee of the House
of Representatives during the last session of the Congress. I t is estimated that such a measure with the 2}^ per cent rate will yield about
$355,000,000, assuming a full year of collections, thus making possible
the elimination of a number of the unsatisfactory arid relatively
unproductive new excise taxes.
In view of the misunderstanding as evidenced in the congressional
debates of last winter, I must emphasize that I am not reconimending
a general sales or turnover tax, withHhe inevitable pyramiding of the
tax, but a manufacturers' excise tax, imposed at one point only.
In short, the recommendations of this department are substantially
those made to the vSenate committee last M a y :
(1) A drastic reduction in expenditures;
(2) The imposition of a tax resting on a broad enough base to
assure adequate revenue.
Because of the effect of existing conditions of the depression on the
Budget for 1934, it is scarcely feasible to provide for resumption in
that year of normal net reduction in the public debt, as was proposed
during the last session of Congress. I can not too strongly urge,
however, the necessity for balancing the Budget for the fiscal year
1934, exclusive of expenditures for debt retirement.
_

Public debt

The Treasury subscription to the capital stock of. the Reconstruction Finance Corporation was chargeable as a current expenditure of the fiscal year 1932; but since the Government closed that
fiscal year with a deficit in excess of the amount of the subscription.

REPORT OF THE SECRETARY OF THE TREASURY

the latter was in effect covered by increased borrowing. The public
debt was necessarily increased by that amount.
I recommend that legislation be enacted providing that upon the
retirement of the capital stock of the Reconstruction Finance Corporation, the amounts repaid to the Treasury shall be applied to the
reduction of the public debt.
The repayments of the funds advanced by the Treasury to the
Reconstruction Finance Corporation on its notes under the terms of
the existing law will be automatically so applied.
Banking reform
The developments of the last decade have uncovered unmistakable
defects in the American banking structure. They constitute a
source of weakness in our economic life, and have been an important
factor in the present depression. They call for fundamental reforms.
The outstanding facts are as follows:
1. During the 20 years ended with 1920 there was an enormous
increase in the number of banks. In 1900 there were about 14,000;
in 1920, over 30,000. In 1900 there was one bank for every 5,500 of
the inhabitants of the United States; in 1920, one for every 3,500.
2. This excessive growth in the number of > banks was due in part
to our dual system of State and National banks, and to a laxity resulting from its competitive feature. There is no doubt that both
State and National authorities have in the past granted bank charters
too freely, a condition to which the Comptroller of the Currency
directed attention as early as 1927.
3. During aU of this period unit banking received every encouragement, while branch banking was discouraged and for the most part
prohibited.
4. The banking system of the United States as thus developed did
not successfully meet the test of adverse circumstances. In 12 years
there have been over 10,000 bank failures, or over one failure for
every three active banks in the country in 1920. These failures have
involved deposits aggregating nearly $5,000,000,000. They have
brought untold hardship to countless individuals, and have intensified
the economic depression. The Comptroller of the Currency has in
recent years repeatedh^ pointed out weaknesses in our existing system.
I t is true that during the period in question the banks have had to
struggle with extraordinarily difficult economic conditions. This was
particularly true in the agricultural regions where sharply declining
prices, accompanied by rapid depreciation in land values succeeding
a rapid increase during the years prior to 1920, created unusual
difficulties for the farmers and the banks that served them.
During the last three years the problems facing our entire banldng
system have been accentuated owing to the strains occasioned by the
credit crisis which has accompanied a world-wide depression.

REPORT OF THE SECRETARY OF THE TREASURY

But even so, the country is entitled to the services of a banking
system which will not only function adequately and safely in periods
of fair weather, but will be able to withstand the stresses of even
unusual storms. Any system that develops weaknesses to the extent
that ours has when subjected to an unusual strain calls for careful
analysis and study with a view to reform.
Various studies that have been made point to unescapable conclusions. The mortality rate is much greater among small banks than
among the banks with larger resources. The earnings of most of the
smaller institutions over the period of the last few years have been
entirely inadequate, making it impossible for them to build up reserves.
The cost of operation, and consequently the cost to the community
which it serves, bears a direct relationship to the size of the bank.
This is particularly true of the great number of institutions with
limited resources that were operating in 1920 at the time the number
of bariks reached the maximum. The losses sustained by the smaller
institutions have been relatively greater; and it is unquestionably
true that a great number of the small banks have been unable to
secure proper management.
This does not mean that mere size will of itself guarantee good
bankirig or a sound banking structure. These facts, however, do
indicate that the operation of a vast number of independent unit
banks under such conditions that it is difficult for them either properly to diversify their assets, to make earnings, to procure competent
management, or to command adequate resources, is a definite source
of weakness in the American system of banking.
Our dual system and the divided control which exists have tended
to relaxation in banldng law and regulations, and to the development
of unsound practices in the management of the banks. Moreover,
recent events have disclosed as never before the extent to which
many banks with deposits payable on demand have allowed too large
a proportion of their assets to become tied up directly or indirectly
in capital commitments. Furthermore, in some instances the functions of commercial and investment banldng have become merged
under the same management to such an extent as to present a difficult and important problem calling for remedy.
; These facts speak for themselves. The banking structure of the
United States needs modification.
In the last annual report of the Secretary of the Treasury it was
recommended that trade area branch banking be adopted for national
banks as a measure that would help overcome some of our present
banking difficulties.
I renew the recommendation looldng to the extension of branch
banking.
141810—32

REPORT OF THE SECRETARY OF THE TREASURY

But it seems to me that the problem goes deeper than this. There
is no occasion for any extensive new gathering of material. The facts >
are available in the reports of hearings of the Banldng and Currency
Committees of both Houses, in the reports of the Comptroller of the
Currency, and in the comprehensive studies made by the Federal
reserve system.
I recommend that a joint committee of the two Houses, in cooperation with the Federal Reserve Board and the office of the Comptroller
of the Currency, consider pending banldng legislation in the light of
information which has more recently become available, with a view
to prompt formulation and enactment of legislation that will remedy
the fundamental weaknesses of our banking structure.
. United States bonds—Circulation privilege
A section in the Federal home loan bank act, approved July 22,
1932, authorized national banks to issue national bank notes on the
basis of all Government bonds carrying a rate of interest of 3% per cent
or less, the circulation privilege having previously been restricted to
the 2 per cent consols and Panama Canal bonds (see p. 71 of this
report). This emergency authority was granted for three years. On
October 31,1932, about $125,000,000 of additional national bank notes
had been issued; these issues may have been helpful in some localities.
Under the terms of this law, however, the total amount of national
bank notes that can be issued is in excess of $900,000,000. Under
different business and economic conditions the power of the banks to
issue such an amount of additional notes would seriously interfere
with the Federal reserve system's contact with the market and ability
to influence credit conditions. I, therefore, recommend that the
authority granted by the act of July 22, 1932, for a period of three
years be not extended beyond that period.
German special deposit account
A proposed amendment to the trading with the enemy act will be
found on page 48 of. this report.
Railroad obligations
In the last annuah report of the Secretary of the Treasury, recommendation was made that the necessary legislation be enacted which
would authorize the Secretary of the Treasury, with the concurrence
of the Interstate Commerce Commission, to take such action as may
be considered necessary to enable the Government to realize the utmost amount obtainable on account of railroad obligations held.
Attention was called to the fact that approximately two-thirds of the
$39,000,000 principal amount of obligations of carriers remaining unpaid
was owed by carriers in the hands of receivers; and that under such
circumstances the Government could not expect to realize the full

REPORT OF THE SECRETARY OF THE TREASURY

amount of the indebtedness due. For that reason it is essential that
broad arid general powers be given to the executive branch of the
Government to deal with the railroad obligations in a practical manner.
A bill (H. R. 6582) providing for the compromise and settlement
of claims of the United States against carriers arising under the provisions of section 210 of the transportation act, 1920, as amended,
was introduced in the last session of Congress. The provisions of the
bill imposed certain restrictions and confined authority to the indebtedness arising under section 210 of the transportation act, and,
therefore, did not fully meet the needs of the situation. In reporting
on this bill, the Secretary of the Treasury called attention to these
restrictions and requested that consideration be given to enlarging
the powers contained in the bill, so that the executive branch of the
Government could deal with all indebtedness of carriers arising under
title 2 of the transportation act, 1920. There was submitted with the
report a draft of an amendment to accomplish the purposes set out
in the report. Another bill (H. R. 10746), containing the suggestions
made in the report of the Secretary of the Treasury on bill H. R.
6582, was introduced during the latter part of the last session of
Congress and referred to the Committee on Interstate and Foreign
Commerce. Because of other more pressing matters, the bill did not
receive consideration.
I t is believed that it is imperative that the Government should
take some action with respect to the indebtedness of carriers to the
United States arising under the provisions of the transportation act.
The Treasury should be in a position to arrange for a settlement of
these debts and to cooperate in any reorganization plans submitted
by receivers, reorganization committees, or the carriers.
I recommend, therefore, that consideration be given to this matter
during the coming session of Congress. I t is believed that, if a bill
be enacted in the same form as H. R. 10746 introduced in the last
session, it will give the Secretairy of the Treasury sufficient authority
to make necessary adjustments of the railroad obligations on a
practical basis.
Senate Resolution No. 494 of March 3,1931, requested the Secretary
of the Treasury to report to the Senate on or before December 1,
1931, with respect to the indebtedness of each railroad debtor on any
notes or other claims on account of loans made under the provisions
of section 210 of the transportation act, 1920, covering the following
items: (1) The financial condition of each raflroad; (2) class of security held by the Government; (3) prospects of payment; (4)
efforts being made to collect; and (5) recommendations as to disposition of the debt. The Secretary reported on this resolution
under date of November 30, 1931, reviewing to some extent the history
of loans made under section 210 of the transportation act, 1920, and
in addition showing the status of the indebtedness of each carrier to

REPORT OF THE SECRETARY OF THE TREASURY

the Government, the collateral security behind each loan, and a financial statement of each carrier for the five years ended December 31,
1930, and eight months of the calendar year 1931. This report was
printed as Senate Document No. 11, Seventy-second Congress, first
session.
OBLIGATIONS OF FOREIGN GOVERNMENTS

During the fiscal year 1932 no payments were received on account
of the indebtedness of foreign governments, because of the suspension of payments authorized by the joint resolution of the Congress
approved December 23, 1931, providing for the postponement of the
payments due during that year under the debt funding agreements.
A statement showing the principal of the funded and unfunded
indebtedness of foreign governments to the United States, the
accrued and unpaid interest thereon, and payments on account of
principal and interest, as of November 15, 1932, will be found as
Table 46 on page 437 of this report.
Postponement of payments on intergovernmental indebtedness
Under the joint resolution of Congress approved December 23,
1931, the Secretary of the Treasury, with the approval of the President, is authorized to enter into an agreement with each foreign government indebted to the United States on account of war and relief
debts and with Germany in respect of army costs, to postpone the
payment of any amount payable during the fiscal year beginning
July 1, 1931, and to provide for the repayment of the amount so
postponed with interest at the rate of 4 per cent per annum beginning
July 1, 1933, in 10 equal annuities; provided, that each such government gives satisfactory assurances to the United States of its willingness and readiness to make agreements with its debtors with respect
to war, relief, or reparation debts substantially similar to the agreement authorized by the joint resolution. All of the governments
indebted to the United States under the funding agreements, with
the exception of the Government of Yugoslavia, have executed
agreements with the United States in accordance with the provisions
of the joint resolution.
The Government of Yugoslavia, because of the effect which such
action would have on its budgetary situation, advised that it could
not accept the provisions of the moratorium. I t has not, therefore,
agreed to the provisions of the joint resolution, and postponement of the
sum of $250,000 payable on June 15, 1932, could not be formally made
by the Government of the United States. The Treasury made formal demand for payment of the amount due, but it has not yet been paid.
The moratorium as related to Germany is discussed in a later
section.
,
The total amount to be received by the United States under the
moratorium agreements over the ten-year period beginning July 1,

REPORT OF THE SECRETARY OF THE TREASURY

1933, is $300,187,340 on account of war and relief debts and 30,580,989
reichsmarks on account of the Army of Occupation. The following
statement shows the total amount postponed for each government on
account of principal and interest, and the annuity payable by each
government over the 10-year period.
Principal and interest payments affected hy the postponement agreements, and
the annuities payable thereunder during the fiscal years 1934 ^o 1943
Amount postponed

Country

Austria
,
Belgium
CzechoslovakiaEstonia
Finland
France
Oreat Britain...
Greece
Hungary....-.-.
Italy
Latvia
Lithuania
,
Poland
,
Rumania

Date of
[postponement
agreement

1932
Sept, 14
June 10
...do....
June 11
May 23
June 10
June 4
May 24
May 27
June 3
June 11
June 9
June 10
June 11

Total.,
GermanyArmy costs..

May 26

Principal

Interest

Total

$287, 556.00
4.200. 000.00
3,000, 000.00
108, 012.87
55, 000.00
11,363, 600,00
28,000. 000.00
660, 000.00
12, 270.00
12,200, 000.00
44, 664.20
38, 616. 00
1, 325,000.00
800, 000.00

• $287,556.00
7,950, 000.00
3,000. 000.00
492,360.19
600, 373.06
257,296.00
312. 295.00
38,636, 600. 00 60,000, 000.00
131, 520,000.00 169,620, 000. 00
1,109, 080.00
449,080.00
69, 342, 75
67,072.75
2,506.125.00
14, 706,126. 00
250, 664.16
206.989. 96
224, 64.5. 46
186,930. 46
7, 486,835.00
6,161,836. 00
000.00

62,094,618.07

184,222,188.36

$3, 750,000.00

Amount payable each year,
including interest at 4 per
cent per annum over 10year period
beginning
July 1,1933

$34, 767. 23
968, 907. 76
365, 625. 56
73,170.68
38.061. 00
6,093, 759. 44
19,441,530.10
134, 274. 76
8,451,16
1, 792, 311. 76
30, 548. 52
27, 366, 62
912,459.42
97. 600.16

246, 316,806. 43 30,018, 733.97

Reichsmarks
26,300,000.00

Reichsmarks
3,068,098.90

A copy of a press release by the Under Secretary of the Treasury of
December 14, 1931, a copy of the joint resolution of December 23,
1931, and copies of the agreements concluded under authority of that
resolution will be found as Exhibits 32 to 49, pages 288 to 308 of this
report.
Payments due July-December, 1932
Practically all of the debt agreements contain provisions whereby
the debtor gpvernment upon 90 days' advance notice may, at its
option, under certain conditions, postpone for the period specified in
the particular agreement any principal payment. The United States,
in its discretion, however, may waive in writing the requiremerit of
the 90 days' advance notice.
Greece.—On June 29, 1932, the Greek Government advised the
Treasury that because of recent unfavorable economic developments
in that country it would be compelled to postpone the payment of
$130,000 falling due on July 1, 1932, under the debt funding agreement. While the debt agreement requires 90 days' advance notice
of the intention to exercise the option to postpone principal payments,
it authorizes the United States in its discretion to waive the requirement of such notice. The Greek Government pointed out that the
conditions which made it necessary for that Government to avail

REPORT OF THE SECRETARY OF THE TREASURY

itself of the postponement provision did not exist 90 days previous
to the payment date and requested that such requirement be waived.
In view of the unforeseen conditions over which the Greek Government had no control, the Secretary of the Treasury waived the provision requiring 90 days' advance notice and Greece postponed the
payment due for a period of 2K years. The amount postponed wUl
bear interest at the rate of 4}{ per cent per annum, payable semiannually, in accordance with the terms of the debt funding agreement.
The Government of Greece failed to meet the payments due on
November 10, 1932, on account of the 4 per cent refugee loan made
to it on May 10, 1929, under authority of the act of Congress approved
February 14, 1929. The amount due was $444,920, of which $227,000
represented principal and $217,920 represented semiannual interest.
A copy of the related press release, July, 1, 1932, will be found as
Exhibit 48 on page 307 of this report.
'
Estonia, Latvia, and Poland.—The Governments of Estonia,
Latvia, and Poland gave notice on September 15, 1932, of their
intention to postporie the principal payments due December 15, 1932,
on account of the bonds first issued under their respective funding
agreements. The Government of Estonia postponed $90,000;
Latvia, $37,000; and Poland, $1,125,000. All of the amounts postponed will bear interest according to the terms of the agreements at
the rate of 3K per cent per annum, payable semiannually.
Copy of the press release, September 15, 1932, announcing the
postponement of payments due December 15, 1932, willbe found as
Exhibit 50 on page 308 of this.report.
Germany.—The postponement of Germany's payments due during
the fiscal year 1932 and on September 30, 1932, is discussed under
Receipts from Germany on page 38.
Reguests for suspension.—Under date of November 10, 1932,
the United States Government received a note from the British
ambassador on behalf of his Government stating: ''They (the British
Government) believe that the regime of intergovernmental financial
obligations as now existing must be reviewed. They are profoundly
impressed with the hnportance of acting quickly; and they earnestly
hope that the United States Government will see its way to enter
into an exchange of views at the earliest possible moment." It is
further stated that they realize that it will not be possible to conclude
an agreement regarding these matters within the short period remaining prior to December 15, 1932, the next payment date, and ask,
therefore, that the payments due on that date be suspended during
the period under discussion or for any other period that may be
agreed upon. Similar requests have been received from the Governments of France, Belgium, Czechoslovakia, Poland, and Latvia.
Hungary.—The Government of Hungary has officially notified the
United States that because of foreign exchange difficulties it will not

REPORT OF THE SECRETARY OF THE TREASTJRY

be in a position to meet the payment due on December 15, 1932.
The amount payable on that date is $40,729.35, of which $12,285
represents pruicipal and $28,444.35 represents semiannual interest.
Payments due.—The amount due to the United States between June
30 and December 31, 1932, from each government is as follows:
Amounts due on account of the indehtedness of foreign governments to the United
States between June 30 and December 31, 1932
Interest .

Country •
Belgium .
Czechoslovakia...
'
Estonia
Finland.............. . J
France
Great Britain
:
Greece
Hungary..
Italy
Latvia.
:...__..•
Lithuania
Poland...J

Principal

$2,126,000.00

.'.:

$1, 500,000.00
245, 370. 00
111, 000.00
128,.235. 00
.58,000.00.
19, 261,432. 00 ._. 65,550,000.00 30,000,000.00
357,000. 00
217,920.00
12, 285. 00
28, 444.:35
1, 245, 437. 00
102,652.12
46, 200. 00
92, 386. 01
3, 070, 980. 00 1, 357, 000. 00
92, 067, 866. 48 3.3,441,485.00

Total
$2,125,000. 00
1,500,000.00
356, 370. 00
186, 235. 00
19, 261,432. 00
95, 550,000.00
574, 920. 00
40, 729. 35
1, 245, 437. 00
148,852.12
92, 386. 01
4, 427, 980. 00
125, 509, 341. 48

Funding of optional payments due by Poland
Under paragraph 4 of the funding agreement concluded November
14, 1924, with the Government of Poland, that Government was
granted the option during the five years ended December 15, 1929, of
paying smaller amounts than required by the regular schedule of
payrnents under paragraph 2 of the agreement. T h e agreement
provided that the difference, including interest on all overdue payments at the rate of 3 per cent per annum from their respective due
dates to December 15, 1929 (the date of the expiration of the option),
should be funded into bonds of the Government of Poland bearing
interest at the rate of 3 per cent per annum from December 15, 1929,
to December 15, 1932, and thereafter at 3K per cent per annum, and
payable serially over the life of the agreement, terminating in 1984,
the bonds issued to be substantially simflar to the bonds first issued
under the debt agreement. The amount paid by Poland under the
option grarited in paragraph 4 of the funding agreement was
$10,000,000; whereas, the amounts due and payable under paragraph
2, including principal and annual interest, aggregated $43,450,550,
leaving a balance of $33,450,550, to which should be added accrued interest of $3,632,176.06, making a total matured debt of
$37,082,726.06.
At the time that the funding of the indebtedness of the Government of Poland was under consideration by the World War Foreign
Debt Commission, the Minister of Poland called the commission's
attention to. certain claims of his Government then pending before the
War Departmerit on account of excess charges, etc., in connection
with the sales on credit of surplus war material to that Government.

REPORT OF THE SECRETARY OF THE TREASURY

He advised the commission that his Government did not wish to delay
the execution of the debt funding agreement because of these pending
claimis and suggested that any amounts allowed, together with interest
thereon at the rates stipulated in the funding agreement, be credited
later against the indebtedness as funded. The minister was advised
that his Government would receive an appropriate credit for any
sums allowed by the War Department on account of such claims.
In December, 1930, the War Department advised the Treasury that
it had examined the claims of the Government of Poland amounting
to $1,969,980.26 and had allowed a total of $1,311,437.89, to which
there was added, in accordance with the understanding, interest in
the amount of $502,757.27, making a total of $1,814,195.16. After
deducting a sum of $766.47, due the War Department on account
of rations furnished the Pohsh Government, the remainder,
$1,813,428.69, was credited agamst the total amount of $37,082,726.06
due under paragraph 4 above mentioned, leaving a net amount to be
funded of $35,269,297.37, for which Poland delivered to the Treasury
on February 29, 1932, an equivalent face amount of its 3-3K per cent
gold bonds dated December 15, 1929, and maturing serially over the
succeeding 55 years. The bond for $212,297.37 due December 15,
1930, was paid on its maturity date.
Czechoslovakia
The Government of Czechoslovakia has not yet ratified the funding
agreement concluded on October 13, 1925, and for that reason has
not delivered bonds in exchange for the obligations now held, as provided for under that agreement. Czechoslovakia has, however, continued to make payments regularly under the funding agreement,
except the payinents postponed under the joint resolution of December 23, 1931.
WORLD WAR FOREIGN DEBT COMMISSION

Under date of December 10, 1931, the President submitted to Congress a special message on our foreign affairs, including in it a recommendation for the re-creation of the World War Foreign Debt Commission to examine such problems as might arise in connection with
the indebtedness of foreign governments to the United States and to
report to Congress its conclusions and recommendations. That portion of the message coricerning foreign debts will be found as Exhibit
30, page 286 of this report. A copy of a press release by the Secretary
of the Treasury on December 12, 1931, in this connection will be
found as Exhibit 31, page 287.
RECEIPTS FROM GERMANY

The United States received no payments during the fiscal year
from the Government of Germany on account of the costs of the

REPORT OF THE SECRETARY OF THE TREASURY

American Army of Occupation or of the awards of the Mixed Claims
Commission, United States and Germany, except interest on postponed payments due on mixed claims.
Army costs
Payments due during the fiscal year under the debt funding agreement of June 23,1930, on account of the costs of the Army of Occupation were postponed under the provisions of the joint resolution
approved December 23, 1931. In accordance with the terms of the
joint resolution an agreement has been made with the Government
of Germany providing for the postponement of such payments and
their repayment over a period of 10 years, with interest at the rate
of 4 per cent per annum, beginning July 1,1933. The amount due
on this account was 25,300,000 reichsmarks, or approximately
$6,000,000 converted at par of exchange. The amounts to be repaid
over the 10-year period under the agreement executed in accordance
with the provisions of the joint resolution are shown on page 35 of
this report.
The army cost account as of October 1, 1932, 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 onGerman 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
Payments received:
Under the army cost agreement of May
25, 1923, which was superseded by
agreement of Jan. 14, 1925
14, 725, 154. 40
Under Paris agreement of Jan. 14, 1925.. 39, 203, 725. 89
Under debt agreement of June 23, 1930.. 12, 069, 631. 84
65,998,512.13
Balance due as of October 1, 1932

181, 867, 133. 36

NOTE,—The balance due on account of army costs is exclusive of the 10 per
cent reduction allowed in the amount of the total army costs originally due,
contemplated in the agreement with Germany, to accord with similar reductions
accepted by the Governments of France and Great Britain under the Young
Plan. The amount due during the fiscal year 1932 and postponed under the joint
resolution of December 23, 1931, has not been deducted from balance due.

REPORT OF THE SECRETARY OF THE TREASURY

Mixed claims
The amount due from Germany on account of mixed claims during
the fiscal year was 40,800,000 reichsmarks, or approximately $9,700,000 converted at par of exchange. Payments due on this account
were not included in the moratorium authorized by the joint resolution of December 23, 1931, as they are considered to be payments
on account of private obligations which were expressly excepted from
the President's proposal of June 20, 1931.
These payments however were postponed for two and one-half years
from their due dates under the option granted in the funding agrecr
ment of June 23, 1930. The postponed payments bear interest at
the rate of 5 per cent per annum, payable semiannually, in accordance
with the funding agreement. The Government of Germany paid the
United States on March 31, 1932, the sum of 510,000 reichsmarks,
representing semiannual interest due that date on the amount postponed on September 30, 1931, and it made a further payment of
1,020,000 reichsmarks on September 30,1932, representing semiannual
interest due that date on the amounts postponed September 30, 1931,
and March 31, 1932;
The Government of Germany postponed also the payments of
20,400,000 reichsmarks on account of mixed claims and 12,650,000
reichsmarks on account of army costs due on September 30, 1932.
The debt agreement with Germany requires an advance notice of 90
days in writing to the United States in case that Government desires
to postpone any of. the payments falling due thereunder, but the
United States, in its discretion, may waive the requirement of any
such notice. That is, at any time up to 90 days before the date of
payment the Government of Germany had the right under the provisions of the debt agreement of June 23, 1930, to give notice of postporiement of the payments due on September 30, 1932. The Secretary of the Treasury was advised by representatives of the German
Government on June 30, 1932, that Germany desired to make the
payments due on September 30 if possible, but it woiild have to give
notice before July 2, 1932, of the exercise of its option to postpone
unless it had some assurance from the Secretary of the Treasury that
the 90-day requirement would be waived if it were later definitely
determined that payment could not be made. It was obviously in
the best interests of the American claimants and the Government of
the United States to allow Germany as much time as possible to
determine whether or not it could make the payments due, instead
of requiring that Government to give notice of postponement three
months prior to the payment date, as it proposed to do if no assurance
of the waiver were given. The Secretary of the Treasury advised the
German Government that the 90-day notice required under the agree-

REPORT OF THE SECRETARY OF THE TREASURY

ment would be waived if that Government later found that it would
not be able to make the payments when due.
On September 28 the German Government advised the Secretary
of the Treasury that it could not make the payments due and requested
the United States to waive the 90-day notice requirement in accordance with the previous understanding. The Secretary of the Treasury waived the provision with respect to the 90 days' advance
notice and the mixed claims payment was postponed for a period of
two years from September 30, 1932, and the army costs payment was
postponed for a period of two and one-half years from September 30,
1932, in accordance with the provisions of the debt agreement. The
amount postponed on account of mixed claims bears interest at the
rate of 5 per cent per annum and the amount postponed on account
of army costs bears interest at the rate of 3% per cent per annum,
both; payable semiannually.
A copy of the press release issued by the Secretary of the Treasury
on September 28, 1932, will be found as Exhibit 51, page 308 of this
report.
TREASURY ADMINISTRATION OF ALIEN AND MIXED CLAIMS

; The settlement of war claims act of 1928 authorized the Secretary
of the Treasury to make payments on account of (1) awards of the
Mixed Claims Commission, United States and Germany, for claims
of American nationals against the Government of Germany; (2)
awards of the War Claims Arbiter for claiihs of German, Austrian,
and Hungarian nationals against the Government of the United
States; and (3) awards of the Tripartite Claims Commission for
claims of American nationals against the Governments of Austria
and Hungary.
The time within which claimants receiving awards from the
Mixed Claims Commission, United States and Germany, and the
Tripartite Claims Commission, United States, Austria and Hungary,
could ffie application, expired on March 10, 1932. Congress, however, by act of June 14, 1932 (Pubhc Resolution No. 27, 72d Cong.),
extended the time within which such applications could be filed for
a period of one year from March 10, 1932. A copy of the act
of June 14, 1932, wiU be found as Exhibit 53, page 310 of this report.
Mixed Claims Commission
Claims against Germany.—The payments made by the Treasury to
American nationals during the past year on account of awards of the
Mixed Claims Commission, United States and Germany, were for
the most part on account of awards in excess of $100,000, and in connection with the 27 per cent distribution of remaining unpaid principal authorized on September 30, 1931. T h a t distribution was made
out of funds appropriated by Congress based on the amount of the

REPORT OF THE SECRETARY OF THE TREASURY

awards entered by the War Claims Arbiter in favor of German nationals, one-half of which by the provisions of the settlement of war
claims act is authorized to be paid to American claimants and the
other half distributed to German nationals. No further funds were
available during the year, as Germany postponed the payments due
September 30, 1931, March 31 and September 30, 1932, under the
debt funding agreement of June 23, 1930.
The following statement shows the dates of distribution and the
ainounts authorized to be distributed on account of the awards in
excess of $100,000. The amounts actually paid in the various classes
to September 30, 1932, are shown in a later statement.

Date authorized to be distributed^

Jan 1, 1928
Aug. 6, 1928
Aug. 22, 1928
Jan. 15, 1929
July 15, 1929
Dec. 16, 1929
Mar. 31, 1930
Sept. 30, 1930
Mar. 31, 1931
Sept. 30, 1931....
Total*

Per cent of
undistribAmount author- uted prin- Undistributed
balance
ized to be discipal au(revised)
tributed (revised) thorized to
be distrib-.
uted

$16,100,000.00
37,138,431.71
8,66.5,634. 06
6, 459, 349.47
6, 527, 822.15
4,620,247.46
7,366,994. 51
4,861, 666. 37
13, 272,048.91

10
7
9
7
12
9
27

$139,894,772.33
123, 794,772.33
86,656. 340.62
77,990. 706.56
72, 531, 357.09
66,003. 534.94
61, 383,287.48
64,017,292. 97
49,165. 736. 60
36,883,687.69

104, Oil, 084.64

» Distribution of $100,000, on account, to each claimant.
« Of the amount authorized to be distributed, $103,655,224.38 has been paid.

Up to October 1, 1932, the Treasury has made payments in the
aggregate amount of $134,468,480 on account of awards of the Mixed
Claims Commission, from which there has been deducted $672,343
representing one-half of 1 per cent authorized by the settlement of
war claims act, making net payments to claimants of $133,796,137.
Of the deductions, $645,322 has been covered into the Treasury
as miscellaneous receipts in accordance with the settlement of war
claims act as reimbursement to the United States for expenses incurred; $198 is avaflable for a like purpose but has not yet been
covered into the Treasury; and $24,150 has been paid to the German
Government, which, together with a further sum of $2,673 avaUable
for payment, represents amounts which were deducted from awards
entered by the commission under the late-claims agreement of
December 31, 1928, and were made avaflable to the German
Government for defraying such expenses as may be incurred by that
government for the adjudication of those late claims.
The foUowing summary shows, by classes, the number and amount
of awards certified to the Treasury by the Secretary of State, the
amount paid on account, and the balance due as of September 30,
1932:

Numher and amount of awards of the Mixed Claims Commission, United States and Germany, certified to the Secretary of the Treasury hy
the Secretary of State, and the amount paid and halance due, by classes, as of September SO, 1932

Awards certified

1. Amount due on account:
Principal of a w a r d s Agreement of Aug. 10, 1922..
Agreement of Dec. 31,1928..
Less amounts paid by Alien Property Custodian and others..
Interest to Jan. 1,1928, at rates specified in awardsAgreement of Aug. 10, 1922
Agreement of Dec. 31,1928...
Total payable to Jan. 1,1928
Interest thereon to date of payment or, if unpaid, to Sept. 30,1932, at 5 per
cent per annum as specified in the settlement of war claims act of 1928
Total due claimants..
2. Payments made on account up to Sept. 30,1932:
Principal of a w a r d s Agreement of Aug. 10, 1922.
Agreement of Dec. 31, 1928
Interest to Jan. 1,1928, at rates specified in a w a r d s Agreement of Aug. 10, 1922
Agreement of Dec. 31, 1928
Interest at 6 per cent per annum from Jan. 1, 1928, on total amount payable as of Jan. 1,1928, to date of payment, as directed by the settlement
of war claims act of 1928

Class III

Class II

Classi
Total
numberof Total amount
awards

Awards on ac- NumNum- count
of death ber of
berof
personal awards
awards andinjury

Awards of
$100,000 and
less

Number of
awards

Awards over
$100,000

4,531 $114,278,420. 93
3,693,716.85
2,288

417
116

$3,475,187. 75
656, 625. 00

3,816
2,167

$14, 744,476. 01
2,446, 667. 57

$96,068, 767.17
691, 434. 28
6, 750,191. 46
139, 214. 35

117,972,137.78
187,226.85

4,031,812. 76

17,190,133. 58
48,012. 60

117,784,910,93

4,031,812,75

17,142,121. 08

96, 610,977.10

60, 372,210, 65
1,408, 765, 63

729, 832. 53
115,976. 22

6,680, 688. 30
970, 683. 90

42,961, 689. 72
322,105. 61

169,565,887.11

4,877, 621. 50

24, 793,493. 28

139,894, 772.33

18,159,584.13

183,154. 25

1,192, 274. 75

16, 784,166.13

187, 725.471. 24

5,060, 775. 76

25,986, 768,03

166.678,927. 46

14, 667,049, 64
2,441, 608.00

1 102,865.944.27
789,280.11

4,216 1120,908,181.66
2,259
3,786, 213.11
7,358,662. 62
1,084, 734.99
1,330,687. 78

417
114

3,475,187. 75
565,425.00

3,799
2,146

729,832, 63
116, 726,19

6,628.830.09
969,008.80

182,810,17

1.147.877.61

(2)
(2)

Total payment to Sept. 30, 1932
134.468.480.16
6,068,981.64 . . . . . . . . 26,754,274.14
103,656,224.38
1 Includes pavments on account of interest to Jan. 1, 1928, on Class III awards. 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, until total of all payments on the 3 pluses equals 80 per cent of the amount payable Jan. 1,1928. Payment
of accrued interest since Jan. 1, 1928, on this class of claims deferred in accordance with act,
2 See above note.

w
w
o

>
Ul

Number and amount of awards of the Mixed Claims Commission, United States and Germany, certified to the Sedrefary of the Treasury hy
the Secretary of State, and the amount paid and halance due, by classes, as of September 30, 1932—Continued
Class II

Class I
Awards certified

Total
number of Total amount
awards

8 $645, 619. 51
« 26,823. 50

Net payments made to claimants up to Sept. 30,1932,.

Balance due claimants as of Sept. 30,1932..

Awards of
$100,000 and
less

Numberof
awards

Awards over
$100,000

$21, 636. 63
3, 758. 24

$109,652. 76
19,118.87

$514,330,12
3,946:39

5,033, 686. 77

25, 625, 602. 51

103,136,947.87

36,144, 702.14
229,609. 25

1, 200. 00

129,413. 87
4,149. 67

51,858. 21
1,925.13

260. 03

61.858. 21
1, 675.10

133, 796,137.16
316
29

298

36,015, 288. 27
224,259. 68

w
teJ
o
tel

16,828,896.35

344.08

44, 397.14

16, 784,165.13

53, 256,991. C

1,794.11

231, 493. 89

63,023. 703. 08

3 Of this amount, $645,321,56 has been covered into the Treasury as miscellaneous receipts. A further sum of $197.95 will be covered into the Treasury at a later date.
< Of this amount, $24,150.09 has been paid to the Government of Germany. A further sum of $2,673,41 is payable ih eohnection with the adjudication of late claims under the
, agreement of Dec. 31,1928.

tel

2. Payments made on account up to Sept. 30, 1932—Continued.
Less one-half of 1 per cent deduction from each p a y m e n t Agreement of Aug. 10, 1922
Agreement of Dec. 31, 1928...

3. Balance due on account:
Principal of a w a r d s Agreement of Aug. 10, 1922
Agreement of Dec. 31,1928
Interest to Jan. 1, 1928, at rates specified in a w a r d s Agreement of Aug. 10, 1922
...
..
Agreement of Dec. 31, 1928...
..
Accrued interest at 5 per cent per annum from Jan. 1,1928, on total amount
payable as of Jan. 1,1928, to Sept. 30,1932

Awards on ac- NumNum- count
of death ber of
berof
personal awards
awards andinjury

Class III

teJ
tel
>
Ul

REPORT OF THE SECRETARY OF THE TREASURY

War Claims Arbiter
Under the settlement of war claims act of 1928 it was the duty of
the War Claims Arbiter, within certain hmitations, to hear the claims of
the German, Austrian, and Hungarian nationals, and to determine
the fair compensation to be paid by the United States for ships
seized, patents sold or used by the United States, and a radio station
sold to the United States.
On December 15, 1931, the arbiter completed his work and certified as final all of the tentative awards entered by him in favor of
the German, Austrian, and Hungarian nationals.
Claims of German nationals.—The arbiter awarded as the value of
94 ships and 4 claims for personal property contained in such ships the
sum of $74,252,933, of which $54,002,133 represented the value of the
ships and property contained therein, and $20,250,800 represented
simple interest at the rate of 5 per cent per annum from July 2, 1921,
to December 31,1928. There is included in the total amount awarded
the sum of $523, representing the amount found due the members
of the former ruling family of the German Government, which under;
the terms of the act is to be credited upon final payment due from
Germany under the debt agreement of June 23, 1930. He also
awarded as the value of 3,788 patents, 34 applications for patents,
and 1 radio station, the sum of $9,079,830, on which simple interest
at the rate of 5 per cent per annum from July 2, 1921, to December
31, 1928, was allowed in the amount of $3,405,558, or a total of
$12,485,388. The total of awards entered by the arbiter in favor of
German nationals under the settlement of war claims act on account
of ships, patents, and 1 radio station was $86,738,321, including
interest, an amount well within the limitation of $100,000,000 fixed
by Congress as the maximum amount, including expenses of arbitration, to be allowed on account of such claims. Interest has accrued
since December 31, 1928, on the amount due as of that date at the
rate of 5 per cent per annum, but the amount of such interest was not
included in the amount of the limitation fixed by Congress. Provision is made for the payment of such interest in accordance with the
scheme of priorities specified in the settlement of war claims act of
1928.
As authorized by the settlement of war claims act, the Treasury
during the past year authorized payment on account of these awards
up to 50 per cent of the amount due as of December 31, 1928. Congress appropriated an amount sufficient to pay the awards in full,
including interest up to December 31, 1928, 50 per cent of which was
used to make payment on account of the awards entered by the arbiter
in favor of German nationals, and the remaining 50 per cent was used
to make payment on account of the awards entered by the Mixed
Claims Commission in favor of American nationals in accordance with

REPORT OF THE SECRETARY OF THE TREASURY

the provisions of the act. Out of the $43,369,160 avaUable for payment to the German nationals, the Treasury has disbursed on this
account up to September 30, 1932, the sum of $43,368,212. Practically all of the payments made during the past year have been made
in reichsmarks in accordance with the arrangements made with the
German Government, which were explained in detail in the annual
report for 1931.
The following summary statement shows the number and amount
of awards in favor of German nationals certified to the Treasury for
payment by the War Claims Arbiter and the payments made on account by the Treasury.
Number and amount of awards entered hy the War Claims Arbiter on account of
claims of German nationals against the United States for ships, patents, and a
radio station, the amount paid, and halance due, as of September 30, 1932
Patents and
Total amount Ships, amount a radio sta(316 awards)
tion, amount
(27 awards)
(288 awards)
1. Amount awarded:
Principal of awards
•.
Interest at 6 per cent per annum from July 2, 1921,
to Dec. 31, 1928, both dates inclusive
Total amount due Dec. 31,1928
Interest at 6 per cent per annum from Dec. 31,1928,
on total amount payable as of that date to Sept.
30, 1932
Total amount due

2. Payments made on account to Sept. 30,1932:
Principal of awards (50 per cent of amount due as of
Dec. 31. 1928)
3. Balance due on account:
Principal of awards »
Interest accrued at 6 per cent per anniun from Dec.
31, 1928, on total amount payable as of that date
to Sept. 30,1932
Balance due

$63,081,963.09

$54,002,133.09

23,666,357. 74

20,250,799.91

$9,079,830.00
3,405,557.83

86,738,320.83

74,262,933,00

12,485,387.83
1,994,368.69

12,816.512.40

10,821,163.71

99,653,833. 23

85.074,086. 71 14,479,746. 52

43,368, 2n. 71

37,126.206. 21

6. 242.006. 60

43,370,109.12

37,126,727. 79

6,243,381.33

12,816,612.40

10,821,163.71

1,994.358.69

56,185,621.62

47,947,881,60

8,237,740.02

1 Represents 50 per cent of amount due as of Dec. 31,1928, on all awards except in the case of 1 award
amounting to $1,375.07, on which the 60 per cent payment has not yet been made, and awards aggregating
$622.58 entered in favor of members of the former ruling family of Germany on which no payments are to
be made.

Claims of Austrian and Hungarian nationals.*—The War Claims
Arbiter awarded to Austrian nationals as the value of 194 patents the
sum of $663,740, together with $248,948 of interest at the rate of 5
per cent per annum from July 2, 1921, to December 31, 1928, or a
total of $912,688. The arbiter awarded to Hungarian nationals as
the value of 30 patents the sum of $39,125, together with $14,675 of
interest at the rate of 5 per cent per annum from July 2, 1921, to
December 31, 1928, or a total of $53,800. The total amount of the
awards, including interest to December 31, 1928, to the Austrian and
Hungarian nationals was $966,488, which was within the maximum
limitation, including the expenses of arbitration, of $1,000,000 fixed
by Congress. Interest accrued after December 31, 1928, at the rate

REPORT OF THE SECRETARY OF THE TREASURY

of 5 per cent per annum but was not to be included in the amount of
the limitation fixed by Congress.
Up to September 30, 1932, the Treasury made payments on account of 131 awards in favor of Austrian nationals in the amount of
$898,387, together with interest of $146,070 since December 31, 1928,
at the rate of 5 per cent per annum. There are three awards remaining unpaid, amounting to $14,301, together with interest from December 31, 1928, to September 30, 1932, in the amount of $2,678; no
applications for these have as yet been received.
Under the provisions of the settlement of war claims act of 1928 the
Secretary of the Treasury is prohibited from making any payments on
account of awards entered by the arbiter in favor of Austrian or
Hungarian nationals until those Governments have deposited in the
Treasury a sufficient amount to make payments on account of the
awards entered by the Tripartite Claims Commission in favor of
American nationals against those Governments. The Austrian Government has made its deposits, but the Hungarian Government has
not deposited sufficient funds to pay the awards entered against it by
the Tripartite Claims Commission, and no payments can therefore be
made to the nationals of that Government on account of the awards
of the War Claims Arbiter until such funds have been deposited in
the Treasury in accordance with the provisions of the act.
Expenses of administration.^—The expenses of the office of the War
Claims Arbiter from the beginning of the arbitration on April 3, 1928,
to its close on December 15, 1931, amounted to $136,896. In accordance with the provisions of the settlement of war claims act, the
arbiter allocated 83 per cent of such expenses, or $113,624, as applicable to the awards in favor of German nationals; 16 per cent, or
$21,903, as applicable to the awards of the Austrian nationals; and
1 per cent, or $1,369, as applicable to the awards in favor of Hungarian
nationals. These expenses were paid out of the German special
deposit account as authorized by the settlement of war claims act,
but that account has been reimbursed from the appropriations made
by Congress for payment of those awards.
German special deposit account
On March 15, 1928, the Secretary of the Treasury, under authority
contained in section 25 (b) of the trading with the enemy act, as
amended by the settlement of war claims act of 1928, requested the
Alien Property Custodian to invest the sum of $25,000,000 in a noninterest-bearing participating certificate, the amount representing an
estimate of that portion of the so-called unaUocated interest fund, as
defined in section 28 of the trading with the enemy act, belonging to
German nationals. Section 25 (b) authorizes an adjustment in the
141810—32

REPORT OF THE SECRETARY OF THE TREASURY

participating certificate if it is determined by the Alien Property Custodian in allocating the interest fund to the various claimants that
the amount of such certificate is in excess of the amount actually
found to belong to the German nationals. The Alien Property Custodian advised the Treasury that according to the allocations made
the sum of $25,000,000 originally invested was determined to be
$2,500,000 iri excess of the amount belonging to the German nationals
and requested that this sum be returned to him from the German
special deposit account. This has accordingly been done, and the
noninterest-bearing participating certificate for $25,000,000 face
amount has been reduced to $22,500,000.
In this connection, the Alien Property Custodian has requested the
Treasury Department to reimburse the so-called unallocated interest
fund from the German special deposit account for interest on the
$2,500,000 belonging to claimants other than German nationals, these
claimants having been deprived of such interest while their funds were
invested in the noninterest-bearing participating certificate. The
trading with the enemy act, as amended, however, does not provide
for payment of interest on excess funds for the period held in the
German special deposit account.
The Treasury believes that the claimants should be compensated
for the loss of earnings during the time their funds were invested in
the noninterest-bearing participating certificate so as to place them
in the same position in which they would have been had their funds
not been so invested. It is recoinmended, therefore, that Congress
amend section 25 (b) of the trading with the enemy act, as amended,
so as to authorize the Secretary of the Treasury, in connection with
any adjustments made or to be made in the noninterest-bearing participating certificates because of the investment of funds in excess of
the actual amount belonging to the German nationals, to pay interest
on such excess for the period during which such funds were invested
at a rate equivalent to that paid by the Alien Property Custodian on
investments made by the Secretary of the Treasury of funds belonging
to the Ahen Property Custodian, and that the amount of such interest
be paid from the German special deposit account in the Treasury.
It is estimated that the total amount involved wUl not exceed $400,000.
The foUowing statement shows the amounts deposited in the German special deposit account and the amounts paid therefrom up to
September 30, 1932:

REPORT OF THE SECRETARY OF THE TREASURY

Statement showing the funds deposited in the German special deposit account and the
payments made therefrom up to September SO, 1932
Receipts:
From investments by
Alien Property Custodian under trading
with the enemy act,
as amended—
Unallocated interest fund (Det)
$22, 500, 000. 00
20 per cent German projDerty retained..1
17,552,096.91
— $40, 052, 096. 91
From Germany—
2y^ per cent of
Dawes' annuities
available for reparations (Paris
a g r e e m e n t of
Jan. 14, 1925)-. 32,183,060.87
Under GermanAmerican debt
agreement, June
23,1930
19,469,964.00
Interest on payments postponed
under terms of
debt agreement
dated June 23,
1930
363,161.64
52,016,186.51
Appropriation for ships, patents, and
radio station
86,738,320.83
Earnings and profits on investments by
Secretary of the Treasury
.
..
4,035,413.00
Total receipts available
Payments on account:
Awards of the Mixed
Claims Commission—
Under agreement of
Aug. 10, 1922... 128, 458, 211. 01
Under agreement of ,
Dec. 31, 1928...
5, 337, 926. 14

$182,842,017.25

133, 796, 137. 15
Awards of War Claims
Arbiter—
For ships
...
For patents and one
radio station. . . .

37,126,205.21
6, 242, 006. 50
43,368,211.71

REPORT OF THE SECRETARY OF THE TREASURY

Payments on account—Continued.
One-half of 1 per cent deducted from
mixed claims payments covered into
Treasury (an additional sum of $197.95
to be later covered into Treasury)
One-half of 1 per cent deducted from
mixed claims payments on account of
awards entered under agreement of
Dec. 31, 1928 (act of June 21, 1930),
and paid to Germany ($2,673.41
withheld but not paid)
Advances to special fund, expenses of administration of the settlement of war
claims act of 1928 (OflSce of the Secretary of the Treasury)

$645, 321. 56

24, 150. 09

29, 175. 00
$177, 862, 995. 51

Balance in German special deposit
account (including investments)
Made up as follows:
$4,447,000 face amount 3 per cent
Treasury bonds of 1951-1955
$100,000 face amount of 3% per cent
Treasury certificates, series TM
1933
Cash balance

4, 979, 021. 74
Principal cost
4, 425, 098. 51
100, 750. 00
453, 173. 23
4, 979, 021. 74

PracticaUy all of the above-mentioned balance, together with the
balance of $22,447,903 authorized to be invested under section 25 of
the trading with the enemy act, as amended, is reserved to make payment on account of any further awards which may be entered by the
Mixed Claims Commission on account of the so-caUed sabotage cases
now pending before that commission. In case no awards are entered
on account of these pending cases, the combined amounts wUl be released for payment on account of other awards in accordance with the
priorities established under the settlement of war claims act. A small
portion of the balance is reserved to make payments on account of
awards certified to the Treasury but for which properly executed applications have not been received.
Tripartite Claims Commission
Claims against Austria.—A full statement of the payments made to
American nationals on account of the awards entered by the Tripartite
Claims Commission against Austria was included in the annual reports
for the fiscal years 1929, 1930, and 1931. In the annual report for
1931 it was stated that there were three unpaid awards amounting
to $696.51. During the past year the Treasury has paid one of

REPORT OF THE SECRETARY OF THE TREASURY

these awards in the amount of $544.33, leaving two awards unpaid
in the amount of $152.18.
Claims against Hungary.—As pointed out in previous reports, the
Treasury has received from the Government of Hungary the amount
of $8,250 in partial satisfaction of the awards entered by the Tripartite Claims Commission against Hungary in favor of American nationals. That Government expressed its willingness to make payment of the balance of the funds due, but on account of certain "most
favored nation" clauses contained in its debt agreements \vith France
and Italy, it felt it could not make the payment without first obtaining
assurances that those governments would not claim similar payments
under their debt agreements. The United States consulted those
governments regarding the waiver of the "most-favored-nation"
-clauses. It received from the Government of Italy, over a year ago,
the advice that Italy renounced the right to claim most-favored-nation
treatment in the case under consideration, but the Government of
France only recently advised the United States in the same sense.
In the meantime the financial situation in Hungary had become so
acute that it became necessary to suspend payments on Hungarian
foreign debts and to put into effect strict foreign exchange regulations so that that government could control all foreign exchange
transactions.
In view of these facts, Hungary has not been in a position up to this
time to deposit a sufficient amount to pay these awards. As soon as
the foreign exchange situation improves so that the Hungarian Government can release the control which it now finds necessary to
exercise, the Treasury wUl again submit a request for payment of the
amount due.
CONDITION OF THE TREASURY

The public debt
At the end of the fiscal year 1932 the gross public debt outstanding
was $19,487,002,444 and showed an increase of $2,685,720,952. The
following table shows the various classes of debt outstanding on June
30, 1931, and on June 30, 1932, and indicates the net change in the
•character of the debt resulting from the year's operations.

REPORT OF THE SECRETARY OF THE TREASURY

Changes in the public deht outstanding June 30, 1931 and 1932, hy classes
[On basis of daily Treasury statements (unrevised), see p. 337]

Interest-bearing debt:
Regular issuesPre-war bonds
Liberty bonds...
Treasury bonds

June 30, 1932

$776,154,790
8,201,746,750
4,552,621,650

$789, 567, 390
8,201, 314,650
6,258,776,100

-i-$13,412,600
-432,200
-f706,164,450

13,630,523,190 14, 249,658,040
1,261, 283,600
451,718,950
1,801,777, 500 2,726,729,900
615,632,000
444,680,000

4-719,134,850
+809,564,660
+923,962,400
+171,052,000

..--

Total bonds
Treasury notes
Certificates of indebtedness
Treasury bills
Total regular issues

16,228,699,640

18,852,303,640

+2,623,703,900

169,189,000
121,800,000

203,970,000
105,000, 000

+34,781,000
-16,800,000

308,970,000

+17,981,000

Special issues for investment of trust f u n d s Treasury notes
Certificates of indebtedness

290,989,000

Total special issues
Total interest-bearing debt
Matured debt on which interest has ceased
Debt bearing no interest
Total gross debt

Increase (+) or
decrease (—)

June 30, 1931

16,619,688,640
61,819,095
229,873,757

19,161, 273, 640 +2, 641,684,900
+8, 260, 290
60, 079,386
265, 649, 519
+35,776,762

16,801, 281,492

19,487,002,444

+2,686,720,952

BlUl-IOM
DOL.LAR5
30

J- \

"^'V

INTERI ; 9 T - B E AR.INO DEBT

- ^

- -

/
PER
CENT
4-. 5

COMPU- r t o IN* X R n a T RATE

•

V.A
1

19J9

1920

1921

19^^

1923

1924 1925

192fe

1927

1926

1929

1930

1931

1932

CHART 9.—Interest-bearing debt outstanding.and ratio of the computed annual interest charge to the
interest-bearing debt, by months, January, 1919, to June, 1932

During the year there were increases of $2,642,000,000 in the
interest-bearing debt, $8,000,000 in the matured debt on which
interest has ceased, and $36,000,000 in the debt bearing no interest.
The increase in the interest-bearing debt was almost wholly in the
regular, or open market, issues sold on public subscription; it
reflected the deflcit, but was due in part also to net payments from

REPORT OF THE SECRETARY OF THE TREASURY

credits established on account of the purchase by the Secretary of
the Treasury of notes of the Reconstruction Finance Corporation
(see p. 69), and to the further liquidation of securities from the
adjusted service certificate fund.
The following summary shows the principal accounts through which
the debt was retired from June 30, 1919, to June 30, 1932:
Summary of reduction in gross deht from June SO, 1919, to June 30, 1932 {with
increases in 1931 and 1932)
[On basis of daily Treasury statements (unrevised), see p . 337]
Fiscal years
1920-1930
Gross debt outstanding:
June 30,1919
June 30, 1930
June 30, 1931
June 30, 1932
Increase
Net reduction
Debt retirement chargeable to ordinary
receipts:
Cumulative sinking fund
•^....,
From foreign governmentsCash repayments of principal...
Bonds, etc., as principal
Bonds, etc., as interest
Total from foreign governments _
Miscellaneous—
Franchise tax receiptsFederal reserve banks
Federal intermediate credit
banks
Estate tax
Gifts, forfeitures, e t c . .
Total miscellaneous..
Total chargeable to ordinary
receipts. _.
Reduction in General Fund balance (debt
reduced)
Increase in General Fund balance (debt
increased)
Debt retirement from surplus receipts
Debt increase from deficit (excess of total
expenditures)
Debtincreasethroughnet payments to the
Reconstruction Finance Corporation i.
Increase in outstanding debt
Total reduction in outstanding debt

Fiscal year 1931 Fiscal year 1932

Fiscal years
1920-1932

$25, 484,506,160
$25,484, 506,160
16,185,309,832 $16,185,309,832
16,801,281,492 $16,801,281,492
19,487,002,444

9, 299,196, 328

615,971,660

19, 487,002,444

2,685,720,952
5,997,603, 716

3,187,468, 300

391,660,000

376,904,500
205, 446,800
906,369,150

48, 245,950

425,160, 450
205,446,800
906,369,160

1,488, 720,450

48,246,950

1,536,966,400

146, 620, 599

17, 550

2,409,863
66,182, 600
15, 224, 282

73,850

412, 554, 760

3,991,683,050

146,638,149

84,660

21,000
1,000
53,000

2, 504, 713
66,183, 600
16, 361,932

230,437,344

176,050

75,000

230,688,394

4,906,626,094

440,082,000

412, 629, 750

5, 759, 337,844

54, 746,805

834.467.650

902,716, 8J^6

2,885,362,299

328,566,569

267,736,208
2,685,720,952

267,736,208

615,971,660

933, 057, 659
3, 459, 512, 575

9. 299,196. 328

153,336,815

5.997.503. 716

1 From credits established on account of the purchase of notes; not chargeable to ordinary receipts;
required by law to be charged to public debt account.

The course of the interest-bearing debt outstanding and of the computed rate of the interest charge on that debt for the fiscal years 1919
through 1932 is shown in Chart 9.
Between June 30, 1919, and June 30, 1930, the annual interest
charge computed on the basis of the interest-bearing debt outstanding
on those dates was reduced from $1,054,000,000 to $606,000,000, or
almost $450,000,000, and the computed rate was reduced from 4.18

REPORT OF THE SECRETARY OF THE TREASURY

per cent on the former date to 3.81 per cent on the latter. By June
30, 1931, the charge had been reduced to about $589,000,000 and the
computed rate to 3.57 per cent. By June 30, 1932, owing to the
increase in the amount of the outstanding debt, the annual interest
charge had increased to $672,000,000, whereas the computed rate
had declined slightly, to 3.51 per cent.
A detailed account pf public debt operations is presented in the section of this report beginning on page 56.
General Fund of the Treasury
All cash receipts of the Government are credited to the General Fund
of the Treasury and all expenditures are made therefrom. The net
balance of this fund represents the working cash balance required in
connection with all receipts and expenditures of the Government.
The net change in this balance from the close of the previous fiscal
year is accounted for as follows:
Summary of the net changes in the General Fund balance between June 30,1931, and
June 30, 1932
[On basis of daily Treasury statements (unrevised), see p. 337]
Amount
$471,943.983. 32
2,685,720,952. 42

Net balance June 30, 1931
Increase in public debt in the fiscal year 1932.
Total to be accounted for.
Excess of expenditures over ordinary receipts in the fiscal year 1932:
General and special fund accounts!
Trust fund accounts»

3,167,664,935. 74
$2,880,184,248.99
5,178,050 03

Total
2,885,362,299.02
Less charges to statutory debt retirements in the fiscal year 1932.
412,629,750.00
Net, exclusive of statutory debt retirements
Payments on account of Reconstruction Finance Corporations.
Net balance June 30, 1932
Total..

2,472,732,649.02
267, 735.208. 55
417.197.178.17
3,157,664,935. 74

I For a description of accounts through which Treasury transactions are effected see p. 338.
> From credits established on account of the purchase of notes; required by law to be treated as public
debt transactions.

The composition of the General Fund of the Treasury, existing liabilities against the assets in the fund, and the balance in excess of such
liabUities are shown for June 30, 1931 and 1932, in the table on the
following page. These figures are on the basis of the daUy Treasury
statements, unrevised (for explanation see page 337). SimUar information is presented in somewhat greater detail, and on the basis of the
daUy Treasury statements, revised, in the table on page 427 of this
report.

REPORT OF THE SECEETARY OF THE TREASUKY

Current cash assets and liabilities of the Treasury,^ June 30, 1931 and 1932, and
changes during the year
[On basis of daily Treasury statements (unrevised), see p. 337]

Gold assets:
Coin..
Bullion

Total
D e d u c t gold liabilities:
Gold c e r t i f i c a t e s . . .
Gold fund. Federal Reserve B o a r d
Gold reserve 2__
Total
Gold in General F u n d
Silver dollars
D e d u c t silver dollar liabilities:
Silver certificates
T r e a s u r y notes of 1890 o u t s t a n d i n g
Total
Silver dollars in General F u n d
General F u n d assets:
I n T r e a s u r y ofiSces—
Gold (as above)
._
.
Silver dollars (as above)
All other (coin, c u r r e n c y , a n d bullion)
I n depositary b a n k s , reserve b a n k s , a n d treasu r y of P h i l i p p i n e Islands
Another
Total
D e d u c t General F u n d liabilities:
Federal reserve n o t e 6 per cent fund (gold)
Aiiother
Total

Balance in t h e General F u n d ofthe T r e a s u r y .

Increase ( + ) ,
decrease (—)

J u n e 30, 1931

J u n e 30, 1932

.$798,176, 225.02
2, 897, 660,690.98

$969, 696,868. 33
1,988,384,765.29

+$171, 519, 643. 31
-909.175,925.69

3, 695, 736,916.00

2,958,080,633. 62

—737,656,282. 38

1, 701, 620,889.00
1, 776, 690, 377.86
156,039,088.03

1,490,689,469.00
1, 235, 736, 771. 58
156,039,088.03

—210,831,420.00
-540,953, 606. 28

3,634, 250, 354.89

2,882, 466, 328.61

—751, 785,026. 28

61, 486, 561.11

75,615, 305.01

+14,128. 743.90

498, 497, 381.00

501,022,733.00

+ 2 , 625, 352. 00

493, 349,026.00
1, 239, 760.00

487,216,201.00
1,222,150. 00

—6,132,825.00
-17,600.00

494, 688, 776.00

488,438,351.00

—6,150,425.00

3, 908, 605. 00

12, 584,382.00

+ 8 , 676, 777. 00

61,486, 561.11
3,908, 605. 00
44, 809, 953.80

75, 615, 305.01
12, 584,382.00
51,779,428.44

+14,128, 743.90
+ 8 , 675, 777.00
+6,969,474.64

509, 307, 793.65
794, 430.90

463,114, 640. 20
994,104.86

—46,193, 253.45
+199,673. 98

620, 307, 344.46

604,087,760.51

-16.219,583.95

30,166,138.13
118,197, 223.01

69,689,661.26
127, 200,921.08

+ 2 9 , 623, 523.13
+9,003,698.07

148, 363, 361.14

186; 890, 582.34

+38,527,221.20

471,943,983. 32

417,197,178.17

- 5 4 , 746,805.15

1 For detailed statement, see p. 427.
3 Reserve against $346,681,016 of United States notes, and Treasury notes of 1890 outstanding in the
amount of $1,239,750 in 1931 and $1,222,150 in 1932. Treasury notes of 1890 are also secured by silver dollars
in the Treasury.

The currency trust fund and the gold reserve fund
The respective amounts of gold coin and buUion and sUver dollars
held in the Treasury on June 30, 1932, against equal amounts of
outstanding gold certificates, sUver certificates, and Treasury notes
of 1890, were as follows:
Gold coin and buUion
Silver dollars
Silver dollars, against Treasury notes of 1890

_.._ $1, 490, 689, 469
487, 216, 201
1, 222, 150

On June 30, 1932, the gold reserve against United States notes and
Treasury notes of 1890 was $156,039,088. 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 outstanding on June 30, 1932,
in the amount of $1,222,150. When such notes are received they are
retired.

REPORT OF THE SECRETARY OF THE TREASURY
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 shown on the books
of the Treasury as '^ Gold fund. Federal Reserve Board," and amounted
on June 30, 1932, to $1,235,736,772, a decrease of $540,953,606 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.
Against the gold in the General Fund, amounting on June 30, 1932,
to $75,615,305, there was a habihty of $59,689,661 for the 5 per cent
gold fund maintained by the Federal reserve banks with the Treasurer
of the United States for the redemption of Federal reserve notes;
$1,088,640 notes in process of redemption are a charge against this
amount.
Interest on Government deposits
Owing to conditions prevailing in the fiscal year 1931, as reflected
in the relatively low rates paid by the Treasury on Government
securities issued to the public during that year, the rate of interest
required to be paid by Government depositary banks on deposits of
public moneys was lowered, by three successive reductions, to onehalf of 1 per cent. This rate, which was established on June 1, 1931,
has been continued in force up to the present time.
PUBLIC DEBT OPERATIONS

General review of public debt operations
During the fiscal year 1932 there was an increase of $2,685,720,952
in the gross public debt. Gross public debt receipts and expenditures
on all accounts, including exchanges and refunding, were $9,634,425,956 and $6,948,705,004, respectively.
In addition to providing for maturing debt, Treasury borrowing
operations in the open market during the year reflected mainly (1)
the excess of expenditures over orduiary receipts, and (2) the purchase
of notes of the Reconstruction Finance Corporation.

REPORT OF THE SECRETARY OF THE TREASURY

The following summary shows, for the fiscal year 1932, the volume
of issues and maturities of United States interest-bearing obligations
sold on public subscription:
Issues
Class

Treasurv
Treasury
Treasury
Treasury

bonds (excluding postal savings)
notes
certificates of indebtedness
bills...

. Total

Number
of issues

Amount

Maturities
Number
of issues

Amount

1
3
10
33 -

$800,424,000
1, 261, 283, 600
3, 051, 307, 050
2,335, 649, 000

1
6
33

$451, 716,950
2,126, 356) 000
2,164, 597, 000

•47 .

7,448, 663, 650

4,742,669,950

Aside from these open market operations, other public debt transactions included the issue and redemption of (1) special obligations
connected with the investment of trust funds and postal savings, and
(2) special one-day certificates to cover temporary advances by the
Federal reserve banks at the. time of the quarterly income tax payments, and transactions connected with the national bank circulation
retirement fund.
The Treasury's financing is arranged by quarters, each covering
the period from one quarterly income tax payment month to the
next.^ As in the past, funds to meet requirements during such
quarterly periods were largely provided for in the financing on the
quarterly tax-payment dates. Owing to the increased volume of
borrowing, occasioned by declining revenues and emergency expenditures, and to the somewhat increased irregularity of the expenditures,
the volume of financing between the quarterly income tax payment
dates increased during the past fiscal year.
The following table presents a summary of the issues, maturities,
and redemptions of interest-bearing United States securities, exclusive of trust fund and other special issues, by quarterly tax-payment
periods from June, 1931, through October, 1932. Department circulars and public announcements covering public debt issues from
November 9, 1932, to October 26, 1932, wiU be found as Exhibits 1
to 21, on pages 221 to 251 of this report.
1 For fuller explanation, see the Annual Report of the Secretary of the Treasury, 1931, p. 40.

REPORT OF THE SECRETARY OF THE TREASURY

Issues, maturities, and redemptions of interest-bearing securities, exclusive of trust
fund' and other special issues, June, 1931, through Octoher, 1932
[On basis of d a i l y T r e a s u r y s t a t e m e n t s ( u n r e v i s e d ) , see p . 337]
Date
1931
June 1
15
15
16
July 1
1
1
1
2
2
17
17
27
27
Aug. 3
3
10
10
17
17
24
31
31

Issue

T r e a s u r y bills m a t u r i n g Aug. 31,1931
T r e a s u r y b o n d s of 1946-1949
Certificates o f i n d e b t e d n e s s issued J u n e 16.1930.
Certificates ol i n d e b t e d n e s s issued Dec. 15,1930..
Postal savings b o n d s , series 41
Postal savings b o n d s , series 1
Trea.'^ury bills m a t u r i n g Sept, 30. 1931
T r e a s u r y bills i«;sued A p r 2, 1931
T r e a s u r y bills m a t u r i n g Sept. 30, 1931
T r e a s u r y billsissued A p r . 3, 1931
,
T r e a s u r y bills m a t u r i n g Oct. 16. 1931
T r e a s u r y bills issued M a y 18, 1931
T r e a s u r y bills m a t u r i n g Oct. 26, 1931
T r e a s u r y bills issued Apr. 27, 1931
T r e a s u r y bills m a t u r i n g N o v . 2, 1931
...
T r e a s u r y billsissued M a y 5, 1931
T r e a s u r y bills m a t u r i n g N o v . 9. 1931
Trea.'^ury billsissued M a y 11, 1931
T r e a s u r y bills m a t u r i n g N o v . 16. 1931
T r e a s u r y billsissued M a y 18, 1931
T r e a s u r y bills m a t u r i n g N o v . 23. 1931
T r e a s u r y bills m a t u r i n g N o v . 30, 1931
T r e a s u r y bills issued J u n e 1. 1931
Miscellaneous r e d e m p t i o n s before m a t u r i t y
,

R a t e of
interest i
P e r cent
0.849

m
2Vi
.631
1. 465
.631
1.465
.489
1.001
.4.'i6
1.330
.511
1.295
.560
1.182
.631
1.010
.686
.616
.849

Total, June through August.
S e p t 16
15
16
15
30
30
30
Oct. 15
15
26
26
Nov. 2
2
9
9
16
16
23
23
30

Dec.

15
15
15
15
16
16
30
30

1932
Jan.

Feb.

1
13
13
25
25
1
1
1

T r e a s u r y b o n d s of 1951-1965
Certificates o f i n d e b t e d n e s s m a t u r i n g Sept. 16. 1932.
Certificates of indebtedness issued Sept. 15, 1930
Certificates of i n d e b t e d ness issued M a r . 16, 1931
T r e a s u r y bills m a t u r i n g Dec. 30. 1931
T r e a s u r y bills is.sued J u l y 1. 1931
T r e a s u r y bill.-' issued J u l y 2 . 1 9 3 1 . .
T r e a s u r y bills m a t u r i n g J a n , 13. 1932
T r e a s u r y bills issued J u l y 17, 1931
T r e a s u r y bills m a t u r i n g J a n . 25, 1932
T r e a s u r y bills Issued J u l y 27. 1931
T r e a s u r y bills m a t u r i n g Feb. 1, 1932
T r e a s u r y bi Is issued Aug. 3 1 9 3 1 . . .
T r e a s u r y bills m a t u r i n g F e b . 8. 1932
T r e a s u r y bills issued Aug. 10, 1931
T r e a s u r y bills m a t u r i n g F e b . 15, 1932
T r e a s u r y bills issued Aug. 17, 1931
T r e a s u r y bills m a t u r i n g F e b . 24. 1932
T r e a s u r y billsissued Aug. 24, 1931
T r e a s u r y bills m a t u r i n g M a r . 2, 1932
T r e a s u r y bills issued Aug. 31. 1931
Miscellaneous r e d e m p t i o n s before m a t u r i t y . . .
Total, September through November
T r e a s u r y notes, series 19.32
Certificates o f i n d e b t e d n e s s m a t u r i n g J u n e 15, 1932..
Certificates o f i n d e b t e d n e s s m a t u r i n g Sept. 15. 1932-.
Certificates of i n d e b t e d n e s s issued Dec. 15. 1930
Certificates o f i n d e b t e d n e s s issued Apr. 15,1931
T r e a s u r y notes, series C-1930-1932
T r e a s u r y bills m a t u r i n g M a r . 30, 1932
T r e a s u r y bills issued Sept. 30,1931
Postal savings b o n d s , series 42
Postal savings b o n d s , series 2
T r e a s u r y bills m a t u r i n g Apr. 13, 1932
T r e a s u r y bills issued Oct. 15, 1931
T r e a s u r y bi Us m a t u r n g A p r . 27. 1932
T r e a s u r y bills issued Oct. 26, 1931
Certificates of i n d e b t e d n e s s m a t u r i n g Aug. 1, 1932..
Certificates o f i n d e b t e d n e s s m a t u r i n g F e b . 1, 1933..
T r e a s u r y bills Issued N o v . 2, 1931.
T r e a s u r y bills m a t u r i n g M a y 11. 1932
T r e a s u r y b i l l s i s s u e d N o v . 9, 1 9 3 1 . .
T r e a s u r y b i l s m a t u r i n g M a y 18. 1932
T r e a s u r y bills issued N o v . 16, 1931
T r e a s u r y bills m a t u r i n g M a y 25, 1932
T r e a s u r y bills issued N o v . 23, 1931
Miscellaneous r e d e m p t i o n s before m a t u r i t y
Total, December through February

\H
2H

n^
1.217
.631
.631
2.384
.489
2.687
.456
2.334
.511
2,009
.660
2,024
.631
2. 281
.586
2. 585
.616

.$429,373,000
169,941,000
4,416,140
41,900
'60,"026,'600'
'60,'427,'00O
60,060, 000
50,428, OOO
'5i,'200,'000"
61,806,000

m
zvi
3.253
1.217
2^
2)^
2.879
2.384
2.483
2.687

ZM
3%
2.334
2. 656
2.009
2.761
2.024
2.709
2.281

•6o,'io2,'o5o
63,610,000

'59,"850,'000'

'66,"ioo,'6oo

60,005,000
60,000.000
"60,"280,'o6o"
60. 001,000
80,019,000

"eo.'ooo.'ooo
80,013. ooo
9,000
1,033,944,900

800, 424.000
314,279, 600
334,211.000
300,176,000
100, 761, 000
60,026. 000
60,060,000
51,641,000
61,200,000
"6i,"338,'000'
"5i,'806.'00O
60,921,000
59, 860,000
"75,"i73,'000"
'60,"065,"00O
76,410,000
60,280,000
"'60,"082,'66o'

"ioo,"49o,'o56'
1,690,619,600

314
2H
3

Amount mat u r e d (or
redeemed)

$80.013.000
821,406,000

1,429,071,140

1 F o r T r e a s u r y bills, average rates on a b a n k d i s c o u n t basis a r e 8hown»

A m o u n t issued

'6o."ooi,'6oo
80,019,000
25. 718. 500
,183.342,600

600,446,200
324, 578. 600
398,226,000
268,381, 000
275.118,000
461,716,950
101, 332, 000
100,761,000
9,466,740
417,380
"60,'i75,'000'
60,937,000

"6i,"64i,'65o
'5i,'338,'6o6

227,631,000
144,372,000
60,921,000
76,399,000

'75,"689,'6o6'
'62,'85i,'500'
2,122,092, 440

'75,'173," 000
76,410,000
60,082. 000
11.706,700
1,482,666. 030

REPORT OF THE SECRETARY OF THE TREASURY

Issues, maturities, and redemptions of interest-hearing securities, exclusive of trust
fund and other special issues, June, 1931, through October, 1932—Continued
Issue

Date

1932
Mar. 2
2
15
15
15
15
30
30
Apr. 13
13
20
27
27
May 2
2
11
11
18
18
25
25

Treasury bills maturing June 1, 1932
Treasury bills issued Nov. 30, 1931
Certificates of indebtedness maturing Oct. 15, 1932...
Certificates of indebtedness maturing Mar. 15, 1933..
do
Certificates ofindebtedness issued Mar. 15,1931
Treasury bills maturing June 29, 1932
Treasury bills issued Dec. 30, 1931
Treasury bills maturing July 13, 1932
Treasury bills issued Jan. 13, 1932
:
Treasury bills maturing July 20, 1932
Treasury bills maturing July 27. 1932
Treasury bills issued Jan. 25, 1932
Treasury notes, series A-1934
Certificates of indebtedness maturing May 2, 1933...
Treasury bills maturing Aug. 10, 1932
Treasury bills issued Feb. 8, 1932
Treasury bills maturing Aug. 17, 1932
Treasury bills issued Feb. 16, 1932
Treasury bills maturing Aug. 24, 1932..
Treasury bills issued Feb. 24, 1932
Miscellaneous redemptions before maturity

Rate of
interest»
Per cent
2.496
2.685
ZVs
ZH
2
2
2.079
3. 253
1.049
2.879

.621
.630
2.483
3
2
.676
2.655
.425
2.761
.289
2.709

Total, March through May.
June

1
1
15
16
15
29
29
July 1
1
13
13
20
20
27
27
Aug. 1
1
1
10
10
17
17
24
24
31
31

Treasury bills maturing Aug. 31, 1932
Treasury bills issued Mar, 2, 1932
Treasury notes, series A-1935..
Certificates of indebtedness maturing June 15, 1933.
Certificates ofindebtedness issued Dec. 15, 1931
Treasury bills maturing Sept, 28, 1932.
,
Treasury bills issued Mar. 30, 1932
Postal savings bonds, series 43
Postal savings bonds, series 3
Treasury bills maturing Oct. 11, 1932
Treasury bills Issued Apr. 13, 1932
Treasury bills maturing Oct. 19, 1932
Treasury bills issued Apr. 20, 1932....
Treasury bills maturing Oct. 26, 1932
Treasury bills issued Apr. 27, 1932
Treasury notes, series B-1934
Treasury notes, series A-1936
Certificates ofindebtedness issued Feb. 1, 1932
Treasury bills maturing Nov. 9, 1932
Treasury bills issued May 11, 1932
Treasury bills maturing Nov. 16, 1932
Treasury bills issued May 18, 1932
Treasury bills maturing Nov. 23, 1932
Treasury bills issued May 25, 1932
Treasury bills maturing Nov. 30. 1932
Treasury bills issued June 1, 1932
Miscellaneous redemptions before maturity

ZH
.629
.676
.485
.425
.419
.289
.325
.321

$101,412,000
$100,490,000
333, 492, 500
660, 715,600
34, 959, 650
623,891,500
102,169,000

"76,"2o5,'o6o"

'ioi,'332,'oo5
60,176,000

75, 600, 000
61, 550, 000
'50,"937,'000
244, 234, 600
239,197, 000
76, 744, 000
76,399,000
75,000,000
"75,'689,'005

"60,'650,"6o6'
62, 851, 000
30,125, 400

100, 022,000
101,412,000
416, 602,800
373,866,500
324, 678, 600
100, 466, 000
"iO2,'i69,"50O
'"8,"066,'960'
864,860
75,278,000
'76,'260,'000
"75,'923,'600"
75, 600,000
83, 317,000
"6i,"650,"005
345, 292, 600
365,138,000
227, 631,000
75, 217, 000

"75,'6i6,'6o5'

"76,'744,"000
75,000,000

62, 350,000

'i6o,'666,'ooo'

'60,'655,'005
100,022. 000
28, 399,160

2, 257,039,860

ZH
IH
VA
3
.233
.408
.192
.385

1, 300, 210, 510

834, 401, 500
451,447,000
314, 279, 600
398, 225,000
100, 665,000
100,466,000
"75,'954,'500'

"60,"278,"6o5
608, 328,900
333,492,500

.140
.400
.196
.466

Total, September and October.
* For Treasury bills, average rates on a bank discount basis are shown.

Amount matured (or
redeemed)

2,131, 324,150 1,171, 889,900

.321
2,496
3
IH
2H
.408
2,079
2H
2M
.385
L049
.400
.621
.466
.630

Total, June through AugustTreasury notes, series A-1937
Certiflcates of indebtedness maturing Sept. 15, 1933..
Certiflcates of indebtedness issued Sept. 15, 1931
Certificates of indebtedness issued Dec. 16, 1931
Treasury bills maturing Dec. 28, 1932
Treasury bills issued June 29, 1932
Treasury bills maturing Jan. 11, 1933
Treasury bills issued July 13, 1932
Treasury notes, series B-1937
Certificates of indebtedness issued Mar. 16, 1932
Treasury bills maturing Jan. 18. 1933
Treasury bills issued July 20, 1932..
Treasury bills maturing Jan, 25, 1933.
26 Treasury bills issued July 27, 1932
Miscellaneous redemptions before maturity

Sept. 15
16
15
15
28
28
Oct. 11
11
15
15
19
19

Amount issued

"75,'iio,'ooo'
"75,"923,"500
"86,"295,'000'
83,317,000
26,073, 460
2,126, 201,400 1,381,054,460

REPORT OF THE SECRETARY OF THE TREASURY

Operations, June through August, 1931,—At the beginning of the
fiscal year 1932 the gross public debt aggregated $16,801,000,000, and
the net balance in the General Fund of the Treasury amounted to about
$472,000,000, representing chiefly funds to the credit of the Treasury
in depositary banks. This balance had been made available largely
as a result of a considerable excess of ordinary receipts over expenditures during the month of June, and through the sale on June 1 of
$80,000,000 of Treasury bills and on June 15 of $821,000,000 of 3)^ per
cent Treasury bonds of 1946-1949, the latter issue more than offsetting
payments on account of two issues of certificates aggregating
$589,000,000 which matured on the same day.
Financing during July and August included the issuance on July 1
of $4,000,000 of postal savings bonds of the forty-first series; the
redemption on the same date of the first series of postal savings bonds,
issued July 1, 1911, in the amount of $41,900; and the issuance of
Treasury bills throughout the period largely to retire maturing issues
of bills. Eight issues of maturing Treasury bills aggregating
$445,000,000 were met through the sale, at lower rates, of new bills
in the amount of $463,000,000. An additional issue of Treasury bills
in the amount of $60,000,000 on August 24 accounted largely for the increase of $63,000,000 in the public debt between the end of June and the
end of August. Current expenditures in July and August were in excess of receipts, and the General Fund balance was reduced from $472,000,000 at the end of June to $134,000,000 at the end of August.
Operations, September through November, 1931.—For the period
September through November, expenditures chargeable against ordinary receipts amounted to $1,066,000,000, including the purchase of
$26,000,000 of 3% per cent Treasury bonds for the sinking fund.
Moreover, it was necessary to provide for net redemptions of special
trust fund securities in the amount of $53,000,000 during the period,
including chiefiy securities from the adjusted service certificate fund
in connection with increased loans to veterans, and for maturing open
market security issues (i. e., issues other than special trust fund
securities) in the amount of $1,158,000,000. The latter included two
series of certfficates of indebtedness maturing on September 15 in the
amount of $634,000,000, and nine series of Treasury bills aggregating
$523,000,000. To meet these requirements, totaling about $2,280,000,000, ordinary receipts in the amount of $610,000,000 were supplemented by the sale of new securities on public subscription in the
amount of $1,691,000,000; the balance in the Treasury's General Fund
showed little change for the period. The new issues included
$800,000,000 of Treasury bonds of 1951-1955 bearing 3 per cent interest, the lowest rate at which United States bonds have been issued on
public subscription during the past 20 years; $314,000,000 of one-year
1)^ per cent certfficates of indebtedness, both dated September 15,
1931; and eight series of Treasury bills aggregating $576,000,000 sold

REPORT OF THE SECRETARY OF THE TREASURY

throughout the period to meet maturing issues of bills aggregating
$523,000,000.
New issues of securities from September through November
exceeded debt retirements during the period, including net redemptions of special securities and the purchase of securities for the sinking
fund, and the total outstanding indebtedness showed an increase for
the quarter of $446,000,000.
Operations, December, 1931, through February, 1932.—During the
quarter extending from the beginning of December, 1931, to the end
of February, 1932, expenditures chargeable against ordinary receipts
were $1,466,000,000, includuig about $330,000,000 of debt retirements
for the sinking fund and also initial payments on the Government's
subscription to the capital stock of the Reconstruction Finance Corporation and to additional capital stock for the Federal land banks
amounting to $67,000,000 and $63,000,000, respectively. On December 15 two series of certfficates of indebtedness, amounting to
$543,000,000, matured, and 3K per cent Treasury notes. Series
C-1930-1932, amountmg to $452,000,000, were due for retirement,
haying previously been called for redemption. In addition seven
series of Treasury bills, aggregating $475,000,000, were payable during
the period; and $417,380 of postal savings bonds of the second series
matured on January 1. Except for $318,000,000 of maturing obligations retired for the sinking fund in December, these maturities had
to be provided for in the financing for the period. Total requirements
thus amounted to more than $2,600,000,000. Ordinary receipts for
the period were $547,000,000. Requirements in excess of these
receipts were more than covered by new issues of securities and the
General Fund balance showed an increase of more than $200,000,000
for the three months ending February 29, 1932.
To meet the maturities of $995,000,000 on December 15, and to
place the Treasury in funds for other purposes, $1,323,000,000 was
borrowed on that date through- the sale of $600,000,000 of 1-year 3%
per cent Treasury notes, and $723,000,000 of certificates of indebtedness in two series, one for six months at 2% per cent and the other for
nine months at 3 per cent, The forty-second series of postal savings
bonds was issued on January 1, 1932, for $9,500,000.
In order to provide funds to meet initial requirements for the
Government's emergency program and to provide for the payment
of $61,000,000 of maturuig Treasury bills two series of certfficates of
indebtedness were sold on February 1. A 6-month series bearing 3}^
per cent interest was issued in the amount of $228,000,000, and a
1-year series bearing 3% per cent interest in the amount of $144,000,000.
Six series of Treasury bills, amounting to $417,000,000, were sold at
intervals to meet maturing issues in approximately the same volume.

REPORT OF THE SECRETARY OF THE TREASURY

United States securities sold on pubhc offering from December,
1931, through February, 1932, aggregated $2,122,000,000, as compared with open market retirements of $1,483,000,000, including
about $12,000,000 of bonds, chiefly i% per cent Treasury bonds,
purchased for the sinking fund in December. A net increase of
$141,000,000 in the outstanding trust fund securities represented
chiefly the excess of new issues for the adjusted service certificate
fund over redemptions from the fund. During the quarter ended
February the gross public debt showed an increase of $816,000,000.
Operations, March through May, 1932.—During the quarter covering the months of March through May, 1932, expenditures chargeable against ordinary receipts were $1,377,000,000. This amount
included $433,000,000 in completion of payments on account of the
Government's subscription to the capital stock of the Reconstruction
Finance Corporation but did not include $23,000,000 representing net
payments from credit established for the Reconstruction Finance
Corporation through the purchase of its obligations which, as provided by law, are treated as pubhc debt transactions and not as charges
against ordinary receipts. Two per cent certificates of indebtedness,
outstanding in amount $624,000,000, matured on March 15, and seven
series of Treasury bills, amounting to $518,000,000 became due on
various dates, so that public maturities in the open market totaled
$1,142,000,000. In addition, a further $30,000,000 of bonds, chiefly
3 % per cent Treasury bonds, was purchased for the sinking fund, and
there were net redemptions of trust fund securities, chiefly from the
adjusted service certificate fund, in the amount of $51,000,000.
Total requirements for the period thus aggregated nearly $2,600,000,000.
These requirements for funds were met in part from ordinary receipts which totaled $466,000,000 and in part through the issuance of
new securities in the open market, the General Fund balance in the
Treasury showing practically no change for the period.
Two series of certificates of indebtedness were issued for March 15,
one a 7-month dji per cent series for $333,000,000 and the other a 12month 3% per cent series for $661,000,000. There were also issued
$34,959,550 of special 1-year 2 per cent certificates in connection
with the President's campaign against currency hoarding (for information regarding this series see p. 69).
With the increasing ease in credit and money market conditions in
the late spring of 1932, it was feasible to lengthen the maturity of new
issues, which had not exceeded 12 months since the bond issue of
September, 1931. Accordingly, securities sold at the beginning of
May included $244,000,000 of 2-year 3 per cent Treasury notes.
Other issues during the period included a series of 1-year 2 per cent
certificates of indebtedness, in the amount of $239,000,000 and eight
series of Treasury bills, aggregating $619,000,000.

REPORT OF THE SECRETARY= OF THE TREASURY

The sale of United? States securities during'the. period thus totaled
about $2,131,000,000 and the excess over,redemptions,was refl^ected
in an increase of $91T,000;000 in the outstanding public debt.
Operations, June through August, 1932:.—During the three.months,
June through August, 1932, expenditures chargeable against ordinary
receipts were $1,048,000,000, and maturing open market issues of
securities aggregated $1,272,000,000, so that funds in the amount of
$2,320,000,000 were required for the period. In addition^ it was
necessary to finance about $510,000,000 of payments against credits
established for the Reconstruction Finance Corporation through
the purchase of its notes which, as aheady brought out, are not
chargeable against ordinary receipts. Qrdinary receipts of $456,000,000 for the three months were supplemented by the sale of nearly
$2,260,000,000 of new issues, and there was a;netincrease of $73,000,000 in speciar fund securities. The General Fund balance showed
a decrease of about $45,000,000 and the outstanding indebtedness
an increase of $1,030,000,000 during the period:
Maturities ih June included $325,000,000 of 2% per cent certificates
of indebtedness and two issues of Treasury bills, amounting to
$204,000,000. To meet these maturities about $990,000,000 of new
issues were sold, incluciing $417,000,000 of 3-year 3 per cent Treasury
notes, $374,000,000 of 1-year 1^ per cent-certificates of indebtedness,
and two issues of Treasury bills amounting to $200,000,000. On
Jiine 30, 1932, the total debt at $19,487,000,000 showed an increase
of $2,686,000,000 for the year.
In July and August seven issues of Treasury bills aggregajting nearly
$550,000,000 were sold largely to meet maturing bUlstotaling„ $515,000,000. On August 1 two series of Treasury notes, were issued,
$365,000,000 hearing interest at 3)^ per ceht with maturity of four
years, and $345;000,000^ bearihg interest at, 2K per cent \Y^ith maturity of two years. These issues p^rovided funds tQ. cover $228,000,000 of 3% per cent certificates of indebtedness maturing on
August 1 and for other Treasury requirements during the period.,
.Issues in September and October, 1932.-—Financing in September
included the issuance on Septeniber 15 of $834,000,00,0. of 5-year
notes bearing a rate of 3% per cent. In. addition, $451,000,00Q of
1-year IK per cent certificates of indebtedness were issued at the
same time. On October 15, $508,000,000 of 3 per cent Treasury
notes with a maturity of four and a half years were issued, The
proceeds of new issues of United States obligations sold in September
and October were in part absorbed by maturing issues including two
issues of certificates, aggregating $713,000,000, which matured on
September W, and $333,000,000 of certificates which matured on
Octoher 15. These and other issues and rnaturities in, Septernber
and October, 1932; are summarized in the table on page 58.
141810—32

REPORT OF THE SECRETARY OF THE TREASURY

Credit and money market conditions
During the fiscal year 1932 accelerated decline in industry, trade,
commodity prices and all values was accompanied by progressive
liquidation of. bank credit, which was particularly rapid in the last
quarter of the calendar year 1931 and the first two months of 1932,
During the summer and autumn of 1931 difficulties which are characteristic of a period of heavy hquidation were greatly aggravated byrepercussions from financial crises abroad, which increased the straia
upon our own monetary and credit structure. During the fiscal year
1932 the resources of the Federal reserve banks were brought to the
support of the country's banking system. Unprecedented demands;
upon our gold stock following the suspension of the gold standard ia
England in September, together with a continued domestic withdrawal!
of currency, chiefly for hoarding, were met by the reserve banks,
through discount and open market operations, but nevertheless, the
pressure upon our banking systeni was reflected in firm conditions in
the money market at the end of 1931 and the beginning of 1932. After
the turn of the year as constructive and remedial measures were
formulated and brought into operation and as the Federal reserve
system at the end of February engaged in open market purchases of
United States securities on a large scale, money market conditions;
bebame easier. Reserve bank rates, which had been increased during;
tKe autuihn of 1931, were again reduced, as money rates in the opea
niarket declined. By the middle of September, 1932,. short-term
money rates in the open market were again at the low levels reached!
in the previous summer.
During the first nine months of the calendar year 1931 a. heavy inward haovement of gold from abroad somewhat more than offset aB
increase in the volume of money in circulation, occasioned by continued currency hoarding. Reserve balances of mernber banks
showed Uttle change during this period, but a decrease in reserve
requirements, on account of a decrease in their deposits,, produced an
improvement in their reserve position, so that in the middle of September, 1931, they had reserves considerably in excess of legal requirements. During this.period the Federal reserve system pursued a.
policy of furthering the development of easier credit conditions, '
Under these conditions, inactive demand for credit offering prime^
security was accompanied by a sharp decline in the cost of shortterm money On prime collateral, as indicated in Chart 10. Ratea.
both to borrowers ih the open market and on loans direct to bank
customers declined tb unusually low levels in the summer of 1931c
The availabihty of credit except to borrowers of the highest credit
rating was limited,'' however, reflecting the cumulative pressure on
banks as a result of increasing withdrawals, of currency by depositors,.

REPORT OF THE SECRETARY OF THE TREASURY

and the effects of a continued decline in security and commodity
values and in business activity. *
The suspension of the gold standard by Great Britain on September 21, 1931, was followed by complete or partial suspension of free
gold operations in many other countries, and by heavy gold withdrawals from this country and acceleration in the domestic withdrawal of currency for hoarding which resulted in an extraordinarily
heavy drain on the reserve funds of our banking system. The outward movement of gold, which was temporarily reversed at the end
of 1931, was resumed again in the early months of 1932 and became
especially large in May and June. At the end of June the total gold
stock showed a decline of $1,100,000,000 from the middle of September, 1931. During this same period there was a further net increase
in the demand for currency, reflecting chiefly withdrawals for hoarding.
The increase in hoarding, however, was not continuous throughout
the period, but was concentrated largely in late September and early
October of 1931, in a few weeks before and after the end of the year,
and in June of 1932. There were releases from hoards in Noveniber
and early December, 1931, and again in late February and March,
1932. From September, 1931, to June, 1932, the increase in the
demand for currency amounted to $560,000,000. Thus the total
drain on the reserve funds of our banking system from September
to June on account of the outward movement of gold and the increased domestic demand for currency aggregated $1,660,000,000.
The larger part of this demand was met by a net increase during
the period as a whole of $1,060,000,000 in the volume of reserve bank
credit outstanding in the form of United States Government securities
purchased by the reserve banks in the open market. I t was not until
February, 1932, however, that reserve bank holdings of Government
securities increased in substantial volume; prior to that time there
was a considerable growth in the volume of member bank borrowings
at the Federal reserve banks and this was a factor in causing flrmer
conditions in the money market. Short-term rates in the open
market rose abruptly in the autumn from the exceptionally low level
of the summer of 1931 and remained relatively firm throughout most
of the winter of 1931-32, as shown in Chart 10.
Reserve bank purchases of United States Government securities in
the open market following the passage of the Glass-Steagall Act not
only offset heavy gold exports up to the middle of June, 1932, but
enabled member banks to reduce their indebtedness at reserve banks
and resulted in an increase in their reserve balances. Following temporary interruption in June and July, the retum flow of currency
from hoarding was resumed. The gold movement was reversed in
June, and between the middle of that month and the end of September, 1932, the total monetary stock of gold increased by nearly

REPORT OF THE SECRETARY OF THE TREASURY

^300,000,000. During this period there was a further reduction in
the volume of member bank borrowing at reserve banks and further
increase in member bank reserve balances. In September the latter
exceeded the legal requirements by more than $350,000,000.
Under these conditions, short-term money rates in the open market
again dechned to unusually low levels. By September 90-day acceptances were quoted in the open market at three-fourths of 1 per cent
as compared with 3 per cent at the end of the calendar year 1931, and
seven-eighths of 1 per cent in the summer of 1931. Prime commercial
,PEtl

CENT

1927

PER.

192©

1929

1930

1931

CENT

ig^SZ

CHABT 10.—Money rates—New York discount rate, and open market rates on commercial paper
and acceptances, calendar years 1927 to 1932

paper was quoted at 2-2% per cent as compared with 3%-4 per cent
at the end of 1931 and 2 per cent in the summer of that year.
The yield on long-term bonds had remained relatively constant
through the first half of the calendar year 1931 and then increased
sharply at the end of the year and again in the spring and early summer of 1932, reflecting in part heavy liquidation in the security
markets. Sharp decline in June, July, and August, 1932, more than
offset the increases earlier in the year.
Cost of Government borrowing

As outlined in the preceding paragraphs, conditions in the money
.market were firm at the end of the calendar year 1931 and early in
1932 but became progressively easier, after February, particularly as
a;ffecting short-term open market rates. Rates on new Government

REPORT OF THE SECRETARY OP THE TREASTJRY

issues with maturities up to one year followed this general trend, as
indicated in Chart 11 showing the rates at which Treasury bills
(with maturities up to 93 days) and certificates of indebtedness ^
(with maturities up to 12 months) were issued during 1931 and 1932.
Since rates on Treasury bills are determined by competitive bidding,
and the bills are for shorter maturity than any other form of United
States securities sold in the open market, the correspondence between
short-term open market rates and rates on new Treasury issues is
most marked for these securities.
In considering the chart it should be borne in mind that for a given
date the relative position of the rates on new issues with different

19^1

1932

CHART 11.—Rates on Treasury short-term obligations issued during the calendar years 1931 and 1932

maturities depends upon conditions prevailing in the market for United
States securities. Rates on new issues of Treasury bUls were below
rates at which certificates (of longer maturity) were issued during the
period covered by the chart. In view of the already large amount of
early maturities outstanding, however, the issuance of securities of
longer maturity as conditions warranted, even at somewhat higher
rates, was in the interest of sound and orderly management of the
public debt. Beginning in May, 1932, Treasury notes with maturities from two to five years, bearing interest at rates ranging from
2% to 3;^ per cent, were sold in large volume.
•The one-year 3K per cent Treasury notes, issued in December, are Included in the chart.

REPORT OF THE SECRETARY OF THE TREASURY

There w^ere marked changes in the rates on new Government
short-term issues during the fiscal year. By the early autumn of
1931 rates on new issues of short-term Government obligations
reached unusually low levels, following steady decline during a
period of more than two years. Certificates of indebtedness sold
on September 15, 1931, bore a rate oi Iji per cent, the lowest at
which such certificates have ever been issued, as compared with
dYs per cent on the issue, of June 15, 1929; and Treasury bills were
sold in the summer of 1931 at a bank discount rate of approximately
one-half of 1 per cent, as compared with a rate of about 3K per cent
for the first issue of Treasury bills, which was sold in December, 1929.
Firmer conditions in the money market after September, 1931, were
reflected in an advance in the rates on new issues of Treasury shortterm obhgations. On December 15, 1931, certificates with maturities
of six and nine months were sold at 2% and 3 per cent, respectively, and
an issue of 1-year Treasury notes carried a rate of 3% per cent. Oneyear certificates were issued on February 1 and March 15, 1932, bearing a rate of 3% per cent. The rates at which certificates were issued
declined subsequently and on September 15, 1932, a 1-year issue was
sold bearing a rate of 1% per cent. Rates on Treasury bills also advanced sharply in the autumn of 1931, and the issue of December 30
was sold at a bank discount rate of about 3K per cent. Declining
rapidly after the opening months of 1932, the rate on new issues of
Treasury bills in the latter part of the fiscal year 1932 reached the
low level of a year earher, and by October, bills were sold at bank
discount rates of less than one-fourth of 1 per cent.
During the period of marked firmness in the autumn of 1931 and
the early part of 1932, Treasury financing was confined to issues
maturing in 12 months or less. As the market for United States
Government obhgations strengthened in the spring and summer of
1932, the Treasury was readily able to dispose of a large volume of
securities with intermediate maturities. On May 2, 1932, the Treasury sold $244,000,000 of 3 per cent Treasury notes with a maturity of
two years, and on June 15, $417,000,000 of notes bearing the same
rate of interest, but with a maturity of three years. On August 1,
$345,000,000 of 2% per cent Treasury notes and $365,000,000 of 3}i
per cent.Treasury notes were sold with maturities of two and four
years j respectively, and on September 15, $834,000,000 of Treasury
notes .were sold, again at a rate of Sji per cent but with a maturity of
five years. By October 15, the Treasury was able to to issue $508,000,000 of Treasury notes with a maturity of four and a half years at 3
per cent, the same rate which had been carried by the smaller May
issue of 2-year notes.

REPORT OP THE SECRETARY OF THE TREASURY

Treasury notes
The last of the three series of three-five year, 3K per cent Treasury
notes issued in connection with the refunding of the second and third
.Liberty loans, was called, on June 8, 1931, for redemption during the
fiscal year 1932. Series A-1930-1932 issued in the amount of
$1,360,456,450 on March 15, 1927, and Series B-1930-1932 issued in
the amount of $619,495,700 on September 15, 192,7, had been called
for redemption on March 15, 1931. Series C, issued in the amount of
$607,399,650 on January 16, 1928, was called for redemption on
December 15, 1931. About $452,000,000 of the latter issue were
outstanding on that date and of the amount then presented for retirement $318,000,000 were redeemed for account of the cumulative
sinking fund.
. .The series of 1-year 3)i per cent notes sold in December, 1931,
represented the first issue of Treasury notes, since the issue of the
3% per cent Victory Liberty loan notes in 1919, made fully taxexempt (except as to estate and inheritance taxes), under the discretion given by the Victory Liberty loan act as regards tax exemption
of Treasury notes. Full tax exemption (except, as to estate and
inheritance taxes) was also accorded the six additional series of
Treasury notes sold from May 2 to October 15, 1932.
Special Treasury certificates
As a part of the campaign initiated by the President to promote the
release of hoarded currency, the Treasury offered on March 5 a special
Treasury certificate, dated March 15, 1932, due in 1 year but redeemable at the option of the holders on 60 days' advance notice, and bearing interest at the rate of 2 per cent per annum. This offering was
for the purpose of making available an interest-bearing security,
readily convertible into cash, to those who otherwise might withhold
currenc}'' from deposit or other active use. It was intended to supplement and not replace other credit facilities, and no effort was made to
promote the sale of these certificates. They were not a part of the
Treasury's regular financing. The sale of these certificates terminated
on AprU 13, 1932. The total amount sold was $34,959,550. Further
details of this issue wUl be found in Exhibits 5 and 6 on pages 228
and 230 of this report..
Reconstruction Finance Corporation
The. Reconstruction Finance Corporation was created by the act
approved January 22, 1932, with, a capital stock of $500,000,000 to
be fully subscribed by the/United States. As amended by the
•emergency relief and construction act, approved July 21, 1932, this
legislation authorized the corporation, with the approval of the

REPQRT OF THE SECRETARY .OF THE TREASURY

Secretary of the Treasury, to issue and .have outstanding at any one
time its notes, debentures, bonds, or other such obligations, guaranteed
by the ^United States, in an amount not to exceed $3,300,000,000.
The Secretary of the Treasury is authorized to purchase, in his discretion, any obligations of the corporation, and.the l a w provides that
purchases and sales of such obligations by the Treasury shall be
treated as public debt transactions of the United States.
I n accordance with the law, the Secretary of the Treasury, on
behalf of the United States, subscribed to the capital stock of the
corporation in the amount of $500;00Q,000. This amount constituted
a charge against the ordinary receipts of the Government and was
therefore reflected in the Budget for the'fiscal year .1932. In addition
to'the subscription to the capital stock the Secretary of the Treasury
purchased, up to June 30, 1932, interim notes of the corporation in
the face amount of $350,000,000,'bearing interest at the rate of 3K
per cent per annum and maturing October'S*^, 1932. Thus funds in
the amount Of $850,000,000 were made available to the corporation
up to the end of the flscal year.
The funds of the corporation are credited to its account with the
Treasury and payments are made by means of checks drawn on the
Treasurer of the United States. The total net payments made by
the Treasurer on account of checks drawn by the corporation up to
June 30, 1932, amounted to $767,73.5,2.08, of which $267,735,208
represented payments from credits established through the purchase
of notes.
Erom the^close^Qf theifiscal year to*Octoher 3i, J.932, 'the'Secretary
of fthe Treasury purchased .additional 3K per cent interim notes of
the cprporatioh, originally ^raaturing October .27, .1932,, and renewed
for a further;peiiiod of'six;months,?in the face amoimtiof $325,000,000,
making a total amount of $1,175,000,000 available t o the corporation since its organization. Net payments b j 'the Treasurer
of the United States on account of checks drawn by the corporation to October 31, 1932, aggregajted -$1,131,587,868. In accordance with the law, payments against credits established through the
purchase of >the Gorporatipni's ^notes by the Tlreasury were treated as
publicdebt -transactions, .?not chargeable against ordinary receipts.
.Obligations ^of the ;CGrporation .maturing ©ctober ,27, 1932, in the
face amount of $675,000,000, were renewed, for the period ending
AprU 30, 1933, at a rate of Sji per :cent periannum. Interest in the
amount of $7,608,904 was paid on October 27, 1932, by the corporation on its notes maturing that day, which has been deposited in the
Treasury as miscellaneous receipts.
The account of the corporation *on t h e books of the Treasury as of
October 31,1932, was as follows:

REPORT OF THE SECRETARY OF THE TREASURY
Capital stock paid in_-____
._.._.________..___
3}^ per cent series A notes dated Oct. 27, 1932, maturing Apr.
30,1933.....
.
_...._
_.

$500, 000, 000
675, 000, 000

Total funds available
.
1, 175,000,000
. Balances witli. the' Treasurer of tlie United Sta;tes on Oct. 31,
1932...
_.._..
...
43, 412, 132
Net payments made by the Treasurer up to Oct. 31, 1932. 1, 131, 587, 868

Adjusted service securities
The financing operations of the Treasury during the fiscal year
reflected the continued operations of the act of February 27, 1931,
which authorized loans to veterans on their adjusted service certificates up to 50 per cent of the face value of such certificates.. During
the year the Treasury redeemed $216,800,000 face amount of the
securities held in the adjusted service certificate fund in order to
provide funds for authorized payments, which consisted largely of
loans to veterans. A statement of the adjusted service certificate
•fund appears on page 107 of this report.
Cumulative sinking fund
The indefinite appropriation avaUable for the sinking fund during
the fiscal year 1932, including a small unexpended balance for the
prior year, was $410,850,121. Bonds totaling' $94,554,750, face
amount, were purchased at a total principal cost of $92,850,074; gtnd
$318,000,000 face amount of 3K per cent Treasury notes of series
C-1930-1932, called for redemption on December 15, 1931, were
redeemed for account, of the fund.. Tables covering: the transactions
on account of the cumulative sinking fund for the fiscal year 1932,
and from its inception on July 1, 1920, will be found on pages 424
to 425 of this, report.
EXTENSION OF THE

CIRCULATION PRIVILEGE TO
UNITED STATES BONDS

ADDITIONAL

Section 29 of the Federal home loan bank act, approved July 22,
1932, made all Bonds of the United States Government bearing
interest at a rate not in excess of 3% per cent eligible as security for
nationar bank notes for a period of three years. At the time of the
enactment of this law only the following three issues of 2 per cent
bonds bore the circulation privilege:
Outstanding
June 30,1932
(in thousands)

2 per cent consols of 1930.
2 per cent Panama Canal loan of 1916-1936
2 per cent Panama Canal loan of 1918-1938
Total....

$599, 724
48, 954
26, 947
674,625

REPORT OF THE SECRETARY OF THE TREASURY

By this act the circulation privilege was extended to an additional
$3,089,000,000 of United States bonds. At the end of the three-year
period the notes issued against such bonds must be retired in an
appropriate manner. The oustanding bond issues accorded the circulation privilege by the new legislation are the following:
Outstanding
June 30,1932
(in thousands)

2)4 per cent postal savings bonds (third to forty-second series)
3 per cent conversion bonds of 1946-1947
3 per cent Panama Canal loan of 1961
3 per cent Treasury bonds of 1951-1955
3H per cent Treasury bonds of 1946-1949
3% per cent Treasury bonds of 1940-1943
^
3% per cent Treasury bonds of 1941-1943
3% per cent Treasury bonds of 1943-1947
Total

$36, 247
28,895
49, 800
800, 422
821,403
352, 994
544, 917
454, 135
3, 088, 813

The maximum amount of national bank notes which may be issued
under the new authorization is limited by the provision of the national
bank act which precludes a national bank from issuing notes in excess
of its paid-in capital. On June.30, 1932, the paid-in capital stock of
active national banks was $1,570,000,000 and national bank notes
secured by United States bonds were outstanding in the amount of
$670,000,000, Ieavmg $900,000,000 as the additional amount of notes
which may be issued under the new legislation. On October 31,
1932, about $125,000,000 of national bank notes had been been issued
against bonds recently accorded the circulation privilege.
As a result of the operations df the Federal reserv.e system the
volume of currency in circulation is currently adjusted to the country's changing currency requirements. The underlying conditions
which determine these requirements are not directly affected by the
new legislation and in consequence the issuance of additional national
bank notes does not cause an increase in the total volume of currency
in circulation, but tends to result in the subsitution of nationtalbank
notes for other forms of currency, particularly Federal reserve notes.
The extent to which the new note-issuing privilege will be availed
of by national banks depends primarily upon underlying credit conditions affecting the advantage to the issuing banks of increase in
theiT note issues. The issuance of additional national bank notes
has tended to be confined to banks that are borrowing at reserve
banks or elsewhere, particularly on United States Government securities as collateral, and so are in a position to issue notes at little cost
to retire indebtedness bearing interest at a higher rate; and to banks
that are out of debt but desirous of improving their cash position or
able to increase their earnings' through additional note issues.

REPORT OF THE SECRETARY OF THE TREASURY

The actual increase in national bank notes in the three months
following the enactment of this legislation has been limited by the
inactive demand for credit on acceptable collateral and by the fact
that many banks were not only out of debt but had considerable
excess reserves at the Federal reserve banks.
As business conditions improve, however, it may. be expected t h a t
more banks will find it possible to use additional funds profitably and
consequently will avaU themselves of the note-issuing privilege more
fully. The abUity of the national banks to obtain currency in large
amounts without resorting to the Federal reserve banks will affect not
only the volume of Federal reserve notes in circulation, but also the
position of the Federal reserve banks in relation to member banks
and the influence of the Federal reserve system on the general credit
situation.
BUREAU OF INTERNAL REVENUE
Administration of the revenue act of 1932
The bureau assisted in formulating Treasury recommendations
regarding new taxes and increased tax rates which were submitted
to the Congress in December, 1931, and were more fully presented
by the Secretary of the Treasury to the Committee on Ways and
Means of the House of Representatives on January 13, 1932. When
the Committee on Ways and Means finally determined upon a general manufacturers' excise tax, extended consideration was given to
the problems of administering such a tax. After the House of Representatives rejected this tax and substituted for it a number of special
manufacturers' excise and other miscellaneous taxes,'the bureau began
to draft regulations for such taxes and to prepare in detail for their
administration.
Although the final form of the revenue act of 1932 was very uncertain up to the time of its passage by the Congress during the first
week of June^ regulations dealing with the new excise and other
miscellaneous taxes were made available for distribution either
before or shortly after the effective date of such taxes.
These regulations included: Regulations 42, approved June 17,
1932, relating to taxes on telegraph, telephone, radio, and cable facilities, transportation of oU by pipe line, safe deposit boxes, checks, etc.,
and electrical energy; Regulations 43, approved June 14, 1932, relating to taxes on admissions, dues, and initiation fees; Regulations 44,
approved June 18, 1932, relating to taxes on lubricating oU, brewer's
wort and malt products, grape products, matches, soft drinks, and
gasoline; Regulations 46, approved June 18, 1932, relating to excise
taxes on sales by manufacturers; and Regulations 71, approved
July 16, 1932, relating to stamp taxes on issues and transfers of stocks

REPORT OF THE SECRETARY OF THE TREASURY

und bonds, sales of produce for future delivery, passage tickets,
foreign insurance policies, and deeds of conveyance.
The various returns and other forms for administering these taxes
were prepared and in the hands of the collectors of internal revenue
well in advance of the time when they were required for use by the
taxpayers. The number of such forms printed was nearly 2,800,000.
The application of the new taxes raised many questions requiring
interpretative rulings relating to both the act and the regulations.
During the two months following the enactment of the law about
20,000 letters of inquiry were received, and in the same period
1,200 conferences were held in the bureau with taxpayers or their
representatives.
The revenue act of 1932, in addition to imposing new miscellaneous
internal revenue taxes, revised income tax rates upward and included
many administrative changes in the income tax law. The revision
of the income tax regulations resulting from these changes has been
a task of great magnitude. The preparation of income tax forms and
regulations has progressed to such a stage that they will all be avaUable to the taxpaying pubhc well in advance of the date established
by law for fihng returns.
The returns for the additional estate tax imposed by the revenue
act of 1932 on estates of decedents dying subsequent to June 6, 1932,
are not required to be filed untU one year after death; and gift tax
returns for the calendar year 1932 are not required to be filed untU
March 15, 1933. Regulations covering these taxes are in process of
preparation.
.
Increase in number of tax returns and administrative work,—The
revenue act of 1932 materiaUy reduced the personal exemptions
allowed to individuals and abolished the specific credit aUowed to
corporations, thus broadening the base of the income tax. The number of individual income tax returns which will be filed for 1932 will
be substantially in excess of those filed for 1931. The number of
additional returns is estimated at approximately three and a half,
million, which would bring the total number of individual returns
anticipated up to about 6,500,000.
The administration of these millions of additional individual returns
together with the returns for the new manufacturers' excise taxes and
other miscellaneous taxes, which now aggregate more than 100,000
monthly, has greatly increased the work of the Bureau of Internal
Revenue. Were it not for the fact that the experienced personnel
of the bureau is now of a more permanent nature than was the case
in past years, a substantial increase in number of employees would
be required to meet the demands created by the new revenue act.
Some additions to the force engaged in administering miscellaneous
taxes wUl no doubt be necessary, but in view of the fact that a large

REPORT OF THE SECRETARY OF THE TREASURY

•75

portion of these taxes, such as those on electrical energy, checks,,
telephone, telegraph, cable, and radio-messages, and gasoline, are
paid at the source, the problem of collection is simplified and presents
a minimum of administrative difliculties.
Sufficient time has not elapsed to give a true indication of the
volume of work that may be encountered in the enforcement of t h e
provisions of the revenue act of 1932 relating to new manufacturers'
excise and other miscellaneous taxes which went into effect for the most
part on June 21, 1932, or of the amount of revenue to be collected.
Large purchases by dealers in June made in anticipation of taxes,,
cut down manufacturers' sales in July and August and in some
instances may affect collections even in later months. Furthermore,
taxes imposed on sales in July were not due until the last day of
August; and in the case of the taxes on electrical energy, and on
telephone, telegraph, cable, and radio messages, there is a two
months' lag in collections due to the fact p a t the tax is payable to
the Government at the end of the month following that in which J t .
is collected by the company, which in turn is usually not earlier
than the month following that in which the service is rendered.
Increasing collections from the new taxes are refiected in total miscellaneous internal revenue receipts, which amounted to $42,000,000
in July, $55,000,000 in August, $73,000,000 in September, and
$78,000,000 in October.
Administrative difiUculties with new taxes.—Many difficult problems have arisen in connection with the administration of the new
taxes imposed by the revenue act of 1932, particularly in connection
with taxes on checks, electrical energy, gasoline, lubricating oil^
jewelry, furs, toilet preparations, sporting goods, soft drinks, and
brewer's wort.
I
The legislative history of the check tax clearly indicates the intention of the Congress to exempt from tax certain instruments which
had been in use for many years by purchasers of farm products.:
The department experienced great difficulity in giving effect to the
intent of the law in this respect without seriously jeopardizing the
revenue yield of the tax. The existing siltuation is far from satisfactory, although the tax is producing very substantial revenue..
The tax on amounts paid for electrical energy applies only t o
amounts paid for such energy furnished for domestic or commercial
consumption. I t was necessary to rule on various large classes of
users of electricity and many border-line cases were encountered I B
which it was extremely difficult to determine whether the energy was
furnished for domestic or commercial consumption or for industrial
or other uses. Some municipalities have talken exception to the Government's rulings that the electricity used by a municipahty for a
proprietary function as distinguished frohi an essential governmental
function is subject to the tax if a separate charge is made.

~ REPORT OF THE SECRETARY OF THE TREASURY

In the case of the new tax on the sale or use of lubricating oil, the
congressional history of the law gave the department no clue as to
how broadly this term should be interpreted. In the absence of
experience with a tax of this character it was necessary to give the
question very careful consideration in order to make a proper construction of the law. YfTiUe practically every oU has some lubricating
qualities, it was decided that it was not the intent of the Congress
to tax oUs not sold or used for lubrication.
In the development of regiflations and rulings for the administration
of the manufacturers' excise taxes it has been necessary to cope with
exacting difficulties in applying the law to practices and conditions
peculiar to the various industries affected. The tax on gasoline
applies to any liquid the chief use of which is as a fuel for the propulsion of motor vehicles, motor boats, or airplanes. One of the major
difficulties in administering this tax has arisen in connection with the
numerous petroleum products just outside the range of products
used chiefly as a motor fuel but which are commonly and easily
combined to produce a taxable motor fuel. The sale or blending of
such materials presents a difficult administrative problem.
A difficult pr6blem in: administering the tax on jewelry is presented by the necessity of interpreting the law as to who is the
manufacturer or producer so as to take account of the conflicting
interests and viewpoints of the various types of manufacturers,
producers, and importers who handle jewelry.
In connection with the tax on toilet preparations, it has been
extremely difficult to classify the articles properly, since man}^ which
are medicated and used in the treatment of abnormal conditions are
also offered to the public as suitable for use as toilet preparations.
The tax on furs became effective at the beginning of the period in
which manufacturers sell their products to retailers for the fall and
winter trade; and because of trade practices the furriers found themselves in the position of being required to pay taxes to the Government prior to the time they could collect the sale price and tax reimbursement. The department attempted to relieve this situation as
J a r as possible under the general provisions of the internal revenue
laws. Also, the determination as to when fur is the component
material of chief value in an article has been found most difficult.
Other difficulties have been encountered in connection with the
tax on sporting goods and games. In view of the fact that the law
specifically exempts children's toys and games from the tax imposed on
games and parts of games, the department has been petitioned
repeatedly to apply that, exemption to various sporting goods which
might be adaptable for use not only by chUdren but by adults as well.
Careful study has been required in many instances to distinguish toys
from sporting goods and children's games from adults' games.

REPORT OF THE SECRETARY OF THE TREASURY

, In connection with the taxes on soft drinks, difficulty has arisen in
attempting to establish the correct present-day definition of finished
or fountain, sirup, fruit juices, and stUl drinks, in view of the fact
that the beverage industry has developed many new products and
practices since the repeal of similar taxes imposed by the revenue
actof 1921.
The high tax on brewer's wort and certain malt products, ranging
from 50 per cent to 125 per cent of the selling price of these products,
has encouraged the manufacturers of such cereal products to make
their products in the form of malt sirups and extracts on which the
tax is 3 cents per pound, the consumer or user for further inanufacture then converting it back into brewer's wort by diltitiph ;w^
water. I t has also come to the attention of the Treasury that^^^^^^^ is
considerable other tax evasion in connection with the m t e i f f ^ t u r e
and sale of brewer's wort. This situation is receiving th.e,..,department's^ careful attention.
... r.-^•...•../
Income tax a d m i n i s t r a t i o n
Approximately 4,200,000 income tax returns were ffied for 1931,
while for the years just preceding the number filed annually was about
5,000,000.
Under the revenue act of 1932, as in the case of the revenue act of
1928, any deficiency tax must be assessed within two years after the
return is filed, and any refund must be aUowed or made within two
years from the time the tax is paid, unless during that period a claim
for refund is ffied. Where deficiency taxes are proposed, either waivers must be accepted extending the period of limitation on assessment
or 60-day deficiency notices must be sent before the expiration of the
statutory period.
Beginning with returns for 1928 the work of the bureau on returns
for a given year has, therefore, had to be completed within two years.
A t the same time increased efforts have, been made to reach agreements with taxpayers as to tax liabilities in order to keep to a minimum the number of cases appealed to the Board of Tax Appeals
and to avoid litigation in the courts.
The work of the Internal Revenue Bureau during a given fiscal year
is for the most part, on returns for the three most recent calendar
years. The bureau must complete the audit of the calendar year
returns for which the period of limitation on assessment expires in
March of the fiscal year; as a rule only a smaU number of these returns
remain unaudited, most of which involve comphcated auditing
problems or depend on pending litigation.
The bureau must concentrate the efforts of the greater part of its
administrative organization on the work of auditing and closing the

REPORT OF THE SECRETARY OF THE TREASURY

major part of the returns filed in March just preceding the beginning
of the fiscal year, and in addition it must begin its audit work on the
returns ffied in March of the fiscal year. More than 95 per cent of the
returns filed in any one year are found to be substantially correct as
ffied, .and are closed within a year after they are filed.
Summary of audit.—The work of the bureau during the fiscal year
1932 is [Summarized in the foUowing table:
Nummary iof income tax audit during ihe fiscal year 1932
,[Nuniber of returns]

^ -

1932

Returns closed b y Income Tax Unit-TWithout use of 60-day deficiency notice
After issuance of 60-day deficiency notice, without appeal to Board of Tax Appeals,..'
Jeopardy assessment
_
.
.

2,460,056

Total
Accounts and Collections Unit . .
Decision of Board of Tax Appeals
Returns involved in appeals filed during year with Board of Tax Appeals * .

1,840,000
6,379
8,676
June 30,
1931

Returns on hand—
For a u d i t Income Tax Unit
All otherj procedure prior to audit incomplete.
Awaiting action of taxpayer, after issuance of 60-day deficiency notice
Appeals pending before Board of Tax Appeals...

2,442,355
15,;679
2,122

.....

364,700
2,140, 000
1,998
21, 233

June 30,
1932

264, 771
2, 270, 000
2,397
20,469

1 Includes some returns for which 60-day deficiency notices were sent prior to the beginning of the year.

There were approxiniately 2,500,000 income tax returns in the
bureau for audit at the beginning of the fiscal year 1932, of which
about 2,200,000 were returns for 1930, filed in March, 1931. The
returns filed during the fiscal year, totaling approximately 4,200,000
included for the most part calendar year returns for 1931 filed in
March, 1932. During the fiscal year about 92 per cent of the previously unaudited returns for 1930 were closed as well as nearly half
of the returns filed for 1931. With respect to a substantial part of
the balance pf the 1931 returns the administrative procedure prior to
audit was incomplete on June 30, 1932..
The audit of the returns of large incomes, or those involving more
complicated accounting problems, is conducted by the Income Tax
Unit. During 1932 the unit concentrated on returns for 1929 for
which as a general rule the period of limitation on assessment ran in
March, 1932.
The total number of returns in the bureau for audit at the end of
the year was approximately 2,500,000. Of the total awaiting audit,
approximately 2,290,000 were returns for 1931, 209,921 were returns
for 1930, and 22,708 were original, hew, or reopened returns for 1929
and prior years. Other returns involving matters stUl in dispute on

REPORT OF THE SECRETARY OF THE TREASURY

79'

June 30, 1932, and not included in the above figures include 2,397
returns awaiting action of the taxpayer after the sending of the 60day deficiency notice, and returns involved in the 20,469 appeals
pending before the Board ofl Tax Appeals.
Cases closed withinthehur eau.-—DviVmg the fiscalyear 1932 the Income
Tax Unit was successful in closing an increased number of returns,,
without the use of the 60-day deficiency notice, thus making available for immediate collection large amounts of additional tax. There
were 132,936 returns involving additional taxes which were closed
without a 60-day deficiency notice, as compared with 111,403 returns,
thus closed during the preceding fiscal year. The amount of additional taxes, including penalties and interest, thus assessed was.
$107,234,539.
There were $32,364,500 of additional taxes assessed during 1932,,
upon agreements negotiated between the field forces and taxpayers.
In such cases the additional tax is assessed before review in Washington and is collected promptly, with a correspondingly smallerinterest charge against the taxpayers. Of additional taxes recommended by the field forces, other than those agreed to in the field,,
approximately $140,000,000 were assessed as recommended. This,
amount includes a substantial sum proposed in 60-day deficiency
notices which the taxpayer did not appeal to the Board of Tax Appeals,
or concerning which agreements were signed during the 60-day period..
Collections of back taxes.—During the fiscal year 1932, the total
revenue received from back taxes on individual and corporation
incomes amounted to $188,781,608 as compared with $238,084,450 for
the fiscal year 1931. The decrease in collections from this particularsource was due to the decreasing number of large cases for early
years, and also to the fact that, as a result of the depression, many
taxpayers were not able financially to make payments of deficienciesfinally determined, and an increasing number required extensions of
time for payment.
Special Advisory Committee.—The Special Advisory Committee has^
continued its work of expediting the settlement of certain cases in
which 60-day deficiency notices have been issued and/or which have,
been appealed to the Board of Tax Appeals. During the year the^
committee disposed of 569 income tax cases in the 60-day status.
involving 655 tax years as compared with 1,627 cases in the 60-daystatus covering 1,975 tax years in the preceding year. This reduction
was due in large part to a change in procedure. When a 60-day
deficiency notice is issued without affording the taxpayer the usual
opportunity for discussion of the case, owing to the running of t h e .
statute of limitations, the subsequent conferences are now held in theIncome Tax Unit instead of by the Special Advisory Committee as,
141810—32

REPORT OF THE SECRETARY OF THE TREASURY

heretofore. The Special Advisory Committee is thus relieved of the
burden of holding such conferences within the 60-day period and at
the same time the taxpayer has an opportunity to ffie an appeal with
the Board of Tax Appeals if he so desires.
The committee also closed by agreement 3,958 cases, involving
5,178 tax years, which had been appealed to the Board of Tax Appeals
as compared with 2,856 cases, covering 4,332 tax years, during the
fiscal year 1931. This increase is also due to a change in the method
of handling cases in the 60-day status. In addition the Special
Advisory Committee made recommendations for defense, no basis for
an agreement having been reached, in disposing of 3,220 cases,
involving 4,241 tax years, which had been appealed to the board.
Miscellaneous cases aggregated 184, involving 285 tax years.
Oifice of the General Counsel.—There were 12,708 offers in compromise closed during the year, as follows: Insolvent compromises, 1,966;
decedents' estates, assignments, etc., 349; liquor cases, 2; and interest
and delinquency penalty compromises, 10,391.
The Appeals Division has immediate charge for the commissioner of
all cases brought before the Board of Tax Appeals, including those in
which the appeals are taken from decisions of the board to appellate
courts. Approximately 54 per cent of the cases closed before the
board have been settled by agreement. During the fiscal year 1932,
7,618 cases were filed with the board, and 8,382 were disposed of.
The CivU Division, in accordance with established procedure, has
charge of all civU 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 total number of cases disposed of
during the year was 1,650, in 500 of which liens were involved and in
the remainder, other issues were in litigation.
The Penal Division, as its title indicates, is concerned with the
preparation of opinions as to liabUity for percentage penalties for
fraud, negligence, or delinquency in cases where an opinion as to
assertion of such penalties has been requested by any officer or unit
of the bureau. It deals with all questions of law involved in a case
where there is also a question of percentage penalty. It is concerned
with the interpretation of percentage penalty and criminal statutes;
preparing, for reference to United States attorneys for prosecution,
criminal cases arising under the internal revenue laws or under
applicable provisions of the criminal laws of the United States;
assisting in such criminal prosecutions by furnishing evidence for
grand jury and court proceedings, preparing indictments and briefs,
and participating in arguments, trials, and appeals at the request of
the Department of Justice or the United States attorneys; preparing

REPORT OF THE:SECRETARY OF THE TREASURY

•opinions as to acceptance or rejection by the commissioner of offers
in compromise made by taxpayers charged with liabihty for percentage penalties or violations of Federal criminal statutes; preparing opinions as to whether cases closed by agreement under section
606 of the revenue act of 1928, and similar provisions of other revenue acts, should be reopened because of ' J r a u d or malfeasance, or
misrepresentation of a material fact"; and consideration of claims
for reward under section 3464 of the Revised Statutes. The number
of cases disposed of during the year was 1,703, special effort being
made to dispose finally of the older cases.
The Review Division reviews cases involving refunds, credits, and
abatements of various internal revenue taxes. Up to October
7, 1931, the division reviewed all cases involving refunds and/or
credits in excess of $10,000 except allowances based on final order of
the Board of Tax Appeals and court decisions, approved settlements
by the Special Advisory Committee, compromise cases, and estate tax
cases. On that date, this procedure was discontinued and the review of cases involving amounts between $10,000 and $20,000 was
assigned to a special committee in the Audit Review Division of the
Income Tax Unit. There were 2,065 overassessment cases disposed
of during the year including certificates allowing reductions in tax
aggregating $173,341,019.53. Pubhc decisions relating to refunds
in the sum of $20,000 and over were promulgated in 1,489 cases and
in 100 cases memoranda were submitted to the Joint Committee on
Intemal Revenue Taxation.
Board of Tax Appeals.—During 1932 there was a decrease of 764
in the number of cases pending before the Board of Tax Appeals,
20,469 being on hand June 30, 1932, as compared with 21,233 pending
at the close of the preceding fiscal year. Appeals docketed by the
board during the fiscal year 1932 totaled 7,618; the cases disposed of
numbered 8,382, of which 5,707 were closed by agreed settlement, the
agreements being secured by the Special Advisory Committee and the
Office of the General Counsel in 3,944 and 1,763 cases, respectively.
At the close of the year there were 14 cases pending before the Special
Advisory Committee awaiting the fihng of closing agreements.
A more detailed description of the work of the bureau will be found
on pages 159 to 176 of this report.
FEDERAL PUBLIC BUILDING PROGRAM

The public building act, approved May 25, 1926, inaugurated the
so-called public building program which is intended to provide suitable
accommodations in the District of Columbia for the executive departments and independent establishments of the Government; and to
provide throughout the country post offices, courthouses, immigration
stations, customhouses, marine hospitals, quarantine stations, and

REPORT OF THE SECRETARY OF THE TREASURY

other public buUdings of the classes under the control of the Treasury
Department. This act authorized an expenditure of $177,404,818,
Early in 1927 a report, based on this legislation, was submitted t o
Congress setting forth the results of a nation wide survey of the Government's building requirements and making specific recommendations for Federal buildings. During the years 1928, 1929, and 1930'
Congress increased the public buUding program in the sum of
$455,891,976. The total amount of the authorized program is therefore $63-3,296,7.94 plus $.69,000,000, the latter amount representing
the estimated proceeds of the sale of obsolete buUdings.
Status of program
A list of projects under the pi^ogram recommended in 1927 was
submitted to Congress during the same year for specific authorization
and appropriation. Specific authorizations or appropriations have
been m a d e by Congress.to the extent of $499,397,619, or more than
70 per oent of the total authorized program of $700,000,000. At the
end of the.fiscal year 1932, 206 projects had been completed, at a
total cost of $67,623,596; 359 projects were wholly or partially under
contract, involving a total limit of cost of $307,416,600;. and 118
projects were on the market, in the specification stage, or construction proposals had been received therefor, involving a total limit of
$53,675,023. Plans were in course of preparation for 106 projects^,
with a tota:l limit of cost of $31,342,400. There were 28 projects
held for amended legislation, for acquisition of title to sites, or for
other reasons, the total limit of .cost of which was $10,660,000. Of
the specific authorizations and appropriations mentioned, 92 per cent
was represented in one of the following stages: Completed, under
contract, on the market for construction bids, or practically ready
to be placed on the market. The remaining 8 per cent represented
projects in the drawing stage, held for amended legislation or for
other reasons.
During the fiscal year ended June 30, 1932, 133 new buildings and
37 major extensions of existing buildings were completed for occupancy. Among these were buildings at Roanoke, Va.; Worcester^
Mass.; Wichita, Kans.; Toledo, Ohio; Tulsa and Oldahoma City^
Okla.; and Baltimore, Md., at construction costs ranging from about
$500,000 to more than $3,000,000 per buUding.
The largest project in the District of Columbia program, the
Department of Commerce Building, was completed during the fiscal
year. A part of the Department of Agriculture Extensible BuUding
was also completed and occupied.
The foundations of the buildings for the Post Office Department,
the Department of Labor and the Interstate Commerce Commission,

REPORT OF THE SECRETARY OF' THE TREASURY

and the Department of Justice were also completed.
tures for these buildings are now under contract.

The superstruc-

Expenditures and outstanding obligations
Of the $499,397,619 specifically authorized or appropriated as of
•June 30, 1932, $347,173,404 in the aggregate had been obligated to
that date. Expenditures had been made under these obligations to
the amount of $229,411,700, including expenditures for the fiscal year
1932 amounting to $85,896,407. Expenditures in 1932 included
$73,450,618 for the country at large and $12,445,789 for the District
of Columbia.
Emergency relief program
For the purpose of providing for emergency construction with a
view to increasing employment, the emergency relief and construction
act, approved July 21, 1932, appropriated an additional $100,000,000
for buUding projects to be selected from projects specffied in House
Document 788, Seventy-first Congress, third session, dated February
*27, 1931. This document is the latest report of the Secretary of the
Treasury and the Postmaster General listing all the buUdings and
the enlargements of existing buUdings outside the District of Columbia
recommended under the public buUding program. Under this provision of the act of July 21, 1932, the Secretary of the Treasury
and the Postmaster General, up to October 31, 1932, have
selected from this document 410 public building projects scattered throughout the United States with limits of cost aggregating
$84,774,500. Further selections wUl be made after a closer study of
the needs of the various communities represented in the remaining
possible projects. Advertisements for proposals for the sale of land
as sites for 125 of these projects have already been published and
further bids are being opened every day. The entire number will be
opened by December 5, 1932. Offers of properties as sites for more
than 100 of these projects are now in the hands of site agents for
inspection of the properties.
Private architectural services
In order to. expedite the public-building program. Congress authorized the employment of private architects to the extent deemed
necessary by the Secretary of the Treasury. At the end of the fiscal
year 1931 contracts had been made with architectural firms for 78
projects amounting to $165,582,023 in limit of cost. At the end of

REPORT OF THE SECRETARY OF THE TREASURY

the fiscal year 1932 this number had been increased to 232 projects,,
with a total limit of cost amounting to $248,772,023, approximately
50 per cent of the aggregate specffic authorizations.
Status of work in the Office of the Supervising Architect
In addition to the checking and reviewing of the plans and specifica-^^
tions for 170 projects prepared by private architects, the Office of t h e
Supervising Architect by the end of the fiscal year 1932 had prepared
and completed the plans and specifications for 440 of the specifically
authorized building projects.
The status of public building work in the Office of the SupervisingArchitect is set forth in detaU in the section beginning on page 203 of
this report.
FEDERAL FARM LOAN BUREAU
The Federal Farm Loan Board has made every effort during t h e
year to be of practical assistance to the banks in the farm loan system
and to correct any unsound practices by means of constructive suggestions regarding the operations of the banks. The board has maintained close supervisory contact with the banks through comprehensive examinations and conferences with officers and directors. Careful attention has been devoted to problems of individual banks as
well as to general economic conditions in their relation to the farm
loan system. Sympathetic consideration of borrowers in temporary
distress has been to the mutual advantage of both borrowers and,
lenders, and the board has encouraged such an attitude on the partof the banks.
Federal land banks
During the 12 months ended June 30, 1932, the Federal land banks>
reported loans closed aggregating $27,445,700, while during the p r e cedihg fiscal year the banks closed loans aggregating $50,145,900..
Several factors growing out of the general economic situation
operated to bring about a decrease in the volume of applications for
loans qualified under the provisions of the farm loan act. In the
majority of cases loans were desired for the purpose of refinancing
existing indebtedness and the appraised value of the premises off'ered
as security was insufficient to support a loan of the necessary amountAlso, the financial condition of many national farm loan associations
precluded the making of new loans upon their indorsement. Generally speaking, the banks have had funds available to make loans
which meet the requirements of the law.
I t has been the general policy of the Federal land banks to require
the payment of maturing obligations, but in cases of delinquencies
each loan has been considered in the light of the facts of the particular
case and foreclosure proceedings have been instituted only when the

REPORT OF THE SECRETARY OF THE TREASURY

borrower was not making an honest effort to meet his obligations or
would have no prospect of succeeding in doing so if given reasonable
time. The banks were enabled to continue this policy, as well as to
continue making new loans, by the amendment to the Federal farm
loan act approved January 23, 1932, which authorized the Secretary
of the Treasury to subscribe for additional capital stock of the Federal
land banks on behalf of the United States in the amount of $125,000,000. I t was provided by the amendment that $25,000,000 of the
authorized additional capital should be used exclusively for the purpose of supplying the banks with funds to use in their operations in
place of amounts of which they might be deprived by reason of
extensions granted to borrowers. The entire amount of the $125,000,000 of additional capital has been subscribed and paid for as
shown in the accompanying table.
Additional capital stock of Federal land banks subscribed and paid for hy ihe Secretary of the Treasury in accordance with the amendment to the Federal farm loan
act approved January 23, 1932
Amount of capital subscribed and paid for inFederal Land Bank of-

Springfield
Baltimore
Columbia
Louisville
New Orleans
St. Louis
St. Paul
Omaha
Wichita
Houston
Berkeley
Spokane..

Total, 12 banks.

February,
1932

April,
1932

425,080 $1,000,000
512,430 1, 000, 000
958, 770
000,980
1,000, 000
661, 070
414,185 'i,'000,'ooo'
905, 360
499,810
2,000,000
924, 055 1, 000, 000
290, 965 2,000, 000
981, 490 1,000,000
679, 545
1, 000,000
63, 243, 740

11, 000, 000

June,
1932

229, 685
229, 690
229, 685
229, 690
229, 690
229,685
229, 690
229,690
229, 690
229,690
229, 685
229, 690

Total

$6,654, 766
6, 742,120
13,188,466
8, 230, 670
12,880, 760
9, 643, 870
19,135,050
9, 729, 600
7,153, 745
9, 520, 655
7,211,175
14, 909, 235
125, 000, 000

Allocation
of
1 $26,000, OOO
for use in
connection
with extensions
$1,117, 780
1,454, 245
1,108, 820
2, 558,660
2, 227, 350
2, 216,120
2, 402, 625
3,499, 810'
1, 924, 055
3, 290, 9651,116, 355
2, 023,316.
25,000, OOO

1 Included in the subscriptions m a d e in February, 1932.

The policy of the Federal land banks in carrying worthy borrowers
unable under present conditions to meet their obligations is reflected
in the relatively small number of foreclosures. On October 31, 1932,.
only about 3 per cent of all loans in connection with which borrowers
from the banks had faiied to meet their obligations, including loans
upon which extensions had been granted, were in process of foreclosure. The banks had entered into extension agreements with approximately 78,000 borrowers and were carrying thousands of others with
whom definite agreements had not been entered into.
At the beginning of the fiscal year the Treasury held, from the
original subscriptions made at the time the banks were organized, a
total of $237,733 of stock in two of t h e banks, the Federal land banks
of Springfield and Berkeley. Of this amount, $61,793.75 was retired

REPORT OF THE SECRETARY OF THE TREASURY

during the year in accordance with the provisions of the farm loan
act, leaving at the close of the year $74,425 of the original Government-owned stock in the Federal Land Bank of Springfield and
$101,514.25 in the Federal Land Bank of Berkeley. Including these
amounts, the capital stock of the Federal land banks owned by the
Government on June 30, 1932, aggregated $125,175,939.25 and represented 65.9 per cent of the total capital stock of the banks.
While the Government now owns the majority of the stock of each
of the Federal land banks, the recent amendment made no change in
the method of selecting the directors of the banks. Each bank has
•seven directors, three of whom are elected by the national farm loan
associations; three are appointed by the Federal Farm Loan Board;
and one is selected by the board from three nominees of the national
farm loan associations.
There were no public offerings of Federal land bank bonds during
the year. The^ Federal Land Bank of Spokane issued $500,000 of
short-term bonds as a refunding operation, and the Federal Land Bank
of Houston issued $1,500,000 of short-term bonds in connection with
a repurchase agreement. The entire amount of these two issues was
Tetired before the end of the fiscal year.
Joini stock land banks
Joint stock land banks reported loans closed during the fiscal year
in the aggregate amount of $2,894,839, consisting mainly of mortgages taken to secure a portion of the purchase price upon the sale
of real estate which had been acquired by the banks. Three joint
stock land banks issued bonds during the year, the aggregate amount
of the bonds being $950,000. In addition, bonds and certificates
amounting to $24,522,526 were issued in connection with the reorganization of the properties and affairs of the Kansas City Joint Stock
Land Bank, which had been placed in receivership in 1927.
Joint stock land banks are privately organized institutions, with
their entire capital stock privately subscribed. WhUe some of the
joint stock land banks have been able to maintain a strong position,
others have been faced with the problems attendant upon an accumulation of real estate holdings, a serious decline in earnings, and an
increase in operating expenses. Some hav^ offset the decrease in
earning assets in part by the purchase of their own bonds in the
market at substantial discounts.
Receiverships.—Duimg the year the liquidations of two joint stock
land banks were completed through receiverships, namely, the Kansas
City Joint Stock Land Bank of Kansas City, Mo.,, and the Ohio
Joint Stock Land Bank of Cincinnati, Ohio. The total of all liquidating dividends authorized to be distributed to holders of bond
obligations who had filed proper claims with the receiver was equal

REPQRT OF THE SECRETARY OF THE TREASURY

in amount to 61.:33 per cent of the:principal-amount of bonds on which
claims were filed in the receivershipfof the Kansas City Joint Stock
Land Bank and 64.11 perxent in that of the Ohio Joint Stock Land
Bank.
I n theTeceivership of 4he Bankers Joint.Stock.Land Bank of Milwaukee, Wis., dividends} aggregating 19 p e r c e n t of the principalface
amount of ontstanding bonds and of unmatured interest accrued to
July 1, 1927, were declared by the^Farm Loan Board-during the fiscal
year 1932. =A liquidating'dividend of 15;per cent had been declared
previously. More than 99 per cent of the bonds of this bank were
purchased by a corporation which contemplated acquiring assets of
the receivership.
.Two joint stock land banks were placed in receivership during the
year on account of default in the payment of bond interest—the
Southern Minnesota*Joint Stock Land Bank of Minneapolis, Minn.,
on May %, 1932, and the St. Louis Joint Stock Land Bank of St.
Louis, Mo.,'On June 1, 1932.
Federal intermediate credit banks
The loans to and discounts for financing institutions by the Federal intermediate credit banks during the fiscal year 1932 aggregated
$126,518,039.90, including renewals. The total during the fiscal year
1931 was $ri.9j608,432.11. The increase in the volume of business
handled by the intermediate credit banks for financing institutions
and the growth in the num-ber of such institutions served by the
bahks are ^indicated in the following table, showing the loans to and
discounts for #nancing institutions outstanding Pn June-30 of each
of the last four years and the number of ^such institutions represented
on *each da;te:
Loans toand dis- iNumber of
counts for financ-. financing
ing institutions, institutions
outstanding
represented

June.30—

1929
1930 . . .
1931...11932..
-.

.
.

.
...-.:

...
..

$59,069,^37.91
64,640,504.89
. '79, 205,948.'64
80,462,366.13

271
272'
426
445.

The^expansion in thesefinancing institutions has been aided through
the efforts of farmers' organizations, local business men, and individual farmers, and by loans made by.^£he Secretary of Agriculture and
the ;Feder:al Farm Board. The Seventy-second Congress, by Public
Resolution .No. 11, authorized the/estabhshment of a revolving fund
of $10,000,000 to enable the Secretary of Agricuiture to make loans
to individuals ;for the purpose of subscribing for capital stock of^financing institutions quahfied to. do busihess with the Federal inter

'88

REPORT OF THE SECRETARY OF THE TREASURY

mediate credit banks. However, the expansion of financing institutions appeared to be inadequate in some localities to provide facilities
•for normal short-term credit to farmers and stockmen, particularly
in view of conditions prevailing among many commercial banks
which would ordinarily extend such credit. Further development
of facilities for this type of credit was mad^ possible by the emergency relief and construction act of 1932, approved July 21, 1932,
authorizing the Reconstruction Finance Corporation to create in
each of the 12 Federal land bank districts a regional credit corporation with a paid-up capital of not less than $3,000,000 to be subscribed by the Reconstruction Finance Corporation. Such credit
corporations are given authority to make loans to farmers and stockmen and to rediscount, when eligible, notes representing such loans
with the Federal intermediate credit banks, the Reconstruction Finance Corporation, and the Federal reserve banks.
During the 12 months ended June 30, 1932, the Federal intermediate credit banks made loans aggregating $128,308,196.47, including
renewals, to cooperative, marketing associations, the total amount
during the previous year being $151,828,288.79. There was a partial
liquidation during the fiscal year 1932 of loans to stabilization corporations.
During the fiscal year the intermediate credit banks sold debentures aggregating $234,335,000. At the beginning of the year
debentures were marketed which carried a rate of 3 per cent, some
issues being sold at a premium. During the fall and winter it was
found necessary to market debentures on a less favorable basis; the
rate of interest on new issues reached 5 per cent in January and
February, 1932, some issues bearing this rate being sold at a discount.
A substantial volume of debentures was purchased by the Federal
reserve banks. The Reconstruction Finance Corporation made
commitments to take any debentures not otherwise sold from issues
during the months of February, March, and April, but these debentures were absorbed without the aid of the corporation.
In order to provide a more stable market for debentures of the
Federal intermediate credit banks, the Federal farm loan act was
amended by an act approved May 19, 1932, making the debentures
eligible security for 15-day borrowings from the Federal reserve banks
by member banks of the Federal reserve system. This amendment
greatly increased the desirabihty of the debentures as investments for
commercial banks and other i investors desiring high-grade, taxexempt securities readily convertible into cash. At the end of the
fiscal year debentures bearing: an interest rate of 3 per cent per annum
were marketed at a premium.
r^
The authorized capital ofHeachiof the Federal intermediate credit
banks is $5,000,000, orU.total of $60,000,000 for the 12 hanks, aU of

REPORT OF THE SECRETARY OF. THE TREASURY

which was subscribed by the Secretary of the Treasury on behalf of
the United States. Of the subscribed capital a total of $30,000,000
had been paid in at the beginning of the fiscal year During the year
the Federal intermediate credit banks of Houston and Spokane each
called $1,000,000 of the unpaid capital. At the end of the fiscal year
the paid-in capital of the 12 intermediate credit banks was as follows:
Federal intermediate credit banks of Columbia and Berkeley,
$5,000,000 each; Federal intermediate credit banks of Houston and
Spokane, $3,000,000 each; Federal intermediate credit banks of
Springfield, Baltimore, Louisville, New Orleans, St. Louis, St. Paul,
Omaha, and Wichita, $2,000,000 each.
BUREAU OF CUSTOMS

Imports and customs collections
Customs receipts for the third consecutive year declined from, the
preceding fiscal year's total. Receipts for 1932 at $328,000,000 were
14 per cent less than in 1931, reaching the lowest level recorded
during the last decade, only slightly above the level of 1920 and 1921.
This decline in customs collections compares with a decline of 28.9 per
*cent in the value of general imports. The reduced customs receipts
jmay be attributed largely to diminished quantities of imports which
treduced the amount of both specific and ad valorem duties and to
:almost uniformly lower values which in some measure refiected depreciation in the currencies of a number of foreign counties.
Free imports represented 66.7 per cent of the total value of imports
for consumption during 1932 as compared with 69 per cent in the
previous fiscal year and a range from 64 to 66 per cent for the preceding
five years. The larger proportion of free goods in 1931 was doubtless
attributable to a reduction in dutiable imports which followed the
accumulation of large stocks of dutiable goods by manufacturers and
dealers immediately prior to the passage of the tariff act.
Imports and customs collections are summarized in the following
table for the years 1928 to 1932:
Merchandise exports and imports arid customs collections, 1928 to 1932
[In millions of dollars]

Fiscal year

1928
1929
1930
1931
1932...

1 On basis of daily Treasury statements (unrevised).

'...-si

Exports

Imports

4,877
6,373
4,694
3,083
1,949

4,147
4,292
3,849
2,432
1,731

Excess of
exports Customs
over
receipts.!
imports
730
1,082
846
651
218

569
602
587
378
328

REPORT OF THE SECRETARY OF THE TREASURY

All classes of general imports showed declines during the fiscal year
1932 as compared with the previous year, the total decrease amounting to $701,530,000, or 28.9 per cent. Imports of crude materials and
of semimanufactures showed the greatest proportionate declines, 33.8
and 34.8 per cent, respectively; the rates of decrease for crude foodstuffs, finished manufactures and manufactured foodstuffs (25.5, 24.9,
and 17.1 per cent, respectively) were less than the rate of decrease of
all ihipprts. In bPth 1931 and 1932 the decrease in value of crude
niaterials as compared with the preceding year was larger than for
any other class of imports, $258,000,000 during 1932 and $544,000,000
during 1931. Large decreases in the value of leading crude commodities, such as crude rubber, raw silk, hides, and fertilizers, contributed substantially to this total decrease.
. The six groups of imports which comprise the leading sources of
Government revenue from customs are cane sugar, unmanufactured
tobaCbP, Thw wool, wool mahufactures, cotton manufactures, and silk
hlahufactures. The changes ih general imports of these commodities
during the fiscal year 1932, as compared with 1931, are shown below:
Value of imports of leading revenue-producing commodities during the fiscal years
1931 and 1932 [General imports; dollars in millions]

1931

1932

Percentage increase
(+)or
decrease

(-)

Cane sugar
^
Tobacco, lininahufac'tuf ed.-....- . a . . .
^.
Wool and mohair, unmanufactured-.
Wool nlanufactiires, including semimanufactures..'.
Cotton manufactures, including semimanufactures
Silk mahufactui'eS-.
.^-i-._^......--......'....-.^^--.
Other dutiable commodities
^.—.
Total dutiable imports

60.0
36.'5
21.6
25.9
34.3
13.3 '•
598.6

416.6

-5.5
-12.8
-41.3
-26.7
-f3.7
-11.8
-30.4

790.1

583.4

-26.2

56.7.
31.8
12.0
19.0
35.6

n.7

The value of imports of leading dutiable commodities, except raw
wool and wool manufactures, did not dechne as much as the total
value of all dutiable commodities. In fact, the value of imports of
cotton manufactures showed a slight increase. As a result the six
leading dutiable commodities constituted a larger proportion of total
imports than during recent years, 24.2 per cent in 1931 and 28.6 per
eeht ih 1932, as compared with from 15 to 20 per cent in preceding
years.
Administration
Marking of articles under section 304 of the tariff act.—Added significance and importance have attached to the enforcement of the
law requiring the marking of articles to indicate the country of origin

REPORT OF THE SECRETARY OF THE TREASURY

because of the provision in the department's appropriation bUl requiring the Secretary of the Treasury to purchase, unless in his discretion the interest of the Government will not permit, only articles of
the growth, production, or manufacture of the United States, even
though such articles may cost more than those of foreign production,
provided the excess of cost of the domestic articles over the foreign
is not unreasonable. Similar provisions in the law require the heads
of other departments to purchase domestic articles.
Importations by air mail.—There has been a material increase in the
volume of importations received through the international air maU
service as a result, in the main, of the establishment of air routes
between the United States and Mexico, Central America, South
America, and the West Indies. Regulations have been prepared (and
will be promulgated at an early date) providing for the immediate
redispatch of imported articles from the port of first receipt in the
United States via connecting domestic air mail routes to points at
or as near as possible to post offices of address for customs examination, instead of detaining the articles at ports of first receipt in the
United States for customs treatment. This will materially advance
the delivery of the mail.
Domestic goods returned through the mails.—The previous practice of
requiring the sender of a maU shipment, addressed for delivery in a
foreign country and returned to the United States undelivered, to
make entry upon its return has been abrogated. Formal entry is not
required where packages remain in the custody of the international
postal service and are returned in substantially the same condition in
which dispatched from the United States. The sender is thereby
relieved from the inconvenience and expense incident to the customs
entry of such returned shipments.
Customhouse brokers.—The revised regulations governing the
customhouse brokerage business and the licensing of brokers is
resulting in uniform administration of this branch of the service and
increased efficiency in the service rendered by licensed brokers.
During the flscal year, 202 licenses were issued by the Bureau of Customs; and 4 licenses were revoked for cause after due notice and
opportunity for a hearing, as provided by the statute.
Legal cases.—The number of cases pending in the legal unit of the
bureau was reduced from 344 at the close of the fiscal year 1931 to
259 at the close of 1932. The pending cases in the administrative
unit, however, increased from 425 to 602 during this same period.
Economy.—A most rigid program of economy was followed during
the entire year—688 positions having been abohshed throughout the
service.

REPORT OF THE SECRETARY OF THE TREASURY
OTHER SUPERVISORY AND NONFISCAL ACTIVITIES

Coast Guard
The following is a summary of the principal operations of the
Coast Guard for the fiscal year 1932 in which comparisons with thepreceding year 1931 are indicated:

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 derelicts recovered
Value' of vessels' assisted, (including cargoes) .i
Persons examined for certificates as lifeboat men . _

1931

1932

6,627
25,898
661
88,367
2,929
$369,341
114
6,536
6,561

5,214
30,847
659
102,268
2,368
$300, 756
123
6,393
7,346

370
$8,020
$47,959,465
5,695

371
$46, 780
$39,177,247
6,120

Increase (+)•
or
decrease ( - )
-413-f 4,949 •
-f98-M3,911.
-571
—$68,585>

+9^

-f867'
+785'

+1-

-i-$37, 760'
—$8,782,218
+525^

Following three observation cruises made in March, 1932, in the
ice regions near the Grand Banks of Newfoundland, the customary
annual ice patrol was inaugurated on April 1. It was estimated that
528 bergs drifted south of Newfoundland from January 1 to July 2,.
1932. Approximately 321 bergs were south of latitude 48° N. during
April. Of the five bergs which drifted south of the tail of the banks,,
only one reached the steamer lanes then in use. No disasters due
to collision with ice occurred. Merchant vessels and shore radiostations rendered excellent cooperation. The patrol was discontinued
July 2, 1932.
In the prosecution of their duties the cutters performing the annual
winter cruising on the coast, for the season December 1, 1931,. to
March 31, 1932, cruised 80,000 miles and afforded assistance to 29
vessels, which, including cargoes, were valued at nearly $2,500,000
and carried 374 persons. Vessels boarded and examined in the interests of the enforcement of United States laws numbered 438.
The Coast Guard continued the enforcement of the rules and regulations governing the anchorage and movements of vessels at ports
and other places where Federal regulations are in effect. Coast Guard
officers serving as captains of the port at a number of places.
The law enforcement duties of the Coast Guard in the prevention
of liquor smuggling from the sea continued to present a problem requiring the greatest vigilance on the part of the sea and coast forces.
There was a slight diminution during the year in the volume of liquor
brought to the coasts of the United States for attempted smuggling

REPORT OF THE SECRETARY OF THE TREASURY

93-

The regular annual patrol, for the season of 1931, of the waters of
the North Pacific Ocean, Bering Sea, and southeastern Alaska, was.
conducted as usual by Coast Guard vessels. In carrying out theirduties the vessels cruised more than 70,000 miles, afforded medical and.
dental aid to 565 persons, assisted 6 vessels in distress, boarded 46vessels and transported 712 persons, and performed numerous otheroffices. The patrol for the season of 1932 was in progress at the close^
of the year. The Coast Guard also carried on the northern Pacific:
halibut fishery patrol in behalf of the Bureau of Fisheries, Department.
of Commerce.
In January, 1932, Coast Guard forces again were brought into action^,
in their traditional work of rendering aid and assistance in floods.
The Coast Guard dispatched personnel and boats into the flooded,
areas of Greenwood, Miss., and other points on tributaries of thcv
Mississippi River, and cooperated with the Red Cross, Federal and.
State engineer officers, and citizens, in various forms of rescue and;,,
relief work. This service continued from January 18 to February 13,„
1932.
The Coast Guard owns and operates a coastal communication system consisting of a telephone and telegraph line system of approximately 1,447 miles of pole line, 2,534 miles of open wire aerial circuits,..
35 miles of aerial and underground cables, and 573 miles of submarine ^
cable. Improvements have been made toward effecting a higher stateof efficiency in handling communications by radio.
The tenth and last cutter of the 10 authorized by the act of Junc;^
10, 1926, was completed during the year. Contract for the construction work on the cutter authorized by act of April 18, 1930, for serviceon Lake Michigan was awarded. Seven 165-foot patrol boats in a.
construction program authorized by act of May 15, 1930, have been,?
coihpleted and placed in commission. Two additional 165-foot patrols
boats in a construction program authorized by the act of February 23,..
1931, were in course of construction under contract at the close of the
year. Two destroyers formerly obtained from the Navy were decommissioned and returned to the custody of the Navy, and another Navy destroyer was transferred to the Coast Guard, in pursuance of the act.
of May 15, 1930. One cutter was sold, 2 patrol boats were disposed!
bf, and 8 patrol boats and 2 harbor tugs have been addedj to the fleet.
of Coast Guard vessels. Six 78-foot special inshore patrol boats,,
started last year, are in service. Twenty-one 38-foot cabinfpicket^
boats have been completed and placed in service.
Coast Guard airplanes during the year cruised 93,750!miles, searched^
over an area of 2,344,250 square miles, and identified more than 2,397
vessels. The aircraft-reporting system along the Atlantic seaboard =
made reports on more than 14,000 passing planes.. No plane using
the system was lost during the year. The construction of the five new
fiying-boat seaplanes mentioned in last year's report, is,,about 80 perr

REPORT OP THE SECRETARY OF THE TREASURY

cent completed. Three amphibian planes have been purchased.
During the year the service leased a site at Dinner Key, Fla., for the
establishment of another air station and contract was entered^ into for
the building of an airplane hangar. This station willbe in commission
early in the fiscal year. 1933.
The Coast Guard (life-saving) station authorized to, be established
at or in the vicinity of the Quillayute River, Wash., was. completed
during the year and placed in commission. Cohtract was awarded
during the year for the construction of the Coast Guard (life-saving)
station authorized by the act of February 26, 1930, to be established
at or in the vicinity of Grand Island> Mich. The appropriation for
constructing and equipping the Coast Guard (life-saving) station at
Dr near Port Orford, Oreg., was continued by the second deficiency
act, fiscal year 1932, approved July 1, 1932.
In May, 1932, 28 cadets were graduated: from the^ Coast Guard
Academy and commissioned as ensigns. There were 84 cadets under
instruction at the close of the year. The 1932 practice cruise for
cadets began May 25, 1932, and was in progress at the close of the
year.
All training-of enlisted personnel was coordinated and extended
duruig the year. The school for radiomen at New London, Conn.,
and the gas-engine school at Norfolk, Va., were continued. A gas^
engine school was established at Buffalo, N. Y. The Navy cooperated in the training of personnel, and many Coast Guard men
attended Navy schools during the year. One hundred and ninetyeight men were graduated from the schools mentioned, and 53
were in attendance at the close of the year. The work at the Coast
Guard Institute, at New London, has greatly increased. In the
course of the year, 168 International Correspondence School diplomas
and 477 Institute Educational certificates were awarded. At the
close of the year there was enrollment of 2,978 men.
A receiving unit was maintained at New London, where newly
enlisted men receive about three months' training before being
transferred to, units of the service for duty.
Service discipline continues to be satisfactory, and it is gratifying
to note that a high standard of morale obtains among the forces.
The service operations, throughout, during the year were most
satisfying.
The Secretary of the Treasury, under the provisions'of law^ awarded
during the year 5 gold and 35 silver life-^saving medals of honor, and 1
silver second service bar.
The death on May 17, 1932, of Rear Admiral. Frederick C.BiUard,
Commandant of the Coast Guard, removed from the pubhc service
one whose character and ability throughout his career were of the
highest type. Admiral Billard entered the Coast Guard in 1894 and

REPORT OF THE SECRETARY OF THE TREASURY

from 1924 was commandant of the service during its period bf
greatest expansion and development. Through his death the
Government has lost a most devoted, able, and trusted public servant.
Public Health Service
In spite of the unfavorable economic conditions during the calendar
year 1931 and the first six months of 1932, reports to the Public
Health Service from State and local health departments and other
sources indicate low morbidity and mortality rates for the notifiable
diseases as compared with preceding years. The general death rate
from all causes for the year 1931 was one of the lowest ever recorded.
Infant mortality has shown a decline in the United States since
1915. In that year there were 100 deaths of infants under one year
of age per 1,000 live births; in 1930 there were 64.7 such deaths; and
in 1931 the rate was 61.7. The birth rate in the United States continued to dechne. For the year 1931 there were 17.8 births per 1,000
population, as compared with 18.9 in 1930, and 24.9 in 1915, when
comparable statistics of births were first collected.
Dming the first four months of 1931 there was a considerable
increase in the prevalence of influenza, but the disease was mild and
pneumonia developed in comparatively few cases.
During the summer and fall of 1931 there was a serious outbreak of
infantile paralysis in the Northeastern States. „New York, Massachusetts, Connecticut, Michigan, and New Jersey reported the greatest
numbers of cases. In Ohio, Kansas, California, and some other
States the prevalence was less than it was in 1930, but the incidence
in the country as a whole was greater than it had been for any other
year since 1916.
. .
The number of deaths from pellagra decreased in 1931 as compared
with 1930.
The death rate for tuberculosis showed a further decrease, the rate
for 1931, 66.3 per 100,000 population, being the lowest ever recorded
for this disease by the Public Health Service.
The proposed International Sanitary Convention for Aerial
Navigation, which was prepared and presented in May, 1930, by the
permanent committee of the International Office of Public Hygiene,
of which the Surgeon General of the Public Health Service is a member
representing the United States, was submitted during the year for
informal consideration and recommendation of various interested
governments, and the comments and recommendations transmitted
by the responding governments received the further consideration of
the permanent committee at its meeting in Paris in April, 1932,
resulting in the adoption of the revised draft of the convention which
141810—32—7

REPORT OF THE SECRETARY OF THE TREASURY

will soon be formally presented to the varipus interested governments
for ratification.
For several years increasing international attention has been given
to the fumigation of ships for the destruction of rats, a subject
important to the International Office of Public Hygiene in Paris under
the provisions of the International Sanitary Convention of Paris of
1926, The advantages of ship fumigation procedures as carried out
to-day in the United States are recognized internationally. During
the year a special committee of fumigation experts, appointed by the
League of Nations, visited the United States for the purpose of making
practical studies of our procedure. The Surgeon General of the Public
Health Service is chairman of this committee.
Early in the fiscal year an informal agreement was entered into
between the Public Health Service and the Quarantuie Service of
Cuba, providing for the mutual recognition by the respective quarantine authorities of certificates given to maritime vessels by either
authority pertaining to the elimination of rats or absence of rat
infestation.
The regulations governing the importation of parrots into ports of
the United States, prescribed in accordance with the provisions of
Executive Order No. 5264, approved January 24, 1930, continued in
force duiing the year. Consideration is being given to the advisabUity of extending these regulations. In the meanwhUe, research
studies on psittacosis, or parrot fever, are being continued by the
Public Health Service. The subject is receiving international attention, a commission having been appointed by the International Office
of Public Hygiene to study the problem and make recommendations.
The Public Health Service continued its cooperation with State and
local authorities in preventing the interstate spread of disease and
in developing local health organizations through studies and demonstrations in rural sanitation and through its expert consultation
service on pubhc health organization and administration, and its
cooperation with departments and bureaus of the Federal Government on sanitary engineering and environmental sanitation problems.
Measures directed against the interstate spread of disease included
cooperation with State authorities in the certification of drinkingwater supplies used by common carriers, cooperation in the sanitary
control over shellfish production and distribution, inspection of drinking and culinary water systems on vessels, raUway sanitation, cooperation in the eradication of endemic foci of trachoma, and plague
suppressive activities in California.
In addition to the regular studies of and demonstrations in rural
sanitation in cooperation with State and local health authorities, the
work in the drought-stricken areas made possible through the emergency appropriation of $2,000,000 was continued until June 30, 1932.

REPORT OF THE SECRETARY OF THE TREASURY

In spite of the conditions resulting from economic distress in the rural
sections of the drought-stricken areas, there has been no serious outbreak of disease nor any increase in mortality from preventable illness during the past year.
The State of California remained free from human cases of plague,
but the disease again appeared in rodents in one of the southern coastal
cities of the State. This recurrence of rat plague emphasizes the
necessity for continuous activity of the Public Health Service toward
the control of rodent infection in the areas adjacent to cities on the
California coast.
At the request of the Governor of Hawaii and with the approval of
the Secretary of the Interior, an officer was detaUed to assist the Territorial Board of Health in the control and eradication of bubonic
plague in the islands, following the report of a human case.
Studies of two major treatments of stream pollution, water purffication and natural stream purification, have developed to the point
where it is believed that the third major treatment of stream poUution, sewage treatment, should be given increased consideration..
The program at the stream pollution laboratory at Cincinnati, Ohio,
has therefore been modified in furtherance of this plan and an experimehtal activated sludge treatment plant is under construction.
Activities were continued during the year involving studies and
investigations of the cause, treatment, and prevention of the venereal
diseases, cooperation with State boards or departments of health
for the prevention and control of such diseases within the respective
States, and the control and prevention of the spread of these diseases
in interstate traffic. Cooperation with the States has included the
distribution of educational material, the development of State venereal disease programs, and the organization of improved treatment
facUities.
Investigations of heart disease were begun during the year, with
the initial studies being concentrated on rheumatic heart disease.
Dental studies have been undertaken.
Special studies dealing with the subject of narcotic drugs and the;
narcotic drug addiction problem have also been conducted. The
establishment of United States narcotic farms and supervision and
furnishing of medical services for Federal prisons has progressed
satisfactorUy.
Medical treatment for sick and injured American merchant seamen, a national policy since 1798, was furnished in 25 marine hospitals
and by contract in 188 non-Government hospitals ih 116 ports in the
United States and its possessions. Seamen remain the most numerous
class of legal beneficiaries, among which are included the Coast Guard
and certain other nautical employees of the Government, as well
as injured civilian Federal employees, immigrants, and lepers. Many

REPORT OF THE SECRETARY OF THE TREASURY

important collateral medical functions were performed, such as
physical examinations of civil service applicants and employees and
special physical examinations legaUy required by the Steamboat
Inspection Service for licensed ships' officers and able-bodied seamen.
An appropriation of $750,000 was made available, as provided in the
act of Congress approved May 26, 1930, for additional buUdings at the
National Institute of Health. Work has been begun on a laboratory
buUding and an administration building on the present site of the
National Institute of Health.
The hospital buUding program, which is designed to remove serious
fire hazards and otherwise improve and enlarge certain marine
hospitals, is progressihg satisfactorily. The new marine hospitals in
New Orleans, Galveston, and San Francisco and the addition at Key
West have been completed and occupied. The Seattle hospital wUl
be finished early in 1933. Construction has begun on the hospital
buUdings at MobUe, Detroit, Chicago, LouisvUle, EvansvUle, and
Baltimore. Plans are nearly completed for the buildings at Memphis,
Stapleton, and Norfolk. The most important hospital project for
which allocation, but not appropriation, has been made is for the
National Leper Home at CarvUle, La., where an infirmary buUding
for bedfast patients requiring intensive nursing is badly needed, and
certain other hospital buUdings are required.
Bureau of Narcotics
The Bureau of Narcotics has continued to operate under the plan
of organization established under the act of June 14, 1930, and to
direct its main activities toward the apprehension of major law violators, the elimination of the sources of illicit supply of narcotic drugs
and the channels of their distribution, and the control of the legitimate
manufacture and distribution of such drugs for medical purposes.
The usual close cooperation between this bureau and the Bureau of
Customs, supplemented by the arrangements for international exchange of information relating to illicit shipments between countries,
has existed throughout the year. . Unusual success in detecting and
confiscating illicit shipments during the previous year discouraged
attempts at smuggling to such a degree that the supply of drugs avaUable to the addict and Ulicit peddler has been materially lessened.
As a consequence there has been a noticeable tendency toward the
robbing of legitimate stocks and the forging of order forms and prescriptions to procure supplies of drugs.
This situation is reflected in the statistics of seizures of drugs in the
illicit traffic during the year, there being seized at ports or border
points 15,801 ounces of narcotic drugs as compared with 66,674
ounces during the previous year. Narcotic drugs seized or purchased
as evidence from illicit sources by Federal narcotic enforcement

REPORT OF THE SECRETARY OF THE TREASURY

officers amounted to 8,334 ounces as compared with 41,622 ounces
during the previous year. The decrease in the supply of drugs in the
Ulicit market is also due in part to the cooperation of certain European
governments in restricting their manufacture.
During the year 5,108 criminal cases were reported, by Federal
narcotic officers, as compared with 6,075 the previous year. There
were 3,048 convictions, the average sentence imposed being 2.73 years.
Fines imposed for violations of the narcotic laws amounted to
$151,253.52, and the 171 cases compromised resulted in the payment
into the Treasury of $20,007.50. One hundred aliens were ordered
deported fpr violation of or conspiracy to violate narcotic laws and the
cases of 172 persons reported to the Department of Labor for such
offenses were pending at the close of the year.
On June 30, 1932, there were 331,063 registrations under the
Harrison narcotic law, as amended, 253 as importers and manufacturers, 1,523 as wholesale dealers, 52,539 as retail dealers, 148,556 as
practitioners, and 128,192 as dealers in and manufacturers of untaxed
narcotic preparations.
* Very satisfactory progress has been made in a number of the districts in developing the further cooperation of State, county, or municipal authorities in dealing with minor violators under local laws and in
providing institutional treatment for addicts. Some cooperation has
also been secured from a number of the State licensing boards in
dealing with hcensed practitioners found to be violating the narcotic
laws, though results in this respect are not as satisfactory as desired.
A final draft of a proposed uniform State narcotic law, prepared by
the conference of State commissioners with the collaboration of the
bureau, is expected to be ready for submission to the legislatures of
the several States in the near future.
The bureau has continued to receive the cooperation of the division
of mental hygiene in the United States Public Health Service in
determining quantities of crude drugs to be permitted importation
into the United States, and with reference to other matters connected
with narcotic law enforcement.
The control of the legal importation, manufacture, and distribution
of narcotic drugs continues reasonably effectual. The quantity of
drugs of domestic manufacture which is diverted to Ulicit use remains
comparatively negligible, notwithstanding the tendency toward petty
diversions through the robbing of stocks and forging of order forms.
Suppression of the smugghng and selling of opium, morphine, heroin,
and cocaine continue to constitute the bureau's principal enforcement
problem.
Bureau of Industrial Alcohol
The functions of the Bureau of Industrial Alcohol comprise chiefly
the direct supervision of the production of industrial alcohol under

100

REPORT OF THE SECRETARY OF THE TREASURY

restrictions designed to prevent the diversion of such alcohol to illegal
•uses and, in conjunction with the Attorney General, the control of
permits relating to the manufacture, sale, and use of alcohol.
The administration of the provisions of the national prohibition act
relating to industrial alcohol and liquors for medicinal purposes
entaUs the supervision of the operation of the largest chemical and
drug manufacturers in the country whose productions are essential
materials in the manufacture of varnishes, paints, lacquers, smokeless powders, artificial silk, dyes, essential medicinal alkaloids, and
coal-tar derivatives. In the medicinal field the supervision covers
hospital and other professional uses of alcohol and medicinal liquors.
The bureau supervises the procurement and use of alcohol in the
research and educational field, and the production and distribution of
wine for sacramental purposes. It also supervises the production and
use of ethyl alcohol, a very important industrial product. The
scope of the activities of the bureau is indicated by the fact that
185,863 permits were issued during the fiscal year 1932 for the various
uses indicated above.
During the year 1,711,029 gallons of whisky were produced
under permit at six distilleries. It is estimated that this quantity
with the stock already in bond, wUl provide the five-year supply
for medicinal purposes necessitated by the fact that the law does
not permit the bottling of whisky in bond until it has aged four years
in a bonded warehouse.
. The manufacture of synthetic ethyl alcohol from ethylene gas, now
a recognized source of industrial alcohol on a large scale, amounted to
more than 14,000,000 gallons during the year.
Laboratory research and experimentation to develop improved
denaturing formulae that wUl better meet the requirements both of
industry and of prohibition enforcement were continued. The extreme care exercised in approving preparations manufactured with
specially denatured alcohol has reduced to a minimum the Ulegal
distUlation of alcoholic preparations to obtain alcohol for iUegal
purposes.
During the past year the development of three new nontoxic
denaturants, calorite, pontol, and tecsol, marks a distinct advance in
denaturing alcohol for general purposes, available to the trade and the
pubhc without a permit. Through intensive research by the technical
division and the cooperation and assistance of the corporations manufacturing these products, more progress has been made, it is believed,
during the past year in developing efficient and satisfactory denaturants for completely denatured alcohol than during the entire period
since the advent of national prohibition.
Under amended regulations all completely denatured alcohol in containers exceeding five-gallon capacity must now be distributed in one

REPORT OF THE SECRETARY OF THE TREASURY

101

way steel drums with embossed serial numbers and symbols identifying the producer. This makes it possible to trace shipments back to
the original producer and will assist in preventing the diversion
of completely denatured alcohol for iUegal purposes.
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.
OGDEN L . MILLS,

Secretary of the Treasury,
To THE SPEAKER OF THE H O U S E OF REPRESENTATIVES.

ADMINISTRATIVE REPORTS
OF BUREAUS AND DIVISIONS

103

ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS
OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS

Railroad obligations
The total receipts during the fiscal year on account of railroad
securities amounted to $1,690,284.02, of which $1,016,741.91 was on
account of principal and $673,542.11 was on account of interest. The
railroad obligations have been gradually reduced each year untU the
principal outstanding at the close of the fiscal year 1932 amounted to
only $38,925,890.94. The following statement shows the total
amount of railroad obhgations by dasses originally held by the United
States Government, the amount held on June 30, 1932, and payments
received on account:^
Railroad obligations held originally hy the United States Government, amount held
June 30, 1932, and total payments of principal and interest received
Principal
Principal amount amount
held
originally held on June 30,1932
Federal control act:
Equipment trust notes
Section 7 . . .
_
Section 12
Transportation act:
Section 207_.
Section 210
Total.-

Total payments received
Principal

Interest

$346,566,750.00
98,401,755.00
62,103,453.28

$100,800.00

$346,465,960.00
98,401,756.00
62,103,463.28

$45, 281, 040.93
23,100,662.27
4,248,171.96

282,712,837.36
290,800, 667.00

5,219,600.00
33,605,590.94

277,493,337.36
267,195,076.06

64,309,248.68
88,968, 502.00

1,080,676,462.64

38,926,890.94

1,041,649,671.70

215,907,625.84

During the year the equipment trust notes were reduced by payments amounting to $33,600 received from the Minneapohs & St.
Louis Railroad Co. A reduction was also made in the obligations
acquired under section 210 of the transportation act, 1920, as
amended, due to payments amounting to $983,141.91, received on
account of the obligations of various carriers. For detaUed statements of the obhgations held and payments made on account of
principal, see Tables 40 and 41, pages 431 and 432.
Sections 204 (^"^d 209.—There have been no transactions under these
sections since June 30, 1931. The total payments under section 204
have amounted to $10,967,801.80 and under section 209 to
$531,756,045.71. Claims for the amounts due from various carriers
on account of overpayments made under section 209, aggregating
$1,793,198.98, as set out in last year's annual report, are still in litigation or in the hands of the Attorney General of the United States.
Section 210.—This section established a revolving fund of
$300,000,000 to be used for loans to raUroads under the conditions
set forth in a certificate of the Interstate Commerce Commission
authorizing each loan, and also for paying judgments, decrees, and
awards rendered against the Director General of Railroads. No new
loans are being made, because the time for making application has
» Revised to include principal and interest collected by Director General.

105

106

REPORT OF THE SECRETARY OF THE TREASURY

expired. The expenditures by the Director General during the fiscal
year under this section amounted to $61,532.91, making net expenditures by him on this account of $33,511,857.65 to June 30, 1932, after
deducting repayments.
For a statement showing the principal amount of obhgations held as
of June 30, 1931 and 1932, on account of loans made, see Table 41,
page 432.
The following statement shows the amounts of principal and interest
due from carriers in default as of June 30, 1932, on account of their
obligations for loans under this section:
Principal and interest due from carriers in default on June 30, 1932, on account of
loans under section 210
Principal in
default

Name of carrier
Aransas Harbor Terminal R y . . .
Des Moines & Central Iowa R. R
Fort Dodge, Des Moines & Southern R . R . Co.
Gainesville & Northwestern R. R. Co
Georgia & Florida Ry., receiver
Minneapolis & St. Louis R. R. C o . .
Missouri & North Arkansas Ry. Co
Salt Lake & Utah R. R. Co
Seaboard Air Line Ry. Co
_
Virginia Blue Ridge Ry. Co
Virginia Southern R. R. Co
Waterloo, Cedar Falls & Northern Ry. Co
Wichita Northwestern Ry. Co
Wilmington, Brunswick & Southern R. R. Co.
Total

Interest in default

$44, 304.67
633, 500.00
200,000.00
76, 000.00

, 382, 000.00

(0
109,900.00

106, 000. 00
38, 000.00
400, 000. 00
381,750.00
90,000.00
3,460,454.67

Total in default

$1,380.71
197, 443.78
29,168.02
40, 352. 53
118, 800. 00
708, 929.73
1, 613, 256.19
392, 614.80
1,435, 759.73
38,160.00
14, 450. 09
781, 270.29
194, 692. 50
10, 800. 00

$45, 685.38
830, 943. 78
229, 168. 02
115, 352.53
118, 800.00
2, 090, 929.73
1, 613, 265.19
602, 514.80
1, 435, 759.73
144, 160.00
52, 450.09
1,181, 270. 29
576, 442. 50
100, 800.00

5, 577, 077. 37

9, 037, 532.04

1 Principal not yet due.

Securities owned by the United States Government
The aggregate amount of securities owned by the Government on
June 30, 1932, as compiled from the latest reports received, was
$13,441,591,969.60, as against $12,333,717,959.69 on June 30, 1931,
an increase of $1,107,874,009.91. A summary comparison of the
holdings at the end of the last two fiscal years is as follows :•
Summary of securities owned hy the United States on June SO, 1931 and 1932
Security.
Foreign obligations:
Received under debt settlements
Aiiother..

...

Total
Capital stock of war emergency corporations..
Reconstruction Finance Corporation
. _.
Railroad obligations
Capital stock of Panama Railroad.
Capital stock of Inland Waterways Corporation
..
.
Capital stock of Federal land banks:
Original act ofJuly 17, 1916
Actof Jan. 23, 1932
Capital stock of Federal intermediate credit
banks
...1..
Miscellaneous securities received by War and
Navy Departments, United States Shipping
Board, and Federal Farm Board
Total

June 30, 1931

June 30, 1932

Increase (+) or
decrease (—)

$11,062,897, 683.63
683,211,013.88

$11,094,105, 696.50
683, 211, 013.88

-f $31,208,012.87

11,746,108, 697.61
46, 673, 080.14
39,942, 432.85
7, 000, 000.00

11,777, 316, 710.38
49, 514, 345.42
767, 735, 208. 55
38, 925, 690.94
7, 000, 000.00

-t-31, 208, 012.87
+2, 841. 265. 28
+767, 735, 208. 65
—1,016,741.91

12,000, 000.00

12, 000, 000.00

2^7, 733.00

175, 939. 25
125, 000, 000.00

—61,793.75
+125, 000, 000.00

30,000,000.00

32, 000, 000.00

+2, 000,000.00

451, 756, 016.19
12, 333, 717, 959. 69

+180,168, 058.87
631, 924, 075.06
13,441,591,969.60 +1,107,874,009.91

REPORT OF THE SECRETARY OF THE TREASURY

107

There was a net increase during the year of $31,208,012.87 in the
principal amount of foreign obligations held by the United States.
This increase is due to the receipt of additional bonds from the
Governments of Estonia and Poland representing the funding of the
difference between the amounts paid by those Governments under
certain options provided for under the respective debt funding
agreements and the amounts due under the regular schedules of payment, together with interest at 3 per cent per annum. The net
amount by which Estonia's indebtedness was increased was $2,636,012.87 and that of Poland, $28,572,000.
. There was a net increase of about $2,800,000 on account of the capital stock of war emergency corporations due to the decrease of cash
balances held by those corporations in the Treasury, which cash
balances are oft'set against the capital stock of these corporations
owned by the United States.
Other increases comprise $500,000,000 for the capital stock of the
Reconstruction Finance Corporation and an additional $267,735,000
representing net payments from credits established on account of the
purchase by the Secretary of the Treasury of obligations of the corporation under section 9 of the Reconstruction Finance Corporation
act; $125,000,000 for additional capital stock of the Federal land banks
as authorized by the act approved January 23, 1932; an increase of
$2,000,000 in the capital stock of the Federal intermediate credit
banks of Houston and Spokane in the amount of $1,000,000 each;
and a net increase of about $180,000,000 in miscellaneous securities
due principaUy to additional securities received on account of the
Federal Farm Board.
A detailed statement of the securities held on June 30, 1932, will be
found as Table 39, page 428.
Trust funds invested by the Treasury
Adjusted service certificate fund.—Investments for the account of
the adjusted service certificate fund, created by the act of May 19,
1924, were made during the fiscal year 1932 in special issues of Treasury obligations bearing interest at the rate of 4 per cent per annum in
accordance with the procedure outlined on pages 118-120 of the
Annual Report of the Secretary of the Treasury for the fiscal year 1925.
Investments made during the year amounted to $393,300,000, of
which $200,000,000 represented funds appropriated by Congress under
the provisions of Public Resolution No. 2, approved December 21,
1931; $193,100,000 represented the principal proceeds of maturing
notes reinvested; and $200,000 was derived from interest on investments. During the year $410,100,000 face amount of securities were
redeemed on account of the adjusted service certificate fund, the proceeds of which, together with interest thereon, were credited to the fund.

108

REPORT OF THE SECRETARY OF THE TREASURY

A statement of the fund as of June 30, 1932, follows:
Adjusted service certificate fund, June 30, 1932
Appropriations:
To June 30, 1931
Available Dec. 21, 1931

FUND ACCOUNT

$896,000,000.00
200,000,000.00
$1,096,000,000.00

Interest on investments:
To June 30, 1931
July 1, 1931, to June 30, 1932..

94,781,707.35
3,018,64L 12

97,800, 348. 47
1,193, 800, 348.47

Checks paid by Treasurer of the United States, less credits on account of repayments of
loans and interest thereon
1,082,043,682.82
Balance in fund June 30, 1932

111,756,765.65
FUND ASSETS

Investments: 4 per cent Treasury certificates of indebtedness
Unexpended balances:
To credit of disbursing officers of the Veterans' Administration with the Treasurer of
the United States
To credit of fund on books of the Division of Bookkeeping and Warrants
Total fund assets June 30, 1932

105,000,000.00
6,729,103.00
27,662.66
Ill, 756,765.65

Civil service retirement and disability fund.—The civil service retirement and disability fund was created by the act of May 22, 1920.
During 1932 the Treasury continued to make investments for account
of the fund 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 1926.
Total credits to the fund during the fiscal year amounted to
$61,441,518.45, of which $31,852,705.60 was on account of deductions
from basic compensation of employees and service credit payments,
$8,588,812.85 represented interest on investments, $20,850,000 was
appropriated by Congress to fulfill the current liability of the United
States Government in connection with the fund, and $150,000 was
appropriated from the revenues of the District of Columbia to cover
its habUity on account of the fund. Pursuant to the second paragraph
of section 9 of the act of March 2, 1931, there was transferred from
the civil service retirement and disability fund to the Canal Zone
retirement and disabUity fund the sum of $1,430,808.84, representing
the amount certified to the Secretary of the Treasury by the Administrator of Veterans' Affairs as the amount, including interest to
June 30, 1931, due from the civil service retirement fund to employees
of the Panama Canal coming within the purview of the Canal Zone
retirement act. After deducting this transfer the net credits to the
fund amounted to $60,010,709.61. Expenditures on account of refunds to employees, annuities, etc., amounted during the fiscal year
to $27,436,014.53 as compared with $23,930,706.21 for the previous
year. The total earnings and profits on investments to June 30, 1932,
amounted to $39,478,331.75.
The foUowing statement shows the status of the fund as of June
30, 1932:

REPORT OF THE SECRETARY OP THE TREASURY

109

Civil service retirement and disability fund, June 30, 1932

Credits:
On account of deductions from basic compensation of employees and
service credit payments—
From Aug. 1, 1920, to June 30,1931
$229,844,743.61
July 1,1931, to June 30, 1932
31,852,705.60
Less amount transferred to Canal Zone retirement and disability
fund under act of May 2,1931
Appropriations—
To JuneSO, 1931
Available July 1,1931

261,697,449.21
1,430,808.84
'
$260,266,640.37
61,460,000.00
121,000,000.00

Interest and profits on investments—
From Aug. 1,1920, to June 30,1931
J u l y l , 1931, to June 30,1932

30,889,618.90
8,688,812.85

Less checks paid by Treasurer of the United States, on account of
annuities and refundsFrom Aug. 1, 1920, to June 30,1931
130,927,492.68
July 1,1931, to June 30,1932
27,436,014.63
Total
Assets:
/
Face amount
$22,695,050 fourth Liberty loan 4 ^ per
47,800,000 4 per cent special Treasury
35,800,000 4 per cent special Treasury
32,400,000 4 per cent special Treasury
64,200,000 4 per cent special Treasury
20,100,000 4 per cent special Treasury

-.-.
Principal cost
cent bonds
$22,399,454.01
notes payable June 30,1933... 47,800,000.00
notes payable June 30,1934... 36,800,000.00.
notes payable June 30,1936— 32,400,000.00
notes payable J une 30,1936,.. 64,200,000.00
notes payable June 30,1937... 20,100,000.00

222,996,050
Unexpended bialances June 30,1932—
Treasurer of the United States, disbursing account
On books of Division of Bookkeeping and Warrants
Total fund assets June 30,1932

868,611.84
263,399.16

82,460,000.00

39,478,331.76
382,194,972.12

168,363,507.11
223,831,465.01

222,699,454.01

1,132, Oil. 00
223,831,465.01

1 Includes $20,850,000 appropriated from the General Fund to cover the liabDity of the United States, and
$160,000 appropriated from the revenues of the District of Columbia to cover its liability in connection with
the financing of the fund.

Foreign service retirement and disability fund.-—The foreign service
retirement and disabihty fund was estabhshed by section 18 of the
act of May 24, 1924 (43 Stat. 144), and is under the administrative
supervision of the Secretary of State, but under the act the Secretary
of the Treasury is directed to make investments from time to time
of such portion of the fund as in his judgment may not be immediately
required for authorized payments, the income derived from such investments to be credited to the fund as a part thereof.
Investments for account of the foreign service retirement and disabihty fund were made during the fiscal year 1932 in special issues of
Treasury notes in the face amount of $453,000, 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. Redemptions during the year amounted to $136,000
face amount, making the net investments $317,000.
Credits to the fund during the year aggregated $453,583.23, of
which $173,904.54 was on account of deductions from basic compensation of employees and service credit payments, $64,678.69 represented earnings on investments, and $215,000 was appropriated by
Congress to meet the current habUity of the Government in connection
with the fund. Net advances to the disbursing officer of the State
Department for the payment of annuities and refunds, etc., amounted
during the fiscal year to $136,000 as compared with $106,000 for the

110

REPORT OF THE SECRETARY OF THE TREASURY

previous year. The total interest and profits credited to the fund to
June 30, 1932, amounted to $217,833.49.
The following statement shows the status of the fund as of June
30, 1932:
Foreign service retirement and disability fund, June 30, 1932

Credits:
On account of deductions from basic compensation and service credit
payments—
From May 24, 1924, to June 30, 1931
July 1, 1931, to June 30, 1932

$1,113,166.99
173,904.64

Appropriations—
To June 30, 1931
Available July 1, 1931

646,000.00
216,000.00

Interest and profits on investments—
From May 24, 1924, to June 30, 1931
July 1,1931, to June 30, 1932

163,154.80
64,678. 69

Less checks paid by Treasurer of the United States, on account of
annuities and refunds:
From May 24, 1924, to June 30, 1931
July 1, 1931, to June 30, 1932

cent
cent
cent
cent
cent

special
special
special
special
special

Treasury
Treasury
Treasury
Treasury
Treasury

217 833.49

611,386.66
127,123.47

738, 309.03
1,626,385.99

notes
notes
notes
notes
notes

due June
due June
due June
due June
due June

30,1933
30,1934
30, 1936
30, 1936
30, 1937

1,606, 000
Unexpended balance June 30, 1932—
Treasurer of the United States, disbursing account
On books of Division of Bookkeeping and Warrants
Total fund assets June 30, 1932

860,000.00

2, 364, 895.02

Balance in fund June 30, 1932
Assets:
Face amount
$142,000.4 per
454,000 4 per
609,000 4 per
440,000 4 per
61,000 4 per

$1,287,061.63

Principal cost
$142,000.00
454,000.00
609,000.00
440,000.00
61,000.00

19,344.90
1,041.09

1^ 606,000.00

20,385.99
1,626,385.99

Canal Zone retirement and disability fund.—The Canal Zone retirement and disabUity fund was created by section 9 of the act of March
2, 1931 (46 Stat. L., 1477). I t is under the administrative supervision
of the Administrator of Veterans' Affairs, but under section 10 of the
act the Secretary of the Treasury is directed to make investments from
time to time of such portions of the fund as in his judgment may not
be immediately recjuired for the payment of the annuities, refunds, and
aUowances authorized by the act, the income from such investments
to be credited to the fund.
Investments for account of this fund in the face amount of $2,070,000
were made during the fiscal year 1932 in special issues of Treasury
notes bearing interest at the rate of 4 per cent per annum in accordance
with the procedure outlined on page 125 of the Annual Report of the
Secretary of the Treasury for the fiscal year 1931. Redemptions
during the year amounted to $6,000 face amount, making net investments of $2,064,000 for the year. Credits to the fund during the
year aggregated $2,274,127.25, of which $420,948.52 was on account
of deductions from basic compensation of employees and service
credit payments; $1,430,808.84 was transferred from the civil service
retirement and disability fund pursuant to the second paragraph of
section 9 of the act; $355,984 was received from the Panama Railroad
Co. under the third paragraph of section 9 of the act; and $66,385.89
represented earnings on investments. The net payments on account of annuities and refunds during the fiscal year amounted
to $184,006.46.

REPORT OF THE SECRETARY OF THE TREASURY

111

The following statement shows'the status of the fund as of June 30;.
1932: =
Canal Zone retirement and disability fund, June SO, 1932
Credits:
On account of deductions from basic compensation of employees subject to retirement act. $420,948. 52'
Transferred from civil service retirement and disability fund
1,430,808.84
Payment by Panama Railroad Co
_ 355,984.00
On account of interest on investments
66,385.89
Less checks paid by Treasurer of the United States, on account of annuities and refunds..
Balance in fund June 30, 1932
Assets:
$1,998,000 4 per cent special Treasury notes, maturing June 30, 1936
66,000 4 per cent special Treasury notes, maturing June 30, 1937
2,064,000
Unexpended balances June 30,1932—
Treasurer of the United States, disbursing account
On books of Division of Bookkeeping and Warrants

2,274,127. 25
184,006.46

__ 2,090,120. 79

$1,998,000. 00
. 66,000.00

2,064,000. 00

11,795.48
14,325.31
26,120.79

Total fund assets June 30, 1932.

2,090,120.79

District of Columbia teachers^ retirement fund.—The act of January
15, 1920, as amended by the District of Columbia appropriation act
of June 5, 1920, vested the administration of this fund in the Commissioners of the District of Columbia, except that it was directed
that such funds shall be held and invested by the Treasurer of the
United States. A further amendment of June 11, 1926, created a
reserve fund, provided for annual appropriations to this end, and
provided that investments on account of such fund shall be held by
the Treasurer of the Uhited States separate from the investments on
account of contributions of teachers. During the fiscal year 1932, the
Treasurer purchased for account of the deductions fund (derived from
deductions from teachers' compensation) $351,200 face amount of
United States bonds at a principal cost of $351,862.69, as follows:
Class of security
m per cent fourth Liberty loan bonds..
4H per cent Treasury bonds of 1947-1952.
4 per cent Treasury bonds of 1944-1954...
ZH per cent Treasury bonds of 1946-1956.
ZH per cent Treasury bonds of 1943-1947.
3 ^ per cent Treasury bonds of 1941-1943.

Face
amount

Principal
cost

$59,000
71,200
79,000
39,000
48,000
55,000

$59, 525. 63
74, 708. 00
79, 366. 25
38,987. 81
49, 500. 00
49,775. 00

351,200

361,862.69

There were also purchased for account of the Government reserves
fund $246,000 face amount of United States bonds at a principal cost
of $250,835.31, as follows:
Class of security
4H per
ZH per
ZH per
ZH per

cent
cent
cent
cent

fourth Liberty loan bonds..
Treasury bonds of 1946-1956.
Treasury bonds of 1943-1947.
Treasury bonds of 1941-1943.

141810—32

Face
amount

Principal
cost

$21,000
15,000
199,000
11,000

$21,183. 75
14,995. 31
204, 701. 25
9,955.00

246, 000

250,835.31

112

REPORT OF THE SECRETARY OF THE TREASURY

The following statement shows the status of the combined funds as
of June 30, 1932:
District of Columbia teachers' retirement fund, June 30, 1932
Credits:
On account of deductions from basic compensation of teachers—
From Jan. 15, 1920, to June 30, 1931
July 1,1931, to June 30, 1932

$2,826,407.96
284,268.53

Appropriations—
To June 30, 1931
Available July 1,1931

$3,110,676.49

1,869,940.91
400,000.00

Interest on investments—
From Jan. 15, 1920, to June 30, 1931
July 1, 1931, to June 30, 1932

680,653.01
178,197.28

Less disbursements on account of annuities, refunds, etc.:
From Jan. 15, 1920, to June 30, 1931
July 1, 1931, to June 30, 1932

2,269,940.91

858,850.29
6,239,467.69

1,451,675.33
278,705.02

Balance in fund June 30, 1932

1,730,380.35
4,509,087.34

Assets:
DEDUCTIONS FUND

Face amount
$26,850 4H per cent first Liberty loan converted bonds
794,750 414 per cent fourth Liberty loan bonds
81,200 4H per cent Treasury bonds of 1947-1952
55,000 3 ^ per cent Treasury bonds of 1941-1943
48,000 ZH per cent Treasury bonds of 1943-1947
39,000 ZH per cent Treasury bonds of 1946-1956
79,000 4 per cent Treasury bonds of 1944-1954
65,320 4 per cent Federal farm loan bonds
1,358,880 4H per cent Federal farm loan bonds
469,440 i H per cent Federal farm loan bonds
91,380 4% percent Federal farm loan bonds
1,000 5 per cent Federal farm loan bonds
182,000 i H per cent Philippine Islands bonds

Principal cost
$27,529.64
763,896.90
84,708.00
49,775.00
49,500.00
38,987.81
79,366.25
64,660.95
1,313,830.89
467,020.91
94,627.91
1,030.00
197,669.66

3,271,820

3,222,603.82
GOVERNMENT RESERVES FUND

21,000 4H per cent fourth Libertyioan bonds
16,000 ZH per cent Treasury bonds of 1946-1956.
199,000 3 ^ per cent Treasury bonds of 1943-1947
11,000 ZH per cent Treasury bonds of 1941-1943
215,640 4 per cent Federal farm loan bonds
819,600 4J4 per cent Federal farm loan bonds.
100 i H per cent Federal farm loan bonds

21,183.76
14,995.31
204,701.25
9,955.00
208,050.78
776,281.48
101.64

1,281,340
1,235,269.21
= = = = =
4,457,873.03
Accrued interest paid in 1932 (on investment purchases), repayable inl933
681.98
Unexpended balance June 30,1932, on books of Division of Bookkeeping and Warrants.
60,632.33
Totalfund assets June 30,1932

4,609,087.34

Library of Congress trust fund.—Under the act of March 3, 1925,
as amended, 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 President, 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 pohcy adopted by the board, investments
and reinvestments of the trust funds are made in interest-bearing
securities of high rating.

113

REPORT OF THE SECRETARY OF THE TREASURY

The following statement shows the earnings collected on account
of each donation as of June 30, 1932:
Library of Congress trust fund earnings to June 30, 1932
Income account
Total collected to
June 30,
1931

Donation

Collected
during fiscal year
1932

Total collected to
June 30,
1932

Babine
Beethoven...
Benjamin....
Bowker
Carnegie
Coolidge
Guggenheim.
HuntingtonWilbur

$127.48
720.46
14,692.60
446.79
12,919.42
39,834.66
5,291.37
21,437.46
23,967.77

$194.27
604.76
3,042.00
84.30
3,733.84
7,396.61
3,786.16
6,722.50
9,987.16

$321.75
1,226.21
17,634.50
630.09
16,663.26
47,231.26
9,076.52
28,169.96
33,944.92

TotaL.

119,326.90

36,450.67

154,777.47

The following statement shows the principal cash accounts for each
donation:
Library of Congress trust fund—Cash receipts, cost of investments, and unexpended
balances, fiscal year 1932
Principal account
Donation

Cost of in- UnexUnexpend- Cash re- Cash avail- vestments
pended
ed balance ceipts dur- able during made dur- balance
mg fiscal fiscal year ing fiscal June 30,
June 30,
year 1932
1931
year
1932

Babine
Beethoven...
Benjamin...
Coolidge
Guggenheim.
Huntington.
Wilbur

$3,320.41
4.00
26.62
10.102.26
39.60
33.75
382.46

Total..

13,909.10

10,326.66

2,372. 50

$3,320.41
4.00
26.62
10,363.93
39.60
33.75
2,754.96

2,715.00

39.60
33.76
39.96

2,634.17

16, 543.27

16,322.80

220. 47

$261. 67

3,282.26

$38.16
4.00

The board received on account of the securities held in the donation
made by Mrs. Ehzabeth Sprague Coolidge subscription rights to
6% shares of common stock of the Public Service Co. of Northern
Illinois, and 12^0 shares of common stock of the Commonwealth
Edison Co. The subscription rights were sold on the market for
$261.67. The board also received on account of the securities held
in the donation of James B. Wilbur subscription rights to 125 shares
of common stock of the PubUc Service Co. bf Northern Ilhnois. The
subscription rights were sold on the market for $2,372.50. Investments
made during the fiscal year 1932 were as follows:
Donation
Babine
Coolidge
Do
Wilbur.Total

. Face
amount

$3,800 4H per cent Federal land bank bonds due July 1,1956
11,640
do
300 ZH per cent Treasury bonds of 1940-1943
3,000
do
_
18,740

Principal
cost

Securities
.
-

$3,282.26
10,054.06
271. 50
2,715.00
16,322.80

114

REPORT OF THE SECRETARY OF THE TREASURY

The following statement shows the securities held by the board for
account of each donation as of June 30, 1932. The securities are held
in safe-keeping by the Treasurer of the United States, and the Federal
Reserve Bank of New York, subject to the order of the Secretary of the
Treasury for account of the board.
Library of Congress Trust Fund Board securities held June 30, 1932
Name of security

Face
amount

Alexis V. Babine donation

American Chain Co. (Inc.)
Federal land bank bonds
United States Government

$600.00
3,800.00
2,000.00

Tung-Sol Lamp Works (Inc.) 2 shares
Tung-Sol Lamp Works (Inc.) 4 shares

(0
(0

Rate

Class of security

Per cent
7 Preferred stock.
4 ^ Farm loan bonds.
414 Fourth liberty loan bonds of 19331938.
Preferred stock.
Common stock.

Beethoven Association donation

Canadian National Railways
Federal land bank bonds
William E. Benjamin donation
Standard Oil Company of California
R . R . Bowker donation 2

Austrian Government
Detroit Edison Company
German Government
Japanese Government

10,000.00
100. 00

Guaranteed gold bonds.
Farm loan bonds.

33, 800.00

Common stock.'

1,
6,
2,
2,

000.00
000. 00
000. 00
000.00

Carnegie donation

Commonwealth Edison Company
Federal land bank bonds...
Missouri Pacific Railroad Company
New England Telephone & Telegraph Co

52, 000.00
80 00
5, 000. 00
25, 400.00

7
5
7

Sinking fund bonds guaranteed loan.
First mortgage bonds.
German external loan.
Sinking fund gold bonds.

iH
iH
6
iH

First mortgage bonds.
Farm loan bonds.
First and refunding mortgage bonds^
First mortgage bonds.

Elizabeth Sprague Coolidge donation

Canadian National Railways Company
Do.
Chicago Railways Company
Federal land bank bonds
Do
-.
Do
Great Northern Railway Company
Houston Home Telephone Company
Missouri Pacific R. R. Company
New England Telephone & Telegraph C o . . .
Public Service Co. of Northern Illinois
Rio Grande Southern Railroad Company
United States Government
Utah Power and Light Company
American Ship Building Company
American Telephone & Telegraph Co
American Window Glass Company
Board of Trade Building Trust of Boston
Commonwealth Edison Company
Elgin National Watch Company
Mexican Northern Railway Company
Pubhc Service Co. of Northern Illinois

OOOOO
000. 00
250. 00
640 00
300. 00
680. 00
000. 00
100. 00
000 00
400. 00
OOO 00
000.00
300.00
000. 00
ooo 00
100.00
500. 00
700. 00
400 00
375. 00
800. 00
000.00

iH Guaranteed gold bonds.
Do,
6
First mortgage bonds.
6
4K Farm loan bonds.
Do.
iH
Do.
4-'
7 General mortgage bonds.
6 First mortgage bonds.
6 First and refunding mortgage bondsFirst mortgage bonds.
i H First
and refunding mortgage bonds..
5 First mortgage bonds.
4 Treasury bonds of 1940-1943.
ZH First mortgage bonds.
Common stock.
5
Do.
Do.
Do.
Do,
Do.
Do,
Preferred stock.

H a r r y F . Guggenheim donation

Federal land bank bonds
Harbor Commissioners of Montreal

740.00
75, 000. 00

Archer M . Huntington donation

Central Pacific Railway Company
Federal land bank bonds
Missouri Pacific Railroad Company
James B. Wilbur donation
Canadian National Railways
Federal land bank bonds
Do
Public Service Company of Northern IllinoisUnited States Government
Total
1 No par.

i H Farm loan bonds.
5 Guaranteed gold bonds.

105,000. 00
1,000 00
49, 500. 00

4 First and refunding mortgage bonds..
loan bonds.
i H Farm
First and refunding mortgage bonds..
5

44, 000.00
16, 300. 00
280. 00
100,000.00
3,000.00

6 Guaranteed gold bonds.
i H Farm loan bonds.
Do.
4-:
Preferred stock.
7
Treasury
bonds of 1940-1943.
ZH

10,145.00

2 Life interest in six-sevenths of income retained under terms of donation.

REPORT OF THE SECRETARY OF THE TREASURY

115

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
eonverted insurance in excess of authorized payments. The act
approved March 3, 1927, as amended by the emergency adjusted
compensation act of February 27, 1931, authorized the Administrator
of Veterans' Affairs to make loans to veterans upon their adjusted
service certificates out of the United States Government life insurance fund. All of the funds avaUable for investment during the fiscal
year 1932 were used to make loans to veterans. The Administrator
of Veterans' Affairs reported outstanding loans to veterans from this
fund, June 30, 1932, on policies and adjusted service certificates,
aggregating $456,346,749.03.
Monthly reports are made by the Treasury to the Veterans' Administration 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 administrator by the safekeeping offices.
The investments as of June 30, 1932, were as follows:
Government life insurance fund, June 30, 1932
Par value
i H per cent Treasury bonds of 1947-1952
4J4 per cent Federal farm loan bonds
4H per cent Federal farm loan bonds

1
.

Principal cost

$28,000,000.00
32, 550, 000. 00
69, 200, 000.00

$28, 016, 346. 21
32, 477,690. 04
69, 742, 644. 40

129, 750, 000. 00

130, 236, 679. 65

101,514, 718.88
364,832,03015

101, 614,718.88
354,832,030.15

Total investments made by Administrator of Veterans' Affairs.

456,.346, 749.03

456, 346, 749.03

Total investments in the fund

686,096,749. 03

586, 583 328,68

Total investments made by the Secretary of the Treasury
Policy loans.
.. .
Adjusted service certificate loans

General railroad contingent fund.—The general raUroad contingent
fund was created by paragraph 6 of section 15 (a) of the interstate
commerce act, approved June 18, 1910, as amended by the act of
February 28, 1920 (41 Stat. 489). Under the provisions of this section if any carrier receives for any year a net raUway operating income
in excess of 6 per cent of the value of the raUway's property held for
and used by it in the service of transportation, one-half of such excess
.shall be placed in a reserve fund established and maintained by and
for use of the carrier, and the other half shall be paid into the general
railroad contingent fund. The fund is administered by the Interstate Commerce Commission.
Pursuant to the act moneys in the fund not required by the commission for expenditures have been invested by the Secretary of the
Treasury from time to time in interest-bearing obligations of the
United States in accordance with advices received from the Interstate
Commerce Commission.

116

REPORT OF THE SECRETARY OF THE TREASURY

The following statement shows the status of the fund as of June
30, 1932:
General railroad contingent fund, June 30, 1932

Credits:
Excess earnings deposited in Treasury under section 15 (a) of the interstate commerce act
Interest and profits collected on investments

$10, 723, 279. 57
2,984, 224,91
13, 707, 504.48
2,164.28

Less refunds to carriers
Balance in fund June 30,1932

13,705,340.20

Assets:
F^dcc CL7Th07J7ht

P T i n c v o d t cost

$9, 799,300 ZH per cent Treasury bonds of 1941-1943
3, 630,000 4 per cent Treasury bonds of 1944-1954

$10,069, 009.78
3, 630,000.00

13,429,300
Accrued interest paid on investments in fiscal year 1932, repayable in
fiscal year 1933
.
Unexpended balance on books of Division of Bookkeeping and Warrants.
Less investments made in fiscal year 1932 and paid for in fiscal yearof 1933
-.Total fund assets June 30,1932

79,876.39
74,196.47

13,699,009.78
651. 50
6,678.92
13, 705,340. 20

National Institute of Health gift fund.—The National Institute of
Health was created by the act of May 26, 1930 (46 Stat. 379), for the
purpose of creating a system of fellowships in said institute, and to
authorize the Government to accept donations for use in ascertaining
the cause, prevention, and cure of diseases affecting human beings, and
for other purposes.
Under the provisions of section 2 of the act the Secretary of the
Treasury is authorized to accept on behalf of the United States, gifts
made unconditionally by wall or otherwise for study, investigation,
and research in the fundamental problems of diseases of man and
matters pertaining thereto, and for the acquisition of grounds or for
the erection, equipment, and maintenance of buUdings and premises.
The Secretary of the Treasury is also authorized to accept conditional gifts if recommended by the Surgeon General of the United
States Public Health Service and the National Advisory Health
CouncU. Any such gifts shall be held in trust and shall be invested
by the Secretary of the Treasury in securities of the United States,
and the principal or income thereof shall be expended by the Surgeon
General, with the approval of the Secretary of the Treasury, for the
purposes indicated in the act.
The Chemical Foundation (Inc.) made a conditional gift of $100,000,
consisting of $45,000 face amount of 3}^ per cent Treasury notes.
Series A, maturing March 15, 1932, and $55,000 of 3)^ per cent
Treasury notes, Series B, maturing September 15, 1932. The income
from the gift is to be used for one or more feUowships in basic chemical
research in matters pertaining to the pubhc health. On June 16,
1931, the board of directors of The Chemical Foundation (Inc.)
passed a resolution consenting to the use of part of the principal of
the gift in case the income is not sufficient to secure qualified men
for the fellowship. The donated securities were caUed for redemption
on March 15, 1931, and the proceeds were reinvested in 4 ^ per cent
Treasury bonds of 1947-1952.
The following statement shows the status of the fund as of June
30, 1932:

REPORT OF THE SECRETARY OF THE TREASURY

117

National Institute of Health conditional gift fund, June SO, 1932

Credits:
Principal proceeds of donated securities
Interest earned on investments
Total

$100,000.00
6,366.63

.-...

106,365.63

Less advances to meet expenditures on account of the institute

4,166.60

Balance in fund June 30,1932

101,199.03

Assets:
$90,000 face amount i H per cent Treasury bonds of 1947-1962, principal cost
100,410.97
Unexpended balance to credit of the fund on books of Division of Bookkeeping and Warrants.
788.06
Total fund assets June 30,1932
101,199.03

Longshoremen^s and harbor workers^ compensation fund.—This fund
was established under the act of March 4, 1927 (44 Stat. 1444, sec.
44), to provide for the payment of compensation for disabUity or
death resulting from injury to employees in certain maritime employments, and for the maintenance of employees undergoing vocational
rehabilitation. Each employer is required to pay into the fund the
sum of $1,000 as cornpensation for the death of an employee of such
employer resulting from injury where it is determined that there is
no person entitled under the act to receive compensation for such
death. Fifty per centum of each such payment shall be avaUable for
the payments on account of injury increasing disability and 50 per
centum shall be available for the payments on account of maintenance
for employees undergoing vocational rehabffitation.
The fund is administered by the United States Employees' Compensation Commission. Moneys not required for immediate disbursement are invested by the Treasurer of the United States.
The following statement shows the status of the fund as of June
30, 1932.
Longshoremen*s and harbor workers' compensation fund, June SO, 1932
Credits:
Assessments
Interest on investments

$106,000.00
6,743.78
110,743.78
7,089.33

Less disbursements on account of current claims and expenses.
Balance in fund June 30,1932
Assets:
Face
amount
$69,160
11,000
11,000
10,000

103,654.45
Principal
cost
$69,684.47
9,680.48
9,642.97
9,959.38

i H per cent fourth Liberty loan bonds of 1933-1938.....
i H per cent Federal land bank bonds
4H per cent Federal land bank bonds
3 per cent Treasury bonds of 1951-1965

91,150
Accrued interest paid in 1932 (on investment purchases) repayable in 1933
Unexpended balancesTreasurer of the United States, disbursing account
Division of Bookkeeping and Warrants
Total fund assets June 30,1932.....

88,767.30
38.60

2,267.96
12,680.69

14,848.65
103,664.46

Alien property trust fund.—Under the act of October 6, 1917, and
the settlement of war claims act of 1928, approved March 10, 1928
(44 Stat. 254), the Secretary of the Treasury held on June 30, 1932,
securities in the face amount of $32,980,500 for account of the Alien
Property Custodian. During the year the foUowing transactions
were made in this account:
Securities:
Held June 30,1931
Purchased and exchanged
Sold or redeemed
Held June 30, 1932

-^«<^« amount
$41,621,700
11,787,000

_
_..

53,308,700
20,328,200
32,980,500

118

REPORT OF THE SECRETARY OF THE TREASURY

A statement of the alien property trust fund as of September 15,
1932, follows:
Alien property trust fund as of September 15, 1932

Credits:
Trusts
Earnings on investments, etc

$40,492,527.21
32,994,151,91

Total
Assets:
Face amount
$9,800,000 4 per cent Treasury bonds of 1944-1954...
21,700,000 4Hper cent fourth Liberty loan bonds...
350,000 3H per cent Treasury notes maturing Aug, 1,1936
93,100 2H per cent Treasury notes maturing Aug, 1, 1934

73,486,679,12
.

Amortized cost
$10,533,313.93
21,858,437.66
353,828.13
93,361.84

31,943,100
32,838,941,46
Accrued interest receivable
486,699.14
Participating certificates issued under section 25(e) of the trading with
the enemy act—
Noninterest-bearing.....
_•
$22,500,000,00
5 per cent interest-bearing..
17,652,096.91
40,052,096.91
Cash with Treasurer of the United States
109,941.61
Total fund assets Sept. 15, 1932.

73,486,679.12

The total amount paid during the fiscal year 1932 upon authorizations of the Alien Property Custodian and the Attorney General was
$13,092,523.71.
Special funds
American National Red Cross building fund.—This fund was
created by an act of Congress approved February 7, 1930, authorizing
the Director of Public Buildings and Public Parks of the National
Capital to supervise the erection of a permanent building for the use
of the American National Red Cross. The act authorized an appropriation of $350,000 as part contribution to the erection of the buUding with a proviso that the appropriation would not be available until
a like sum had been provided out of funds of the American National
Red Cross. Under a decision of the Comptroller General of the
United States the American National Red Cross was authorized to
deposit with the Treasury $350,000 face amount of Government
obligations, which were to be sold from time to time as funds of the
Red Cross were required to match advances made from the appropriation to meet authorized expenditures for construction of the
building. The proceeds from the sales of the investments, including
earnings thereon, amounted to $361,271.10, which sum, together with
the appropriation of $350,000, had been advanced to the Director of
Public Buildings and Public Parks of the National Capital for disbursement up to the close of business July 15, 1932.
Colorado River dam fund.—This fund was established under the act
of December 21, 1928, to provide for the construction of works commonly referred to as the Boulder Canyon project, or the Hoover
Dam. All revenues received in carrying out the provisions of the act
are payable into the fund. Expenditures are made out of the fund
under the direction of the Secretary of the Interior.
The Secretary of the Treasury is authorized to advance to the
fund, from time to time within the appropriations therefor, such
amounts as the Secretary of the Interior deems necessary for carrying out the provisions of the act, except that the aggregate amount
of such advances shall not exceed the sum of $165,000,000. Ofthis
amount, the sum of $25,000,000 shall be allocated to flbod control

REPORT OF THE SECRETARY OF THE TREASURY

119

and shall be repaid to the United States out of 62^ per cent of
revenues, if any, in excess of the amount necessary to meet periodical
payments during the period of amortization, as provided in section 4r
of the act. If the said sum of $25,000,000 is not repaid in full during
the period of amortization, then 62K per cent of all net revenuesshall be applied to payment of the remainder.
The Secretary of the Treasury is required to charge the fund as
of June 30 in each year with such amount as may be necessary for
the payment of interest at the rate of 4 per cent per annum accrued
during the year upon the amounts advanced from'the general Treasury
and remaining unpaid, except that if the fund is insufficient to meet
the payment of interest the Secretary of the Treasury may, in his
discretion, defer any part of such payment, and the amount so deferred shall bear interest at the rate of 4 per cent per annum untU
paid. Under an opinion of the Attorney General of the United
States, dated December 26, 1929, funds advanced from the general
Treasury to the Colorado River dam fund for construction costs of
the Ail-American canal are not subject to the interest charge. To
date, however, no funds have been advanced to the fund on account
of the All-American canal project.
Up to June 30, 1932, Congress appropriated the sum of $31,660,000
for the purpose of carrying out the provisions of t h e act. Up to
June 30, 1931, the Secretary advanced from the Treasury to the
Colorado River dam fund the sum of $1,745,866.46, a year's interest
on which, amounting to $69,834.66, was chargeable to the ColoradoRiver dam fund as of June 30, 1932. Additional advances were made
from time to time during the fiscal year 1932 in the sum of $17,018,608.34, the interest on which, amounting to $285,195.26, was alsochargeable to the Colorado River dam fund as of June 30, 1932.
The total amount of interest chargeable to the Colorado River dam
fund as of June 30, 1932, was, therefore, $355,029.92, which was deferred for one year by the Secretary of the Treasury under section
2 (d) of the act of December 21, 1928, upon certification by the
Secretary of the Interior that the moneys in the fund were insufficientto pay the interest due on June 30, 1932, and to carry on the work.
The status of the fund as of June 30, 1932, was as follows:
Colorado River dam fund, June 30, 1982

Credits:
Advances from the General Fund
Receipts

$18,764,474.80'
18,868.02

Total credits
Charges:
Advances to disbursing officers
Less repayments

18,783,342.82:
_

$18,737,935.31
17,043.39

Transferred to Department of Commerce for direct expenditure under act of Apr, 18,
1930
Interest due June 30, 1931, and covered into Treasury as miscellaneous receipts i
Total charges
Balance on books of Division of Bookkeeping and Warrants, June 30, 1932

18,720,891.9225,00000*
25,631,5818,771, 523,50'
11,819.32
18, 783, 342.82"

1 Interest due June 30, 1932, $355,029.92, deferred for 1 year under section 2 (d) of the act of December
21, 1928.

Advances to reclamation fund.—Under the act of Congress, approved
Juhe 17, 1902 (32 Stat. 388), there was established in the Treasury

120

REPORT OF THE SECRETARY OF THE TREASURY"

a special fund known as the reclamation fund, representing receipts
from the sale of public lands in certain States and Territories to be
used for the construction of irrigation works for the reclamation of
arid lands. Pursuant to the act of June 25, 1910 (36 Stat. 835), the
Secretary of the Treasury advanced to the reclamation fund from the
General Fund of the Treasury $20,000,000. The act of elune 12,1917
(40 Stat. 149), provides for the reimbursement of the money so advanced through the transfer of $1,000,000 annually from the reclamation fund to the General Fund of the Treasury beginning July 1, 1920,
and continuing until full reimbursement is made. Beginning with
the fiscal year 1921 there has been returned to the General Fund
$1,000,000 annually, making a total of $10,000,000 for the 10 years
ended with the fiscal year 1930. The deficiency act of February 6,
1931, provided for a suspension for a period of two years of the annual
payments required to be made from the reclamation fund to the
General Fund of the Treasury and the act of April 1, 1932, provided
a further extension of one year.
The deficiency act of March 4, 1931, authorized an additional
advance to the reclamation fund from the General Fund of $5,000,000,
all of which was advanced between April 28, 1931, and November
30, 1931.
The following statement shows the status of the account as of June
30, 1932.
Charges:
Advances from the General F u n d Under act of June 25, 1910
Under act of Mar. 4,1931

$20,000,000
6,000,000
25,000,000

Credits:
Repayment of advances to June 30,19301
Unreimbursed balance

10,000,000
15,000,000
26,000,000

1 Installments for 1931 and 1932 suspended under act of Feb. 6,1931, as amended by the act of Apr. 1,1932*

Division of Bookkeeping and Warrants
Duties.—The Division of Bookkeeping and Warrants, in the name
of the Secretary of the Treasury, issues all warrants on the Treasurer
of the United States, and under section 10 of the act of July 31, 1894
(U. S. Code, title 5, sec. 255), keeps the official accounts relating to
the receipt, appropriation, and expenditure of the public money,
covering all departments and establishments of the Government.
Other duties of the division include the preparation of the annual
digest of appropriations and the combined statement of receipts and
expenditures, and the handling of duplicate checks, outstanding
hability claims, budget matters, special deposit accounts, etc. A
detailed description of these duties is shown on pages 121-127 of the
Annual Report of the Secretary of the Treasury for the fiscal year
1930.
A statement of the receipts and expenditures of the Government
for the fiscal year 1932, compiled by this division, is shown as Table 1,
page 341 of this report.
District of Columbia account.—^Under the act of June 29, 1922 (42
Stat. 669), the Treasury is required to keep a special account of

REPORT OF THE SECRETARY OF THE TREASURY

121

receipts and expenditures of the District of Columbia. The transactions in this account since June 30, 1924, on the basis of warrants
issued, were as follows:
Receipts and expenditures of the District of Columbia account for the fiscal years
1925 to 1932
Fiscal year

1925.
1926...
1927
1928.
1929.
1930
1931
1932

Revenues

....

$22, 317, 529. 59
26,847, 837, 91
30, 511, 554, 74
32,777, 616,00
33, 530, 263,17
35,194,596.45
36,456,525.45
35,843,078.09

Contribution of
United States

$9,000,000.00
9,000,000.00
9,000,000.00
9,000,000.00
9,000,000.00
9,000,000.00
9, 500,000.00
9, 500, 000,00

Expenditures

$32, 674,993,85
34, 372,169.10
37, 766,415,31
40,176,205.14
40,906,206.43
44,347,809. 22
49,520,101.81
48,183,608.92

Balance to
credit of District
of Columbia
account
1 $9,402, 535.84
10,878, 204. 65
12, 623,344.08
14, 224,754,94
15,848,811,68
16, 695,598,91
12,132,022. 55
9,291,491,72

. 1 The balance at close of preceding fiscal year was $10,760,000.10.

Division of Deposits
The Division of Deposits is charged with the administration of
matters pertaining to the designation and supervision of Government
depositaries and the deposit of Government funds in such depositaries.
The Treasury's established policy of maintaining balances with
depositaries in proportion to the Government's requirements was continued during the year, and balances with Federal reserve banks and
general depositaries averaged approximately the same as during the
preceding year. The demand deposits with special depositaries, representing proceeds from the sale of public debt obligations, increased
considerably, due to the larger financing operations required.
Approximately 3,000 changes and adjustments were made within
the depositary system during the year. A total of 192 depositaries,
carrying aggregate Government balances of $26,721,529.56, closed.
Government deposits are secured by collateral, but owing to the
depressed market for bonds and securities the Treasury has not,
in so far as consistent with the protection of its interests, pressed the
sale of securities held as collateral in cases where the immediate sale
would cause a loss to the trust. Notwithstanding this liberal policy,
the accounts of 170 closed depositaries, with Government deposits
amounting to $25,336,617.52, have been liquidated in full. The
remaining 22 cases, involving deposits totaling $1,384,912.04, are in
process of settlement. To date the United States has not sustained
any losses through the failure of depositary banks.
All Government depositaries, with the exception of Federal reserve
banks, are required to pay interest on daily balances at the rate of
one-half of 1 per cent per annum. The interest received upon deposits
with special depositaries during the fiscal year 1932'was $1,662,082.78
and the total received from this source from April 24, 1917, to June
30, 1932, was $88,786,526.69. Interest received from other depositaries during the year was $137,405.24. The total interest received
from this latter source since June 1, 1913, was $20,973,850.30.
The following statement shows the number and classes of depositaries maintained by the Treasury and the Government deposits held
by such depositaries on June 30, 1932.

122

REPORT OF THE SECRETARY OF THE TREASURY

Number of depositaries and amount of Government deposits held on June SO, 1932^..
by class of depositaries
Amount

Depositaries
Federal reserve banks (including branches)
Member bank depositaries:
To credit of Treasurer of the United States..
To credit of other Government officers
Insular depositaries (including Philippine treasury):
To credit of Treasurer of the United States
To credit of other Government officers
Foreign depositaries:
To credit of Treasurer of the United States
To credit of other Government officers
Special depositaries
_..

$3, 758, 367.946,852, 874.12'
17,612, 875.46
1,112, 943.42802, 286,61
61, 646. 25^
723,377.41
405, 648, 239. 95-

Total

436, 572, 610,06>

1 In addition 160 branch banks are carried on the depositary list of the Treasury under the designation
of the parent banks,
2 Includes 1,918 national banks and 1,290 State banks and trust companies, 1,397 of which held deposits;
on June 30, 1932.

The regulations of the Treasury governing special deposits of public
moneys under the act of Congress approved September 24, 1917, as^
amended, issued as Department Circular No. 92, were revised on
December 4, 1931, and January 19, 1932, so as to bring certain of
the collateral security provisions in line with current market values.
The circular was revised and reprinted under date of February 23,.
1932, and appear^ as Exhibit 60, page 319.
Section of Surety Bonds
On June 30, 1932, there were 73 domestic companies holding certificates of authority from the Secretary of the Treasury under the act
of Congress approved August 13, 1894, as amended by the act of
Congress approved March 23, 1910, qualifying them as sole sureties
on recognizances, stipulations, bonds, and undertakings permitted o r
required by the laws of the United States, to be given with one or
more sureties. There were also four domestic companies and six
branches of foreign companies holding certificates of authority authorizing them to act only as reinsurers on bonds in favor of the United
States. Changes in the outstanding certificates of authority during
the period ended August 31, 1932, are indicated in the following table:
. Companies authorized as of June 30,1931
Changes during the year ended June 30,1932:
Certificates terminated—
Companies ceasing business.
Companies voluntarily ceasing business with the United States
Company in process of liquidation
Company's authority revoked (subsequently in liquidation)
Certificates issued
Net reduction in number

,..

Companies authorized as of June 30,1932
Further changes to Aug. 31, 1932: Certificates terminated, companies ceasing business
Companies authorized as of Aug. 31,1932

89>
5
2
1
1

9
3
d"83;
2
i 81

1 On Aug. 31, 1932, 3 companies were in process of merging into a new organization, and another
company was in the process of voluntarily retiring from transacting any further business in favor of the
United States.

In accordance with the practice of the Treasury, a number of
departmental circulars to the heads of departments and independent
establishments of the Government, bond-approving officers, and others

REPORT OF THE SECRETARY OF THE TREASURY

123

•concerned, have been issued during the past year to advise such
officials of the status of the bonds in favor of the United States
•executed by the companies whose certificates of authority were
terminated. These circulars (Nos. 450, 453, 455, 459, 464, 466, and
467) refer respectively to the Federal Surety Co. of Davenport, Iowa;
New York Indemnity Co. of New Orleans, La., and Northwestern
Casualty and Surety Co. of Milwaukee, Wis.; Franklin Surety Co. of
New York, N. Y.; Southern Surety Co. of New York, New York
'City; New Jersey Fidehty and Plate Glass Insurance Co. of Newark, N. J.; Commonwealth Casualty Co. and the ' ' o l d " Independence
Indemnity Co. of Philadelphia, Pa.; and Central West Casualty Co.
of Detroit, Mich.
DIVISION OF APPOINTMENTS

Number of employees
The total number of employees in the Treasury Department in
Washington on June 30, 1932, was 130 more than on June 30, 1931.
T h e principal increase in the regular force occurred in the Office of the
Supervising Architect, due to the enlarged building program authorized by Congress. Moreover, employees of the Insolvent National
Bank Division, whose salaries are paid by the banks, were this year
included in the personnel reported for the Office of the ComptroUer
of the Currency. The principal decreases in the departmental service
were in the Bureau of Internal Revenue and the Bureau of Engraving
and Printing.
The total number of employees in the Treasury Department outside pf Washington on June 30, 1932, was 897 more than on June 30,
1931. The principal increases in the regular field force were in the
'Custodian service and the engineering force of the Office of the Supervising Architect, made necessary by the increase in the number of
public buildings; in the Public Health field service, due to the drought
rsanitation activities in certain parts of the country; and in the Coast
Guard field service. The principal decreases in the field services were
in the Customs and Internal Revenue services.
The number of employees in the departmental service of the Treasnry, classified according to bureaus and offices at the end of each
month from June 30, 1931, to June 30, 1932, is shown in Table 52,
page 447 of this report. A comparison of the number of employees in
the departmental and field services of the Treasury on June 30, 1931,
•and June 30, 1932, is contained in Table 53, page 448.
Retirement of employees
From September 1, 1931, to August 31, 1932, 259 persons were
retired from the departmental service of the Treasury Department,
19 of whom were retired by their own option. During the same
period 608 persons were retired from the field services, 14 of whom
were retired by their own option. Of the total number retired during
this period, 82 employees in the Treasury in Washington and 352 in
its field service were retired on June 30, 1932, in accordance with the
provisions of section 204 of the economy act of June 30, 1932. At the
present time seven persons above the retirement age are retained in
the departmental service of the Treasury and four in the field service.

124

REPORT OF THE SECRETARY OF THE TREASURY

under authority of the President in accordance with the provisions of
section 204 of the economy act.
Table .54, page 448, shows the number of persons retired and the
number retained in the departmental and field services of the Treasury under the provisions of the retirement act, and under section 204
of the economy act of June 30, 1932.
BUDGET AND IMPROVEMENT COMMITTEE

The Budget and Improvement Committee is responsible, under
the direction of the Under Secretary 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. In 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. It makes inquiries along
various hnes with the purpose of improving methods and procedure,
and from time to time, under special instructions, makes a detaUed
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.
Estimates submitted by heads of bureaus and offices for the fiscal
year 1934 (exclusive of interest on and retirements of the public debt
payable from ordinary receipts and the amounts for the support of
the Bureau of the Budget) were given an exhaustive examination by
the budget officer, with the assistance of the committee. On the
basis of his recommendations the Secretary of the Treasury approved
deductions aggregating $28,216,451, and submitted, with his approval, the balance of the estimates to the director of the Bureau of
the Budget. The following statement shows the amounts appropriated or estimated for expenditure from permanent and indefinite
appropriations and special funds for the fiscal year 1933; the amounts
of the estimates for 1934 submitted, by heads of bureaus and offices,
disapproved by the Secretary, and approved by the Secretary; and
the increase or decrease as compared with the appropriations or
estiniated expenditures for 1933:
Appropriations for 1933 and estimates for 1934
Appropriations or estimated expenditures
from permanent and
indefinite appropriations
and special
funds, 1933
Ordinary annual appropriations... $142,118,168
Permanent and indefinite appropriations and special funds
24,719,439
Refunding taxes illegally collected .
Public buildings construction, act
May 26,1926, as amended-_
108,000,000
Total

274,837,697

Estimates for 1934

Increase or .
decrease in
approved
estimates
for 1934 as
compared
with appropriations
and estimates for
1933

Submitted
by bureaus
and offices

Disapproved by
Secretary

Approved
by Secretary

$158,223,606

$7,616,451

$160,607,165

+$8,488,997

20,272,367
78,000,000
76,000,000

600,000
10,000,000

19,672,367
68,000,000

-6,047,072
+68,000,000

10,000,000

66,000,000

-43,000,000

331,495,973

28,216,451

303,279,622

+28,441,925

REPORT OF THE SECRETARY OF THE TREASURY

125

During the year supplemental and deficiency estimates were submitted aggregating $94,138,335.84. After examination by the budget
officer, with the assistance of the committee, these estimates were
reduced to $42,643,333.25.
General reserves amounting to $1,803,747 were set aside from ordinary annual appropriations for the fiscal year 1932 to meet extraordinary or emergency demands that might arise. Reserves amount-,
ing to $138,740 were released, leaving $1,665,007 in reserve at the
end of the year, which represents a part of the savings from annual
appropriations.
For the fiscal year 1933, heads of bureaus and offices recommended
reserves amounting to $788,770. After examination by the committee
$155,200 was added, making a total for the year of $943,970.
The Budget and Improvement Committee was appointed July 8,
1922. ^ It has examined estimates for the budgets of 1924 to 1934,
inclusive, as well as supplemental and deficiency estimates. As a
result of its examinations and on its recommendations items aggregating $193,078,589 have been disapproved and deducted from said
estimates before they were transmitted to the Bureau of the Budget.
OFFICE OF CHIEF CLERK AND SUPERINTENDENT

Public buildings
The Chief Clerk has custody of sites for proposed public buUdings
in Washington, D . C , and is superintendent of aU Treasury buUdings
in the District of Columbia, except the Bureau of Engraving and
Printing. Under his direction the razing of structures necessary to
continue the pubhc buUding program in the so-called triangle was
completed; and in the area between Tenth and Third Streets on
Pennsylvania Avenue, the only structures left standing were two
buUdings on the south side of the Avenue, which are stiU occupied,
and an old warehouse on the east side of Four and one-half Street.
Satisfactory progress has been made in clearing properties in southwest
Washington for Department of Agriculture buildings and the central
heating plant.
Work on the proposed plaza bounded by Thirteenth and Fourteenth
Streets and C and D Streets, having been held up temporarUy, about
three-fourths of the area was rented for $1,310 per month for automobile parking.
During the year the office handled 215 agreements or contracts
for rental of properties controlled by the Treasury with total receipts
aggregating $103,259.22.
Housing of Treasury activities
The work in the Office of the Supervising Architect and in the
Insolvent National Bank Division, Office of the Comptroller of the
Currency, having materiaUy increased, it was^ necessary to place
additional employees in rented space in the Washington BuUding.
In preparation for the construction of a vault in the north court
of the Treasury Building the section of the Supervising Architect's
Office occupying this space was moved into quarters previously
occupied by a section of the Division of Loans and Currency, the
latter having been moved to the Liberty Loan Building.

126

REPORT OF THE SECRETARY OF THE TREASURY
Miscellaneous

In addition to work generally performed by the forces responsible
for the maintenance and operation of the Treasury Building and its
several annexes, several awards were made during the past year for
performing miscellaneous work of a major character.
COAST GUARD

The following is a summary of the principal operations of the
Coast Guard for the fiscal year 1932, in which comparisons with
the preceding year 1931 are indicated:
1931

Lives saved or persons rescued from peril
_.
1
5 627
Persons on board vessels assisted
.
25 898
Persons in distress cared for.
561
Vessels boarded and papers examined
.
88,357
Vessels seized or reported for violations of law
2,929
Fines and penalties incurred by vessels reported
$369, 341
Regattas and marine parades patrolled
114
Instances of lives saved and vessels assisted
5,536
Instances of miscellaneous assistance
6, 561
Derelicts and other obstructions to navigation removed or
destroyed...
370
Value of derelicts recovered
$8 020
$47,959 465
Value of vessels assisted (including cargoes)
Persons examined for certificates as lifeboat men
6,695

Increase (+)
or
decrease (—)

1932

5 214
30 847

659
102 268
2 358
$300, 756

123
6 393
7 346

371
$45 780
$39,177 247
6,120

-413
+4,949
+98
+13,911
-571
-$68,585

+9
+857
+785
+1
+$37,760
-$8,782, 218
+525

The foregoing statement is indicative of the continued efficiency
and effectiveness of operations in the various duties and responsibihties with which the service is charged. The majority of the items
enumerated, it will be noted, represent increases over the preceding
fiscal year.
Service discipline continued to be satisfactory, and there was gratifying evidence that a high standard of morale prevailed among the
forces. The percentage of reenlistments during the year was 97.7.
Average monthly losses, other than by expiration of enlistment,
decreased from 378 in 1926 to 73 in 1932. There was also a very
material reduction in the number of desertions.
The law enforcement activities having to do with the prevention
of smugghng of liquor into the United States from the sea were continued along with the other duties of the service, including the saving of life and property.
Protection to navigation
International ice observation and ice patrol.—In March, 1932, three
observation cruises were made in the ice regions near the Grand Banks
to ascertain the ice conditions. The patrol boat engaged in these
cruises was greatly hindered in the work by severe and storrny
weather. On March 28, 25 bergs were reported just east of the Grand
Banks, and it was deemed advisable to begin the regular annual
patrol.
I t was estimated that 528 bergs drifted south of Newfoundland
from January 1 to July 2, 1932. In April, the ice conditions were
by far heavier than at any other time during the season. Approximately 321 bergs were south of latitude 48° N. during the month.

REPORT OF THE SECRETARY OF THE TREASURY

127

However, the Labrador current was particularly weak south of latitude 45° at this time and the United States-European lanes were not
menaced by ice. After June 7, no bergs were sighted or reported south
of latitude 47° N.
D uring the season three oceanograpffic cruises were made, and from
the data collected three current charts were drawn of the ice regions.
These charts were turned over to the patrol cutters for use in determining the probable set and drift of bergs. The actual observed
drift followed closely the computed currents.
As in former years the surface-water temperature reports were collected from all vessels in crossing near the ice regions. These temperatures were used in constructing isotherm charts.
No disasters due to collision of ships with ice occurred. The
patrol was discontinued on July 2, 1932.
Winter patrol.—On November 18, 1931, the President, on the recommendation of the Secretary of the Treasury, designated 12 cutters
to undertake special cruising duty along the coast for the winter season of severe weather. An additional cutter served as reserve. I n
the prosecution of their duties these cutters cruised 80,000 miles, and
afforded assistance to 29 vessels, whose values, including their cargoes,
amounted to nearly $2,500,000. There were 374 persons on board the
vessels assisted. The vessels boarded in the interests of the enforcement of United States laws numbered 438.
Removal of derelicts,—During the year units of the service removed
371 derelicts and other floating dangers and obstructions to navigation.
Anchorage and movements qf vessels.—The enforcement of the rules
and regulations governing the anchorage and movements of vessels at
ports and other places where Federal regulations are in effect was continued during the year by utUizing, as formerly. Coast Guard personnel and equipment. The general plan and arrangement of this
activity remained substantially unchanged. Coast Guard officers continued to serve as captains of the port to enforce the regulations at a
number of places throughout the country.
Regattas.—In the course of the year the service units patrolled and
supervised 123 regattas, marine parades, and boat races, and, informally, a number of other hke events of local interest.
Flood relief service
In January, 1932, the Coast Guard gave assistance in the relief of
flood conditions which seriously menaced the public welfare. On this
occasion Greenwood, Miss., and other points on tributaries of the
Mississippi River were in the hold of a devastating flood. Cooperating with the Red Cross, Federal and State engineer officers, and citizens,
it took up its task of transporting refugees to safety, delivering provisions for the Red Cross, carrying the sick from imperUed homes, taking
livestock to the highlands, transporting Red Cross officials and Federal
and State engineer officers, and convicts (more than a thousand in
number), and distributing tons of sacks along the river.
The service boats cruised approximately 4,200 miles, and were
under way 586 hours, in the performance of the work. Radio communication was established by service forces between operating units,
and this important agency proved to be of great value. The duration
of service activities in connection with this work was from January 18
to February 13, 1932.
141810—32

128

REPORT OF THE SECRETARY OF THE TREASURY
Enforcement of customs and other laws

The enforcement by the Coast Guard of the customs laws of the
United States and the laws relating to navigation and motor boats'
was attended during the year with satisfactory results. As is customary, harbor cutters, or launches, were stationed at the principal
ports to assist the customs authorities in boarchng incoming vessels
and in the conduct of other customs duties. Assistance was also
rendered to other branches of the public service in the enforcement of
the Federal laws.
Liguor smuggling.—The operations of the service in its law enforcement work for the prevention of smuggling of liquor into the United
States from the sea proceeded satisfactorUy throughout the year.
There was, undoubtedly, some falling off in the volume of liquor
brought to the Umted States coasts for attempted smuggling, but this
reduction in volume was comparatively slight. The matter continued
to be one demanding the utmost vigilance on the part of the personnel in practically every quarter of the service. The Coast Guard
worked to the extent of its resources to combat this illegal activity.
Patrol in northern waters.—The patrol of the waters of the North
Paciflc Ocean, Bering Sea, and southeastern Alaska was conducted
during the season of 1931 by six Coast Guard cutters and one patrol
boat. The patrol, was in progress at the close of the fiscal year 1931.
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 States, Great Britain, Russia, and Japan, and the
laws and regulations for the protection of the fur seal and sea otter
and of the game, the fisheries, and fur-bearing animals of Alaska.
In the prosecution of their work, the vessels cruised more than 70,000
miles, assisted 6 vessels in distress, boarded 46 vessels, afforded medical and dental aid to 565 persons, and transported 712 persons.
The patrol for the season of 1932, in progress at the close of the
fiscal year 1932, is being carried on by six cutters and a patrol boat.
Northern Pacific halibut fishery.—The duties of the Coast Guard in
connection with the Northern Pacific halibut fishery were performed
during the year by a single cutter, which made two cruises, one covering the period October 17 to November 7, 1931, and one the period
March 1 to 24,1932. This annual activity is conducted for the Bureau
of Fisheries, Department of Commerce.
Communications
The communication service is concerned with the provision, construction, operation, and maintenance of all communication facilities
of the Coast Guard, the design and development of materials, the
handling of secret and confidential publications, and the preparation
of codes and ciphers. The methods of communication employed in
the Coast Guard are the telegraph, telephone, radio in various applications, and visual signals.
Telephone and telegraph lines and cables.—The Coast Guard owns
and operates a coastal communication system consisting of a telephone
and telegraph line system of approximately 1,447 miles of pole line,
2,534 miles of open wire aerial circuits,, 35 miles of aerial and underground cables, and 573 miles of submarine cable, all divided into 188

REPORT OF THE SECRETARY OF THE TREASURY

129

separate and distinct telephone and telegraph lines. Through these
facUities telephone and telegraph service is furnished the Coast Guard
(life-saving) stations and other service units, and a large number of
lighthouses and other Government stations. The greater part of these
lines is connected with the central offices of commercial telephone
systems, thus affordmg local and long distance telephone and telegraph
service for all units connected.
Routine overhauling and repairing of lines, and certain major projects involving the replacement of submarine cable at various localities,
and rebuilding, were undertaken during the year. The scientific
study and investigation of telephone transmission problems were continued with considerable progress.
Radio.—It is necessary that the Coast Guard keep abreast of the
contuiued change and advancement in the field of radio in order to
avoid interfering or becoming involved in interference with commercial stations or other Government radio stations, all of which are keeping abreast of radio developments.
In the course of the year improvements were made on board
ships and at shore stations in order to bring about a higher state of
efficiency in handling communications by radio. The completion of
main traffic stations at Grays Harbor, Wash., and Winthrop, Mass.,
greatly increased the efficiency of communications in the divisions
with which they are connected. Gasoline engine-driven generator
sets as auxiliary and emergent sources of power were installed on all
ships and stations, as it was found to be expedient to so replace storage
batteries previously used.
Radio equipment is being developed to meet the special needs of
aircraft operation. Considerable progress was made in the matter of the elimination of electrical induction interference to radio reception on the planes, and in the development of radio direction finders.
An officer of the Coast Guard continued to represent the Treasury
Department on the Interdepartmental Radio Advisory Committee
This officer also represented the Treasury Department on the Interdepartmental Committee in preparation for the International Radio
Conference in Madrid in 1932.
Eguipment
Floating eguipment.—On June 30, 1932, there were in the Coast
Guard in commission 36 cruising cutters, 15 Coast Guard destroyers,
34 harbor craft, 5 special craft, seven 165-foot patrol boats, thirtythree 125-foot patrol boats, thirteen 100-foot patrol boats, six 78-foot
patrol boats, one hundred eighty-one 75-foot patrol boats, 34 miscellaneous patrol boats, SS cabin picket boats, 61 open picket boats, and
17 other (Class A) picket boats. This floating equipment does not
include, the primarUy life-saving boat equipment attached to Coast
Guard vessels and stations.
The last cutter of the 10 authorized by the act of June 10, 1926,
was completed and delivered to the Government on March 9, 1932.
The design plans and specifications for the cutter, authorized by
the act-of April 18, 1930, for service on Lake Michigan, were completed, and bids for-the construction work were opened October 30,
1931, and contract was awarded. Construction progress at the close
of the fiscal year was about 81 per cent of completion.

130

REPORT OF THE SECRETARY OF THE TREASURY

Seven 165-foot patrol boats in a construction program authorized
by the act of May 15, 1930, have been completed and placed in
commission.
On March 15, 1932, contract was entered into for the construction
of two additional 165-foot patrol boats in a construction program
authorized by the act of February 23, 1931. These boats are to be
simUar to the seven boats mentioned above. Construction progress
at the end of the year indicated 12 per cent of completion.
During the year two destroyers, formerly obtained from the Navy,
were decommissioned and returned to the custody of the Navy, and
another Navy destroyer was transferred to the Coast Guard, in pursuance of the act of May 15, 1930.
One cutter which had been placed out of commission in December,
1930, was sold, and two patrol boats were disposed of. Eight patrol
boats and two harbor tugs were added to the fieet of Coast Guard
vessels.
In addition to overhauling, reconditioning, and repairing certain
vessels at the Coast Guard depot, routine repairs to vessels of the
service were made during the year under contract with private concerns and at various navy yards.
A program for building six 78-foot special inshore patrol boats which
was started last year was completed, and the boats are in service.
Twenty-one 38-foot cabin picket boats were also completed and placed
in service.
Aviation.—During the year. Coast Guard airplanes cruised 93,750
miles and searched over an area of 2,344,250 square miles. They
were in the air 1,250 hours and more than 2,397 vessels were identified.
Coast Guard seaplanes were called into use to locate missing or disabled boats and derelicts and other obstructions to navigation, to
convey medical assistance to vessels offshore, and to remove from
vessels to the shore sick and injured persons.
The aircraft reporting system established by the Coast Guard along
the Atlantic seaboard is proving to be of inestimable value. No plane
using the system was lost during the year. More than 14,000 reports
of passing planes were made.
T h e construction of five new flying-boat seaplanes, mentioned in
last year's report, is about 80 per cent completed. They are of all
metal construction, powered with two 450-horsepower engines. I t
is expected that the first of these planes will be in commission shortly
after the beginning of the ensuing fiscal year, and that the others
will follow, one every 30 days.
Three amphibian planes, all metal construction and with wooden
wings, were purchased. They are each powered with two 300horsepower engines.
All Coast Guard aircraft are equipped with radio transmitting and
receiving sets, radio direction finders and the most modern instruments for navigation and fiying under adverse weather conditions.
T h e Coast Guard has in commission an air station at Gloucester,
Mass., and one at Cape May, N. J. During the year the service
leased a site at Dinner Key, Fla., for the establishment of another
air station. Contract was entered into for the building of an airplane
hangar. It is expected that this station will be in commission early
in the coming fiscal year.

REPORT OF THE SECRETARY OF THE TREASURY

131

Ordnance.—All except two destroyers held short-range, day-spotting
and long-range battle practice in southern waters, and the personnel
of 13 of these vessels fired smaU-arms target practice on the Egmont
Key, Fla., rifle range. Seven cruising cutters have already fired shortrange battle practice and an extension of time has been granted 17
more, so that by September 30 nearly all cutters for which this training
is prescribed will hav^e completed it. By that time all section bases
and many of the smaller cutters will have completed target practice
instruction. A considerable number of cutters, bases, and small
boats have held small-arms target practice and it is expected that
many more units will have completed this training by the end of
September. Four districts have already held small-arms target
practice and two more have submitted plans. That small-arms
efficiency has increased is evidenced.by the fact that the Coast Guard
stood second in the National Match and won the Scott and DuPonfe
trophies.
New target ranges were constructed at Base 15, Biloxi, Miss.^
and at Base 18, Woods Hole, Mass. In addition to the establishment
of these new ranges, the firing lines of the Cape May and Egmont
Key ranges were improved, new target carriers provided at Cape
May, N. J., and improvements made in the butts at Egmont Key.
A man from each station in the second district was given special
instruction in the upkeep and methods of firing small arms, so that
he might act as coach and instructor at his station.
Several hundred rifles, surveyed as of no value, were completely
overhauled and rebarrelled at the Springfield Armory, maldng them
equivalent to new rifles and effecting a considerable saving. Orders
were placed for new remodeled gallery rifles, 1922, M - 2 , which will
bring equipment of this kind up to date.
A continuing program of magazine overhaul and reconstruction
was initiated, to be carried out during the regular overhaul periods
until the ammunition stowage on all vessels conforms to standard.
Flare-signal equipment was purchased for all floating units not
previously so equipped. This equipment is proving of much value.
Efforts were made to improve line-throwing equipment. Experiments were conducted with the 6-pounder line-throwing gun and
with the shoulder line-throwing gun, to increase the range.
Demohtion blocks were issued for test to determine the advisabihty
of using the half-pound, compressed T N T blocks in wrecldng operations instead of the regular Navy wrecking mines. Very favorable
reports are being received. Indications are that the use of the
demolition blocks will greatly facilitate wrecking operations and make
the work much more effective, at a reduced cost.
The continued courtesy and cooperation of the Army, Navy, and
Marine Corps are gratefully acknowledged. Without the generous
assistance received from these services, the accomplishments of th©
year would not have been possible.
The Academy, stations, bases, repair depot, etc.
Coast Guard Academy.—The course of instruction at the CoasI
Guard Academy at New London, Conn., was lengthened to four
years. During the fiscal year, 66 cadets were appointed to th©

132

REPORT OF THE SECRETARY OF THE TREASURY

academy, 40 cadets resigned, and 28 cadets completed the course of
instruction and were graduated from the academy and commissioned
as ensigns on May 16, 1932. There were 84 cadets under instruction
at the end of the fiscal year.
Entrance examinations of candidates for cadets were held beginning
June 15, 1932.
The practice cruise for cadets in 1931 was carried on by two Coast
Guard cutters, which constituted the practice squadron. The cruise
began on June 18, 1931, and included calls at a number of foreign
ports. The cruise was concluded on August 28, 1931.
Two cutters composed a special practice squadron for the 1932
cruise, and left New London, Conn., on May 25, 1932. The itinerary
includes calls at a number of ports. The cruise was in progress at the
close of the fiscal year, and it is expected it will terminate at New
London, Conn., near the end of August. The practice cutters stopped
at Quantico, Va., from May 27 to June 10, where the cadets and
ships' complements engaged in small-arms target practice at the
Marine Corps rifle range.
Construction work progressed satisfactorily on the buildings for
the new Coast Guard Academy now being erected at New London,
Conn., under the direction of the Office of the Supervising Architect,
Treasury Department. I t is expected that the buildings will be ready
for occupancy when classes start in the fall of 1932.
Stations and bases.—On June 30, 1932, there were 254 Coast Guard
(life-saving) stations in an .active status. There were 1 floating section base, 18 shore section bases, and 1 subbase, established for lawenforcement purposes. These include the shore section base established at Galveston, Tex. The service craft attached to these bases
operate primarily against smuggling activities.
Rebuilding, repairs, alterations, additions, and improvements
were accomplished during the year at many Coast Guard (life-saving)
stations and other units. Contracts were awarded, or work was begun, during the year for major work of rebuilding, alterations, and
improvements at 15 Coast Guard (life-saving) stations, the depot,
academy, 3 section bases, 1 radio station, and in 1 Coast Guard
division.
The Coast Guard (life-saving) station authorized by the act of
February 8, 1929, to be established at or in the vicinity of the QuUlayute River, Wash., and contract for the construction of which was
awarded on April 6, 1931, was completed during the year, and placed
in commission March 11, 1932. I t was named Quillayute River
Station.
The appropriation made available by act of February 23, 1931, for
constructing and equipping the Coast Guard (life-saving) station
authorized by act of March 3, 1891, to be established at or near Port
Orford, Oreg., expired before the service was able to complete negotiations for the site and enter into contract for the construction of this
station. The second deficiency act, fiscal year 1932, approved July
1, 1932, made the appropriation available for 1933.
Contract was awarded during the year for the construction of the
Coast Guard (life-saving) station authorized by act of February 26,
1930, to be established at or in the vicinity of Grand Island, Mich.

REPORT OF THE SECRETARY OF THE TREASURY

133

[_ Repair depot.—A number of Coast Guard vessels were overhauled
at the Coast Guard repair depot, Curtis Bay, Md., during the year,
and several patrol boats were overhauled and reconditioned. The
boat-building shop at the depot constructed 87 standard boats for
assignment to various units of the service as needed.
Personnel
On June 30, 1932, there were on the active list of the Coast Guard
433 regular commissioned officers, 10 temporary commissioned officers,
84 cadets, 85 chief warrant officers, 507 regular warrant officers, 265
temporary warrant officers, and 11,034 enlisted men, and 421 civilian
employees in the field, of whom 375 were per diem civilian employees
at the Coast Guard depot, Curtis Bay, Md.
Recruiting.—On July 1, 1931, the beginning of the fiscal year, the
recruiting service of the Coast Guard comprised 10 main stations and
18 substations located at various places in the country. There were
no changes in the stations during the year.
In the course of the year there were 18,289 applicants for enlistment, of which number 1,615 were enlisted, 1,157 rejected for physical
disabUity, and 15,517 rejected for other disabling causes.
Training.—All training of enlisted personnel was coordinated and
greatly extended during the year. The school for radiomen at New
London, Conn., and the gas-engine school at Norfolk, Va., were
continued, the course of instruction at the latter place being extended
to include Diesel engines. A gas-engine school also was established
at Buffalo, N. Y. The Navy cooperated in the training of personnel
and many Coast Guard men attended Navy schools during the year.
This assistance on the part of the Navy is gratefully acknowledged.
During the year, 198 men were graduated from the various schools
and 53 were in attendance at the end of the year.
The work of the Coast Guard Institute at New London, Conn.,
was greatly increased by reason of a change in the regulations which
made necessary the completion of certain rating courses before
promotion. For this reason many men made application for courses
wffich would fit them for advancement in rating. In the month
of June, 222 students were enrolled and 3,347 lesson papers were
received for correction. During the fiscal year 168 International
Correspondence School diplomas and 477 Institute Educational
certificates were awarded, indicating that a lively interest in educational work is being taken by service personnel. Tffis is especially
emphasized by the fact that at the close of the year there was an
enrollment of 2,978 men, an increase of 1,545 over last year's enrollment.
A receiving unit was maintained at New London, Conn., to wffich
were sent all newly enlisted men. Here they received traimng for
approximately three months before being sent to duty at various
units.
Welfare.—Fully appreciating in what a great measure the efficiency
of the service depends upon the morale of its personnel, the Coast
Guard uses its best endeavor to so expend the recreation and welfare
funds as to bring to the enlisted men every proper avaUable means to
insure their comfort, contentment, and health, and to provide for

134

REPORT OF THE SECRETARY OF THE TREASURY

them wholesome recreation and entertainment. Recreational material such as sporting equipment, reading matter, radio receiving sets^
and other equipment, have been furnished during the year. Lesson
study pampffiets, technical books, and other educational materials
also were provided, distribution being made through the Coast Guard
Institute at New London, Conn.
Sound-motion-picture equipment has been furnished and put into
use, so that now certain Coast Guard units are taking advantage of
the opportunity to use motion-picture exchange service maintained
by the Navy Department. The assistance of the Bureau of Navigation
in this and other matters is greatly appreciated.
Awards of Ufe-saving medals
The Secretary of the Treasury, under the provisions of law, awarded
during the year 5 gold and 35 silver life-saving medals of honor, and
1 silver second service bar, in recognition of bravery exhibited in the
rescue or attempted rescue of persons upon an American vessel or
from drowmng in waters over which the Umted States has jurisdiction.
COMPTROLLER OF THE CURRENCY

Changes in the condition of national banks
Continued contraction in the volume of general business activity
during the third year of the depression was reflected in marked
liquidation of bank credit. Total loans and investments of national
banks, which aggregated about $20,860,000,000 on June 30, 1931,
declined to less than $17,500,000,000 at the end of the fiscal year 1932,
a reduction of nearly $3,400,000,000. The decline was particularly
rapid following the period of critical monetary and financial disturb^
ance abroad during the summer and autumn of 1931. ^Vhereas
national bank loans and investments showed a decline of about
$700,000,000 between the end of June and the end of September, 1931,
there was a further decline of nearly $2,700,000,000 during the subsequent nine months. Decline in loans and investments was accompanied by a corresponding reduction in the volume of deposits,
aggregate demand and time deposits of national banks declining from
$18,685,000,000 on June 30, 1931, to about $15,200,000,000 at the end
of the fiscal year 1932, a reduction of nearly $3,500,000,000.
The resources and liabilities of national banks on the date of each
report from June 30, 1931, to June 30, 1932, are shown in the following
table:

REPORT OP THE SECRETARY OF THE TREASURY

135

Abstract of reports of condition of national hanks at the date of each report from
June 30, 1931, to June SO, 1932
[In thousands of dollars]
June 30,
1931
Number of banks

Dec. 31,
1931

Sept. 29,
1931

June 30,
1932

6,805

6,658

6,373

6,160

Loans and discounts (includingrediscounts)!
13,177,485
Overdrafts
j
7,790
United States Government securities owned
3, 256, 268
Other bonds, stocks, securities, etc., owned
4, 418, 569
Customers' liability account of acceptances.
434, 717
Banking house, furniture and
fixtures
_.
795, 866
Other real estate owned
125, 681
Reserve with Federal reserve banks
1, 418, 096
Cash in vault
"...
368, 589
Due from banks.
3, 146, 951
Outside checks and other cash items. _
61, 559
Redemption fund and due from United States Treasurer
32, 165
Acceptances of other banks and bills of exchange or
drafts sold with indorsement
168,137
Securities borrowed
11, 986
Other resources. _
218, 839

12, 479, 935
7,596
3, 289, 267
4,380,016
344, 459

11, 921, 389
5,439
3,176, 475
4, 024, 950
389, 399
770, 454
132, 415
1,137, 747
379, 900
2, 293, 328
88, 127

10, 281, 676
4,701
3, 352, 666
3,843, 986
262, 943
760, 057
143,585
1,150, 576
338,404
1, 956, 154
40,728

31, 688

31, 536

32,711

98, 601
9, 534
194, 603

106, 263
195,861

7,182
7,951
184, 392

25, 746, 064

24, 662, 286

22, 367, 711

1, 656, 374
1, 470 291
456, 474
115, 942

1, 621, 449
1, 381, 612
351, 597
171,109

1, 568, 983
1, 259.425
302, 521
148, 919

22,198, UO

82, 976
631,569
2, 527, 514
9, 393, 194
8,160, 285
308, 391
20,379, 384

52, 604
627, 490
2, 301, 018
9, 071, 452
7, 610, 436
261, 441
19,2U, S47

49, 439
652, 168
2, 041, 333
7, 940, 653
7, 265, 640
213, 287
17, J^60,915

10, 266
153, 533

17, 762
324,198

51,126
555, 365

39, 535
506, 890

168,137
442, 235

98, 601
354,464

106,263
397, 600

7,182
279, 220

5,874
11, 986
194, 512

6,257
9,534
143, 248

5,528
9,003
87, 193

3,098
7,951
81, 467

25, 746, 064

24, 662, 286

22, 367, 711

RESOURCES

Total

790, 324

124, 092
1, 365, 334
389, 741
2, 207, 630
33, 344

9, 003

LIABILITIES

Capital stock paid in__
1, 687, 663
1, 493, 876
Surplus
443, 592
Undivided profits, net
130, 599
Reserves for dividends, contingencies, e t c . .
..
Reserves for interest, taxes, and other expenses accrued
62,881
and unpaid
639, 304
National-bank notes outstanding
3, 277, 539
Due to banks 2
10, 105, 885
Demand deposits
8, 579, 590
Time deposits (including postal savings)
235, 226
United States deposits
Total deposits

Agreements to repurchase United States Government
or other securities sold
Bills payable and rediscounts
__.
Acceptances of other banks and bills of exchange or
drafts sold with indorsement
Acceptances executed for customers
Acceptances executed by other banks for account of
reporting banks
Securities borrowed
._
Other liabilities
Total

27, 642, e

1 Includes customers' liability under letters of credit.
2 Includes certified and cashiers' checks, and cash letters of credit and travelers' checks outstanding.

National banks suspended and reopened
The increasing pressure upon the banks as a result of continued
credit liquidation due to the depression, the hoarding of currency,
and the heavy outflow of gold to foreign countries during the greater
part of the fiscal year 1932 resulted in bank failures on an unprecedented scale. This was particularly true during the critical period
in the autumn of 1931 and the opening months of 1932. Constructive measures taken by various Government agencies to meet
this situation and basic improvement in banking and credit conditions were effective in reducing the number of failures in subsequent
months. In the six months from September, 1931, through February,
1932, there were 342 national bank suspensions whereas in the follow-

136

REPORT OF THE SECRETARY OF THE TREASURY

ing six months the number was reduced to less than one-third of this
total. Every effort was made to expedite the liquidatipn and,
wherever possible, the reorgamzation of closed institutions.
Information regarding the number and deposits of national banks
suspended and of national banks reopened is presented in the following
table:
National hank suspensions and national hanks reopened
Banks suspended

Banks reopened ^

Year and month
Number
Fiscal year 1930
Fiscal year 1931
Fiscal year 1932...^...
JulyAugust
September

Deposits

Number

78
229
458

$62,167, 000
231, 515, 000
481, 329, 000

16
29
46
100
35
63

7, 045, 000 N o n e .
31,629,000 N o n e .
79, i'i% 000 N o n e .
11.1, 088, 000
2
2
28, 039, 000
87, 448, 000

Deposits
$1, 208. 000
24, 554, 000
26, 245, 000

1931
:.

October...
November
December.

991. 000
1, 036, 000
589, OOO

1932
January.
February
March
April
May
June
July
August
September

63. 686, 000
17,098,000
4, 484, 000
2, 634, 000
O; 258, 000
42, 474, 000
17, 546, 000
11, 853. 000
2,980,000

3, 293, 000
3, 026, 000
8, 747, OOO
1, 793, 000
3, 879, 000
2, 891, 000
15, 678, 000
4, 398, 000
2,297,000

Summary of changes in membership in the national banking system
From the inauguration of the national banking system in 1863 to
June 30, 1932, charters have been issued to 13,623 national banking
associations, of which 6,205 are in existence. By reason of liquidations, consolidations, and failures, 7,418 associations have been
terminated.
The authorized capital of the banks in existence on June 30, 1932,
was $1,589,995,815, a decrease during the fiscal year of $123,601,331.
While charters were issued during the year to 63 associations, there
was a net decrease of 681 in the number of banks—that is, from 6,886
to 6,205—by reason of voluntary liqmdations, receiverships, and
consolidations.
Changes in the number and capital of national banks during the
last year are shown in the following summary:

137

REPORT OF THE SECRETARY OP THE TREASURY

Organization, capital stock changes, and liquidations of national hanks during the
fiscal year 1932
Number
of banks
Charters granted
Increases of capital (75 banks) ^
Restored to solvency
.

Capital
$9,275,000
53,963, 554
2, 060,000

63
_

. ^

Total
Voluntary liquidations . . .
Receiverships 2
__
^
I
Decreases of capital (15 banks)
Closed under consolidation' (act of Nov. 7, 1918) and capital decrease incident
thereto

16
79

65.298, 554

293
460

116, 820.300
60,817, 585
9, 730,000

4,107,000

783

2 191,474,885

Net decrease
Charters in force June 30, 1931, and authorized canital

681
6.886

123,601.331
1, 713, 697,146

Charters in force June 30, 1932, and authori zed capital

6,205

1,589,995,815

Total

1 Includes 2 increases aggregating $150,000 which were effected as a result of consolidations under the act
of Nov, 7, 1918, and 13 increases aggregating $26,207,500 incident to the consolidation of State banks with
national banks under the act of Feb, 25, 1927, and 5 increases by stock dividends aggregating $295,504,
2 Includes 23 banks with aggregate capital of $2,576,000 which had been previously reported in voluntary
liquidation.

BUREAU OF CUSTOMS

Receipts
The fiscal year 1932 was the second year during wffich the tariff
act of 1930 was in effect. I t has been impossible, however, to determine the eft'ect of this act either on the volume of importations or on
the revenue, since the world-wide business depression which has
continued unabated during the entire life of tffis tariff invalidates
comparisons which might otherwise be presented. Despite the increased rates of duty imposed on various commodities, customs collections continued to recede throughout the year, amounting in June
to little more than half the total for the preceding July. This decrease
in revenue is attributable in a large measure to a further falling off
in commodity prices, such prices having reached a lower level than
at any time during recent years.
The following statement shows customs receipts, refunds, and net
proceeds for the past two fiscal years based on the amounts actually
coUected and disbursed by collectors of customs:
Customs receipts and refunds during the fiscal years 1931 and 1932
1931
Receipts:
Duties, including tonnage tax
MiscellaneousSale of unclaimed merchandise and abandoned
goods
Fines
Sale of seizures...
All other customs receipts
. .. .

$379,881, 770

2, 074,997

1, 469, 587

381,956,764

329, 493,842

8, 562, 334
12, 830, 375

5,444, 373
11, 455, 874

Total refunds

21,392, 709

Net customs receipts from all sources

360, 564, 055

$328, 024, 255
$32,410
1, 285, 916
69, 648
81, 613

$10, 829
1,800, 884
112,411
160, 873-

Total miscellaneous
Total receipts
Refunds:
Excessive duties
Drawback payments

1932

16, 900, 247
312,593,595

138

REPORT OF THE SECRETARY OF THE TREASURY

The proceeds from the sale of unclaimed and abandoned merehandise and seizures do not represent the total amount received from
such sales and deposited in the Treasury, since the amount of duties
accruing on such merchandise is deducted and deposited as duties.
The amounts in the foregoing table, therefore, show only the balances
remaining from the proceeds of sale after deduction of duties and
expenses connected with the sale.
Volume of business
Entries of merchandise.—The number of entries of merchandise,
although smaller than during the preceding year, did not decline to as
great an extent as the volume of imports. The total number of
entries, 2,350,599, was less than that for any fiscal year since 1923 and
15,2 per cent less than in 1931. Practically all classes of entries
participated in this decline.
Vessels, highway traffic, etc.—The number of vessels entered at the
various seaports in the United States and the volume of vehicular and
passenger traffic for the last two fiscal years are shown in the following
table:
Number of vessels, automobiles, airplanes, and passengers entered into the United
States during the fiscal years 1931 and 1932
1931
Vessels
.
Automobiles, busses, etc
Airplanes
Fassengers arriving b y Vessels a n d ferries
A u t o m o b i l e s , busses, etc
Trains..
Airplanes
.
..

_ . _ _ - _
.

1932

Decrease

80, 743
12,374, 424
6,708

70, 417
11, 218, 455
6,913

10, 326
1,165,969
793

6, 869, 997
37,473, 686
1,436, 552
20,907

3,998,698
32, 976, 879
1,111,819
18, 946

1,861, 299
4,497,807
324, 733
1,962

Drawback transactions.—The number of drawback entries received
during the fiscal year was 21.4 per cent smaller and the number of
notices of intent received 24.4 per cent smaller than during 1931.
Since the amount of drawback allowed relates to a considerable extent
to importations of the previous fiscal year, its shrinkage was considerably smaller, amounting to only 11.2 per cent. The drawback
actually paid amounted to $11,455,874, as compared with $12,830,375
during 1931.
Under authority of section 318 of the tariff act of 1930, the President, by proclamation, declared an emergency to exist because of
general business conditions and authorized the Secretary of the
Treasury to extend the period of time within which merchandise
imported on or before December 31, 1929, may be withdrawn from
warehouse, may be proved to have been used in the manufacture of
floor coverings under paragraph 1101 of the tariff act of 1922, or may
be exported with benefit of drawback. Extensions of one year were
granted in each of these cases by Treasury Decisions 45541, 45591, and
45627, respectively, provided the statutory period had not expired
before the date of the applicable proclamation.
Seizures.—The number of seizures for customs violations diirihg the
iscal year 1932 aggregated 68,183, as compared with 40,995 durmg

REPORT OF THE SECRETARY OFTHE TREASURY

139

the previous year, an increase of 66.3 per cent. This large increase in
the number of seizures was due to the flood of lottery tickets and other
proffibited articles which inundated the country. Actual merchandise seizures were considerably fewer than during 1931, and the valu©
of such seizures was only one-half as great as during the previous year.o
The number and value of liquor and narcotic seizures also declinedp
with the single exception of an increase in the quantity of alcohol
seized by customs officials, this increase being due to two unusually
large seizures at New Orleans and Buffalo.
Most of the spirituous liquors seized by customs officials during the
fiscal years 1931 and 1932 were taken in the districts along the
Atlantic coast, 73.7 per cent being seized in this region during 1932^
as compared with 78.1 per cent during the preceding year. Seizures
of malt liquor, on the other hand, were made chiefly along the Canadian border, approximately nine-tenths of the total being reported,
from this region.
In connection with the illicit transportation of liquor and narcotics.p
1,342 automobiles and 456 boats were seized during the year. Im
addition, 353 automobiles, valued at $101,299 and 73 boats with a
valuation of $93,444 were seized for various violations other than the
transportation of liquor and narcotics. The total seizure of boats
declined from 564 in 1931 to 529 in 1932, or 6.2 per cent, while their
value showed an increase of $111,043, or 8.5 per cent. The total
number of automobiles seized was 504 less than during 1931, a decline
of 22.9 per cent, while their value declined by $266,212, or 39.3 per
cent.
Other governmental enforcement agencies cooperated in th©
enforcement of the customs laws, and in a number of instances customs officials made seizures for violations of other than customs laws.
Fines and penalties collected.—Fines and penalties collected for
violation of customs laws amounted to $1,285,916, as compared with
$1,800,884 during the previous fiscal year, a decrease of 28.6 per cento
This decrease is due chiefiy to the fact that during the previous fiscal
year several unusually large fines were collected at the port of New
York.
Most of the classes of violations for which comparable figures are
available show a decrease since last year. Penalties for failure to
report to customs officials upon entering the United States and for
unlading merchandise without permit, however, show increases of
107 and 150 per cent, respectively, while penalties for failure of masters to manifest their entire cargoes were 12 per cent greater than during 1931. Fines for miscellaneous violations also resulted in increased
collections.
Only one-fifth of the fmes collected during the fiscal year 1932
represented penalties imposed on passengers from abroad for failure
to make declaration of all of their foreign purchases. This constituted
a decline of 69 per cent from the fines collected for this violation im
1931, during which year penalties of this sort constituted almost onehalf of the total collections. These fines include the personal penalty
equal to the home value of the goods and such additional amounts as
were paid to secure release after forfeiture.
During the past two fiscal years, many fines levied against masters
for failure to manifest all articles and for unlading without permil
were made as the result of liquor seizures.

140

REPORT OF THE SECRETARY OF THE TREASURY

Informers.—Awards of compensation to informers who reported
customs frauds aggregated $250,000 during the fiscal year, the total
net amount recovered by the Government in these cases being approximately $1,000,000. Many of these frauds were so carefully planned
and cleverly executed that the most exhaustive investigation would
have been unsuccessful but for the information and assistance furnished by such informers.
Smuggling
Legitimate merchandise.—Reduction of duty on cut diamonds to
10 per cent by the tariff act of 1930, and placmg uncut diamonds on
the free list have reduced smuggling of these commodities to a minimum. One major case of commercial smugglmg of jewels was
reported, the articles seized being appraised at a value of $95,000.
Contraband merchandise.—A large number of seizures of narcotics
was made by customs officers during the year on their own initiative
and upon information furnished by the Bureau of Narcotics. A number of important seizures of smoking opium were made independently
by customs officers on vessels arriving from Oriental ports, five of such
seizures aggregating 6,891 ounces in connection with which penalties
amounting to $172,275 were imposed.
Specially trained agents continue to concentrate on the apprehension of narcotic smugglers. While there was but a slight decrease in
the number of narcotic seizures, there was a decided decrease in the
value thereof. During the fiscal year 1931, 194 seizures of narcotics
were made valued at $252,041; while during the previous fiscal year
172 seizures, with a value of $91,746, were made.
Petty liquor seizures during the year were practically the same as
during the previous years, although major liquor seizures decreased
in number and increased in quantity. Liquor smuggling, while on
the decrease, continued to be one of the major problems with which
the investigative unit had to deal. While there was a considerable
falling off in the amount of liquors seized, the number of convictions
for hquor smuggling in connection with cases developed by the Customs Service was larger than during any previous year.
\ Airplanes.—Smuggling by airplane appears to have greatly increased during the year. A small unit equipped with confiscated
planes was put in operation on the Mexican border to combat this
type of smuggling, and it met with almost immediate success in the
pursuit and capture of two contraband-laden planes which crossed
the border at a high altitude and landed in the interior of Texas.
Thirty-five airplanes were seized for penalties or forfeiture during
the year.
Antidumping
Complaints against importations of foreign merchandise at prices
afleged to be unfair and requests for the application of the provisions
of the antidumping act of 1921 to such importations have increased
very materially during the year. Efforts have been made to investigate all such complaints with a view to affordmg domestic industry
such protection as may be available under the terms of the act. At
the close of the fiscal year about 50 cases were pending, a number of
which were nearing completion.

REPORT OF THE SECRETARY OF THE TREASURY

141

Convict, forced, and indentured labor under penal sanctions
A world-wide investigation developed the fact that there are not
many lines of foreign merchandise produced by convict labor, forced
labor, or indentured labor under penal sanctions which find their way
into the general commerce of the world. . For the most part, goods
produced by these forms of labor are consumed by the governments
of the countries in wffich they are produced.
The department was able to develop evidence in one case during
the fiscal year 1932 in which foreign convict-manufactured merchandise was being imported into the United States, and the provisions of
section 307 of the tariff act of 1930 were invoked against such merchandise and its importation was prohibited.
Investigative activities
Port examinations.—The port examination committee was reorganized during the year for the purpose of conducting more efficiently
tffis important work. Wffile no scheduled examinations were made,
agents stationed in the various districts completed 217 semiannual
examinations of the financial condition of headquarters and subports.
Undervaluations.—Tffis is one of the most important phases of the
work of the investigative unit both in the United States and abroad.
Wffile the actual recoveries in increased and additional duties made
as a result of tffis class of investigations during the fiscal year 1932
($607,764.62) were somewhat less than in 1931 ($857,341.54), there
was no decrease in the number of such cases handled. Apparently,
the world-wide economic distress was a contributing factor in the
continued large number of undervaluation cases handled.
False invoicing and entry.—Continued attempts were made during
the year by unscrupulous importers to defraud the customs revenue
by falsely invoicing merchandise. In one case, an importer of embroidered articles invoiced and entered 13,393 dozen linen handkercffiefs at a value of $7,533, duty being paid on that amount; whereas,
investigation disclosed the fact that 110,476 dozen had actually been
imported at a value of $90,950. Negotiations for settlement of this
case are still pending.
Criminal cases.—In connection with the smuggling of contraband
merchandise, customs agents during the year investigated and
reported 988 criminal cases to United States attorneys involving 347
defendants, and investigated and reported 532 civil petitions.
Customs information exchange.—The customs information exchange
continued its activities as the clearing house for information respecting market values and classifications for the entire Customs Service.
In this capacity the following work was performed by it during the
year:
Appraisers' reports of value received
Appraisement appeal reports received
Advanced value reports received
Changes in value circulated
Requests for investigations abroad

13,695
.2,710
4,020
2,841
1,269

Drawback.—The number of drawback investigations continued to
increase throughout the country. Apparently, there are two causes
for this increase: First, the provisions of section 313 (b) of the tariff
act of 1930; and, second, because of the depression importers have
endeavored to take advantage of drawback privileges to unload old

142

REPORT OF THE SECRETARY OF THE TREASURY

and obsolete stock. This has necessitated the strictest investigation
of applications for drawback rates.
During the fiscal year 1931, 2,863 drawback investigations were
made, an increase of slightly more than 44 per cent over 1930; while
during the fiscal year 1932, 3,244 such investigations were made, an
increase of almost 20 per cent over 1931.
Summary.—The following tabular statement shows the results
during the past year of the investigative unit so far as direct results
can be measured in dollars and cents or by count of individual cases:
Number of ports examined..
Number of drawback investigations.Number of foreign investigations
Number of arrests
Number of convictions
Number of acquittals.
Number of failures to indict
.
Nuraber of indictment cases pending
Number of seizures made.
.
Number of seizures appraised
Number of seizures released or pending
Appraised value of seized merchandise
Fines, penalties, and forfeitures incurred, exclusive of court
Proceeds of sale of seized merchandise
Increased and additional duties collected
Amount deposited in offers of compromise._
Fines imposed by United States courts
Bail forfeited
.

217
3, 244
2,330
.__
i, 323
610
60
91
298
i, 144
1,218
338
$2,744,808.35
1,501,902.68
83,605.46
607,764.62
305,540.60
239, 377.98
177,000.00

__
..:
•.

fines

Miscellaneous
During the fiscal year 1932, the Customs Service in conjunction
with the Immigration Service entered into contracts for the erection
of seven small customs-immigration inspection station buildings in
the districts of Maine and New Hampshire. Construction work on
these buildings was begun during the latter part of the year.
The Bureau of Customs also continued its endeavors tp give those
entering the country at the various ports a clearer understanding of
the laws and regulations affecting the entry and examination of passengers and their baggage, automobiles, and other personal and household effects. The booklet for overseas passengers was revised and a
new booklet and leafiet were printed for the information of those
arriving at border ports. In addition, newspaper articles were prepared and distributed explaining in detail the requirements at border
ports.
The bureau has also prepared drafts of two manuals of instructions
for inspectors of customs and for customs patrol inspectors, which are
expected to be issued during the next calendar year.
DISBURSING CLERK

The followmg is a summary of the work performed by the office of
the Disbursing Clerk during the fiscal year 1932:
Number

Amount

Disbursements:
Checks (salaries, expenses, supplies, etc.)
Cash (salaries)
Checks (refunding taxes illegally collected)

353,181 $121,754, 554. 52
192,180
17,109,443. 72
123,286
81, 585,428.06

Total
Collections on account of rents, sales, etc
Vouchers paid
Schedules of claims for tax refunds
Appropriations under which disbursements were made

668,647
9,729
297,063
6,632
1,043

220,449,426. 30
1,181,655.49

REPORT OF THE SECRETARY OF THE TREASURY

143:

The cash payments and the checks for salaries, expenses, supplies,,
etc., cover disbursements for all bureaus and divisions of the Treasury
Department m the District of Columbia (except the Bureau of E n graving and Printing), and a large portion of the salaries and expenses
outside the District of Columbia under the Public Health Service,
Supervising Architect's Office, Bureau of Internal Revenue, Bureau
of Industrial Alcohol, Bureau of Narcotics, Federal Farm Loan
Board, ComptroUer of the Currency, Coast Guard, Secret Service,.
Bureau of Customs, and Public Debt Service.
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.
BUREAU OF ENGRAVING AND PRINTING

Deliveries by the bureau during the year amounted to 333,998,086'
sheets, as compared with 325,523,665 sheets for the previous year, an
increase of 8,474,421 sheets, or 2.6 per cent. A comparative statement of deliveries of finished work in the fiscal years 1931 and 1932:
follows:
Deliveries of finished work in the fiscal years 1931 and 1932
Sheets
1931
Currency:
United States notes
Silver certificates
....
Gold certificates..
National bank currency.
Federal reserve notes
Total..
Bonds, notes, and certificates:
Pre-war bonds
Liberty bonds
Treasury bonds
Treasury notes
Treasury bills
Treasury certificates
Certificates of indebtedness
Insular bonds—
/
Philippine Islands...
Puerto Rican
^
Farm loan bonds
Certificates for farm loan bonds
Collateral trust debentures
Philippine treasury certificates
.Interim transfer certificates for postal savings
bonds
Interim certificates for Puerto Rican bonds...
Bonds evidencing indebtedness of foreign
governments to the Government of the
United States
SpecimensLiberty bonds
Treasury bonds
.Treasury notes
Treasury bills
.Treasury certificates
.
Certificates of indebtedness
Insular b o n d s Philippine Islands
Puerto Rican
Farm loan bonds
Certificates for farm loan bonds
Bonds evidencing indebtedness of foreign
governments
—

141810—32

6,162,000
52,130, 000
4,458, 000
3,999, 998.
14,853,144

. 4,465,000
59, 709,000
3,326,000
4, 310, 516
10,893,350

$231, 720, OOOt
716, 508,000
895, 200,0004.37,299,4401,998, 780,000

81,603,142

82,703,866

4, 279, 507, 440'

12, 6063^
142, 693
393, 277^^
3,501
6,160
73,535 '
1,521
7, mZH
222,055H
2,500
5,940
1,056,000

41, 265
329,140iyi2
570, 364]^
78, 975
14, 426
128,750
116,210

200
2,3589/10
70,283H
13, 316
412, 000

650

3,000
650

162

327

165,489, 600.
1,523,419,000
2, 378, 521,000'
2, 681,400, 000
6, 847,416,000>
87, 500,0006, 374, 500, 000'
200, 0001,082,00041, 001,400'
373,675,000
5,150,000'

2H
H
"I'H
2
7^0

1,928,6111^^0

Total..

Face value
1932
1932

IH
H
H
2H

1, 781,277^

20,479,354, OOO

144'

REPORT OF THE SECRETARY OF THE TREASURY
Deliveries of finished work in the fiscal years 1931 and 1932—Continued
Sheets
F a c e value
1932
1931

1932

Total..
Miscellaneous:
Checks
Drafts
Warrants
Commissions
Certificates...
T r a n s p o r t a t i o n req uests
Liquor permits
O t h e r miscellaneous
Blank paper
Specimens

35, 250
94,130, 252^7
584, 628
3,23621/34
138,869,943
10, 500
63,710
936,834i.{3
865M00
4,577

229,229,61448^tio 234,639,0171076/275
7, 896,135

. . .
.
•_
-

Total
G r a n d total

..
. . .

Subjects
1,350,000
8,391,100,947
42, 231, 225
37,153
l."^. 299. 853. 860
oo-

Stamps:
33, 500
Customs
Internal r e v e n u e U n i t e d States
88,884,6811^04
P h i l i p p i n e Islands
197,865
Puerto Rican
193, 680
Virgin Islands.c
300
35
Spetimens, United States
Postage s t a m p s 139,127, 353
U n i t e d States
7,060
U n i t e d States, surcharged " C a n a l Z o n e " .
65,814
C a n a l Zone
716,289
Philippine Islands
Specimens, U n i t e d States
30%o
Postal savings s t a m p s
3, 0071^

80,660,800
8,633
457,700
23,821,689,018

52,080
30,0451^
1,807,057
3.50, 443
2,464,0871^
157, 646H
4,750
52

8,451, 515
20,025
41, 200
139, 233
3,440,020^^
304, 235
2, 274,600
188, 757H
7,000
7,338

42, 256, 950
41, 350
206,000
77, 918
14,875, 582
1, 521,175
9,444,800
2, 204, 578

12, 762, 2963^

14,873,9242^^6

70, 658, 793

30,440

325,523,664i3%04 333,998,086483^^6300

There was expended during the year $9,394,016.61 as compared with
.$9,426,366.29 in 1931, a decrease of $32,349.68, or 0.34 per cent.
T h e following statement shows the appropriations, reimbursements,
.and expenditures for the fiscal years 1931 and 1932.
Appropriations, reimbursements, and expenditures for the fiscal years 1931 and 1932

.Appropriated by Congress, salaries and expenses
Reimbursements to appropriation from other bureaus for
work completed i . .
.
Total
"Expended, salaries and expenses 2
Unexpended balance

-.
._

1931

1932

Increase (+)
or decrease (—)

$6, 362,315, 00

$6,813,938.00

+$451,623. 00

3,105, 774. 21

2, 597,008.89

-508,765,32

9, 468,089. 21
9,426, 366. 29

9,410,946.89
9, 394,016. 61

-57,142.32
-32, 349, 68

41, 722. 92

16, 930. 28

1 An additional amount of $7,666.29, received from sale of by-products and useless property, was deposited
•to the credit of the Treasurer of the United States as miscellaneous receipts.
«Includes $15,000 in 1931 and 1932 transferred to Bureau of Standards for research work; and $275,768.04
rand $283,345.13 transferred to retirement fund in 1931 and 1932, respectively.

The average number of persons employed during the year was 4,486
as compared with 4,567 during the previous fiscal year, a decrease of
81 persons, or 1.77 per cent.
Overemployment, a condition existing in certain groups for the
past three years, was prevalent during 1932. All surplus personnel,
however, was reduced under that for 1931 by reason of voluntary anci

REPORT OF THE SECRETARY OF THE TREASURY

145

automatic separations from the service. The policy of conducting a
rotating furlough was continued. This furlough, however, applied
only to those groups in which overemployment existed.
()n June 30, 1932, 37 employees of this bureau were retired in
accordance with the provisions of the economy act.
Spoilage was reduced, the percentage for 1932 being 3.08 per cent
:as compared with 3.95 per cent for the year 1931.
The following dies were engraved for new postage stamps during
the year:
Class

Bicentennial Series (George Washington head).
'Olympic (Lake Placid)
.Arbor Day
.
•Olympic (Los Angeles)
:
..Philippine:
Mayon Volcano
Post office, Manila
Manila Bay
Pagsanjan Falls
Rice planting
Rice terraces
Baguio Zig-zag
'Canal Zone:
General Hodges head
Jackson Smith head
H. H. Rousseau head
Air mail
Postage due

Denomination
Cents
4,5,9,10
2
2
3,6
Centavos

2
4
12
18
20
24
32

Cents

10
15
20
5,10,15,20, 40
1, 2, 5,10

A considerable amount of work in the engraving and surface printing
divisions was involved in making effective the provisions of. the act
of March 3, 1931, which required that a new series of revenue stamps
be printed for each calendar year. As much of the stocks prepared
for shipment as could be salvaged was removed from the vaults and
•overprinted, and the remaining stocks were delivered to the destruction committee. New plates were prepared bearing the series number,
and new stamps were printed. As the cost of making this change was
not contemplated in the estimates for the fiscal year 1932, and as
additional orders above the amount estimated for disbursing officer's
<checks were received, it was necessary to present a deficiency estimate.
The amount of this estimate, $113,938, was made available by an
appropriation from Congress on July 1, 1932.
During the past year the work of removing the machine shop from
its old quarters to D wing of this building, which was referred to in
last year's report, was completed. The new shop is modern in every
respect, and efficiency of the mechanics has been increased by reason
of better working conditions.
New quarters for the Division of Paper Custody, Office of the Commissioner of Public Debt, were provided for in an annex formerly occupied by a branch of the Surface Printing Division. This building was
thoroughly renovated, painted, and furnished with modern equipment
to facilitate the storage and handling of distinctive fiber paper. The
removal of this division from its former quarters in the basement of
the main building was accomplished during the early part of the year.
On January 1, 1932, the storage and custody of internal revenue,

146

REPORT OF THE SECRETARY OF THE TREASURY

postage, and check paper were.transferred from the Division of Paper
Custody to this bureau.
The renovation of the electric shop was in progress at the close of
the year. The work of purchasing and installing eqmpment in connection with the maceration of mutilated currency by the de-inking
process made considerable progress.
During the fiscal year 1931 designs and specifications were prepareA
for the construction of two postage stamp-gumming machines. These
machines were required to accommodate the increase in production
of postage stamps by the flat-bed printing process and to replace a
gumming machine which had been in service for many years. One of
these machines was delivered during the latter part of the fiscal year
and placed in satisfactory operation. Tffis machine is of modern
design and construction. The installation of the machine has resulted
in a saving of labor and an increase in production.
Among the important improvements accomplished during the year
were designing and construction of a new sizing machine; installation
of rotary circulating pumps for feeding the sizing solution to the
machines, replacing the old reciprocating pumps which had a tendency
to make the solution foam; installation of a new packing device on
wetting machines; designing and construction of a new drying unit
for rotary presses; installation of concrete floors in lieu of wooden
floors on the second, third, and fourth floor corridors; and partial
renovation of the cafeteria.
The usual inventories of stocks on hand were conducted by auditors
charged with that work. In all cases stocks on hand were reported
to agree with the records.
COMMITTEE ON ENROLLMENT AND DISBARMENT OF ATTORNEYS
AND AGENTS

The Committee on Enrollment and Disbarment of Attorneys and
Agents, created by department Chcular 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 1932, 2,379 applications for enrollment of
attorneys and agents were approved and 15 were disapproved. In
7 cases the applicant for enrollment was afforded a formal hearing
by the committee. Since the organization of the committee in 1921,
32,465 applications have been approved and 488 disapproved. Some
8,600 persons were enrolled prior to the organization of the committee
and many of them are now in active practice.
On June 30, 1931, complaints were pending agamst 99 enrolled
individuals, 57 new complaints were filed durmg the year, and 66 were
disposed of by the Secretary, leaving 90 pending on June 30, 1932.
In 16 cases the Secretary, on recommendation of the committee,
accepted the answers of the respondents as sufficient and the complaints were dismissed. In 50 cases the committee, after formal
hearing accorded the respondent, submitted its findings and recom-

REPORT OF THE SECRETARY OF THE TREASURY

147

mendations to the Secretary who disposed of them as follows: In 12
-cases it was found that the charges were not proven and the complaints
were dismissed; in 38 cases the charges were found proven in whole or
in part, and the Secretary imposed penalties—23 practitioners were
-disbarred from further practice before the Treasury Department, 7
were suspended from practice for various periods, and 8 were reprimanded. During the year three practitioners who had formerly been
disbarred were reinstated to practice before the department. Since
the organization of the committee in 1921, 113 practitioners have
been disbarred, 107 have been suspended from practice for various
periods, and 145 have been reprimanded, while 12 disbarred practitioners have been reinstated to practice before the Department.
I t is the policy of this committee to give an enrolled attorney or
agent opportunity to show cause why formal disbarment proceedings
^should not be instituted against him; three such cases occurred during
the year.
FEDERAL FARM LOAN BUREAU
Operations of Federal land banks
During the fiscal year 1932 the Federal land banks made 7,257
first mortgage loans in the aggregate amount of $27,445,700, a
Telatively small part of which represented purchase money mortgages approved as collateral for farm loan bonds. From organization
to June 30, 1932, the total of such credit aggregated $1,709,155,914.87,
Tepresenting 526,460 loans. Mortgage loans were outstanding on
June 30, 1932, in the total amount of $1,147,110,513.24. On the
same date $1,148,729,920 of farm loan bonds of Federal land banks
were outstanding, including $4,400 bonds matured or called for
redemption but not including $1,266,160 held by banks of issue.
The combined capital stock of the 12 Federal land banks on June
30, 1932, amounted to $189,861,594.25. Of this amount, $125,175,939.25 was owned by the Federal Government, $63,869,540 by national
farm loan associations, $705,175 by borrowers through the Puerto
Rico branch, and $110,940 by other borrowers. The capital stock
owned by the Federal Government consisted of $125,000,000 of
additional capital subscribed in accordance with the amendment to
the Federal farm loan act approved January 23, 1932, and $175,939.25
remaining in two banks from the Government's subscription to the
original capital stock of the banks. The latter figure was decreased
from $237,733 during the year by retirements in the manner provided
by the farm loan act. The 12 banks reported legal reserves as of
June 30, 1932, totaling $13,374,526.38, undivided profits of $3,674,€33.06, and special reserves against real estate, delinquent installments, etc., and other reserves aggregating $19,730,631.60.
National farm loan associations decreased in number from 4,653
to 4,651.
^
^
.
No change was made during the fiscal year in the rates of interest
charged by the banks on new loans. The Federal land banks of
Springfield, Louisville, St. Louis, St. Paul, Omaha, Wichita, Houston,
Berkeley, and Spokane maintained their rate of 5K per cent, and the
Columbia, New Orleans, and Baltimore banks continued a rate of 6
per cent, while that of the Puerto Rico branch of the Baltimore bank
remained at 6 K per cent.

148

REPORT OF THE SECRETARY OF THE TREASURY

The following table shows total assets, net mortgage loans, and
principal liabilities of each of the Federal land banks as of June 30^
1932:
Principal assets and liabilities of Federal land hanks on J u n e 30, 1932
Federal Land Bank of—

Total assets i

Net mortgage loans 2

Bonds outstanding 3

Capital stock

Reserves and'
undivided
profits 1

Springfield...
Baltimore...
Columbia...
Louisville

$60, 239, 693
78, 965, 536
73,411, 951
133,693,886

$60,122,855
66,040, 506
62,315,052
117,601,891

$48,686, 960
65,451,340
55, 357, 080
113, 980, 940

$9, 700, 586
10, 526, 345
16,146, 565
14, 828, 660

$466, 931
861,62a
357, 726
2, 459,379

New Orleans
St. Louis
St. Paul
.Omaha

128,670, 319
120, 816,396
162, 903,430
183, 337, 001

98,895,115
101, 753,406
110,136, 482
165,465,671

106, 278, 220
102, 949, 240
122, 943, 020
157,499, 240

18,696.940
15,323, 260
25, 344, 045
18, 874,195

1, 264, 674
709, 803
1,037, 682

100,811, 635
172, 600, 521
60,616,580
117, 591,188

86, 768,100
11, 995, 765
87,430, 726
156,835, 916 146,003, 300 . 18,182,875
49, 276, 341 48, 716, 360 10, 213, 304
91, 236, 554 95, 091, 720 20,129,055

Wichita
Houston
Berkeley
Spokane
Total..

1,383,458,136 1,147,110, 613 1,148, 725, 520

189, 861, 594

3, 241,871

1,088,421
5,149, 872
522, 824
64,323
17, 215,128

1 Special reserves set up against particular assets have been deducted.
' Represents the outstanding balance of first mortgage loans closed by the banks, including such pur •
chase money first mortgages as have been approved as collateral for farm loan bonds in accordance with
the provisions of the farm loan act,.but excluding purchase money first mortgages not so approved and
excluding purchase money second mortgages.
3 Bonds onhand and bonds matured or called but not yet presented for payment are not included.

Operations of joint stock land banks
During the fiscal year, liquidation was completed of two of the
three joint stock land banks which were in receivership at the beginning of the year; and two banks were placed in receivership upon
default in the payment of bond interest. At the end of the year there
were 51 jpint stock land banks, including 1 in voluntary liquidation
and 3 in process of liquidation through receivership.
Joint stock land banks reported 661 loans closed during the year,
amounting to $2,894,838.64, bringing the total loans by these banks
from organization to June 30, 1932, to 129,907 loans, in the total
amount of $899,899,155.89. The loans closed during the year represent mainly mortgages taken to secure a portion of the purchase price
upon, the sale of real estate which had been acquired by the banks.
The reports submitted by the banks to the Federal Farm Loan
Board as Pf June 30, 1932, indicated that the capital stock of 48 banks
on that date was $39,073,060.24, while legal reserves were $5,580,713.51 and surplus paid in, surplus earned, and undivided profits were
$8,017,811.27. They reported also special reserves against real estate^
delinquent installments, etc., and other reserves m the aggregate
amount of $11,462,628.51. Deficits reported by 8 jomt stock land
banks aggregated $3,843,035.41. Mortgage loans were outstanding
in the net amount of $472,360,681.86. Farm loan bonds of joint
stock land banks m the amount of $485,381,980 were outstanding,
mcluding $3,000 of bonds matured or called for redemption, but not
includmg $2,774,640 held by banks of issue.
In addition, the net amount of mortgage loans outstandmg m the 3
banks in process of liquidation through receivership was $29,540,989.83. These 3 banks had a total of $54,944,800 of bonds outstandmg
on the respective dates on which they were placed in receivership.

REPORT OF THE SECRETARY OF THE TREASURY

The following table shows total assets, net mortgage loans, and
principal liabilities of each joint stock land bank as of June 30, 1932::
Principal assets and liabilities of joint stock land baiiks on June 30, 1932 ^

Name and location of bank

Atlanta, Atlanta, Ga.
Atlantic, Raleigh, N. C
Burlington, Burlington, Iowa
California, San Francisco, Calif
Chicago, Chicago, 111
Corn Belt, Taylorville, 111
Dallas, Dallas, Tex
Denver, Denver, Colo
DesMoines, Des Moines, Iowa
First Carolinas, Columbia, S. C . . .
First, Fort Wayne, Ind
First, Montgomery, Ala
First, New Orleans, La
First Texas, Houston, Tex
...
First Trust, Chicago, 111
Fletcher, Indianapolis, Ind
J..
Fremont, Lincoln, Nebr
....
Greenbrier, Charleston, W. Va
Greensboro. Greensboro, N. C
Ilhnois, Monticello, 111
Illinois Midwest, Edwardsville, 111
Indianapolis, Indianapolis, Ind
Iowa, Sioux City, Iowa.
Kentucky, Lexington, Ky
La Fayette, La Fayette, Ind
Lincoln, Lincoln, Nebr
Louisville, Louisville, Ky
Maryland-Virginia, Baltimore, Md
Minneapolis-Trust, Minneapolis, Minn.
Mississippi, Memphis, Tenn
New l o r k , Rochester, N Y
North Carolina, Durham, N. C
Northwest, Portland, Oreg
Oregon-Washington, Portland, Oreg
Pacific Coast, Portland, Oreg
Pacific Coast, Salt Lake City, Utah
Pacific Coast, San Francisco, Calif
Pennsylvania, Philadelphia, Pa
Phoenix, Kansas City, M o .
Potomac, Washington, D. C
San Antonio, San Antonio, Tex
Southwest, Little Rock, Ark
Tennessee, Memphis, Tenn
Union, Detroit, Mich
.
Union, Louisville, Ky
Union Trust, Indianapolis, Ind
Virginia-Carolina, Elizabeth City, N. C
Virginian, Charleston, W, Va
.
..
TotaL...

Total assets 2

Net mort- Bonds outgage loans 8 standing *

Capital
stock

Surplus,,
reserves,,
and undivided
profits 2-

$90, 233t
$350, 000
247, 574
907, 500
250, 000
874,916
916,000
4, 000, 000
250, 000
11, 792
920,4732,431,200
548,403
1,184,800
1,150, 000
785, 000
(s)
400, 000
249, 562
550, 000
18, 983
250, 000
45, 978550, 000
205,164'
848, 9544, 600, 000
750, 000 ,1,032,530;
850, 000
150, 669^
250, 000
43, 728
250, 000
147. 362450, 000
110, 459^
350, 000
250,000
21,953^
500, 000
378, 081
650, 000
300, 000
5 3, 621
253, 5262, 711, 400
618,878
500, 000
(5)
250,000
164, 202450, 000
213, 89#
350,000
29, 92a
800, 000
303, 548
700, 000
369, 559'
87,160
16, 802'
250, 000
2,695,000
37,169450, 000
6, 586, 000
233,
389
300,
000
3, 783, 000
92, 02015,497, 000 1,400, 000
745,
620'
.418, 500
5,317,000
346, 096
18,426, 280 1, 650, 000
3,199,945
400, 000
5,148, 500
166, 800'
16, 026, 000 1, 226, 500
491,877
285, 000
3, 910. 400
23, 754
250, 000
3, 061, 000
91, 755
19, 029, 500 1, 370, 000
413,017
250, 000
2, 325, 300
(5)
250, 000
252,000
132, 724
400, 000
5, 756, 500
212,
575.
11,583,900
1,150, doo
353, 641
547, 004, 377 472, 360, 682 485, 378, 980 39,073,060 14,461, 217"
759,898
805,059
079, 958
694, 766
272, 652
858, 275
925, 973
067,267
738, 233
511,124
632,127
518,155
775, 026
417,852
190, 976
415,036
358,754
312, 030
792,197
927, 718
490. 986
115,673
879,163
899, 325
987, 976
676, 736
730,517
620, 967
747,170
165, 776
662, 001
923, 528
105, 536
172, 301
469,129
320, 981
233, 761
205, 302
440, 234
832, 799
097,178
298,184
467, 353
390, 501
597,129
642,173
492, 477
286, 445

$4,387,813
12,177, 625
2,374,460
14,181, 382
32, 477, 222
780, 720
35,271,402
12, 704,836
7,360,049
7, 211, 911
6,731,657
7, 283, 906
3, 082, 781
6, 713, 987
66, 002, 368
15,028, 969
7,113, 371
2, 027, 494
4, 089, 004
6,162, 457
4, 868, 787
1, 039, 700
6, 950, 441
8, 805, 264
8, 394, 717
29, 873, 783
4, 505. 632
2,420. 352
4,151,129
3, 352, 328
10, 677, 500
9, 926, 517
11,586
2, 634, 679
7, 042, 403
4, 024,193
16, 930, 351
5, 546, 970
20, 677, 933
5, 017,172
16, 902, 605
3, 805,152
3, 064, 624
18,826, 839
2, 007, 964
588, 292
5, 397, 837
11, 752, 619

$5,183, 500
13,174, 000
2,887,000
13, 612, 000
42, 728.100
550, 000
34, 722, 000
12, 069, 000
10, 203. 000
9. 721, 500
6,884, 200
7, 802, 500
3, 384, 000
6,487, 000
63, 741, 000
14, 455,100
7, 214. 500
1, 981,000
4, 273, 000
6,314,000
6, 054,000
817, 500
6,879, 300
9, 028, 000
8,318, 900
29, 820, 000
5, 257, 500
2,174,500
4, 039, 000
3, 592, 000
11,285,000
12,329, 500

(«)
(«)

(') .

(«)

1 Joint stock land banks in receivership are not included.
2 Special reserves set up against particular assets have been deducted.
3 Represents the outstanding balance of first mortgage loans closed by the banks, including such purchase money first mortgages as have been approved as collateral for farm loan bonds in accordance with theprovisions of the farm loan act, but excluding purchase money first mortgages not so approved and excluding purchase money second mortgages.
* Bonds on hand and bonds matured or called but not yet presented for payment are not included.
« These banks had deficits as follows:
Burlington
$104.900 56
Chicago..
2,107,415.54
Des Moines..
.•
880,172. 08
First Carolinas
479,695.51
Illinois Midwest
40,183.98
Kentucky
^
80,886.38
Louisville
1
122,93040
Union, Louisville
26,85096
Total

3,843,035.41

150

REPORT OF THE SECRETARY OF THE TREASURY
Operations of Federal intermediate credit banks

During the fiscal year loans made by the Federal intermediate credit
ibanks to cooperative marketing associations, including renewals,
amounted to $128,308,196.47, bringing the total loans from organization to June 30, 1932., to $783,672,039.14. The loans to cooperative
associations outstanding on that d a t e aggregated $35,628,482.97.
Loans to and discounts for financing institutions during the year
amounted to $126,518,039.90, including renewals. This brought the
total credit extended to financing institutions from organization to
June 30, 1932, to $734,328,855.12. Outstanding credit for financing
institutions on that date aggregated $80,462,366.13.
The earnings of the 12 banks during the calendar year 1931 aggregated $1,396,357.28, of which $1,353,768.75 was transferred to the
banks' reserves for contingencies. This compares with earnings of
:$1,482,936.20 during the calenciar year 1930, of which $1,335,728.10
was carried to reserves for contingencies.
As of June 30, 1932, 10 banks reported surplus, reserves, and undivided profits aggregating $4,585,552.61; 1 bank reported no surplus,
Teserves, or undivided profits; and 1 bank reported a deficit of
'$622,840.97, as compared with a deficit of $639,251.96 at the end of
the fiscal year 1931.
At the beginning of the fiscal year the interest rate of 9 of the banks
on loans and discounts was S% per cent per annum, whUe the rate of
3 banks and the Puerto Rico office was 4 per cent. Increases in the
rates of interest paid on debentures issued by the banks during the
l a t t e r part of 1931 and the early part of 1932 necessitated increases
in the rates charged by the banks. Sales of debentures toward the
end of the fiscal year at more favorable interest rates, however, enabled
the banks to reduce the rates charged by them, so that on June 30,
1932, the rate of 7 banks was 3 ^ per cent per annum; 3 banks and
the Puerto Rico office, 4 per cent; 1 bank, 4K per cent; and 1 bank,
"3% per cent.
The following table shows total assets, loans and discounts, and
principal liabUities of each Federal intermediate credit bank as of
JuneSO, 1932:
.Principal assets and liabilities of Federal intermediate credit hanks on J u n e 30, 1932

;Federal Intermediate Credit Bank of-

Total assets

Loans and
discoimts

:Springfield__.
Baltimore...
'Columbia.."Louisville...

$13,189, 389
7,100,432
7, 547,105
7, 696, 985

$9,110, 353
2, 543, 234
6, 265, 354
4, 059, 310

New Orleans
St. Louis
St. Paul
Omaha

12, 937, 673
11, 238,101
13, 324, 898
14, 550,196

9,134, 255
7,180,157
10,143, 991
11, 530, 988

Wichita
Houston
Berkeley
^Spokane

8, 277, 202
24, 073, 439
16, 790,426
16,960, 209

5,
20,
15,
14,

Total..

163, 686,056

Surplus,
reserves,
Debentures
outstand- Capital stock and undivided
ing!
profits
$5, 000, 000
5,000, 000
5, 000, 000
5, 000, 000

$534, 734
291,202

200, 000
645,000
550, 000
765, 000

6, 000,000
5, 000, 000
5, 000, 000
5,000,000

468, 067
190, 266
557, 377
588, 431

015, 663
971, 551
862, 966
273, 027

2, 525, 000
18, 050,000
11, 410, 000
11, 320, 000

5, 000,000
5,000,000
5, 000,000
5,000,000

450, 357
616,857

116,090,849

86, 965, 000

$7, 550, 000
1, 750, 000
3,100, 000
2,100,000
7,
5,
7,
8,

1 Debentures hold by banks of issue and debentures matm-ed are not included.
2 Deficit of $622,840,97.
-3 $32,000,000 p a i d i n , a n d $28,000,000 callable from t h e U n i t e d S t a t e s T r e a s u r y .

(2)

514,095

374,166

3 60, 000, 000 4, 585, 552

151]

REPORT OF THE SECRETARY OF THE TREASURY
SECTION OF FINANCIAL AND ECONOMIC RESEARCH

The section wffich now includes the office of Government Actuary,,
performs a combined research, editorial, actuarial, and service function for the Treasury, largely in the field of finance. Upon requestor on the initiative of the section, studies and investigations in taxation, public debt, and other subjects in or related to the field of public
finance are conducted, largely for use witffin the department.
During the past session of Congress the activities of the section
included a large amount of statistical and analytical work in connection with the consideration, in the department and in Congress, of"
the revenue bill and other legislation, and the provision of specialinformation for Members of Congress.
As in the past, the Annual Report of the Secretary of the Treasury
was edited and in part prepared by the section, under the general
supervision of the Under Secretary; the section also participated in
the preparation and editing of Statistics of Income for 1930, and of"
other Treasury publications.
The monthly publication of daily yields of Government bonds and.
notes, and the monthly estimate of the population of the United States(appearing on the Circulation Statement of United States Money)
were continued.
Service on various governmental committees was performed b y
members of the section, including the service of the Government
Actuary on the Board of Government Actuaries in connection with,
the civil service retirement law.
GENERAL SUPPLY COMMITTEE

The following table shows the value of the purchases reported by
the various Government departments and establishments under contracts negotiated by the Secretary of the Treasury through theGeneral Supply Committee during the fiscal years 1923 to 1932.
Value of purchases reported hy executive departments under contracts negotiated by
the Secretary of the Treasury through the General Supply Committee for the fiscal,
years 1923 to 1932
Year
1923
1924
1925
1926
1927

Value

_.
:

$6, 223, 961. 89
6, 498, 619. 23
6, 645,195. 64
6, 725, 60O 35
7, 506,923. 41

Year
1928
1929
1930
1931
1932

Value
$8, 835, 799. 40
9, 299, 289, 41
11. 869, 481. 51
13, 678,195. 22
10,178,290.33-

Durmg the fiscal year 1932, 2,483 bids were received and m connection therewith, 25,740 samples. There were 1,443 contracts entered
into involving 26,871 items.

152

REPORT OF THE SECRETARY OF THE TREASURY

A summary of the surplus property transactions during the fiscal
year follows:
Statement of the surplus property accountability for the fiscal year 1932
•stores on hand July 1,1931
Appraised valuation of receipts during the fiscal year 1932
.Revenue:
Serviceable propertyIssued t o Executive departments
Independent establishments
District of Columbia

$63,119. 92
42, 740. 22

$105,860 14

$6,970 84
6,187.14
1, 363. 48
14,521.464,840.48

Discount on purchases of above

19,361.94
TJnserviceable property—public s a l e s Auction
Contract

13,629.86
63,380 07
77,009.93
=
=
96,371.87
9,488.27

'Stores on hand June 30, 1932

105,86014

Under the provisions of the act of February 27, 1929 (45 Stat., 1341)
and the act of March 26,1930 (Public, No. 78, 71st Cong.), the General
Supply Committee is authorized and directed to purchase or procure
and distribute supplies to meet the consolidated requirements of the
executive departments and independent establishments of the Federal
Government m Washington, D. C , of the municipal government oi
the District of Columbia, and of the field services when request is
made by the head thereof. These supplies are paid for by the General
Supply Committee out of a revolving fund and collections therefor are
made from the departments and deposited in the general supply
fund.
^Statement of the assets, liabilities, and operating expenses of the general supply fund
for the fiscal year 1932
Inventory as OfJuly 1, 1931
Purchases during the fi.scal j^ear 1932..

$3,118.04
1,175,017. 68

.-Inspection and breakage..
Returned purchases
'Cost of goods sold...

243. 37
70.10
1,175,906.25

$1,178,135. 72

1,176,219.72
1,916.00
.
31,931,06
5,659,74
4,027.19
41,617.99

•Inventory as of June 30,1932...
IRe venue:
6 per cent surcharge for local delivery
1 per cent surcharge for field deliverj^
Purchase discount
_
Total..

General supply fund halance sheet as of June 30, 1932

Assets:
- Treasury cash
.
Disbursing oflficer's cash
•'
...
Accounts receivable...
Invoice receivable...
Inventory stores
Total assets
tLiabilities and capital:
Invoices payable
Unpaid audited vouchers.Surplus fiscal year 1931
Surplus fiscal year 1932
LTnencumbered capital
Unliquidated capital
•Capital reimbursable

Total liabilities and capital..,

$308,148. 75
6,361.06

22,420.79
3,944.41
43,989. 38
41, 617. 99
259,694.86
24,613.32
15,691.82

$314,509.81
61,537.63
34,032.00
1.893.13
411,972. 57

Ill, 972. 67

300. OOP. 00
411.972.57

153

REPORT OF THE SECRETARY OF THE TREASURY
BUREAU OF INDUSTRIAL ALCOHOL

Technical activities
The technical division conducts the chemical work of the Bureau of
Industrial Alcohol as well as the work of this character for the Bureau
of Prohibition in the Department of Justice, Bureau of Narcotics,
and the Bureau of Internal Revenue. I t supervises generally the
activities of the chemical laboratories of the Bureau of Industrial
Alcohol 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. Certain features of the general internal revenue laws relating
to bonded warehouses and other miscellaneous items are also
administered. Tffis division is also charged with the work in connection with the concentration of distilled spirits in accordance with the
provisions of the act of February 17, 1922
The following table shows the number of each class of permits,
issued under the national proffibition act, in force on June 30, 1931
and 1932.
June 30,
1931

Class of permit
A,
B,
C,
D,
E,
F,

Permits to manufacture, bonded warehouses, and free warehouses
Permits, wholesale druggists
Permits to transfer
Permits to import and use
Permits to import and sell.."
Permits to export alcohol only to places other than Canada, Mexico, West Indies,
and other near-by Islands
"G, Permits to expoirt alcohol to Canada, Mexico, West Indies, and other near-by
islands and other liquors to any destination
.
H, Permits to use intoxicating liquors in the manufacture of preparations unfit for
beverage use and for experimental purposes
I. Permits to use and sell
J, Permits for physicians to prescribe and use
K, Permits to manufacture vinegar and procure intoxicating liquor for, conversion
into same
•L. Permits to operate dealcoholizing plants
N. Permits to procure medicated alcohol in quantities exceeding 1 pint
P. Permits to receive and possess for storage in bond and sell from concentration....
. p . Permits, hospitals
R. Permits to produce mash for the purpose of producing yeast, after which residue
is to be destroyed
1
S. Permits to procure wine for ritualistic purposes
T, Permits to dentists, veterinarians, optometrists, osteopaths, chiropractors, chiropodists, wspineologists, to use alcohol, and to dentists to administer liquor
Special permits, cases not covered by above classes
,
To operate industrial alcohol plants
To operate industrial alcohol bonded warehouses
To operate denaturing plants.,
To bonded dealers in specially denatured alcohol
To manufacturers to use specially denatured alcohol
..•
^..
Tax-free alcohol
Total

...

401
255
475
15
41

June 30,
1932
316
254
478
17
36
12
61

22, 541
19, 675
87, 623

21, 893
19. 868
80,474

441
180
6
62
2,829

452
162
6
53
2,873

7
94

33, 472
86
50
68
54
69
3, 835
6, 525

48,817
93
40
65
44
69
3,996
5,693

177,883

185,863

WhUe basic permits are issued by the various field offices, all
formulae involving the use of any tax-paid mtoxicating liquor are
exammed m this division, and recommendation made to the supervisors of permits regarding the issuance of permits authorizing the
procurement and use of these liquors m the preparation of the articles
designated. The character of the formulae examined is greatly varied,
but the larger portion consists of three general classifications: Medicinal, culinary, and sirups in which are incorporated intoxicating

154

REPORT OF THE SECRETARY OF THE TREASURY

liquors. The recommendation regardmg the manufacture of these
products involves also the examination of labels under which they are
to be distributed and related advertising matter, in order to msure
compliance with the regulations interpreting Title I I of the national
prohibition act.
In all cases where authority is granted for the importation of wine,,
whether for medicmal or sacramental use, the specific requests, with
supporting evidence, are passed upon in this division. The monthly
reports of receipt and distribution of these wines are reviewed and
audited here.
In order to insure uniform control over preparations m which taxpaid intoxicating liquors are used it has been deemed necessary to
centralize all inquiries of a technical nature, and this duty is assigned
the nonbeverage section, together with general inquiries relating to
procedure, policy, and special processes.
Nineteen field laboratories have been established to expedite and
facilitate the local enforcement and permissive work. The work of the
field laboratories has increased both in the number of samples examined
and in the importance of the character of the cheihical work. During
the past fiscal year 162,378 samples were examined in the field
laboratories, an increase of approximately 30,000 samples over the
number received and examined during the fiscal year 1931. This
is the largest increase in the number of samples handled in the branch
laboratories for several years.
The formulae for all preparations and processes using pure or denatured alcohol are submitted to the Technical Division in Washington for review and approval before permits are issued by the supervisor for the withdrawal of alcohol. The policy of exercising extreme
care in approving preparations manufactured with specially denatured
alcohol has reduced to a minimum the illegal distillation of alcoholic
preparations to obtain potable alcohol for illegal purposes. The use
of calol ethatate, a denaturant for ethyl acetate, developed by the
Technical Division over two years ago has effectually prevented the
diversion of ethyl acetate for illegal purposes. Extensive research
work is now being carried on for the purpose of developing medicaments for bay rum, rubbing-alcohol compounds, and similar preparations to prevent their beverage use by a small class who make a
practice of drinking these preparations. The bureau is receiving the
assistance and cooperation of the trade on this problem.
The modification of the formulae for specially denatured alcohol,
which is of greatest importance to both industry and the enforcement
of the national prohibition act, is the subject of continued study in
the Washington laboratory. Research work is being conducted with
the hope of further strengthemng the specially denatured alcohol
formulae with the view not only of safeguarding the alcohol from diversion but also of providing legitimate industry with denatured alcohol
better adapted to its needs.
Completely denatured alcohol formula No. 5 was revised and two
new completely denatured alcohol formulae, Nos. 5-A and 10, were
authorized by the bureau, effective July 1, 1932. The revision of
completely denatured alcohol formula No. 5 involved the substitution of calorite fpr alcotate, one of the denaturants used in this formula.
This revision was necessary because the disagreeable and nauseating
odor of alcotate interfered with the use of completely denatured alcohol

REPORT OF THE SECRETARY OF THE TREASURY

155

formula No. 5 for antifreeze purposes. Calorite, a petroleum product,
was developed after cPnsiderable research with the cooperation of the
producers. While it imparts less odor to the denatured alcohol, it
has a more disagreeable taste than alcotate and makes the alcohol
more nonpotable than alcotate. Completely denatured alcohol formula No. 5-A, containing less hydrocarbons than completely denatured
alcohol formula No. 5, was authorized for the trade which desired
denatured alcohol containing less hydrocarbons. A new denaturant,
pontol, was developed and also added to tffis formula. Pontol consists principally of a mixture of primary and secondary aliphatic
ffigher iso alcohols of characteristic odor and taste. I t is a synthetic
product which renders alcohol nonpotable and can not be removed
by any practical physical or chemical process.
Completely denatured alcohol formula No. 10 was developed and
authorized as a solvent formula, A new denaturant called tecsol was
developed for tffis formula as a result of extensive research by the
Technical Division and the producers. I t is a product free from wood
alcohol, containing a definite proportion of pyroligneous bodies produced by the destructive distillation of wood. This denaturant used
in connection with pontol, denaturing grade isopropyl alcohol, and
aviation gasoline produces a formula that contains no hydrocarbons
and can be used for cutting shellac and other solvent purposes where
hydrocarbons are objectionable. Tffis formula supplies the demand
in the legitimate trade for a solvent formula that has existed for several
years.
The chemists in the Washington and field laboratories spent 3,320
•days in attending court proceedings and revocation hearings, while
290 days were spent in special investigations and inspections where
technical knowledge was essential. They are being used more and
more by adnnnistrative officers for investigating and inspecting permittees where technical knowledge is valuable. This policy of using
the technically trained men of the bureau in this manner has been
one of the factors in reducing the quantity of industrial alcohol
diverted to beverage purposes and has prevented the issuance of
permits to apphcants who were not qualified to carry on chemical or
technical operations. Practically the entire time of one chemist in
the Washington laboratory is occupied as haison officer between the
bureau and the trade using industrial alcohol, so that the permissive
features of Title I I I can be administered in a manner that wiU not
hamper legitimate industry.
The Washington laboratory examines very few enforcement samples
and devotes practically its entire time to research work and technical
matters involving the denaturization of alcohol and the vStudy of preparations and processes involving the use of alcohol wffich are submitted
for approval.
.
Review of production data
The policy of limiting the production of industrial alcohol to the
actual needs of legitimate industry, initiated January 1, 1928, is still
being followed and continues to be successful. Each industrial alcohol plant is allotted a fixed quota of the total alcohol to be produced
with a provision that only 40 per cent of the total quota for the 3^ear
could be produced during the first six months of the calendar year,
provided legitimate industries do not require an excess of that quan

156

REPORT OF THE SECRETARY OF THE TREASURY

tity. Due largely to the business depres^on very few companies
have manufactured during the present fiscal year their full quota of
alcohol, with the exception of those where alcohol is a by-product.
In the following statement comparison is made of the production
and withdrawals of alcohol, denatured alcohol, other (hstilled spirits,
and wines during the fiscal years 1931 and 1932, together with other
related information:
Comparative figures pertaining to the production of alcohol, denatured alcohol, other
distilled spirits, and wines during the fiscal years 1931 and 1932
1931

1932

Increase (+) or
decrease (—)

Alcohol produced (proof gallons)
166, 014, 346.15 146, 950, 912. 76 -19,063,433.39
Alcohol withdrawn, tax paid (proof gallons)
7, 398, 519.54
6,149, 767, 42 - 1 , 248, 752.12'
Total alcohol withdrawn tax free (proof gallons).
152.172,186. 27 135, 554,158, 07 -16,618,028.20
Alcohol withdrawn tax free for denaturation (proof
gallons)
149,303, 438,59 132, 678, 234, 75 -16, 725, 203,84Completely denatured alcohol produced (wine gallons). 49,136, 200,64
34, 298, 235, 54 -14, 837, 965,10
Specially denatured alcohol produced (wine gallons)
37,172, 740 71 44, 031, 281. 80 -f 6,858, 641. 09Cereal beverages produced (gallons)
97, 243, 528. 00 85, 741, 598. 00 -11,601,930 00
Distilled spirits other than alcohol withdrawn tax paid
(proof gallons)
1, 262,932,90
998,957. 20
-263, 975, 70)
Rum produced for denaturation and exportation (proof
gallons) —
1, 070, 719. 20
1,059,068.20
-11,651. OO
Taxes collected on wines
$228, 495. 06
$186, 563. 29
-$41,931. 77
Wineries and wine storerooms operated
397
319
-78.
Wine produced (gallons)
6, 658, 854. 00
5, 210, 453. 71 -1,448,400 29

The decrease m the quantity of alcohol produced and completely
denatured during the year is attributable, principally, to the business
depression, to the policy of the bureau of limiting production to the
actual needs of industry, and to the use of a smaller quantity of completely denatured alcohol as an antifreeze in automobUe radiators
during the past winter, as well as to the fact that a number of manufacturers formerly usmg completely denatured alcohol changed to
specially denatured alcohol, the latter being better suited to their
requirements. The increase m the quantity of specially denatured
alcohol produced durmg the year is largely due to the new and increasing use of such alcohol m the manufacture of special proprietar}^ solvents for general solvent purposes.
The manufacture of synthetic ethyl alcohol from ethylene gas has
been firmly estabhshed on a commercial basis and is now a recognized
source of industrial alcohol on a large scale. Over 14,000,000 gallons
of alcohol were produced during the year by this method.
During the fiscal year 1932 four distiUery warehouses were established. Two of these were established at distilleries for the storage of
new whisky and two were established at fruit distilleries for the temporary storage of brandy. At present there are 20 concentration
warehouses containing 14,480,929.3 gallons of distilled spirits, original
gauge. There are eight distUlery warehouses and two general bonded
warehouses containing 2,935,604.5 taxable gallons of distilled spirits,
which have not as yet been concentrated, owing to the fact that the
security, storage, and bottling facilities are adequate; and as most of
them are contiguous to a distUlery, industrial alcohol plant, or mdustrial alcohol bonded warehouse where Government offices are maintained, no additional expense for supervision is incurred by the
Government.

REPORT OF THE SECRETARY OF THE TREASURY

157

Six distUleries were operated during the year m the production of
1,711,028.5 taxable gallons of medicinal whisky, a decrease of 724,602.9gallons from the production of such spirits during the previous year.
Twenty-one fruit distilleries were operated in the production of
brandy, wine spirits, and high-proof fruit spirits, producing a total of
630,786.5 taxable gallons of such spirits, of which 99,852.7 taxable
gallons of brandy were produced for medicinal and general non-^
beverage purposes and 530,933.8 taxable gallons of brandy, wine
spirits, and high-proof fruit spirits were produced for the fortification
of wines and for nonbeverage purposes authorized under the tariff
act of 1930. This latter amount is a decrease of 188,755.7 taxable
gallons under the production for similar purposes during the previous
year.
The decrease in production of wme is attributable to conditions
within the grape and wine industry, the general depression that prevailed during the year, and somewhat heavy production in the preceding year.
Public relations and dissemination of information
The public relations and information section contmued its work of
disseminating a broad range of information relating to industrial
alcohol and nonbeverage liquors. Considerable printed material was
prepared for the purpose of promotmg better understanding by the
public of matters relating to administration of laws governing uses
of alcohol and nonbeverage liquors.
The demand for these publications was evidenced particularly in
the chemical manufacturing industries and in allied industrial lines of
activity. Much factual and statistical material was prepared in
response to requests for specific mformation of a technical character.
Many of these requests came from Senators, Congressmen, and representatives of industry. Special material along different lines also was.
prepared in response to requests for authentic technical data for use
in the press and in technical magazines.
Research work relating to expanding uses of alcohol in the manufacture of essential commercial products, the collection of authentic
research data relating to world alcohol production trends, and the
preparation of an historical review of the problem of denaturation
over a period of 26 years since the enactment of the tax-free denatured
alcohol act were important phases of the work of the section.
Administration
Each of the 12 administrative districts was examined one or more
times during the year and numerous improvements in operation were
made and some notable economies effected.
A definite program was adopted by the Bureau of Industrial Alcohol
at the beginning of the year for the purpose of coordinating ideas
looking toward improving admmistrative procedure in the field. A
questionnaire manual was issued to the field inspection staff to assist
them in standardizing procedure in the various divisions of each
district or branch office, and during the year was revised on the basis
of experience and expanded to cover practically all operations in

158

VREPORT OF THE SECRETARY OF THE TREASURY

district and branch offices, establisffing uniform, economical practice
throughout the field. Work was continued on the series of permit
inspection manuals describing the technical operations of production
•and manufacturing plants and proper methods of inspection for the
instruction of permit inspectors in the field.
At the close of the first half of the year it became increasingly
^evident that one of the most difficult problems that the field inspection
staff had to cope with was improvement in the management of permit
inspection forces in the field. Two conferences of chief inspectors
were held during the spring of this year, one in New York and the
other in Kansas City, Mo., and a definite system of managing
inspection forces was agreed upon for the instruction and guidance of
rail officers supervising permit inspectors. As a result, procedure has
been greatly simplified and marked economy of operation effected.
The Law Division of the bureau, at the head of which is the chief
counsel, performs the legal work of the bureau. I t coordinates the
.field legal work and advises the field legal offices.
Field attorneys aid and assist United States attorneys in preparing
pleadings in appeal cases, and, in some instances, prepare all the
pleadings and argue the cases in court. In all cases of appeal from
the District Courts to the Circuit Courts of Appeals, or from the
Circuit Courts of Appeals to the United States Supreme Court, field
.attorneys prepare and forward to the bureau copies of all records and
pleadings in each case, and the bureau attorneys review and examine
the cases and prepare a summary of the law and facts for presentation
to the Department of Justice, together with the recommendation of
the bureau as to whether such cases should be appealed. Thereafter
the bureau cooperates with the Department of Justice in the preparation and prosecution of such cases on appeal.
Personnel
At the close of the fiscal year there were 150 permanent employees
a t Washington and 1,520 permanent employees in the field service,
making a total of 1,670. At the end of the previous year there were
153 permanent employees at Washington and 1,565 in the field service,
a total of 1,718. During the year vacancies were left unfilled wherever it was possible to do so without actual detriment to the conduct
of business. Of the 32 employees who were serving as inspectors in a
temporary status, approximately one-third failed to qualify in the
civU service examination for probational appointment and it was
necessary to drop their names from the rolls. Tffirteen other employees were separated from the service in accordance with the provisipns
of the economy act of June 30, 1932, proffibiting the retention of
employees who have reached the retirement age prescribed for
automatic separation from the service.

REPORT OF THE SECRETARY OF THE TREASURY

159

BUREAU OF INTERNAL REVENUE
General
Internal revenue receipts.—RecQipts from internal revenue taxes
during the fiscal years 1931 and 1932 were as follows:
Summary of internal revenue receipts for the fiscal years 1931 and 1932
[On basis of reports of collections, see p. 338]
Decrease ( - ) or
increase (-H)

1932

1931

Sources

I n c o m e taxes:
Corporation!
Individual

$1, 026. 392, 699. 02
833, 647, 798. 37

$629, 566,115. 55
427,190, 581. 99

-$396, 826, 583. 47
- 4 0 6 , 457, 216. 38

Total

1, 860,040, 497. 39

1, 056, 756, 697. 54

- 8 0 3 , 283, 799. 85

48,078. 326. 89
444, 276, 502. 62
75,227,812.00
586,149. 68
6, 317. 21
13,148. 43

47, 422, 313. 00
. 398, 578, 618. 56
64,449,096.40
490, 773. 26
17,066. 70
14, 477.18

-656,013.89
—45, 697,884, 06
-20,778,715.60
-95,376:42
-1-10, 749. 49
+ 1 , 328. 75

Miscellaneous i n t e r n a l r e v e n u e :
E s t a t e s of d e c e d e n t s . . . . . _ . . . .
Tobacco manufactures, etc
O t h e r miscellaneous taxes 2
R e c e i p t s uncier n a t i o n a l p r o h i b i t i o n l a w s
Collected t h r o u g h c u s t o m s ofiices
.
Miscellaneous r e c e i p t s . .
Total...

568,188, 256. 83

•Grand total

2, 428, 228, 754. 22

500,972,345.10

- 6 7 , 215, 911. 73

1, 557, 729,042. 64

—870 499 711. 58

1 Includes income tax on Alaska railroads (act of July 18, 1914) amounting to $11,311.92 for-1931 and
$7,614.31 for 1932.
2 Includes $147,052.47 for 1931 and $79,025.51 for 1932, delinquent taxes collected under repealed laws.

In this summary tax receipts are classified accorchng to the adniinistrative organization for the audit of returns, i. e., the Income Tax
Unit, the Estate Tax Division, the Tobacco Division, and the Sales
Tax Division. A stateinent of collections by taxes in detail appears
in Table 8, page 375.
Refunds.—In the foregoing statement of receipts no deductions
have been made on account of refunds, which during the fiscal year
1932 were paid from the several appropriations as follows:
Refunding taxes illegally collected, 1930 and prior years
Refimding taxes illegally collected, 1931 and prior years.
Refunding taxes illegally collected, 1932 and prior years
Total

Sl,,396. 97
79, 187, 092. 80
1, 395, 0.14, 34
80,583,504.11

In addition to the above amount there were certain repayments as
provided under specific appropriations which were not refunds of
taxes errpneously paid under our present internal revenue laws. The
redemption of stamps repi^esents the return to the Governmeht of
stamps purchased by the taxpayer in excess of his requirements.
The stamps so redeemed during the fiscal year, including interest,
totaled $2,918,711.83. Repayments under the appropriation act
''Refuhding legacy taxes, act of March 30, 1928," totaling $726.24,
relate to claims under repealed tax laws, the interpretation of which
has been changed by court decision.
141810—32^

160

REPORT OF THE SECRETARY OF THE TREASURY

Numher of claims, amount refunded, and interest allowed on each class of tax during
the fiscal year 1932
Appropriation and class of tax

Amount refunded 1

Claims

"Refunding taxes illegally collected," for the fiscal year 1930
and prior years, 1931 and prior years, and 1932 and prior years:
Income taxes
Miscellaneous internal revenueEstate
Tobacco
Capital stock
Sales.
Spirits and narcotics .
Miscellaneous
Total
Repayments (not refunds) of taxes erroneously collected:
Redeinption of s t a m p s Tobacco
Spirits and narcotics . . .
Miscellaneous
Total
Refunding legacy taxes, act of Mar. 30, 1928

_.-

Interest allowed

$72,112, 874, 21 $17, 726, 680. 71

128,133
1,987
17
53
1,370
370
125

7,164, 611,43
1, 819.84
506, 656. 57
689, 062.75
10, 674.70
97, 804. 61

1, 080,946. 54
27,38
136,730.27
113,128.75
141.98
6, 075, 26

132, 055

80, 583, 504.11

19, 063, 730.89

712
147
2,501

399, 450.82
2, 228.84
2,517,032,17

60. 54
329, 221.96

3,360
2

2,918,71L83
726, 24

329, 282. 50

1 Including interest.

If the tax refunds during the year on account of erroneous or illegal
collections for 1932 and prior years, amounting to $80,583,504.11,
were deducted from the gross collections of $1,557,729,042.64, the
net collections for the fiscal year would be $1,477,145,538.53. The
gross collections, however, are used for comparative purposes in this
report.
Additional assessments.—The additional assessments resulting from
office audits and field investigations, which amounted to $332,363,707^61, were as follows:
Additional assessments made during the fiscal year 1932, by class of tax
Class of tax
Income taxes. . .

Amount

...

Miscellaneous int'ernal revenue:
Estate
Tobacco
- Gift
Capital stock
Sales.-Miscellaneous

1 $309, 275, 000.42

..-

- .
_-- .-

17, 958, 393.87
65, 944,85
175, 230. 20
31, 789.25
539, 437.86
4, 317, 911.07

Total

2 23, 088,-707,19

Grand total

332, 363, 707. 61

1 Includes for income taxes, $269,494,610,42 from the Income Tax Unit and $39,780,390 from the Accounts
and Collections Unit, The assessments of the Income Tax Unit include $50,973,391.84 made under the
jeopardy provisions of sees. 279 and 280 of the revenue act of 1926 and sec, 273 of the revenue act of 1928.
2 Includes for miscellaneous internal revenue, $3,819,438 from the Accounts and Collections Unit; and
$19,269,269.19 from the Miscellaneous Tax Unit.

Cost of administration.—The amount expended and .obligated in
administering the internal revenue tax laws for thecfiscal year 1932
was $33,870,903.62. This does not include the amount expended for
refunding taxes Ulegally or erroneously collected, which is in no sense
an administrative expense. The aggregate receipts of internal revenue were $1,557,729,042.64, which makes the cost of operation for
the fiscal year 1932, $2.17 for each $100 collected as compared with
$1.40 for the fiscal year 1931, when the receipts were nearly $870,500,000 greater.

161

REPORT OF THE SECRETARY OF THE TREASURY
Income Tax Unit

The Income Tax Unit has charge of the auditing and closing of all
income tax returns except certain returns of small incomes for which
the auditing problems are not .difficult. The latter are settled in the collectors' offices under the administration of the Accounts and Collections Unit. For its work, the Income Tax Unit has an organization
of auditors in Washington and a field force throughout the country.
Returns audited and closed.—The number of returns audited and
closed by the Income Tax Unit during the fiscal year 1932 is summarized in the following table:
Summary of work of the Income Tax Unit for the fiscal years 1931 and 1932
Number

Returns on hand in Washington and in the field at beginning of year '
Returns received during year:
Reopened and new
Original .\
Total.
Total to be disposed of

Returns closed during year: 2
Additional assessments, except jeopardy—
Before 60-day deficiency notice
After 60-day deficiency notice 3—
Agreement
Default
Total--.:
Jeopardy assessments
Certificate of overassessment-No change .

Total closed
Returns not closed during year:
. , Reopened or on hand for. audit in Washington and field at end of year
Awaiting action of taxpayer after the sending of 60-day deficiency notice
Involved in appeals to board during year on 60-day deficiency notice sent
during year <
_. .
..
'
Total not closed-

1931

1932

221,893

364, 700

73, 475
3, 217, 738

131, 795
2,228,510

3, 291, 213

2, 360, 305

3,513,106

2, 725, 005

111, 403

132,936

6,153
13, 291

4,941
10, 638

130,847
2,125
57, 435
2, 944, 581

148,
2
79,
2. 230

3,134,988

2 460 056

364, 70O
1, 998

515
122
025
394

254, 771
2, 397

11, 420

7 781

378,118

264 949

1 This total does not include returns with respect to which 60-day deficiency notices were sent prior to
the beginning of the year.
2 Excludes returns closed through decision of Board of Tax Appeals.
3 Includes some returns with respect to which 60-day deficiency notices were sent prior to the beginning
of the year.
< These figures do not agree with the number of returns with respect to which appeals were taken during
the year since many of such appeals were from determinations set forth in 60-day deficiency notices sent
prior to the beginning of the year. The number of the latter returns with respect to which appeals were
taken were 12,158 and 8,575 for 1931 and 1932, respectively,

^ At the beginning of the fiscal year 1932 there were 364,700 returns
on hand in the unit. Durmg the year the unit received 2,360,305
returns. Of the total received, 2,228,510 were original returns filed
covering the taxable years 1930 and 1931, and 131,795 were reopened
and new returns for the taxable years prior to 1930.
There was a substantial increase over the preceding year in the
number of cases reopened. This resulted in large part from final
court decisions which made it possible for the bureau to close, among
pther cases, those of the Osage Indians and of taxpayers residing in
States having community property laws.

162

REPORT OF THE SECRETARY OF THE TREASURY

The total number of returns before the unit for consideration during
the fiscal year was 2,725,005. The unit closed 2,460,056 returns,
without an appeal having been taken to the Board of Tax Appeals.
In addition, there were also closed during the year 6,379 returns after
action by the Board of Tax Appeals on appeals pending, making a
total number of 2,466,435 returns closed. The total included 1,947,411 individual and partnership and 519,024 corporation returns.
Additional revenue.-—The total additional revenue made available
for collection (exclusive of jeopardy assessments) was $218,521,218.58,
as compared with $242,893,237.91 the previous fiscal year, a decrease
of $24,372,019.33. The field forces of the Income Tax Unit secured
agreements to the immediate assessment and collection of $32,364,500.22, while $186,156,718.36 was assessed after consideration in
Washington.
The additional revenues are classified in the following table to show
the amounts involved as additional tax, penalty, and interest, and
also the procedure involved in reaching a settlement with the taxpayers.
Additional revenue made available for collection during ihe fiscal years 1931 a n d
1932, classified according to the tax, interest, and penalty, a n d the agreement
procedure involved
1932

1931
Amount
Tax, interest, a n d p e n a l t y :
' Tax.:
'
Interest
Penalty..

• Total.-..-...!
Rejected claims for a b a t e m e n t a n d credit
T o t a l additional r e v e n u e
P r o c e d u r e involved -in s e t t l e m e n t :
M i m e o g r a p h 3552 1.
Regular p r o c e d u r e A g r e e m e n t s executed b y t a x p a y e r w i t h o u t
60-day letters
A g r e e m e n t s executed b y t a x p a y e r a n d filed
s u b s e q u e n t t o 60-day letters
A p p e a l s n o t filed w i t h i n 60-day period
Action of B o a r d of T a x Appeals
Total

Amount

P e r cent

81.5 $173,809,724,07
15.4
36,150, 696,87
L4
1, 687, 848. 30

79,5
16.5
.8

238, 730, 523.77
4,162,714,14

98.3
1-7

211, 648, 269. 24
6,872, 949,34

96,8
3.2

242, 893, 237,91

100.0

218, 521, 218. 58

100.0

41, 002, 633. 22

17,2

32, 364, 500. 22

15.3

71, 624, 534. 22

30.0

74, 870. 038,36

35.4

31, 267, 359.72
43, 520, 692,78 51, 315, 303,83

13.1
18.2
21,5

17, 077, 637.17
28,017,041.78
59, 319, 051,71

8.1
13.2
28.0

100.0

211, 648, 269. 24

100.0

$197, 798, 730.90
37, 488, 328.48
3, 443, 464, 39

P e r cent

238,730,523,77

1 The effect of mimeograph 3552 is to shorten the interest period when the additional tax is agreed to by
taxpayer and .field, force. ^ The above figures cover assessments made during the periods May 1; 1930, to
May 31, 1931, and June 1, 1931, to May 31, 1932.

In addition to the amount of revenue thus made available, additional taxes were also assessed under the jeopardy provisions of the
several revenue acts, as follows:
Additional revenue assessed whder the jeopardy provisions of revenue acts during the
fiscal years 1931 a n d 1932
1931
U n d e r b a n k r u p t c y a n d dissolution p r o c e d u r e
R e t u r n s believed t o b e f r a u d u l e n t l y r e n d e r e d .
T o t a l assessed
Interest
Peaalties.-.l
Grand total.

$22, 611, 283. 87
13, 664, 648. 49

. . . . . '
.:

. . . .

. . . . . . .
._.

• 1932
$23,458,811.50
16,167, 409. 93

36, 275, 932. 36 .
6, 608, 210 31
7, 541, 351. 01

38, 626, 221. 43
7, 352,963. 52
4,994, 206. 89

50, 425, 493. 68

50,973, 391. 84

163

REPORT OF THE SECRETARY OF THE TREASURY

Final notices of deficiency {60-day letters).—'Durmg the year 22,456
final notices of deficiency (60-day letters) were mailed by the Income
Tax Unit, as compared with 26,670 for the previous fiscal period.
Petitions were filed with the Board of Tax Appeals involving 34
per cent of the returns with respect to which 60-day letters had been
issued. This compares with 35 per cent during the fiscal year 1931.
The following table shows the number of tax years involved in
petitions filed with the Board of Tax Appeals during the fiscal years
1929 to 1932, inclusive:
Number of tax years involved in petitions filed with the Board of Tax Appeals during
the fiscal years 1929 to 1932, by tax years
Tax year
1917
1918
1919
1920
1921
1922
1923
1924
1925

1929

1930

62
89
118
198
166
265
579
1,845
2,514

16
47
67
99
67
79
159
679
1, 094

1932

1931
30
38
50
127
86
105
174
452
617

T a x year

18 1926
.
28 1927
28 1928
86 1929
29 1 1930
82 1931
66 1932
108
161
Total

1932:

1929

1930

1931

1,947
348
13

2,054
1,233
211
5

1,288
3,164
5,643
378
5
1

246
849
1,493
5,107
269
4
1

8,144

5,810

12,158

8,575

...

Claims and overassessments.—The following table shows the number
of refund claims adjusted and the certificates of overassessment
issued, together with the ainounts of overassessments involved during
the fiscal years 1931 and 1932:
Refund claims adjusted and overassessments determined during the fiscal years 1931
and 1932
1931

•

Claims:
P e n d i n g a t b e g i n n i n g of year
Filed d u r i n g year

Number
12, 812
42, 219

1932
Number
23,879
47, 666

T o t a l to b e adjusted

55, 031

71, 545

Allowed i n full or i n p a r t
Rejected

21,147
10, 005

31, 529
15,970

31,152

47, 499

T o t a l adjusted

..-

P e n d i n g a t e n d of year

_ •-

Certificates of overassessment issued w h e n no claim h a d b e e n

filed..

A m o u n t of overassessments d e t e r m i n e d on all claims settled b y :
Abatement
.
.
Credit
.-Refund
.
Total
Interest
G r a n d total

- - . - •-.-.

23, 879

24, 046

43, 904

52, 379

Amount
Amount
$100,187, 067. 04 $111, 520, 556. 49
23, 717, 559. 31
24, 932,127.16
46, 690, 550. 30
54, 386,193. 50
170, 595,176. 65
16, 437, 404. 91

190, 838, 877.15
17, 726, 680 71

187,032,581.56

208, 565, 557. 86

NOTE.—The amount involved in claims filed during the year was $265,479,501.06, as corapared with
$293,828,780.64 the preceding year. Of the claims adjusted during the year, the amounts rejected total
$418,268,438.95, as compared with $207,611,943.68 the preceding year.

There were also allowed during the year, 8,822 collectors' claims, of
which 7,519 recommended abatements or credits and 1,303 recommended refunds. A collector's claim usually lists a number of

164

REPORT OF THE SECRETARY OF THE TREASURY

items in favor of different taypayers and those settled during the year
covered 8,892 items for abatement or credit and 69,499 for refund.
Returns on hand.—A comparative table of returns for all tax years
on hand at the close of each of the past four fiscal years follows:
Returns on hand on June SO, 1929 to 1932, hy tax years
Tax year
1917
1918
1919
1920
1921
1922.
1923.
1924
1925

1929

1930

1931

.185
232
299
400
409
575
1,111
5,019
7,305

147
222
270
367
305
466
754
1,828
2, 556

142
180
174
298
249
276
423
735
1,001

1932

1929

Tax year

150
207
251
275
261
307
373
517
677

17,104
5,814
1,630
1,101
122,286
3.713
18, 529
5,061
1 115,522 166, 800 10,172
4,380
10,496
1 23,835 237,868
1 106,491 209,921
1 22,142

1926.
1927.
19281929.
19301931.
Total..

270, 447 221,893

364, 700 254, 771

1 Figures are incomplete, since the preliminary work against the returns for the year just previous to the
end of the fiscal year can not be completed within that fiscal year.

Audit in Washington.—The following table presents an analysis of
the returns, original and reopened, pending in the several divisions
and sections of the Washington office:
Original and reopened returns under consideration in Washington, June 30, 1932.,
hy tax years
A u d i t R e v i e w Division
I n d i v i d u a l returns

T a x year

Original

Reopened

31
76
105
99
110

12
11
19
22
14

i'
4
4
2

41
48
47
60
36

421

232

2
2
8
42
169

108
124
135
189
315
2,409
2,131

17
18
33
51
58
138
278

13
14
31
34
65
98
156

36
38
58
63
109
193
334

1917
1918..
1919
1920
1921
Total
1922
1923 . . .
1924-1925.1926.1927
1928-

C o r p o r a t i o n re- Consolidated returns
turns
Reopened

Original

Reopened

Original

2
9
17

Special
Adjustment
Section

Valuation
Division

Origi-

•

ReReopened opened

•

T o tal

Original;

Reopened

27
31
31
35
28

20
30
35
44
60

4'
4
4
2

131
196
237
260
248

152

189

1,072

2
4
29
37
46
77
95

23
22
41
32
78
66
97

92
127
151
206
273
370
525

15
18
62
74
121
226
437

276
329
418
541
833
3,176
3,365

223

5,411

593

411

831

290

359

1,744

953

8,938

2,887
11,465

2,545
537

418
1,676

435
152

741
1,488

316
61

332
1,111

177
7

690
401

4,378
15, 740

4,163
1,158

14, 352

3,082

2,094

587

2,229

377

1,443

184

1,091

20,118

5,321

Grand
t o t a l . . 14, 575

8,914

2,123

1,258

2,654

1,440

1,733

695

3,024

21,085

15, 331

Total...
1929
1930
Total...

Audit in the field.—On June 30, 1932, there were 179,718 returns
for 1930 and prior years pending for verification in the offices of the
38 field divisions of the Income Tax Umt, compared with 204,014
returns for 1929 and prior years on hand, June 30, 1931.

REPORT OF THE SECRETARY OF THE TREASURY

165

Changes in tax liability were recommended by the field forces in
150,418 returns, or 32.7 per cent of the 460,624 returns disposed of
by the field during the year. On 114,555 returns, or 76.2 per cent of
those changed, taxpayers agreed with revenue agents' conclusions.
The total additional tax recommended by revenue agents during the
fiscal year was $275,942,496.80, compared with $295,338,223.99 the
preceding fiscal year.
Special Advisory Committee
The Special Advisory Committee was organized to consider cases
pending before the bureau, the Board of Tax Appeals, or the courts
fpr the purpose of attempting to reach settlement without litigation.
In those cases in which settlement is reached the final responsibility
rests with the committee subject to the approval of the commissioner.
The work of the committee over a period of approximately five years
has demonstrated that the disposition of most problems arising out
of tax disputes is and should be a matter of administration rather than
of litigation.
Conferences held before the committee are informal. The taxpayer is privileged tp present for consideration all data bearing on
his case without fear of technical objections, which might arise if
the case proceeded to hearing before the board, and it has been found
in many cases that such evidence proves a determining factor in
Teaching a settlement.
During the five years of its existence, the committee has completed
its consideration of 35,474 cases, covering 54,011 tax years, in which
the proposed deficiency tax amounted to $559,355,807.40. Settlements were effected in 22,489, or 63.39 per cent of these cases. The
remaining 12,985 cases were recommended for defense, no basis for
settlement having been reached. Further statistics of the committee
show that, of the cases included in the latter group and decided by the
board to date, the bureau has been sustained in 64.8 per cent of the
total proposed deficiencies. Of the remaining 35.2 per cent of the
proposed deficiencies which were not affirmed by the board, it is
found that the board's decisions in part covered issues not acquiesced
in by the commissioner on prior caises and issues raised before the board
but not raised before the committee.
Miscellaneous Tax Unit
The Miscellaneous Tax Unit is charged with the administration of
all taxes other than income taxes. The unit is composed of three
divisions, namely. Estate Tax Division, Sales Tax Division, and Tobacco
Division, and an Appeals and Review Section which is attached to the
office of the deputy commissioner in charge. A field force under
internal revenue agents in charge throughout the country investigates
estate and gift tax returns. The gift tax imposed by the revenue
act of 1932 will be administered by the Estate Tax Division, as was
the former gift tax levied by the revenue act of 1924, as amended.
The former Miscellaneous Division was abolished in June and a new
division known as the Sales Tax Division was established to administer
the new excise taxes imposed by the revenue act of 1932, as well as
those taxes for the administration of which the former Miscellaneous
Division was responsible. The personnel of the Sales Tax Division was

.166

REPORT OF THE SECRETARY OF THE TREASURY

increased in order to care for the additional work. There was also a
slight increase in the personnel of the Estate Tax Division. These
. increases in force were accomplished by the reassignment of personnel
from other units of the bureau.
Estate Tax Division.—Estate tax coUections amounted to $47,422,313
for 1932 as compared with $48,178,326.89 for 1931. Collection of a
large amount of tax was delayed because of the fact that numerous
taxpayers availed themselves of the privilege provided by the law
to extend the time for payment of taxes due in 1932.
The administrative work involved in auditing returns during the
year is summarized below:
Summary of audit of estate tax returns for the fiscal year 1932
Returns in field:
On hand at beginning of year
Received for investigation

__-

2, 916
8, 183

Total to be disposed of_-'_

11, 099

Major reports submitted by field force

- 8, 981

On hand a t end of 3^ear^

2, 118

Returns in bureau:
Not closed, on hand at beginning of year
Received
Total to be disposed of____

i 7, 443
8, 769
16, 212

Disposed of
On hand at end of year

.___ 10, 689
^

Protest letters of taxpayers as a result of tax determined by audit:
On hand at beginning of year
i
Received-Total to be disposed of
Disposed of__

On hand at end of year _ Deficiency tax assessed, including interest

5, 523
:_.

453
1, 674
2, 127
1, 988
139

._ $17, 958, 393. 87

Final agreements in accordance with the provisions of section 606of the revenue act of 1928 were approved by the Secretary of the
Treasury in 402 cases and 309 cases were adjudicated by the Board
of Tax Appeals.
Estate tax and gift tax abated or refunded during the year amounted
to $115,538,929.01. The gift tax abated or refunded was assessed or
collected under the revenue act of 1924, as amended. The cases disposed of and the amounts allowed and rejected during the year are
classified by refund and abatement claims in the following table. In
a large number of cases, the 80 per cent credit for State inheritance
taxes paid, allowed under the revenue act of 1926, is claimed as .a
refund or an abatement after the estate tax return is filed.

1 Of this number, 2,916 were under investigation in the field, 1,217 were reported cases awaiting audit in
the closing file, and the remaining cases were in a suspense status pending final settlement.

167

REPORT OF THE SECRETARY Or THE TREASURY

Estate tax and gift tax claims on hand, received, and disposed of during the fiscal
year 1932
Gift tax claims

E s t a t e tax claims

Number

Amount

Refund

Abatement

Refund

Number

Amount

Number

Amount

Abatement
Number A m o u n t

C l a i m s filed:
O n h a n d J u l y 1,
1931
Received during
year

419

$9,792,095.14

$105,910 11

1,546

6,996,984.99

3,389

82,951, 295. 04

68,614,11

$215,91

T o t a l to b e disposed of

1,965

15,789,08O 13

3,417

83,057. 205.15

176,753,49

216,91

1,383
257

5,023, 906.92
4,409, 263. 65

3,369
31

82,897,486.13
30,913. 79

6
4

59,768,16
116, 219. 23

216, 91

T o t a l disposed of. 1,640

9,433,170.57

3,400

82,928,399.92

174,987, 38

215.91

325

6,355, 909. 56

128,805. 23

1, 766.11

598

999,144. 64
1, 066,896. 45

1,670

26. 554,163, 59

845,18
14,050,09

3, 614,40

Allowed
Rejected

On h a n d J u n e 30,
1932.
N o claims filed, overassessments a l l o w e d . .
Interest allowed
T o t a l a m o u n t allowed,
including interest

7,089,948. 01

109,451, 649. 72

5 $108,139,38

74, 663.42

3, 614,40

Sales Tax Division.—Total collections of taxes under the administration of the Sales Tax Division amounted to $54,450,276.40 for the
year, compared with $75,227,812 for 1931. During the fiscal year
1932, miscellaneous taxes were collected under the provisions of the
revenue act of 1928, except that documentary and stock transfer
stamps, etc., purchased during the last 10 days of June were sold
at the rates provided for in the revenue act of 1932 and collections
amounting to $1,180 were received in payment of special tax stamps
covering the tax imposed by the revenue act of 1932 on the use of
certain yachts or boats after July 1, 1932. Other miscellaneous
taxes that became effective June 21, 1932, are payable on returns
due to be filed on or before the last (lay of the succeeding month.
The collections from the various taxes for the current and past
fiscal years are shown in the following table:
Miscellaneous taxes collected during the fiscal years 1931 and 1932
Source

1931

D o c u m e n t a r y s t a m p s , including p l a y i n g cards:
B o n d s of i n d e b t e d n e s s , capital stock issues, etc
C a p i t a l stock sales or t r a n s f e r s . .
Sales of produce (future delivery) . .
.
P l a y i n g cards
Total
•Oleomargarine s t a m p a n d special taxes
A d u l t e r a t e d a n d process or r e n o v a t e d b u t t e r ,
cheese, a n d mixed flour..
Admissions to t h e a t e r s , etc
D u e s a n d initiation fees
_
P i s t o l s a n d revolvers
Distilled spirits
Narcotics......
Y a c h t s a n d b o a t s ( a d v a n c e collections)
D e l i n q u e n t , u n d e r repealed laws...
T o t a l miscellaneous t a x e s .

1932

Increase (-f) or
decrease (—)

$14,757, 383.38
25, 519,972.75
1, 682, 680. 56
4,993, 559. 50

$9,198, 539. 57
17, 696,129.86
959, 319. 64
4, 386, 830. 50

- $ 5 , 558, 843. 81
—7,823, 842.89
—723, 360 92
-606,729.00

46,953, 696.19
, 2,681,428.29

32, 240,819. 57
. 1,744, 736.78

— 14,712,776.62
—936, 691, 51

11,822.36
2,778, 864.09
11, 477,723. 20
137, 921. 37
10,432,064. 49
607,339. 54
147, 052.47

8, 837,00
1, 858, 605,97
9, 204, 687,04
87, 358.40
8,703,963, 27
521,162.86
1,180.00
79,025. 51

—2,985 36
—920, 258,12
—2,273,136 16
—50, 662.97
— 1,728,101 22
—86,176. 68
-\-l, 180.00
—68,026.96

75,227,812.00

64, 450, 276. 40

—20,777,535 60

filled
.

168

REPORT OF THE SECRETARY OF THE TREASURY

The principal decrease, $7,823,842.89, which was in the coUections
pf the tax on capital stock sales or transfers, resulted from the
decrease in the volume of trading on the various stock exchanges,
and the decrease of $5,558,843.81 in the collections of the taxes on
bonds of indebtedness and capital stock issues resulted from a
decrease in the issue of capital stock and bonds.
The following table summarizes the work on Sales Tax Division
claims:
Claims received and disposed of during the fiscal years 1931 and 1932
1932

1931
Number
1,065
7, 591

Number
1,440
10,392

Total to be disposed of...
Adjusted....:

8,656
7,216

11,832
8,549

On hand at end of year

1,440

• 3.283

On hand at beginning of year._
Received or reopened

.. _

Claims allowed
Interest included in refunds

Amount
$2, 762, 557. 76
262,101.35

Amount
$11,861,829.94
585.358.76

The Sales Tax Division performs certain administrative work for
the entire unit, relating to amounts approved for assessment lists
and offers in compromise. The following paragraphs summarize
this work for the fisca) year 1932.
A total of $70,986,114.28, representing 179,346 items, was approved
by the commissioner on miscellaneous assessment hsts, which embrace assessments of all internal revenue taxes except those administered by the Income Tax Unit. These lists include all assessments, original and additional, of the miscellaneous internal revenue
taxes which are not collected by the sale of stamps and the additional assessments on the latter group of taxes. There were included
in the lists $19,269,269.19, representing 23,992 additional assessments, resulting from office audit and field investigations, including
interest totaling $1,804,978.71.
A small amount of tax liability in connection with sales, tobacco;
capital stock, estate, gift, spirits, narcotics, and miscellaneous stamp
and special taxes is compromised with the taxpayer. The off'ers in
compromise received and disposed of during the year and t h e
amounts involved are summarized in the following table:
Offers i n compromise received and disposed of during the fiscal years 1931 and 1932
1932

1931
Number

Amount

Number

Amount

•

On hand at beginning of year.
Received during year

..-

Total to be disposed of
Accepted
Rejected
Withdrawn
Total disposed of
On hand at end of year

.
.

$398, 876.09
797. 838. 73

3.345
8,002

18, 645 1.. 196,714.82

11,347

791,125. 60

9,189
279
347

495, 277. 41
131,221,41
48,349,11

9,815

674, 847.93

2,870
15, 775

14, 708
. 540
52

715,493.13
. 80,987.50
8,943. 58

15, 300

805,424. 21

. 3,345

391, 290 61

• 1, 532 .

$391, 290. 61
399, 835. 05

116, 277. 73.

REPORT OF THE SECRETARY OF THE TREASURY

169

; Tobacco Division.—Collections from tobacco taxes amounted to
$398,578,618.56 for the year, a decrease of $45,697,884.06 or 10.29
per cent, compared with the previous year. The collections from the
taxes on the various manufactures of tobacco for the last two fiscal
years are shown in the following table:
Tobacco taxes collected during the fiscal years 1931 and 1932
Increase (-f) or decrease (—)
Source
Amount
Small cigarettes
Manufactured tobacco
Large cigars
Snuff
Cigarette papers and tubes.
Small cigars
Large cigarettes...
Leaf tobacco sold..:
Total...

$358, 915,187. 84 $317, 533, 080. 02
58, 376,942.03
68,030,155. 75
18, 025, 467. 34
14, 207,679.50
7,190, 466.16
6,846, 301.69
1, 441, 826. 41
1, 700,502. 85
270, 644.10
226, 508. 98
45,815. 64
31, 659. 71
10,153.10
2, 730.06
444, 276, 502. 62

1, 578, 618. 56

Per cent

-$41, 382,107.82
-346, 786. 28
- 3 , 817, 787.84
-344,164. 47
-1-258, 676. 44
-44,135.12
-14,155.93
-7,423.04

-f 17. 94
-16.31
- 3 0 90
-73.11

-45,697,884.06

-10 29

-11.63
-.59

-21.18
-4.79

Appeals and Review Section.—The Appeals and Review Section holds
hearings in cases arising under the various tax laws administered
by the Miscellaneous Tax Unit, renders on request from the heads
of divisions opinions on questions arising in connection with the
administration of such tax 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 taxes, although a large number involve the various
miscellaneous taxes, such as documentary stamp taxes, excise taxes,
and taxes oh admissions and dues. During the year the Appeals and
Review Section held 424 hearings, prepared 393 formal opinions on
cases in which hearings had been held or on which formal opinion had
been requested by the heads of divisions, and reviewed 379 claims for
refund and abatement and 4,001 estate and gift tax cases resulting in
certificates of overassessment. There were 168 memoranda to the
commissioner recommending certain changes in 60-day letters routed
through this section for approval.
There were 124 cases on hand at the close of the year, of which
50 were held for hearings, 19 awaited further evidence from taxpayers, 4 were held awaiting supplemental reports from the field, 21
awaited reports from the Securities Section, Valuation Division of the
bureau, and 30 were under consideration.
Accounts and Collections Unit
The Accounts and Collections Unit, which is the central administrative organization for the 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 establishes accounting methods for use in collectors' offices and
the procedure for the intensive audit of the smaller individual income
tax returns; audits collectors' revenue accounts current and collectors'

170

REPORT OF THE SECRETARY OF THE TREASURY

special deposit accounts current for offers in compromise, surplus
proceeds in distraint sales and sums offered for the purchase of real
estate; issues internal revenue stamps; and compiles statistics for
officials of the Treasury Department and the public. The activities
of the field force of supervisors of accounts and collections and of
the force of internal revenue agents on sales and miscellaneous taxes
are controlled and directed by this division under the general supervision of the deputy commissioner.
There were filed in collectors' offices during the year 5,069,594 tax
returns, compared with 5,626,978 for the previous year, a decrease of
557,384. Of the total tax returns filed in 1932, there were 4,528,335
income tax returns compared with 5,027,739 filed during the previous
year, a decrease of 499,404.
There were audited and closed in this unit during the year approximately 1,840,000 income tax returns of individuals on Forms 1040 and
1040-A which showed small income, and 5,380,321 information returns
on Form 1099 were verified. Approximately 267,000 returns on
Form 1040 for the year 1930 were assigned to collectors' offices for
audit. At the end of the year there were 16,495 of these returns
remaining on hand in collectors' offices. In connection with this
audit work 172,354 income tax returns were investigated.
A total of 8,103,030,260 stamps, valued at $441,150,316.28, was
issued to collectors of internal revenue and the Postmaster General,
compared with 8,605,729,527 stamps, valued at $496,615,229.65,
issued during the year 1931. Stamps returned by collectors and by
the Postmaster General amounted to $16,200,288.40, compared
with $3,887,385.76 for 1931.
After the appropriate administrative procedure, collectors of
internal revenue transmitted to the bureau, or otherwise disposed of,
105,427 claims as compared with 135,071 during 1931, a decrease of
29,644. The number of claims on hand at the close of the fiscal year
1932 was 1,037 compared with 872 at the close of the previous fiscal
year.
During the year field deputy collectors made 228,157 revenue-producing investigations in connection with the verification of tax
returns, the discovery of delinquent taxpayers and warrants for
distraint. The total amount of tax involved in these investigations
was $43,599,828, including $32,628,961 collected and $10,970,867
reported for assessment. The amounts involved for the various
types of work were:
Additional taxes collected and reported for assessment by collectors' field forces during
the fiscal year 1932
reported
Taxes collected Taxes
for assessment
Verification of tax returns
Delinquent ta.x;payers.
W arrants for distraint
Total

.
•.

$1, 731,348
5, 502, 431
25, 395,182

$4, 980, 695
5,990,172

32, 628, 961

10, 970,867

There were 48,572 warrants for distraint served by deputy collectors
during the year, and on June 30, 1932, there were 21,056 warrants in

REPORT OF THE SECRETARY OF THE TREASURY

171

the hands of the field forces for collection as compared with 15,352
on June 30, 1931.
Special attention has been given to the discovery of the various
classes of delinquent taxes. That tffis work has been liigUy productive of revenue is evidenced by the fact that the tax collected and
reported for assessment as the result of these investigations during
the fiscal year 1932 amounted to $11,492,603.
In addition to the above amounts, the special force of internal
revenue agents working under the direction of the Accounts and Collections Unit collected and reported for assessment $927,422. '
The supervisors of accounts and collections submitted 117 reports
covering their examinations of the accounts of the various collectors'
offices compared with 122 reports submitted during 1931. . With the
exception of two districts, every collector's office was examined at
least once and most of them twice during the year.
Collectors^ Personnel, Eguipment, and Space Division.—The Collectors' Personnel, Equipment, and Space Division is charged with
the consideration and granting of allowances to collection districts
covering the employment of personnel and miscellaneous operating
expenses.
DisburseTYient Accounting Division.—The Disbursement AccountingDivision is charged with the duty of keeping the accounts in connection with expenditures from appropriations made available by Congress
for the use of the Internal Revenue Bureau and service. The division
is charged also with the responsibility and supervision of the administrative examination required by law of the disbursing accounts of 64
collectors of internal revenue and 38 internal revenue agents in
charge, including internal revenue salary payments made by the
collector of customs at San Juan, P. R,, as well as the administrative
audit of miscellaneous vouchers for transportation, equipment, telephone service, rentals, etc., paid from internal revenue funds by the
disbursing clerk of the Treasur}^ Department and direct settlements
by the General Accounting Office,
The division administratively examined and recorded 1,236 monthly
accounts of collectors of internal revenue and internal revenue agents
in charge, including internal revenue salary payments made by the
collector of customs, San Juan, P. R., together with 46,342 supporting
vouchers, in addition to which 2,785 expense vouchers of employees
and 8,009 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.
Ofiice of the General Counsel
The activities of the several divisions of the office of the General
Counsel are shown under their respective titles.
Civil Division.—^The Civil Division, in cooperation with the Department of Justice and the various United States attorneys, takes charge
of 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 Civil Division also has charge of all claims
for taxes filed in bankruptcy and receivership cases pending in both
Federal and State courts.

172

REPORT OF THE SECRETARY OF THE TREASURY

The division's major activities during the fiscal year are shown in
the following tables:
Civil cases received and disposed of during the fiscal year 1932 ^
Cases

.In court..
For suit by the XJnited States
Xien cases in court-.
Total.

Pending
July 1,
1931

Received
during
year

Closed' Pending
during
July 1,
1932
year

3,069
210
637

862
157
831

968
182
500

2,963
185
968

3,916

1,850

1,650

4,116

1 Excludes bankruptcy, receivership, insolvency, compromise and liquor cases.

Civil cases pending in courts July 1, 1931 and 1932 ^
July 1,
1932

Courts
District courts
Circuit Courts of Appeals.
Court of Claims
Supreme Court
State courts and miscellaneous
Pending payment of judgment claims

•.

Total

1 Excludes bankruptcy, receivership, insolvency, compromise and liquor cases.

Offers in compromise of pending suits received during the year
numbered 95. Compromise offers disposed of, including those pending at the beginning of the fiscal year, numbered 64, of which 38 were
accepted and 26 were rejected. The total amount of taxes sought to
be recovered in cases finally compromised was $2,125,416.72 and the
sum of $517,382.46 was secured.
The number of cases tried and decided during the fiscal year is
shown in the following table. It will be observed that the number
of decisions exceeds the number of cases tried. Tffis discrepancy is
due to the fact that a case may be tried in one year but not decided
until a subsequent year.
Tax cases tried and decided hy the Federal cditfts during the fiscal year 1932
Cases decided

Cases
tried

Court

District courts
Circuit Courts of Appeals
Court of Claims
Supreme Court
Total

_
_

For
Government

Partly
for Government
Against
and
Govern- partly
ment
against
Government

Total

236
57
107
13

148
72
84
12

•77
14
20
7

15
7
8

240
93
112
19

413

316

118

464

REPORT OF THE SECRETARY OF THE TREASURY

173

The work of the division for the fiscal year 1932, in bankruptcy
and receiversffip cases, is summarized as follows:
Bankruptcy and receivership cases closed during the fiscal year 1932
Cases
Pending July 1, 1931
Received during year..
Total to be disposed of.
Closed during year
Pending June 30, 1932

Number
1,355
1,266
2, 621
752
1,869

In the 752 cases closed relating to bankruptcy and receivership,
claims were filed in the amount of $5,901,008.76, and $890,487.32 was
collected.
Interpretative Division.—An important feature of the work of the
Interpretative Division during the fiscal year 1932 was in connection
with proposed revenue legislation which resulted in the revenue act
of 1932. About the middle of March, when Congress had a general
manufacturers' excise tax under consideration and also amendments
to the provisions of the existing laws relating to income tax and estate
and gift taxes, it was necessary that much preliminary work be done
for carrying such legislation into execution promptly in the event it
should become a law. With that end in view, attorneys from this
division were detailed to work out plans with the Miscellaneous Tax
Umt and the Income Tax Unit of the bureau. The progress of the
proposecl legislation was carefully observed and a study made of the
various provisions of suggested legislation. Outlines were drawn of
regulations which would be necessary for the administration of a
general manufacturers' excise tax law.
When it became apparent that a general manufacturers' excise tax
would not be enacted but that, instead, a measure would be passed
providing selective taxes on sales and on the use of facilities, representatives of this division, as a result of their study of the proposed
legislation, made suggestions for the elimination of inconsistencies and
for such provisions as would facilitate the admimstration of the law.
During the same period regulations were being prepared with respect
to the income tax, estate and gift taxes, and other tax legislation proposed, for the purpose of keeping this work current. This, of course,
necessitated a continuous study of the various provisions of the
proposed legislation during its consideration by the committees in
charge of the measures and also while those provisions were debated
in both legislative houses.
In connection with the preparation of regulations and during the
time when the various legislative proposals were under consideration
in Congress, representatives of this division, in cooperation with the
Miscellaneous Tax Unit and the Income Tax Unit, conferred with
representatives of manufacturers' associations, associations of dealers,
producers, and others interested with a view to the study of questions
bearing upon the effective and equitable admimstration of the laws
and the possible need for remedial legislation.
As the result of a study of such proposed legislation in the light of
previous revenue acts, court decisions, and rulings of the department.

174

REPORT OF THE SECRETARY OF THE TREASURY

some of the regulations relating to miscellaneous taxes were made
available before the effective date of the various provisions of the
revenue act of 1932 dealing with such taxes, and the preparation of
regulations relating to other taxes was materially expedited.
Review Division.—The Review Division reviews cases involving
refunds, credits, and abatements of internal revenue taxes. Public
decisions are prepared in accordance with Treasury Decision 4264
in all cases where the overassessments exceed $20,000. In cases
involving credits and/or refunds in excess of $75,000, reports to the
Joint Congressional Committee on Internal Revenue Taxation are also
prepared, as required by section 710 of the revenue act of 1928. The
class of cases reported to the Joint Congressional Committee includes
those in which consideration of appeals by the Special Advisory
Committee or by the Appeals Division has resulted in stipulations
before the Board of Tax Appeals of refunds and/or credits'in excess
of $75,000. While this division has maintained no force devoted
regularly to the original disposition of cases it has, during the fiscal
year 1932, become more active with respect to such cases through
participation with other bureau agencies in their efforts to reach final
adjustments, particularly in old cases.
There were 2,065 overassessment cases disposed of during the year,
including certificates allowing reductions in tax aggregating
$173,341,019.53. Adjustments made by this division in 140 of these
cases totaled $4,875,252.18. Some of the principles involved in these
adjustments also aft'ected the disposition of other cases pending elsewhere in the bureau.
Public decisions under Treasury Decision 4264 were promulgated
in 1,489 cases, and in 100 cases memoranda were submitted to the
Joint Congressional Committee under the provisions of section 710
of the revenue act of 1928.
As heretofore this division has regularly afforded conferences in
cases in which issues appeared to require action contrary to the
taxpayer's contentions.
. A p p e a l s Division.—This division has immediate charge for the
commissioner of all cases brought before the United States Board of
Tax Appeals, including those in which appeals are taken from decisiphs of the board to the appellate courts. Taxpayers have filed with
the board petitions for the redetermination of about one-third of the
number of deficiencies proposed in 60-day letters. Approximately
54 per cent of the cases closed before the board have been settled by
agreement. During this fiscal year 7,618 cases were filed with the
board, while 8,382 were disposed of. At the close of the year 20,469
cases, involving proposed deficiencies aggregating $707,265,709.56,.
were undetermined. Of this number, 816 were in the appellate
courts.
Forty-four field division hearings in 29 cities were held during the
year by the Board of Tax Appeals. The commissioner was represented at these hearings by attorneys from the Appeals Division.

175

REPORT OF THE SECRETARY OF THE TREASURY

Cases filed with and closed before the Board of Tax Appeals during the fiscal years
1931 and 1932
1932

1931
Cases
Number

Amount

16, 035
11, 726

$596, 715, 402. 66
247, 215, 655. 41

Total to be disposed of

27, 701

843,931,058. 07

Closed during year:
By dismissal, etc
By decision on merits
By agreed settlement _

849
1,329
4,350

Pending at beginning of year
Filed and reopened during year

Total--

Pending at close of vear..

Number

Amount

;

21, 233 $706,142, 422. 99
7,618
184, 281, 526. 75
28,851

890, 423, 949. 74

1,532
1,143
5,707

6,528

137, 788, 635. 08

8, 382

183,158,240.18

21,233

706,142,422.99

20, 469

707, 265, 709. 56

Penal Division.—The Penal Division, in cooperation with the
Department of Justice and the various United States attorneys,
passes upon criminal internal revenue cases; prepares opinions on
liability for percentage penalties for fraud, negligence, or delinquency;
and on acceptance or rejection of offers in compromise of tax cases
in which such questions are involved. The division also prepares
opinions interpreting or construing percentage penalty and criminal
statutes, and opinions on all questions of law involved in a case where
there is also a question of percentage penalty or crime. The division
also passes upon questions as to whether cases that have been closed
by agreement under section 606 of.the revenue act of 1928, and similar
provisions of the other revenue acts, should be reopened because of
''fraud or malfeasance, or misrepresentation of a material fact,"
and informers' reward claims under section 3463 of the Revised
Statutes.
The following table shows the work of the division during the last
two fiscal years:
I of by ihe P e n a l Division during the fiscal years 1931 and
1932 -

Cases received and

Cases

1932

P e n d i n g at beginning of year
Received during year

1,134
2,546

1,154
1, 552

T o t a l to be disposed of.
Disposed of
.

3,680
2,526

2,706
1, 77.3

P e n d i n g at e n d of year

£33

Special eft'ort was made finally to dispose of the older cases, both
those wffich had been in the division longest and those involving the
earlier tax years. This effort has been successful, and a considerable
number of the older cases have now been closed.
On April 11, 1932, the United States Supreme Court, in the case of
the United States v. William R. Scharton, 285 U. S. 518, construed
section 1110 (a) of the revenue act of 1926 as providing a 3-year
statute of limitations on indictments, under section 1114 (b) of that
141810—32

176

REPORT OF THE SECRETARY OF THE TREASURY

act, charging taxpayers with attempting to evade income taxes. I t
had been the position of the Government, and of some of the lower
courts, that criminal proceedings on such a charge might be instituted
at any time witffin six years after commissipn of the offense. Tffis
decision disposed of the question of criminal prosecution in 24.7 per
cent of the cases that were then being held open in the Penal Division
pei^tding trial, or presentation to grand juries, or consideration as to
reference to United States attorneys for prosecution. Section 1110
of the 1926 act has now been amended by section 1108 of the revenue
act of 1932, enacted June 6, 1932, to provide clearly and specifically
a 6-year statute of hmitations, not only where the charge is attempting to evade or defeat tax but also as to certain other offenses against
the internal revenue laws.
Administrative Division.—The activities of the Administrative
Division include the review of offers in compromise and the holding of
conferences on difficult and complicated or protested cases. The
division is charged with the supervision of the personnel, library,
manuscripts, mail, and records; and devises and inaugurates methods
of procedure, assembles and reviews efficiency ratings, interviews
applicants, and performs other varied and miscellaneous duties pertaining to the work of the General Counsel's office.
The Compromise Section was transferred from the Civil Division
and made a part of the Administrative Division as of July 1, 1931.
Tffis section passes upon compromise offers of income and miscellaneous taxes, except criminal or fraud cases, and recommends tp the
commissioner acceptance or rejection of interest and penalty cases
prepared in the income and miscellaneous tax units.
The volume of work of the Administrative Division is summarized
in the following table:
Cases received and disposed of hy the Administrative Division during the fiscal years
1931 dnd 1932
Cases

1931

1932

Pending at beginning of year..
Received during year..

905
17,113

1.307
12,633

Total to be disposed of..
Closed during year..
—

18,018
16,711

13,940
12, 708

1,307

1,232

Pending at end of year

There were 1,966 cases closed involving insolvent taxpayers. Offers
in compromise were accepted in 1,116 cases in the sum of $3,886,706.96
for assessments aggregating $11,328,077.07; in 775 cases offers in
compromise were rejected. Seventy-five cases were disposed of by
transfer or otherwise. There were 349 cases closed involving claims
against estates, assignments and miscellaneous cases. Claims were
filed in the aggregate amount of $1,428,246.06, and the sum of
$795,122.27 was collected.

REPORT OF THE SECRETARY OF THE TREASURY

177

MINT BUREAU
Institutions of the mint service
During the fiscal year 1932, 10 mint service institutions were in
operation; coinage mints at Philadelphia, San Francisco, and Denver;
assay office at New York City, 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.
Coinage
During the past fiscal year the number of coins executed was again
very small, 26,801,500 domestic coins having been made with a total
face value of $111,999,580. The value of the gold coinage amounted
to $111,015,000; silver coinage, $803,000; and nickel and bronze
coinage, $181,580.
Coins executed for foreign governments totaled 9,532,316 pieces of
silver and nickel, all made at the Philadelphia Mint, as compared with
2,355,120 pieces of gold and silver made during the.prior year.
Total domestic and foreign coinage executed amounted to 36,333,816
pieces in 1932, as compared with 100,591,620 in 1931.
Bullion deposits
The number pf bullion deppsits during the fiscal year increased to
54,105 from last year's 36,098. Each of these deposits must be
separately melted, assayed, computed, etc. Many small parcels were
received frpm individual placer miners, doubtless thus working while
more remunerative employment is unavailable; and many more small
parcels of secondary materials (old jewelry, plated ware, etc.) were
received for monetary use. These increased deposits are continuing
:in the current fiscal year and promise to reach new high records. Very
greatly increased gold imports arrived at the San Francisco Mint.
Gold and silver operations
Gold, acquired by the Government at the mint service institutions
•during the fiscal year 1932 totaled $413,057,073.88; United States gold
coin received by the mints for recoinage amounted to $2,945,294.55;
transfers of gold between mint offices totaled $11,692,940.68; the
aggregate amount of gold received by the mint service institutions
during the fiscal year 1932 was $427,695,309.11, wffich compares with
$224,713,639.03 during the prior year.
Receipts of purchased silver during the fiscal year totaled 1,051,030.55 fine ounces, the average cost of which was 28.71 cents per
ounce, the total cost being $301,737.75. Silver received in exchange
for bars bearing the Government stamp totaled 1,578,487.34 fine
ounces; United States silver coin received for recoinage totaled
4,937,147.47 fine ounces, the recoinage value being $6,825,156.35;
silver deposited in trust by other governments totaled 3,259,843.03

178

REPORT OF THE SECRETARY OF THE TREASURY

fine ounces; and transfers between mint service offices totaled 735,841.89 fine ounces, maldng the aggregate quantity of silver received
by the mint service offices during the fiscal year 11,562,350.28 fine
ounces,'as compared with 7,851,899.24 ounces during the prior year.
The New York market price of silver during the fiscal year averaged
$0.29404; the lowest price was $0.269375, on June 30, 1932; and the
highest price, $0.375625, on November 10, 1931.
Refineries
The refineries at the San Francisco and Denver Mints produced
1,602,238 fine ounces (54.9 tons) of electrolytically refined gold during
the fiscal year, which compares with 1,365,444 fine ounces (46.8 tons)
in the prior fiscal year; and 1,855,387 fine ounces of electrolytically
refined silver (63.6 tons), which compares with 1,811,491 fine ounces
(62.1 tons) in the prior year. The New York electrolytic refinery did
not operate during the year.
The stock of gold and silver in unrefined b.ffilion increased during the
fiscal year b}^ about 136 tons to 665 tons, as compared with the prior
year's increase of about 89 tons.
New design coin
A new design for the quarter dollar was authorized by the act of
March 4, 1931, as an incident of the bicentennial celebration of the
birth of George Washington. A portrait head of Washington is the
principal feature of the design, which is by the sculptor John Flanagan. On the reverse is an eagle with wings spread, standing on a
bundle of arrows; and beneath, two olive branches are shown. Inscriptions are those required by law.
Washington bicentennial medal
The y^?^ ashing ton bicentennial medal, authorized by the act pf February 23, 1931, which provides for commemorating the two-hundredth
anmversary of the birth of George Washington, was executed at the
Philadelphia Mint. The portrait bust of George Washington is in
mUitary umform, and a shield bearing his coat of arms separates the
years 1732-1932, On the reverse appears a full-length figure symbolizing libert}^ stcanding with arms outstretched on the prow of the
ship of state, a torch in the right hand and a sword in the left; above
the figure is an eagle with wings spread, and 13 stars scattered in the
field. The inscription on the obverse is *' Washington "; on the reverse,
'^Proclaim liberty throughout all the land." The design is by Laura
Gardin Fraser, sculptor.
Housing
The new building for the New York assay office was practicall}^
ready for ocPupancy at the end of the fiscal year. I t is located on the
East River water front at Old Slip, South, and Front Streets, about
six blocks from the old Wall Street site which has been sold by the
Government. I t covers an area of about 195 by 142 feet, is five
stories in height, with much greater floor area than the old building
provided.
The Seattle assay office moved, in February, 1932, from the rented
building at 617 Ninth Avenue which it had occupied since the office

REPORT OF THE SECRETARY OF; THE TREASURY"

179

was established in 1898, to its quarters on the top floor of the new
immigration station and assay office building at Fifth Avenue South
and Airport Way. The entire top floor was specially arranged for the
assay office.
The old Mint Building at New Orleans was vacated by the New
Orleans Mint (operated as an assay office only) in June, 1931. Much
smaller but adequate quarters were made available in the Custom
House, where the mint is now located.
The Boise assay office is soon to occupy quarters specially arranged
for it. in a new Federal'building.
Gold and silver in the United States
Stock of coin and monetary bullion.—On June 30, 1932, the estimated stock of domestic coin in the Umted States was $2,765,212,687,
of which $1,793,828,454 was gold, $540,007,911 standard silver dollars, $304,882,996 subsidiary silver coin, and $126,493,326 minor coin.
The stock of gold bullion in the mints, assay offices, and Federal
reserve banks on the same date was valued at $2,124,767,363, a decrease during the year of $1,132,720,046; the stock of silver bullion
was 21,721,223.09 fine ounces, an increase of 5,397,519.59 fine ounces.
Production of gold and silver.—Domestic gold production during the
calendar year 1931 was $49,527,200, as compared with $47,247,600 in
1930. The output was about 49 per cent of that for the record year
1915, when the total was $101,035,700.
Domestic silver production during 1931 totaled 30,932,050 ounces,
valued at $8,970,294. This compares with 50,748,127 ounces, valued
at $19,538,029, for 1930, and with the record production of 74,961,075
fine ounces, valued at $37,397,300, for 1915.
Industrial consumption of gold and silver.—Gold consumption in the
industrial arts during the calendar year 1931 is estimated at $29,157,865, of which $5,930,780 was new material. SUver used in the arts is
estimated at 33,682,119 fine ounces, of which 24,335,838 fine ounces
was new material. As compared with the prior year, sUver consumption was about 2,700,000 ounces less and gold consumption about
$13,500,000 less.
Net import and export of domestic gold coin.—The net import of
domestic gold coin during the fiscal year, according to statistics compiled by the Bureau of Foreign and Domestic Commerce, was
$32,675,722; during the prior fiscal year there was net import of
$213,742,550. During the 18 fiscal years 1915-1932, since the open-,
ing of the Worid War, there has been a net export of $776,210,798 of
domestic gold coin; since 1870 the net export has been $1,653,859,862.
Appropriations, expenses, income, etc.
Appropriations available for the mint service during the fiscal year
1932 totaled $1,731,920, and reimbursements to appropriations for
services rendered amounted to $102,324.15, maldng a total of
$1,834,244.15.
Expenses amounted to $1,552,048.70, of which $1,543,209.26 was
chargeable to appropriations and $8,839.44 chargeable to income.
The income realized by the Treasury from the mint service aggregated $1,010,838.26, of which $402,421,54 was seigniorage. The

180

REPORT OF THE SECRETARY OF THE TREASURY

seigniorage on subsidiary silver coin was $276,133.38; on nickel coin,
$27,822.44; and on bronze coin, $98,465.72.
The number and value of deposits, transfers, gross income, and
expenses for the fiscal year 1932, and the number of employees on
June 30, 1932, at each institution are shown in the following table:
Deposits of gold and silver, income, expenses, and employees, hy insiitutidns, fiscal
year
Numberof
deposits
of gold
and
silver

Institutions

Philadelphia
San Francisco
Denver
N e w Y o r k City
N e w Orleans
Carson C i t y
Boise
:
Helena
Seattle
Salt L a k e C i t y .

12,399
^. 15,899
3,811
15,105
704
612
_
668
556
2,228
89

Number of
mint
service
transfers
490
1,317
96
131

EmExcess of in- ployees
Coinage value
Gross income Gross expense come (-I-) or of J u n e
of gold a n d
expenses ( - )
silver received
30,1932

$14, 332, 531,19
222,634,088,19
14,848.848.28
174,970, 737.47
463, 770. 31
173,778.42
253,340 89
137,434.86
10, 310, 558. 67
30,446.43

$452,956. 36
196,399. 31
98,873. 28
253,944. 67
1, 220. 86
809. 68
1, 563. 21
1,319. 79
4, 991. 27
578. 86

$615,096. 24 -$162,139.88
246,390, 37
-49,991,06
195,399.04
- 9 6 , 525. 76
382,449. 85 -128,505.18
13,619.65
-12,398.79
6, 298. 74
-5,489.06
7,976. 86
-6,413.65
6, 722. 62
-5,402.83
33,447, 73
-28,456.46
4,401. 37
- 3 , 8 2 2 . 51

248
96
79'

a
4
3
9
2

52,071

2,034

438,155, 534, 70

1,012, 657. 29

1, 511,802. 47
42,065. 26

-499,145.18
- 4 2 , 0 6 5 . 26

G r a n d t o t a l . . - 52,071

2,034

438,155, 534. 70

1,012, 657, 29

1, 553,867. 73

-541,210,44

574

1,291

236,072, 559.17

1, 633,157.17

1, 567, 330. 73

-1-65,826. 44

612

Total
B u r e a u of t h e M i n t

Prior fiscal year

34,807

561
13

BUREAU OF NARCOTICS

Activities
Following the policy of the previous year the activities of the
bureau have been directed mainly toward the apprehension of the
major law violators in an endeavor to eliminate the sources of supply
of narcotic drugs and the main channels through which such drugs
are illicitly distributed, as well as to exercise control of the legitimate
manufacture and distribution of drugs for medical purposes.
In the pursuit of these objects, close cooperation has contmued
between the Bureau of Narcotics and the Bureau of Customs, supplemented by the arrangements for the international exchange of
information relating to illicit shipments proceedmg from one country
to another.
. Very satisfactory progress has been made in a number of districts
m developing the cooperation of State, county, and municipal authorities in dealing with minor violators under local laws and in providing
for the institutional treatment of addicts within their respective
jurisdictions. The special representative of the Bureau of Narcotics
continued to visit officers of the several State licensing boards and the
officers of many of the State medical associations to solicit cooperation in the matter of revocation or suspension of licenses to practice
medicine, dentistry, or pharmacy with respect to those licentiates
who have been convicted of violatmg the Harrison narcotic law or
who were suspected of being narcotic drug addicts.
The Bureau of Narcotics also continued to cooperate with the
Conference of Commissioners on Uniform State Law^s by submitting

REPORT OF THE SECRETARY OF THE TREASURY

181

suggestions and recommendations to that organization with respect
to a draft of a uniform State narcotic law which is being prepared
by the conference. A final draft is expected to be ready for submission
to the legislatures of the several States in the near future.
The unusual success in detecting and confiscating illicit shipments
of narcotic drugs during the previous year so effectively discouraged
attempts at smuggling that the supply of drugs available to the addict
and illicit peddler has been materially limited. As a consequence
there has been a noticeable increase m the robbing of legitimate
stocks and the forging of order forms and prescriptions to procure
supplies of drugs.
The reduced attempts at smugglmg and the limited supply of drugs
available to the addict are reflected in the statistics of seizures of
drugs in the illicit traffic during the year. Narcotic drugs seized at
ports or border points amounted to 15,801 ounces as compared with
66,674 ounces during the previous year. Narcotic drugs seized or
purchased as evidence from illicit sources by Federal narcotic enforcement officers amounted to 8,334 ounces as compared with 41,622
ounces during the previous year. This decrease in the supply of drugs
in the illicit market is also due, in part, to the effective cooperation
of certain European governments in limiting the manufacture of drugs.
The bureau has continued to receive the cooperation of the Division
of Mental Hygiene in the United States Public Health Service in determining quantities of crude drugs to be permitted importation mto
the United States, and with reference to other matters connected
with narcotic law enforcement.
The following table shows the number of cases of violation, by registered and nonregistered persons, of the narcotic laws and of the acjt of
January 17, 1914, which regulates the manufacture of smoking opium;
and the cases disposed of during the year.
Violations of ihe narcotic laws and ihe cases disposed of during the fiscal year 1932
Under narcotic
laws other than
the act of Jan.
17, 1914
Cases
Register- Nonregistered
ed perpersons
sons
Pending July 1, 1931Reported during 1932

Total to be disposed of
Convicted
Acquitted
Compromised ^
Dropped

.--

Total disposed of,..
Pending June 30, 1932

Under
act of
Jan. 17,
1914

1,824
4,398

16
7

1,172

6,222

104
12
174
407

2,944
124
7
1,602

697

4,677

475

1,545

469
703

i includes 10 cases involving tax liability which were closed on payment of taxes and penalties.

One hundred and nine aliens were ordered deported during the year
for violation of or conspiracy to violate narcotic laws and the cases of

182

REPORT OF THE SECRETARY OF THE TREASURY

163 persons reported to the Department of Labor for such offenses
were pending at the close of the year.
Fines imposed during the year for violations of the narcotic laws
amounted to $151,253.52. There were 171 cases compromised, resulting in payment into the Treasury of $20,007.50.
Extent and trend of narcotic trafiic
On June 30, 1932, there-were 331,063 registrations under the Harrison narcotic law, as amended, 253 as importers and manufacturers,
1,523 as wholesale dealers, 52,539 as retail dealers, 148,556 as practitioners, and 128,192 as dealers in and manufacturers of untaxed narcotic preparations, the latter number including registrants not required
to pay occupational tax in tffis special classification by reason of paying another occupational tax under the act.
During the year 145,458.33 pounds of opium were imported as
compared with importations of 134,092.75 pounds during the previous year, or an increase of 11,365.58 pounds. Importations of coca
leaves for medicinal purposes amounted to 223,388.70 pounds as
compared with importations of 221,997.50 pounds during the previous year, or an increase of 1,391.20 pounds.
A further quantity of 98,695 pounds of coca leaves was imported for
purposes other than medicinal, that is to say, for manufacture of
decocainized coca extracts as provided by section 6 of the act of June
14, 1930.
Exports of narcotic drugs of all kinds amounted to 3,536 ounces in
1931 and 4,402 ounces in 1932, or an increase of 866 ounces. The
drugs exported during 1932 involved 46,963 taxable ounces of products.
The net quantity of pure drugs of all kinds sold to domestic purchasers by manufacturers amounted to 350,932 ounces as compared
with sales of 382,857 ounces of such drugs during the previous year.
The drugs thus sold to domestic purchasers involved 3,881,895 taxable
ounces of products.
The control of the legal importation, manufacture, and distribution of narcotic drugs continued to be reasonably effectual. The
quantit}^ of drugs of domestic manufacture wffich was diverted to illicit
use remained comparatively negligible, notwithstanding the tendency
toward petty diversions through the robbing of stocks and the forging
of order forms. Wffile smuggling and the subsequent selling of opium,
morpffine, heroin, and cocaine continued to present the principal enforcement problem, the bureau, as previousl}^ stated, also continued its
efforts to secure an efficient degree of State cooperation to supplement
the Federal enforcement activities hereinbefore outlined.
Personnel
The personnel of the Bureau of Narcotics on July 1, 1931, consisted
of 105 employees on the bureau roll and 323 employees on the field
roll, a total of 428 employees. At the close of the fiscal year there
were 105 employees on the bureau roll and 320 employees on the field
roll, a total of 425 employees.

REPORT OF THE SECRETARY OF THE TREASURY

183

PERSONNEL CLASSIFICATION OFFICER

Appeals and classification sheets
The total number of classification sheets handled by the personnel
classification officer during the fiscal year 1932 was 20 per cent less
than the number acted on during the previous year. The number of
individual appeals presented for change in grade was approximately
55 per cent less than during the previous fiscal year.
The decrease in the number of classification sheets handled was due
primarily to the President's request that no promotions be made, as
well as to the fact that only absolutely necessary vacancies were filled.
Also, the survey of the Bureau of Internal Revenue undertaken by the
Personnel Classification Board was practically completed at the close
of the fiscal year 1931, and the personnel of the Supervising Arcffitect's Office had about reached its peak by that time.
The following table presents- a summary of the appeals acted on
during the year:
Appeals

Carried over from fiscal year 1931
P r e s e n t e d d u r i n g fiscal year 1932:
. Individual
.
Group
-

Number
of appeals

124
83

124

. T o t a l to b e disposed of
Approved:
1931...
1932-—

Number
of persons
involved

132

207

216

361

11
21

33
21
32

Disapproved:
1931
1932.--

-..

29
81

39
126
165

110
Canceled:
1931• 1932
T o t a l acted on—
1931
1932.
Carried over to fiscal year 1933:
1931
1932

43
108

84
153

41
24

70
54

Efiiciency ratings
The total number of employees rated as of May 15, 1932, was 8,902
and the average for the entire department was 88.13 per cent.
Special investigation was made of every case where the efficiency
rating given the employee would involve a reduction in salary, a
reduction in grade, or dismissal, under the rules as laid down.
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 issue. I t is also responsible for the

184

REPORT OF THE SECRETARY OF THE TREASURY

issue of bonds or other obligations of Puerto 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 cancelled as unfit and mutilated paper (spoilage, etc.) received from the
Division of Paper Custody and the Bureau of Engraving and Printing.
Issue and retirement of securities.—The following is a summary of
the activities'during the fiscal year in connection with the issue and
retirement of securities conducted through this division. Complete
detaUs of all transactions in public debt securities are presented in
formal statements elsewhere in the report.
Issues, retirements, and transactions in stock of United States securities during the
fiscal year 1932
[Par value]
Registered

Nonregistered

Total

ISSUES

Stock shipments to Federal reserve banks:
For exchange- transaptions
Allotment for original issue
Original issue by the division
Securities issued on exchange
Total securities issued and shipped.

2 $2,120, 226, 670. 00
789,647, 980. 00
2, 909,874,650 00

$3, 777, 349, 60O 00 $3, 777, 349,600 00
1 14,159, 365, 900. 00 14,159,365,900.00
11, 284, 860 00 2,131, 611, 630.00
53,115, 490 00
842, 763,470.00
18,001,116,850 00

20, 910, 990, 60O 00

422,333, 680 00
1,694, 398. 75

842,763,470.00
2.083,953. 203.. 76

RETIREMENTS

Securities retired on exchange
Securities cleared for redemption
Securities retired on other accounts (i. e.,
claims, credit, and exchange authorization
retirements)
Total securities retired..

420, 429, 790 00
2 2, 082, 258,805. 00
407, 407, 925. 00

30, 855. 00

407, 438, 780. 00

2, 910, 096, 520. 00

424, 058, 933. 75

3, 334,155,453. 76

STOCK ACTIVITIES

Securities received from Bureau of Engraving
and'Trinting.
Securities restored to stock by Federal reserve
banks
...
Stock cancelled and delivered to Register of
Treasury:
S ecurities
Detached matured coupons (15,914,775
pieces)

2 2, 955, 306, 840 00 19, 383, 046, 600. 00 22, 338, 363, 440.00

4, 747, 240 00

44, 776, 550. 00

44, 776, 550.00

660, 890, 850. 00

665, 638, 09O 00

432, 512, 234. 74

432, 512, 234, 74

1 Includes Treasury bills available for either original issue or exchange, amounting to $6,847,416,000.
* Includes,special 1-day certificates,of indebtedness amounting to $1,656,000,000.

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 accounts open on
June 30, 1932, were as follows:
Number
of
accounts
Interest-bearing loans:
Pre-war loans...
Liberty and Treasury loans.
Treasury notes and certificates of indebtedness.
Total interest-bearing loans
Noninterest-bearing loans, Liberty and Victory and postal savings.
Total open accounts

Principal

19,864 $767,891, 720
867, 593 2, 345, 387, 300
308,970,000
13
,87, 475 3, 422, 249,020
1, 204, 680
5,931
893, 406 3, 423, 453, 700

185

REPORT OF THE SECRETARY OF THE TREASURY

There were 89,105 individual accounts closed for registered Liberty
bonds. Victory notes, and Treasury bonds, and 28,559 accounts were
decreased, representing the retirement of securities amounting to
$512,097,000 par value. In connection with the same loans, 96,845
new accounts amounting to $482,103,350 principal were opened.
Thirty-four thousand five hundred and eighty 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 by means of 1,719,750 checks, amounting to $94,569,434.96.
On registered securities of the pre-war loans, 47,049 checks for
$15,866,207.50 were issued and there was certified to the Treasurer
interest payable amounting to $8,102,963.09 on registered Treasury
notes and certificates of indebtedness. There were received from the
Bureau of Engraving and Printing 1,842,650 checks as stock, and
there were cancelled and delivered to the Destruction Committee stock
consisting of 202,062 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:

Received

Settled b y Reissue or r e d e m p t i o n of s e c u r i t i e s . . .
Recovery of securities
Disallowance of claims
o t h e r disposition L T o t a l settled

• . .:
. ..

Number
of claims

Number
of securities
(pieces)

2,966

9,144

$832,041. 61

1,852
613
67
146

4,781
1,253
273
569

277, 340 61
515, 265. 00
21, 540. 00
2, 795. 00

2,678

6,866

816, 940. 61

Par amount
of securities

1 War savings cases sent to Surrenders Section for settlement because of question of ownership.

Sah-keeping of securities.—At the beginnmg of the year there were
securities amounting to $345,743,150 in safe-keeping for various
Government offices, against which formal audited receipts were outstanding. Throughout the year securities amounting to $622,319,400
were received for safe-keeping and receipts therefor issued, and securities amountmg to $605,066,300 were delivered from safe-keeping
upon the surrender of outstanding receipts, leaving a balance of
securities amounting to $362,996,250 in safe-keeping June 30, 1932.
: Mutilated paper and redeemed currency.—Mutilated paper verified
and delivered to the Destruction Committee consisted of 21,706,953
sheets and coupons, of which 20,655,099 sheets and coupons were
received from the Bureau of Engraving and Printing and 1,051,854
sheets from the Division of Paper Custody.

186

REPORT OF THE SECRETARY OF THE TREASURY

Redeemed currency counted and delivered to the Destruction
Committee during the year amounted to 690,393,302 pieces, representing $1,245,621,854.44, detaUed as follows:
Number of pieces and amount of redeemed currency delivered to the Destruction Committee during the fiscal year 1932
Number of
pieces

Currency retired from circulation as unfit

Face value

OLD S E R I E S

United Statesnotes
Silver certificates
Gold certificates
Treasury notes '
Fractional cm-rency
Total-

1,899,238
5, 325, 877
2, 026,609
2,396
6,073

$6,856, 231. 00
6, 212, 987. 00
49, 338,800. 00
17,100. 00
1, 354. 44

9, 260,193

62,426, 472. 44

73, 431, 520
586, 383, 939
21, 317, 650

306, 851. 419.00
586, 378,113. 00
289, 965, 850. 00

N E W SERIES

United states notes
Silver certificates ^
Gold certificates
Total

. .-

-..

---

Grand total _ .

681,133,109

1,183,195,382.00

690,393, 302

1, 245,621,854. 44

1 Slight excess of pieces is due to redemption of exact half notes at half value.

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 320,000 printed circulars were distributed
to the public during the 3^ear by this means.
Register of the Treasury
The Register of the Treasury performs the final audit and has
custody of all retired Federal securities, including interest coupons,
together with the securities of the insular possessions. All public
debt securities redeemed by the Treasurer of the United States must
be finally audited by the Register and certification thereof made to
the Comptroller General before credit is extended to the Treasurer
for amounts expended. The Register also establishes 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.
The following comparative statement sets forth, by class of security,
the total number of documents, together with the face value thereof,
which were received, examined, and filed in the Register's office during
the fiscal years 1931 and 1932:

187

REPORT OF THE SECRETARY OF THE TREASURY

Securities received, examined, and filed in the Register's office during the fiscal years
1931 and 1932
1932

1931

Class of security
Pieces

Amount

Pieces

Amount

REDEEMED

Bearer

United]States securities:
Pre-war loans
Liberty loans
Treasury bonds .
Treasury notes
Certificates of indebtedness
Treasury bills
-Treasury (war) savings securities
Interest coupons
Total

38
40,432
2
148, 986
79, 342
11, 963
256,868
17,
419,
282
-.

$5,470.00
3, 966, 800.00
1,000. 00
1,141, 491,950. 00
1, 431, 579, 200.00
771,149,000.00
404, 044. 03
449,159, 752.86

142
21,926
6,196
110, 523
103,802
40, 933
200, 735
16,175, 976

$10, 210. 00
2, 541, 700. 00
94, 269, 550. 00
475, 527, 650. 00
2,106, 251, 550.00
2,150, 724, 000. 00
320, 473. 08
469, 077,116. 99

17, 956, 913

3, 797, 757, 216. 89

16, 660, 233

5, 298, 722, 250. 07

41
4,199
645
309
17,435
2

66. 880. 00
938, 250.00
904, 507, 000. 00
1, 675, 700, 000.00
611, 555.98
4.24

1,950
1,836
108
923
12, 971

497, 580. 00
389,400. 00
14, 542, 000. 00
2, 066,100, 000.00
412, 281. 20

Registered

United States securities:
Pre-war loans..
Libertyloans
Treasury notes.
Certificates of indobtedness
Treasury (war) savings securities
Interest checks (Liberty loans)
Total
Total redeemed

22, 631

2, 581, 823,690.22

17, 788

2,081, 941, 261. 20

17, 979, 544

6, 379, 580, 907.11

16, 678,021

7, 380, 663, 511. 27

1,304
1, 019, 218
90, 399
70,039

1, 004, 480.00
923, 039, 850.00
499, 552, 800.00
449, 605, 950.00

1,557
794, 094
204, 004
41, 477

1, 036,290. 00
1,800,010, 500.00
1,141, 794,100.00
552, 968, 900. 00

43
80, 636
530
-1

8,450.00
1, 339, 425, 000. 00
21,806,000.00
-6.00

53
108, 632
7, 534

5, 40O 00
1, 849, 716, 30O 00
402, 646, 000.00

RETIRED ON ACCOUNT OF EXCHANGES FOR
OTHER SECURITIES, ETC.

Bearer

United States securities:
Pre-war loans
.•
Libertyloans . . . .
Treasury bonds
Treasury notes
First Z.H per cent Liberty loan interim
cer ti ficates
Certificates of indebtedness
Treasury bills
Treasury (war) savings securities
Securities not affecting public debt, insular possessions loans
Total

5,985

5, 985, 000.00

635

635,000.00

1, 268,153

3, 240, 427, 625.00

1,157,986

5,748,811,490.00

14, 060
205, 998
13, 336
18

80,686, 710. 00
428, 444,650.00
167, 637, 550.00
512, 513,.00O 00.
122, 500,"000.00
- 3 0 . 00

39,071
191,653
18, 577
6
37
-32

144, 320, 790. 00
369, 715, 450.00
141,992,150.00
la, 5.64, 000..00
149, 000, 000.00
-160.-00

Registered

UnitedlStates securities:
Pre-war loans
_ ..
. Liberty loans
Treasury bonds.
.Treasury notes.Certificates ofindebtedness
Treasury (war) savings securities
Securities not affecting public debt, insular- possessions loans...
Total
Total retired on account of exchanges, etc

• 4

-6
2,. 184

4,v283i-500.00

l,-97i'

.4,.174, 000.00

235, 594

1, 306, 065, 380. 00

251, 283

827, 766, 230.00

1,503,747

4, 546, 492, 905. 00

1, 409, 269

6, 676, 577, 720. 00

283
19, 579
4
68,066
134,052
13, 456
32
637, 358

152,870.00
14, 984, 700.00
4, 000.00
425, 430, 250.00
734,823, 500.00
1, 298, 387,000.00
160.00
487,993, 733. 01

UNISSUED STOCK R E T I R E D

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
CertiQcates o f i n d e b t e d n e s s
T r e a s u r y bills
^
T r e a s u r y (war) savings securities
Interest coupons
Securities.not affecting p u b l i c d e b t , insular possessions loans
Total..::

...:.-

3,009
30
333,125
121, 955
16, 618
5, 794, 463

6,269,207

167,800. 00
245, 000. 00
626, 784, 750. 00
736, 932, 000.00
310,-549, OOO 00
35. 00
414,100, 466. 64 16,

2, 088, 779,051. 64

150

150,000.00

16, 872, 980

2, 961, 926, 213. 01

188

REPORT OF THE SECRETARY OF TE:E TREASURY

Securities received, examined, and filed in the Register's office during the fiscal years
1931 and 1932—Continued.
1932

1931

Class of security
Pieces

Amount

Pieces

Amount

UNISSUED STOCK RETIRED—Continued
Registered
United States securities:
Pre-war loans
loans ,
Liberty
Treasury bonds
J
Treasury notes
Certificates of indebtedness
Securities not affecting public debt, insular possessions loans
Railroad loans
--

32
115
7

$113,000,00
494, 500. 00
14, 000.00

4, 889227
246
20
20

$1,186,280.00
222,950.00
1,191,650. 00
No value.
No value.

5,183

24, 099, OOI). 00

669
2

2, 335,000.00
6,000.00

5,337

Total

24, 720, 500.00

6, 274, 544

Total unissued stock retired

2,113,499,551.64

6,073

4,941,880. do

16, 879, 063

2,966,868,093.01

1,982
835, 599
210, 204
220,066

1,199, 370.00
1,817,536,900.00
1,236,067, 650.00
1,453,926,800.00

RECAPITULATION

Bearer
United States securities:
1,342
Pre-war loans
loans
1,062, 659
Liberty
-.
Treasury bonds.
90,431
552,150
Treasury notes
-First ZH per cent iJiberty loan interim certificates
43
Certificates of indebtedness
281,933
Treasury bills
29, 111
Treasury (war) savings securities
256, 874
23, 213, 745
Interest coupons
Securities not affecting public debt, insular possessions loans
5, 985

1,009,951). 00
927,174,451). 00
499, 798,80). 00
2, 217, 882, 651). 00

8, 451). 00
53
3, 507, 936, 20). 00
346,486
1,103, 504,00). 00
61,923
404,074,03
200, 767
863, 260, 21'), 50 32,813,334
5,986,00). 00

25,494, 273

Total

786

6 400 OO
4,690, 791, 350.00
3,851, 756 000.00
320, 633.08
957,070, 850.00
785,000.00

9,126, 963, 793. 53 34, 691,199 14,009,469,953,08

Registered
United States securities:
Pre-war loans
,.; .Libertyloans
_;—.. — .._.
•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
Total. -

14,133
210, 3^2
^13,343
663
313
17, 429
2
7,367
263, 662

Grand total.

25, 757,835

80,866; 59). 00
.,.429, 877, 40). 00
157r 651, 55100
1,417,020,00). 00
1,798,200,00). 00
611, 525. 98
4.24

146,004,650.00
45,910
193, 716 ,„., 37ft 327,800.00
143,183,800.00
18,823
134
33,106,000.00
980 2, 215,100,000.00
412,121. 20
12, 939

28, 382, 500.00

2,640
2

6, 509,000,00
6 000.00

3,912, 609, 570. 22

275,144

2,914, 649, 371. 20

13,039, 573, 363. 75 34,966, 343 16, 924,109, 324. 28

Numerical ledgers are maintained in whicii are recorded by code
the source and various transactions connected with each bearer
security functioned in the Register's office, e5:cepting Treasury (war)
savings securities. Inquiries from various Eigencies of the Federal
Government and the public involving over 85.000 items were handled
during the fiscal year 1932.
Division of Public Debt Accounts and Audit
This division maintains administrative control accoimts for all
official transactions in the public debt conducted by the various
Treasury offices and the Federal reserve baiiks as fiscal agents of the

REPORT OF THE SECRETARY OF THE TREASURY

189

Umted States, and also for transactions involving paper used for
printing public debt securities. United States currency, stamps, etc.,
and other miscellaneous securities and documents in the Bureau of
Engraving and Printing. Numerous administrative audit functions
are performed in connection with the foregoing. The division also
maintains control accounts for various classes of unissued currency
in reserve stocks of the Treasurer of the United States and the
Comptroller of the Currency, and conducts administrative examinations and physical audits of such unissued stocks of currency, and of
cash balances in custody and collateral securities held in trust in the
offices of the Treasurer of the United States.
During the year 137 physical audits were engaged in by a force of 19
auditors and audit clerks regularly assigned to this work, which force
was augmented in some of the larger audits by additional auditors
and assisted by groups of counters. These audits involved securities,
currency, paper, interest checks, etc., amounting to about $30,000,000,000 in face value and 100,000,000 in number of pieces.
During the year this division determined and certified credits to the
cumulative sinldng fund and amounts in the sinking fund available for
expenditure from time to time, interest on all classes of public debt
securities'iwhich became due and payable on their respective interestpayment dates, and the amount of each form of pubhc debt securities
and unpaid interest outstanding each month. I t prepared estimates
of interest to become payable on public debt securities in future
fiscal years and expenditures to be made on account of retirements for
the sinking fund and other special accounts, and prepared statements
showing the accountability of Federal reserve banks for public debt
securities for the use of Federal Reserve Board examiners in their
periodical examinations of those banks. Numerous data pertaimng to
public debt transactions for various interested offices and individuals
were also compiled.
Division of Paper Custody
A summary of the operations of the Division of Paper Custody
during the fiscal year 1932 is presented in the following tables:
Receipts and issues of distinctive and nondistinctive paper during ihe fiscal year 1932
Kind

D i s t i n c t i v e p a p e r for U n i t e d States currency, Federcal
reserve notes, a n d n a t i o n a l b a n k currency, new
series, 12 subjects
B a n k n o t e paper, experimental
U n i t e d States b o n d p a p e r P a r c h m e n t , artificial p a r c h m e n t , a n d p a r c h m e n t deed
paper....
Miscellaneous p a p e r
....-.-..^..
P h i l i p p i n e • Isla^nds, '••distinctive ^paper for P h i l i p p i n e
currency
Postal card
Total

On h a n d
J u l y 1,
1931

On h a n d
J u n e 30,
1932

Receipts

Issues

Sheets
31, 785, 774
9,995
4, 579, 395

Sheets
80,020,923

Sheets
92,884, 672

1, 858, 282

2, 368,186

254,017
4, 516, 528

179, 010
397,448

190,095
3,017,080

146^ 268
16, 751

75,444

146, 268
70, 006

22,189

41, 308, 728

82, 531,107

18, 676, 307

25,163, 628

Sheets
18,922.025
9,995
4, 069,491
• 242,932

190

REPORT OF THE SECRETARY OF THE TREASURY

Federal reserve notes, new series, received and issued during the fiscal year 1932
On hand July
1, 1931

Federal reserve bank
Boston..
New York
Philadelphia-_.
Cleveland
Richmond
Atlanta
Chicago.
St. Louis
Minneapolis-_.
Kansas City-..
Dallas
San Francisco..

$332,300,
824, 800,
256,080,
308, 620,
306, 200,
179, 860,
550, 360,
72, 280,
76, 740,
79, 680,
130.080,
57, 040,

Total--

Received
$158, 820, 000
274, 800,000
284, 520,000
266, 520,000
16. 440, 000
92, 040, 000
265, 140,000
151, 200, 000
21, 300, 000
129, 060, 000
91, 200, 000
247, 740, 000

3,174,040,000

1,998,780,000

On hand June
30, 1932

Issued
$178,800, 000
579, 620, 000
212, 600,000
223, 000,000
58, 740,000
36, 900,000
667,840,000
82, 200,000
35,900, 000
68, 620,000
55, 500, 000
132, 360, 000

2, 232, 080, 000

$312, 320,000
519,98ft 000
328,000,000
352,14ft 000
263,900,000
235,00ft 000
247,660,000
141, 28ft 000
62,14ft 000
140,12ft 000
165, 780,000
172, 42ft 000
2, 94ft 740,000

Destruction Committee
The following table summarizes the number of pieces and the face
amount of securities received from the various offices and destroyed
by the destruction committee during the fiscal year 1932.
Face value

Pieces i
Division of Loans and Currency and
Treasurer of the United States:
New seriesUnited Statesnotes
.
Silver certificates
..
Gold certificates

73, 524, 290
587, 348, 439
21, 349, 937

$307,30ft 119.00
587, 342, 613. 00
29ft 418, 450. 00
fioo

Old seriesUnited States notes
Silver certificates
Gold certificates
Treasury notes.
Fractional notes
Total-

Rftft

ft86ft23L00
ft 212, 987.00
49,338,800.00
17,100. 00
1,354.44

1, 899,238
5, 325, 877
2,026,609
2,396
ft 073

AO c n A

7C711'

103, 054

201, 922. 00

393,768,642.60

874,148, 740. 00
75, 602, 395. 00

98,113, 281
4, 549, 620

Internal Revenue Bureau:
Miscellaneous stamps from Stamp
Division
Miscellaneous stamps from Tobacco
Division
'..
Refund, miscellaneous stamps, Tax
Unit
Bureau of Engraving and Printing,
unissued vault stock
'All money under the head of pieces is expressed in whole notes.

20, 690, 292. 50
414,458, 935, 00

50.32ft 223

•IAO p . e n

62,42ft 472, 44

15,084, 332. 50
5,404, 038. 00

1,143, 518
408, 893ir^

-..

Comptroller of the Currency and Federal
reserve bank agents:
Federal reserve notes (new series)
Federal reserve notes (old series)

341,218,005.00
31,974, 237. 50
2ft 576, 400. 00

42, 71ft 840
Z,77b,ZQ\H
2,178, 616

ll, 185,061,182. 00

1,247,487.654,44

691, 482, 859

Comptroller ofthe Currency and National
bank agents:
New seriesNational bank notes (5 per cent
account)
National bank notes (retired)
Unissued vault stock
Old seriesNational bank notes (5 per cent
account)
.
.
National bank notes (retired)
Federal reserve bank notes (retired)
Total---

r>no

qni

949, 751,135, 00

16, 200,288. 40
374, 294. 58
99,189. 37
14, 616, 347. 88

31, 290,120 23

REPORT OF THE SECRETARY OF THE TREASURY
,
Register of the Treasury:
Coupon bond notes. Federal reserve,
unissued
.
Interest coupons, unissued
. Interest coupons, unissued. Federal
reserve bank
_
Farm loan bonds and coupons
.'...
Registered war savings stamps, redeemed..;.
- ;_-..
. Oldloan registered securities, unissued.
, Miscellaneous securities, specimen
copies. _ _
. - .
Public Debt Service, photostats

Pieces

$876,947,860.00 *
248,654,876 64

25ft 547
643,479

17.897,392 06
425,205, 663.47

' lft 173
5,621

50.850.42
3,332,640.00 .

436

. '.."^

3,744, 590. 00
376

...

Face value

921,364
7,664,123

Division.of Loans and Currency (security
section) interest checks
Grand total

191

202,062
.

854,163, 963

4,217, 821,597.26

Sheets
Division of Loans and Currency (Bureau
of Engraving and Printing spoilage):
2,65ft 313}^
Money of all kinds.7,647,6209i2j^O2OO
Postage stamps.2,113,636H
Internal revenue stamps _.
' 188,755H"
Bonds and certificates of indebtedness"
1, 347,12940J'i800
Customs and miscellaneous stamps. _.
239,795
Postal savings certificates
Void coupons
.
Experimental, nondistinctive
. .
281
Division of Loans and Currency (Division
of Paper Custody):
' Bond papei:
._
.:
.1,051,849
Securitv naner
...
5. ...
Grand total. _
L
15,139,286206^060

Coupons

ft 567,670.00

6,667,670.00

PUBLIC HEALTH SERVICE

Division of Sanitary Reports and Statistics
Notwithstanding unfavorable economic conditions, the. reports received from State and local health officers and other sources mdicate
generally good health conditions in the United States during the
calendar year 1931 and the first six months of 1932. The general
death rate and the morbidity and mortality rates for the communicable diseases were low during these periods. In 1929 the general
death rate in the registration area of. the United States was 11.9 per
1,000 population; in 1930 it was 11.3, The 1931 death rate for the
registration area was not available at the end of the fiscal year, but
reports to the Public Health Service from 18 States, having an aggregate population of over 63,000,000, give a death rateof approximately
11 per 1,000 population.
Information collected from the United States and foreign countries
as to the outbreaks of diseases dangerous tp the public health and the
current prevalence of quarantinable and other communicable diseases
was made avaUable to State and local health officers and other sani.tarians as promptly as practicable.
The weekly Public Health Reports, the National Negro Health
Week Bulletm and Poster, and other publications were made avaUable
durmg the year. Reprints from the Public Health Reports were
issued on a smaller scale than m previous years due to the limited
funds for priutmg.
141810—32—13

192

REPORT OF THE SECRETARY OF THE TREASURY

The preparation of the volumes contaming Federal and State laws
and regulations pertaining to public health, enacted during the calendar years 1929 and 1930, was completed durmg the fiscal year, but,
owing to depletion of the prmting appropriation, will not be published.
The material will be made available, however, by the publication of
a list of citations. There were distributed 350,391 copies of publications, as compared with 528,257 durmg the fiscal year 1931. Several
exhibits, designed to demonstrate the causes and methods of spread
of diseases dangerous to the public health and measures for their prevention, were prepared. Among the subjects covered were infantile
paralysis, peUagra, tularsemia, and milk sanitation.
A small amount of equipment for the production of motion pictures
on health subj ects and the display of motion-picture films, stereopticon
slides, and other exhibit material was obtained durmg the year.
Division of Foreign and Insular Quarantine and Immigration
Quarantine transactions.—During the fiscal year, 18,048 vessels and
2,407,154 persons were inspected by quarantine officers as shown in
the following table:
Inspections by quarantine officers during the fiscal year 1932
Inspections at—
Stations in continental United States..
Insular stations
Foreign ports, prior to embarkation
Total

Vessels

Passengers

Seamen

13,256
2,619
2,173

718,696
122,617
201, 563

998,471
205,146
160,761

18,048

1,042, 776

1,364,378

In addition, 2,205 airplanes arrived at official air ports of entry in
the United States from foreign ports requiring quarantine mspection.
These planes carried 24,694 persons, 17,387 of whom were required to
undergo medical examination, prior to entry, by medical officers of the
Public Health Service.
Of the passengers who embarked at European ports, 26,564 were
vaccinated and 10,190 were deloused under the supervision of medical
officers of the service. Their clothing and baggage, amounting to
24,489 pieces, were disinfected.
A total of 2,455 vessels were fumigated either because of the occurrence of disease on board or for the destruction of rats, and 8,392 dead
rats were retrieved following fumigation, of which 4,371 were exammed
for plague infection.
There was no importation of any quarantinable disease from abroad
into the United States. One case of smallpox and 1 case of typhus
fever reached our quarantine stations, and 2 cases of cholera occurred
aboard a steamer arriving at Manila. In each instance appropriate
measures were taken at the respective quarantine stations to prevent
the introduction and spread of these diseases into the United States.
Plague was reported to exist in the Islands of Hawaii and Maui during
the fiscal year, and special measures were instituted against vessels
arriving from ports in the infected areas at ports in the continental
United States.

REPORT OF THE SECRETARY OF THE TREASURY

193

The cholera epidemic which began about May 1, 1932, in the
vicmity of Shanghai and Canton began spreading southward and
threatened to assume serious proportions. Special precautions were
adopted to protect United States territory, particularly the Philippine
Islands, against the introduction of this disease from China. Increased prevalence of smallpox was also reported in the Orient during
the year, particularly in Shanghai, Hong Kong, and Amoy, and appropriate quarantine restrictions, mcluding vaccination, were enforced
agamst these ports.
Executive Order No. 5264, issued by the President on January 24,
1930, restrictmg for the time being the introduction of parrots into the
United States, and the regulations promulgated thereunder, remained
in force during the fiscal year. Consideration is now bemg given to the
advisability of a further revision of these regulations specifically to
include all birds of the parrot family and possibly impose some addi^
tional restrictive requirements, or place a complete embargo against
the importation of all birds of the parrot family. The probleni
of the satisfactory control of psittacosis has become of international
interest in the last few years, resulting in the appointment of a commission by the permanent committee of the International Office of
Public Hygiene in Paris to make a study of this problem and to make
recommendations. This disease has made its appearance in various
parts of the world; and many countries, including almost all European
countries, have promulgated regulations prohibitmg the importation
of birds of the parrot family. The commission has recommended that
this temporary prohibition be maintained for the present and that the
subject receive further study.
The special regulations relating to meningitis prescribed under the
provisions of Executive'^Order No. 5143, approved June 21, 1929,
restrictmg for the time bemg the transportation of passengers from
certain ports in the Orient, remained m force during the fiscal year.
Particular attention was given by quarantine officers at oriental
ports of embarkation to regulations relating to the number of steerage
passengers allowed to be carried under the navigation act of 1882, for
the purpose of making appropriate notations on bills of health issued
to these vessels for the information of quarantine officers at United
States ports. There was a reported increased prevalence of meffingitis
in the Orient, especially in Hong Kong, Canton, and Macao, in the
spring of the fiscal year, but tffis situation subsided without becoming
definitely threatening.
The problem of sanitary control of aerial navigation, which has been
receiving international attention for several years, finally culminated
in a proposed international convention for the sanitary control of
aerial navigation, which was prepared and presented by the permanent committee of the International Office of Public Hygiene in
Paris in May, 1930. This proposed draft was presented during the
year for the informal consideration and recommendations of various
interested governments, and the comments and recommendations
submitted by responding governments received the further consideration of the permanent committee at its meeting in Paris in April,
1932. I t is anticipated that the revised draft of the convention will
soon be formally presented to the various interested governments for
artification.

194

REPORT. OF THE SECRETARY OF THE TREASURY

Medical examination of aKens.—There were 372,802 alien passengers
and 897,788 alien seamen examined by medical officers at the various
stations. Of this number, 15,115 passengers and 1,367 seamen were
*^certified" to the proper immigration officials as being affiicted with a
mental or physical defect, in accordance with the act of Congress
approved February 5, 1917. The most important causes of certification of alien passengers were: Trachoma, 346; tuberculosis, 119;
feeble-mindedness, 96; insanity, 85; syphilis, 273; gonorrhea, 394. Of
the alien seamen, 39 were certified for trachoma, 7 for tuberculosis, 146
.for syphilis, 162 for chancroid, and 332 for gonorrhea.
During the year Public Health Service procedure was modified
relative to the certification by medical officers of the detectability of
conditions making aliens madmissible into the United States by competent medical exammation performed at time of embarkation or
employment on board. This change was the result of a jomt conference between representatives of the Bureau of Immigration and the
Public Health Service to brmg the practice into accord with recent
court decisions interpreting the immigration laws, and it is anticipated
that the new procedure will serve greatly to reduce potential litigation
based upon such cases.
Examination of prospective immigrants abroad.—There were 42,831
applications for immigration visas examined by medical officers in
foreign countries. Of this number, 26,560 were exammed by medical
officers of the Public Health Service attached to American consffiates
in Europe, and the remainder, 16,271, were exammed by medical
officers of the service attached to American consulates ffi the Western
Hemisphere. Of the number exammed ffi Europe, 851 were reported
by these officers to the American consuls as afflicted with one or more
.pf the.diseases listed in class A as mandatorily excludable, and 6,278
were reported as affiicted with a disease or condition listed ffi class B
as liable to affect their ability to earn a living. Of the number
exammed by medical officers of the Public Health Service in their
countries of origm ffi the Western Hemisphere, 162 were reported to
consular officers as affiicted with one or more of the diseases listed under
class A, and 1,788 were reported as afflicted with a disease or condition
listed ffi class B.
Of 38,375 aliens who had been given a preliminary medical examination ffi foreign countries and to whom visas had been issued, only 7
were certified upon arrival at a United States port as being afflicted
with class A diseases, requiring mandatory deportation.
Due to the economic conditions prevailing in the United States,
the number of immigration visas granted during the year to prospective immigrants abroad was greatly reduced. Because of this it was
possible to reduce the personnel engaged in the performance of the
medical examination of aliens in foreign ports.
Division of Domestic Quarantine

The Public Plealth Service in cooperation with the State health
^agencies inspected and controlled more than 92 per cent of the 2,360
sources of drinking water used by railroads and bus lines, 95 per cent
of the 242 sources used by vessels, and 85 per cent of the 120 sources
used by airplane carriers. Through the assistance of municipal
health agencies, 2,845 samples of drinking water taken from common

REPORT OF THE SECRETARY OF THE TREASURY

195

carriers were examined and, with few exceptions, found to comply
with the Treasury Department standards. Inspections of water
supply systems were made on 1,096 vessels engaged in interstate
traffic, or 57 per cent of those in active service. Continued improvement in railway-yard sanitation was noted during the year;
There was a considerable extension in the public health engineering
services rendered other branches of the Government, such services
requiring, during the year, over 34 per cent of the time of the engineers.
This service has not only included surveys, demonstrations, review
of plans and advice, but also the designing of water, sewage, and
garbage disposal devices. Of the time devoted to this cooperative
service, approximately 83 per cent was spent in connection with various problems of the Office of Indian Affairs, National Park Service,
Supervising Architect's Office, Forest Service, and the Bureau of
Prisons. Assistance in special problems was given the Lighthouse
Service, Bureau of Mines, Bureau of Plant Industry, Bureau of
Roads, Coast Guard, Engineer Corps, Food and Drug Administration,
and Reclamation Service.
Cooperative rural health demonstrations were carried on in 144
projects in 28 States, exclusive of the temporary projects undertaken
in connection with relief in the drought-stricken areas. The annual
survey conducted by the Public Health Service showed that on January 1, 1932, there were in the United States 615 counties with fulltime health service, as compared with 557 on the same date of the
preceding year. A special feature of the regular cooperative work on
rural sanitation included the inauguration of advisory service to State
health departments on methods of local administration in the fields
of child and maternal health and environmental sanitation. Many
of the States took advantage of the ayaUability of this service, with
the result that improvements were made in the organization of State
supervision over the work, with a corresponding improvement in
content and character of the activities of the local units.
The trachoma eradication work was continued in cooperation with
State authorities in Missouri, Kentucky, Tennessee, and Georgia.
Physicians and nurses employed jointly by the Public Health Service
and the States examined 91,603 individuals in schools, homes, clinics,
and dispensaries. More than 23,797 treatments, including 1,115 operations, were given to 6,761 cases seen. This work undoubtedly has
prevented thousands of cases of blindness which would have become
a burden to the public. There is ample evidence that the prevalence
of trachoma, in the areas where it is endemic, is slowly but consistently
being reduced.
Plague-eradication activities in California included rodent surveys,
trapping operations, sanitary inspections, and laboratory examinations
similar to those conducted in the past. Examinations were made of
approximately 31,665 rats trapped by local authorities in wSan Francisco and Oaldand. R a t plague reappeared in one coastal city, but
no human case was reported.
Division of Scientific Research
The cancer studies being carried on both at the National Institute
of Health and the Harvard Medical School are a continuation of the
research program begun during the preceding fiscal year. At the

196

REPORT OF THE SECRETARY OF THE TREASURY

Harvard Medical School they have been largely related to studies of
the biological effects of radiation and of immunity and susceptibility
to malignant growths.
Investigations of heart disease were.begun in Jffiy, 1931. Preliminary laboratory investigations have been related to a study of
rheumatic heart disease.
The leprosy investigations in the Territory of Hawaii have included,
in addition to the routine medical relief given to the patients, (1) an
investigation of the therapeutic effect of diet, (2) an epidemiological
survey of the disease in Hawaii, (3) research work on the isolation
and growth of the bacillus of leprosy, and (4) an attempt to determine
the effects of poorly balanced diets on rat leprosy.
In July, 1931, a study was begun of the transportation of mosquitoes
by airplanes arriving from tropical countries, a matter involving danger not only in the possible introduction of yellow fever by means of
infected mosquitoes, but in the introduction of new species of insects
not indigenous to the United States. The establishment of a new
vector of malaria in the Uffited States woffid greatly increase the
problem of malaria control.
With the knowledge acquired through the pellagra studies of the
Public Health Service, pellagra has been practically eliminated from
most of the institutions and other communities of the South where
the diet is capable of regulation by central authority. The work now
in progress is directed toward a termination of this activity through
the simplification of control measures and the determination of the
relative pellagra-preventive potency of the foodstuff's most easily and
cheaply produced at home and which may be made available during
the late winter and early spring when the diet normally is most
restricted.
Following the report of a case of human plague in Hawaii, the
Territorial health authorities instituted plague-suppressive measures
and requested the assistance of the Public Health Service in the control and eradication of bubonic plague in the islands. A medical
officer has been detailed to tffis work to determine the extent of the
infection as to both the area involved and the infestation of affimals
within that area. In addition, the usual suppressive measures, a
flea survey and a measure of flea infestation of rats, have been undertaken.
Because of increasing demands, the manufacture and distribution
of the vaccine for the prevention of Rocky Mountain spotted fever
continues to be the most important phase of the work of the Rocky
Mountain spotted-fever laboratory at Hamilton, Mont. During the
fiscal year 1932 there was a 75 per cent increase in the demand for
this vaccine over that for the preceding fiscal 3^ear.
In connection with the purchase of the Hamilton laboratory building from the State of Montana, the Public Health Service on July 1,
1931, took over the tick parasite studies previously conducted by the
State.
Studies of child hygiene have included a study of cffildren of psychotic parents and the mental status of cffildren of various types of
birth. Other investigations were related to the hearing and vision
of school cffildren.
Dental studies were begun in September, 1931, with the assignment
of a dental officer to work on the problem of the distribution of

REPORT OF THE SECRETARY OF THE TREASURY

197

mottled enamel in the United States, wffich may also throw some
light on the problem of dental caries. At present mottled enamel has
been reported in 24 States.
A study of air pollution is being made in 14 representative cities in
the United States for the purpose of obtaining basic data as to the
presence in the air of soot, ash, sulphur, lead, iron, and carbon monoxide in the average city in this country.
An investigation of industrial skin diseases is in progress, the following industries having been covered so far: Rubber, dyeing of silk,
wool and fur, oil refineries, and candy making.
Activities of the office of milk investigations have included studies
of the bactericidal treatment of containers and equipment in connection with milk production, processing, and distribution, studies of
the public health significance of milk cooling, studies of the value
of chlorine disinfection of udders and hands as compared with simple
cleansing, studies of the relative value of the direct microscopic count,
the standard plate count, and the methylene blue reductase test as
measures of milk sanitation, studies of the effect of heating upon the
growth-promoting characteristics of cow's milk, and studies of the
extent of pasteurization and tuberculin testing in American cities of
10,000 population and over in 1927 and 1931.
The oflRce of statistical investigations has been tabulating data
on the incidence and cost of illness in about 9,000 families in 17 States
and the District of Columbia. An incidence of 850 illnesses per
1,000 population per year was recorded. Of the cases serious enough
to cause the patient to go to bed for one or more days, there were 461
per 1,000 persons per year or 52 per cent; and of those that caused the
patient to lose time from ffis usual work or school there were 545
per 1,000 persons per year or 61 per cent.
During the year there were summed up the experimental evidence
and the more important conclusions developed from research studies
in water purification and natural stream purification upon wffich the
stream pollution laboratorj^ has been engaged in recent years. I t has
appeared advisable to give increased consideration to the subject of
sewage treatment, and in furtherance of tffis plan an experimental
activated sludge treatment plant is being constructed for the research
study of certain of the biochemical and biological factors operative in
this method of sewage purification.
Studies of public health methods have included a survey of the
health needs of people living in rural areas and the manner in wffich
an average small county health department is meeting these problems
and the work df the health department personnel from the administrative point of view.
Following the discovery in 1931 that rat fleas taken on premises
where cases of endemic typhus were occurring contained the virus of
the disease, laboratory studies have been carried out to determine the
behavior of the virus in the flea and the exact mechanism of transmission from rat to rat. Under experimental conditions endemic
typhus is readily transmitted from rat to rat by means of fleas when
the fleas are allowed free access to the rat. Late in the fiscal year
it was found that a vaccine prepared from an emulsion of typhusinfected fleas conferred some immunity upon guinea pigs.
Epidemiological studies of Rocky Mountain spotted fever (eastern
type) have shown that the disease is present in Maryland, Virginia,

198

REPORT OF THE SECRETARY OF THE TREASURY-

District of Columbia, New Jersey, Delaware, Pennsylvania, North
Carolina, South Carolina, Georgia, Louisiana, Minnesota, and possibly
Tennessee. Efforts to determine the presence of spotted fever in
wild rodents and ticks obtained from their normal habitats were
without success. However, in prosecuting this work an infection
was recovered which in some ways simulated Rockj^ Mountain spotted
fever in laboratory animals.
Undulant fever has been reported from 44 States and the District
of Columbia. There were 1,572 cases officially reported during this
year. Observations at a State sanatorium for tuberculosis have revealed that undulant fever may be mistaken for early tuberculosis.
Investigations as to the methods of transmission have confirmed
previous reports that there is no evidence of transmission of the
disease from person to person or by ^^carriers."
Early m December, 1931, an outbreak of psittacosis occurred in
California. Investigations have shown that the disease is present in
the parrakeet-breeding aviaries of southern California.
Since the outbreak of multiple neuritis, or ^^ginger paralysis,"
studies have been conducted on the pharmacology of phenol esters.
Twelve phenol esters were studied during the past year. Of all the
esters so examined, only the tffio-phosphoric ester and the phosphorus
acid ester of ortho-cresol have been found to share to any extent in
the specific action of tri-ortho cresyl phosphate. Moreover, the
phosphorus acid ester of ortho-cresol has been found to produce in the
experimental animal a condition of extensor rigidity in many ways
analogous to decerebrate rigidit}^, tffis being associated with combined degeneration of the nervous system with more or less specific
involvement of certain well defined afferent and efferent tracts.
The building program of this division includes two additional;
buildings on the present site of the National Institute of Health, to be
used as administration and laboratory buildings, respectively, wffich
are now under construction, a laboratory buUding at Hamilton,
Mont., for use in connection with Rocky Mountain spotted-fever
studies, plans for wffich were practically completed at the end of the
fiscal year, and a laboratory building on the site of the new marine
hospital at San Francisco, Calif., where studies of mvcotic diseases
and plague work will be carried on.
Division of Marine Hospitals and Relief
A total of 343,054 beneficiaries applied at the marine hospitals and
other relief stations for treatment or other medical services; 1,734,508
hospital days and 972,110 out-patient treatments were furffished;
and 76,179 physical examinations, were made for purposes other than
treatment. One thousand two hundred and eleven deaths occurred
in hospital. The per diem cost for the National Leper Home was
$3.30, and at the tubercffiosis hospital. Fort Stanton, N . Mex., $3.86.
The average cost of operation in the other 23 marine hospitals, all of
which are general hospitals for acute medical and surgical patients,
was $3.81 per patient per day, which covers all maintenance and
other related expenses. Tffis is considered a very low cost compared
with costs of private hospitals not operated for profit. Further
evidence of economy is found in the fact that $293,793 was saved out

REPORT OF THE SECRETARY OF THE TREASURY

199

of the annual appropriation, 1932, and returned to the general
treasury.
Cooperation was continued with the Veterans' Administration, to
whose patients all avkUable beds were devoted in Portland (Me.),
Savannah, Key West, Buffalo, Cleveland, Detroit, Pittsburgh,
Evansville, LouisvUle, and Galveston, in which ports, the marine
hospital is the offiy Government hospital.. The effiarged facilities
in the marine hospitals in New Orleans, San Francisco,.Baltimore,
MobUe, and Norfolk will, at least until the normal movements of
ships are resumed, alleviate the building needs of the Veterans'
Administration.
Division of Venereal Diseases
Important studies were carried on in the venereal disease laboratory
at Stapleton, Staten Island, N . Y., on personal prophylaxis of syphilis,
on the biology of the Treponema pallidum and the reputed transition
forms of this organism which are expected to shed considerable light
on the efficacy of personal prophylaxis and the more or less prolonged
periods of latency observed in syphilis. Reports on this work are
nearing completion.
Research on the use of biologic products in the treatment of
gonorrhea conducted at Chicago, 111., indicate that the more refined
gonotoxm fractions and the specific chemo therapeutical measures
seiem to hold more promise than vaccines and serums in the control
of this disease. These studies had to be suspended at the close of the
year so that relatively more promising studies already under way may
continue.
Investigations into the malaria treatment of neurosyphilis have
been developed along scientific Iffies which include methods of transporting infectious material for therapeutic use under varying conditions of temperature, time, and distance, and cooperative studies in
service hospitals on the malaria treatment of beginning neuro involvement shown by routine spinal-fluid examinations, in the attempt to
prevent the development of later cripplmg manifestations in the
service beneficiaries necessitating hospitalization.
Continued assistance has been given the division of mental hygiene,
and the Office of Indian Affairs, Department of the Interior, toward
improving the quality of antUuetic treatment in Federal penal and
correctional institutions and the organization of effective syphilis
control measures among Indians.
There has been a marked increase in the number of applicants for
treatment ffi the venereal disease clinic conducted in Hot Springs,
Ark. A large number of these applicants appeared to be of a higher
type than those who sought free treatment in this clinic when economic conditions were more normal.
Investigations on the prevalence of the venereal diseases in the
general popffiation, first started in 1926, were extended during the
year to include three additional cities—San Francisco, Calif., Birmingham, Ala., and Dallas, Tex.
Studies on the mass control of sypffilis among Negroes were brought
to a close during the year because of the withdrawal of further cooperative financial assistance. . The results„of these demonstrations clearly
mdicate that this method of control is effective and applicable among
Negroes in southern rural areas.

200

REPORT OF THE SECRETARY OF THE TREASURY
Division of Mental Hygiene

The year ended June 30, 1932, marks the second full 12 months'
activities of the division of mental hygiene in the office of the Surgeon
General. The activities of the division during the past fiscal year
have been concerned with special studies of the nature of narcotic
drug addiction, of the abusive uses of narcotic drugs, of the quantities
necessary for the medicinal and scientific needs of the country, and
with administrative duties incident to the establishment of the
United States narcotic farms and the supervision and furnishing of
medical, psychiatric and technical services for Federal prisons.
Special studies of the nature of narcotic drug addiction have been
continued at the United States Penitentiary Annex, Fort Leavenworth, Kans. Collection of data concerning the medico-social aspects
of drug addiction has been conducted, and special studies have been
undertaken with reference to the legal distribution of narcotic drugs to
registrants under the Federal narcotic laws.
Plans for the construction of the necessary buildings at the first
United States Narcotic Farm, Lexington, Ky., had progressed to the
extent of contracting for the building of the foundations. Construction began in January, 1932.
The service continued to supervise and furnish the medical and
psychiatric services in Federal penal and correctional institutions, the
work being extended to include three additional institutions during
the fiscal year, the Federal correctional camp. Fort Eustis, Va., on
January 1, 1932; and the Federal jail. New Orleans, La., and the
Federal detention farm. La Tuna, Tex., on March 1, 1932.
Division of Personnel and Accounts
Personnel.—On July 1, 1932, the regular commissioned corps of the
Public Health Service consisted of the Surgeon General, 8 assistant
surgeons general, 42 medical directors, 1 pharmacologist director in
the grade of medical director, 29 senior surgeons, 1 senior dental
surgeon, 1 senior sanitary engineer in the grade of senior surgeon, 88
surgeons, 13 dental surgeons and 11 sanitary engineers in^the grade of
surgeon, 66 passed assistant surgeons, 7 passed assistant dental
surgeons, and 5 passed assistant sanitary, engineers in the grade of
passed assistant surgeon, 52 assistant surgeons, 18 assistant dental
surgeons, 4 assistant sanitary engineers, and 10 assistant pharmacists,
all in the grade of assistant surgeon—a total of 357 commissioned
officers. Of this number, 4 medical directors, 12 semor surgeons, 8
surgeons, 2 passed assistant surgeons, and 1 assistant surgeon were on
waiting orders.
The number of reserve officers on active duty on July 1, 1932, was
29. This ilumber included 6 surgeons, 1 dental surgeon, 11 passed
assistant surgeons, 1 passed assistant dental surgeon, 5 assistant
surgeons, and 5 assistant dental surgeons.
Other personnel of the service on July 1, 1932, included 732 acting
assistant surgeons, 426 attending specialists and consultants, 42 contract dental surgeons, 99 mternes, IS pharmacists, 34 scientific
employees. National Institute of Health, 31 administrative assistants,
18 druggists, 672 nurses, 36 aides, 29 dietitians, 35 laboratorians, 37

REPORT OF THE SECRETARY OF THE TREASURY

201

pilots, 38 marine engineers, 364 clerks, 3,040 other field employees, 201
departmental employees—a total of 6,238.^ This does not include
4,606 appointees designated as collaborating epidemiologists and
assistant collaborating epidemiologists, who serve at nominal compensation, and who assist in the collection of statistics relating to the
prevalence of communicable diseases, being for the most part officers
or employees of State and local health organizations.
Financial statement.—Following is a statement of appropriations
and expenditures for the fiscal year 1932:
Appropriation title

Appropriated

Salaries, office of Surgeon General
Pay, etc., commissioned oflScers and pharmacists.
Pay of acting assistant surgeons
Pay of other employees
-Freight, transportation, etc
-Maintenance, National Institute of Health
Books
-..
Pay of personnel and maintenance of hospitals
Quarantine service
.Preventing the spread of epidemic diseases
Field investigations of pubhc health
Interstate quarantine service
Studies of rural sanitation
Studies of rural sanitation, drought stricken areas.
Control of biologic products.
Expenses:
Division of Venereal Diseases
Division of Mental Hygiene
l
Educational exhibits
Total

$34ft 135. 00
1,437, 548. 00
397, 984. 00
1,122, 090. 00
29, 000. 00
48, 000. 00
500. 00
1 8, 06ft738. 00
617, 150. 00
400, 000. 00
456, 70O 00
68, 040. 00
338, OOO 00
2 1,611, 372. 69
46, 620. 00
100, 000. 00
50, 515. 00
2, 50O 00

_..

I 15,126,892. 69

Expended
$338, 347, 33
1, 418, 763. 55
362,394. 21
1, 081,421. 82
27, 709. 46
4ft 760 90
496. 87
7, 709, 983. 28
466, 006. 47
293,894. 79
443, 827. 88
66, 091. 38
335, 70O 00
1,598,130 95
44, 937. 45
89,207.34 '
47, 973. 94
2, 222. 74
14,373,870 36

1 Includes $1,396,259 reimbursement for care and treatment of beneficiaries of the Veterans' Administration.
2 Balance available July 1, 1931, out of $2,00ft000 appropriated for 1931 and 1932.
3 Statement does not include expenditure of $4,166.60 from trust fund for National Institute of Health
conditional gift fund.

Expenditures from allotments of funds from other bureaus and
offices for direct expenditure during the fiscal year 1932 were as
follows:
A p p r o p r i a t i o n title

Allotted

V e t e r a n s ' A d m i n i s t r a t i o n : Salaries a n d expenses
D i s t r i c t of C o l u m b i a : M o s q u i t o control in D i s t r i c t of C o l u m b i a
D e p a r t m e n t of Justice:
Federal I n d u s t r i a l I n s t i t u t e for W o m e n
F e d e r a l jails
Prison camps.
U n i t e d States I n d u s t r i a l Reformatory, Chillicothe, Ohio
U n i t e d States P e n i t e n t i a r y , A t l a n t a , G a . .
_
U n i t e d States P e n i t e n t i a r y , A t l a n t a , Ga., buildings a n d e q u i p m e n t .
U n i t e d States P e n i t e n t i a r y , L e a v e n w o r t h , K a n s
U n i t e d States P e n i t e n t i a r y , M c N e i l Island, W a s h
T o t a l , D e p a r t m e n t of Justice
G r a n d total

-.-

Expended

$1,408,982.60

$1, 408, 982. 60

6,50O 00

5, 943.84

45,360 00
12,878. 00
24, 870 00
44, 530 00
57, 080. 00
34, 920. 00
101, 213. 00
68,502.00

30,111 87
9,422. 61
23, 564.45
41,114.11
56, 643. 61
33,446. 56
94,137, 70
51, 509.12

379, 353. 00

339 950 03

1, 794,835. 60

1, 754,876. 47

202

REPORT OF THE SECRETARY OF THE TREASURY

The revenues derived from operations of the Public Health Service
during the fiscal year 1932 and covered into the Treasury as miscel-.
laneous receipts are as follows:
Source of revenue:
General fund receipts—
Quarantine charges
.
.
.Hospitalization charges and expenses..
Sale of subsistence
_
, Laundry service!
Sale of occupational therapy products...
Sale of obsolete, condemned, and unserviceable equipment..Rents
.'
Reimbursement for Government property lost or damaged
Commissions on telephone pay stations installed in service building
Sale of refuse, garbage, and other by-products...
Sale of livestock and livestock products..
.-Other revenues
-..
.-.
Total, generfil fund receipts
Trust fund receipts—
' Efi'ects of deceased patients
Grand total

-...

---

A
<.
Amount
.$29ftl68. 03
38,630. 67
-. 13,049.62
62. 70
339.97
2,392.46
239.48
192. 92
1,343.01
.-1,398.11
278.96
128,96
348,224.87

..-

7,468.08
355,692.94

SECRET SERVICE DIVISION

During the fiscal year 1932, 2,139 persons were arrested by agents
^ of the service, or by their direction, on charges involving counterfeiting
of the obligations and coins of the United States and forgery, as well
as miscellaneous offenses against the Federal statutes relating to the
Treasury Department. Of this number, 839 were note counterfeiters
and note passers, 119 were note raisers and passers of altered currency,
625 were coin counterfeiters and coin passers, 440 were check forgers,
23 were apprehended for negotiating stolen or forged bonds, 17 were
held for violating the World War adjusted compensation act, and 93
arrests were made for miscellaneous oft'enses.
Seventeen new counterfeit note issues, warranting distribution of
descriptive warning circulars, were detected during the 3^ear, exclusive
of approximately 70 unidentified productions of varying types and
denominations circulated in different sections of the country for short
periods, some being hand-drawn and photographic specimens of
extremely crude workmanship.
Counterfeit notes aggregating $540,538 and altered notes aggregating
$24,215 were captured or seized by operatives of the service, and
counterfeit coins totaling $49,773 were also confiscated in connection
with raids and subsequent arrests. The counterfeit notes captured
during the year were largely used in evidence against the makers and
passers. In connection with investigations and arrests, agents captured orseiized 960 plates and glass and film negatives for printing counterfeit obligations and securities, including 5 plates for foreign notes;
359 molds for counterfeiting coins, including 3 molds for foreign
coins; and 21 dies, together with, a large quantity of miscellaneous
materials and paraphernalia.
Of the total number of persons arrested during the year, 1,183 were
convicted and sentenced, 68 were acquitted, 580 are awaiting action
of the courts, while others were variously disposed of,
Agents conducted investigation of 1,542 check cases, 62 bond cases,
and 9 war savings stamp cases. In the check case investigations, the
sum of $3,593 was received and transmitted to the department in
restitution.
The Veterans' Admimstration during the year forwarded to the
service for investigation 293 cases, involving violation of the World

REPORT OF THE SECRETARY OF THE TREASURY

203

War adjusted compensation act and-5 requests were received from the
Farm Loan Board for investigation of offenses against the farm loan
act. Inquiries in 182 cases by the General Supply Committee for
information concerning prospective bidders on Government supplies
were received during the year and assigned to field agents for approrpriate investigation.
OFFICE OF THE SUPERVISING ARCHITECT .

Public building program
During the fiscal year 1932 the Office of the Supervising Architect
has been intensively engaged on the program of building construction
authorized by the so-called Keyes-Elliott Act, approved M a y 25,
1926, and the several amendatory acts of Congress enlarging the
program thereby initiated. This work has constituted the major
function of the office during the period indicated. In addition,
however, the office has performed its other normal functions, including the supervision of the remodeling, enlarging, maintenance, and
repair of the public buildings throughout the country, totaling more
than 1,500 in number, which are continuously under the control of
the office.
Under the original Keyes-Elliott bill and its several amendments
there had been authorized, up to June 30, 1932, a public building program amounting to $633,296,794, plus $69,000,000, the latter amount
representing the estimated proceeds of sale of obsolete public buildings
in various sections of the country. Under this authority Congress
had, up to June 30, 1932, specifically authorized 817 buildffig projects
and appropriated for land in the District of Columbia, involving
a total limit of cost of $499,397,619.28. The following tabulation
indicates the status of work as of June 30, 1932, under these specific
authorizations or appropriations.
Status of work in the Office of the Supervising Architect
Limit of cost

Completed, 206 projects
$67, 623, 596; 06
Under contract (in whole or in part) 359 projects
307, 416, 600. 00
Bids in, on market, or in specification stage, i l 8 projects
53, 675, 023. 22
In drawing stage:
Supervising Architect, 44 projects
5, 324, 400. 00
Private architects, 62 projects
26, 018, 000. 00
Land owned, ready for drawings, 3 projects595, 000. 00
Sites selected, title not vested, 6 projects
: 1, 780, 000. 00
Sites advertised for, examined, and awaiting selection, 4 projects
1, 585, 000. 00
Held for amended legislation or other reason, 15 projects
6, 700, 000.,00
Sites purchased in the District of Columbia
27, 522, 522. 75
Balance available for sites in the District of Columbia.
1, 157, 477. 25
Total.-.

499, 397, 619. 28

Emergency relief program.—Since the close of the fiscal year the
emergency relief and construction act of 1932, appropriating an addi
tional $100,000,000 for public building projects, was passed. These
projects are to be selected from projects specified in House Document 788, Seventy-first Congress, third session, the last report of
the Secretary of the Treasury and the Postmaster General, dated

204

REPORT OF THE SECRETARY OF THE TREASURY

February 27, 1931, listing all buildings and enlargements of existing
buUdings outside the District of Columbia recommended under the
public building program. Four hundred and ten public building
projects scattered throughout the United States have been selected from
this document by the Secretary^^of the Treasury and the Postmaster
General to be prosecuted under tliis appropriation. Advertisements for
proposals for the sale of land as sites for 125 of these proj ects have already
been published and the entire number will be opened by December 5,
1932. Offers of properties as sites for more than 100 of these projects are now in the hands of site agents for inspection of the properties.
T h i s appropriation is not included in the figures for specific authorizations and appropriations shown in this report since the act was
passed after the close of the fiscal year. The details for the fiscal year
and to date on general authorizations, specific authorizations, contracts
awarded and expenditures under the public building program are
presented in the following pages.
General authorizations.—Total general authorizations of the Congress
under the Keyes-Elliott Act and earlier acts covering this program
are shown in the following table. These general authorizations include
authorizations for buildings and sites.
General authorizations for public building program
Total general authorizations for all buildings, extensions, etc., up to
June 30, 1932, including all land authorizations outside of the
District of Columbia and certain ones in the District of Columbia, also $69,000,000 expected to be realized from the sale of
property now owned by the Government
^ $649, 000, 000
Authorization for purchase of triangle site in the District of
Columbia
.._
40,000,000
Authorizations prior to May 25, 1926
13, 296, 794
Total general authorizations to June 30, 1932

702, 296, 794

Specific authorizations of projects.—The part of the above general
authorizations which had been authorized or appropriated for use in
specific projects by the Congress at a definite limit of cost for each
project up to June 30, 1932, is shown in the following table:
Number and amounts of specific authorizations for buildings and land, and appropriations for land purchases up to June SO, 1932, under the public building
program and prior authorization
Number of
projects
Authorizations for specific projects outside of the District of Columbia up to
June 30, 1932, including all land site authorizations..
Authorizations for specific projects in the District of Columbia including certain,
but not all, land site authorizations up to June 30, 1932
Total specific authorizations exclusive of certain land site appropriations
in the District of Columbia to June 30, 1932
Specific appropriations for certain additional land sites in the District of Columbia.
Total specific authorizations and appropriations for buildings and land
sites to June 30, 1932. •

Amount

796 $369,148,118. 07
21
817

101, 569, 50L 21

47ft
28, 717,
680, 619.
000. 28
00
499, 397, 619. 28

1 Since sites in the District of Columbia are purchased in small parcels, it is not feasible to indicate the
number of sites purchased.

REPORT OF THE SECRETARY OF THE TREASURY

205

Contracts.—The following tabulations show, in summarized form,
the value of contracts awarded, both for land and construction, under
the specific public building authorizations and appropriations hereinbefore referred to:
Contracts awarded during t h e fiscal year 1932:
Outside t h e District of Columbia—
Buildings
Land-Buildings under prior a u t h o r i z a t i o n - I n the District of Columbia—
Under public building program authorization
Under prior authorization
Total
Obligations for triangle site in District of
assumed during t h e fiscal year 1932

36, 821, 051. 96
430, 712. 00
140, 794, 742. 31

Columbia,
4, 007, 532. 02

Total contracts awarded a n d land obligations assumed
during t h e fiscal year 1932
Contracts awarded to June 30, 1932:
Outside District of Columbia
I n t h e District of Columbia
Total
Obligations for triangle site in District of
assumed up to J u n e 30, 1932
1

$87, 608, 926. 62
15, 818, 243. 26
115, 808. 47

_-_-

144, 802, 2 7 4 33
245, 360, 216. 45
74, 290, 665. 13
319, 650, 881. 58

Columbia,
27, 522, 522. 75

T o t a l contracts awarded a n d land obligations assumed
u p to J u n e 30, 1932
Balance specifically authorized b u t yet to be placed under
contract
Balance specifically appropriated b u t yet to be obligated
for purchase of sites in District of Columbia
T o t a l a m o u n t unobligated for land a n d buildings

347, 173, 404. 33
151, 066, 737. 70
1, 157, 477. 25
152, 224, 214. 95

Among the contracts awarded during the fiscal year 1932 were the
following large building projects:
Outside t h e District of Columbia:
Atlanta, Ga., post office
Baltimore, Md., marine hospital
Chattanooga, Tenn., post office a n d courthouse
Chicago, 111., post office
Detroit, Mich., post office
F o r t Wayne, Ind., post office
F o r t Worth, Tex., post office
:
Hartford, Conn., post office
Knoxville, Tenn., post office
Little Rock, Ark., post office
Louisville, Ky., post office
Miami, Fla., post office
Montgomery, Ala., post office
Newark, N . J., post office
New Y^ork, N . Y., parcel post building
Pittsburgh, Pa., post office
Portland, Oreg., courthouse
Sacramento, Calif., post office.
Seattle, Wash., Federal office building
Sioux City, Iowa, post office
South Bend, Ind., post office
Topeka, Kans., post office
Trenton, N. J., post office

•.
-

Amount
$1, 534, 351. 00'
809, 900. 00
813, 600. 00
13, 459, 970. 00
3, 127, 213. 00
503, 000. 00
1, 017, 000. 00
903, 225. 00
932, 950. 00._
802, 600. 00
1, 507, 700. 00
1, 032, 472, 00
736, 650. 00
2, 868, 000. 00
5, 233, 23L 00
4, 596, 000. 00
1, 126, 000. 00
842, 890. 00
1, 294, 000. 00
550, 245. 00
685, 800. 00
608, 900. 0 0 .
749, 500. 00

206

REPORT OF THE SECRETARY OF THE TREASURY

district of Columbia: . •
Department of Agriculture Extensible Building (additional
wiiigs)------Labor-Interstate Commerce Commission Building, connecting wing
.-_
Interstate Commerce Commission Building
Department of Justice Building Department of Labor Building
Post Office Department Buildirig_:_--_-_-:_-_-:_-_:-—__
Post Office extension
--__--______-_____.---__-.__:

$5, 380, OOO 00.
1, 741, 000. 00
3, 600, 000. 00
7, 667, 000. 00
3, 740, 000. 00
7, 642, 000. 00
2,999, 000. 00

Expenditures and outstanding contract obligations.—Of the $499,397,-619.28 specifically authorized or appropriated as of June 30, 1932^
$347,173,4.04.33 in the aggregate had been obligated to that date.
Expenditures have been made under these obligations to the amount
of $229,411,699.66, including expenditures for the fiscal year 1932
amounting to $85,896,407.12. Expenditures in 1932 included
$73,450,617.88 for the country at large and $12,445,789.24 for the
District of Columbia.
Sites.—The situation with respect to land purchases may be summarized as follows:
Status of sites as of June 30, 1932
Sites
Outside the District of Columbia:
Acquired previous to June 30, 1931...
Acquired during the fiscal year 1932
Proposal accepted
Total

Amount

$48,971,961.91
25, 501,210,10
i, 822, 726. 08
—

76,295,898. IT'

In the District of Columbia:
Expenditures to June 30, 1931
Expenditures during the fiscal year, 1932.

27, 692,031.13
4,922,453.52-

Total

32, 614,484. 66.

Contracts for outside professional services.—Under the authority of.
the Keyes-Elliott Act (March 31, 1930) wffich authorized the employment of outside architects for full professional services, contracts
were made with 172 additional architects in the fiscal year, bringing
the total to 250 for projects amounting to $248,772,023.22.
Rerriodeling and enlarging public buildings
Under the $500,000 appropriated for remodeling and enlargmg
public buildings, 65 buildings received attention, under a total obligation of $496,752.57, during the fiscal year, the limit of expenditurefor any one building being $25,000.
The total space gained under these operations was 72,672 square
feet, at $6.83 per square foot.
Annual appropriations for maintenance, repairs, etc., of public buildings
The 1932 appropriations for operating force, operating supphes,
repairs and preservation, mechanical equipment, furniture and furffiture repairs, and vaults and safes, aggregated $15,602,800. The
Office of the Supervising Architect has charge of 1,502 courthouses,.

207

REPORT OF THE SECRETARY OF THE TREASURY

post offices, customhouses, etc., and 58 quarantine stations and marine hospitals, maldng a total of 1,560 buildffigs throughout the
country, to which new buildings and extensions are added every year.
The expenditures under these appropriations increase accordingly and
practically the entire appropriations have been expended.
Total expenditures
Total expenditures for all purposes for the Office of the Supervising
Architect during the fiscal year 1932, together with outstanding contract liabilities and remaining unencumbered balances of appropriations, are shown in the following table:
Expenditures from J u l y 1, 1931, to J u n e SO, 1932, contract liabilities charged against
appropriations, and unencumbered balances

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
E x t e n s i o n to buildings
Miscellaneous s p e c i a l i t e m s
^
Unallotted appropriation (lump sum)
R e m o d e l i n g a n d enlarging p u b l i c buildings
L a n d s a n d o t h e r p r o p e r t y of t h e U n i t e d States
R e p a i r s a n d p r e s e r v a t i o n of p u b l i c buildings
M e c h a n i c a l e q u i p m e n t for p u b l i c b u i l d i n g s
V a u l t s a n d safes for p u b l i c b u i l d i n g s
F u r n i t u r e a n d repairs to s a m e for p u b l i c b u i l d i n g s . .
O p e r a t i n g supplies for p u b l i c buildings
General expenses for p u b l i c b u i l d i n g s
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
,
O p e r a t i n g force for p u b l i c b u i l d i n g s
Total
1 I n c l u d e s $50,000 reserve, 1932.
2 I n c l u d e s $100,000 reserve, 1931; $20,00ft 1932,

C o n t r a c t liabilities charged U n e n c u m b e r e d
June
against a p p r o - balances,
30, 1932
priation

$662, 419. 87
3ft 423, 663. 71
47,298, 598.19
8, 358, 635.60
147, 670. 44

$115,56
2, 018,492.08
lift 904,482.42
8,954, 725.94
126,813,70

453, 088. 62
169. 64
1, 282, 388,99
63ft 471, 70
142, 241,04
1,334, 027,04
2, 983, 443.35
5, 822, 285. 36
1, 345, 482.15
4, 222, 766. 32
8, 491, 109. 90

30ft 612.99
276, 078. 67
167, 271, 38
83, 317, 27
264, 340. 61
42ft 644. 07
71.439,19
177, 420. 88
798, 774. 60
1, 028, 323. 59

113,598,451.92

125, 604, 652.95

$42,065.47.
1,22ft 647. 25
4,877,086.64
475,948. 39
24,195.04
658, 661.99
970.04
964.96
» 468,465.4427,156.41
12, 223.07
8,995. 66
2 347,906. 72
3 158,049. 72
* 683, 277,57
135,895,42
9,142, 499, <

3 I n c l u d e s $8,000 reserve, 1932.
< I n c l u d e s $200,000 reserve, 1931,

The following table shows the total expenditures to June 30, 1932,
for all purposes for bmldings under the control of the Treasury
Department:
Classification of public buildings under the control of the Treasury Department,
by titles, showing expenditures in each class to J u n e 30, 1932, prepared pursuant
to act approved J u n e 6, 1900 {31 Stat.

'
Construction

Post-ofl3ce, courthouse, customhouse
buildings, e t c . _
- . $128, 480,114. 24
C o u r t h o u s e buildings
--1, 061, 252. 20
C u s t o m h o u s e buildings
24,102,957. 00
M a r i n e hospital buildings
lft 915, 639. 43
Post-office buildings
114,431,397.74
Q u a r a n t i n e station buildings
3,443, 606. 96
V e t e r a n s ' hospital buildings
493, 355. 47
Miscellaneous buildings
- . 73, 004, 031. 73
Total

141810—32

355, 932, 354. 77

Extensions, alterations, a n d A n n u a l repairs
special i t e m s

T o t a l expenditures, J u n e
3ft 1932

$29,124, 971. 36
509,155. 34
3, 483, 404. 95
3, 779, 575.16
7, 017, 442. 04
2, 41ft 424.11
369, 076. 52
5, 354,128. 83

$2ft 257, 619.19
547, 205. 60
2, 726, 777. 39
3, 867, 720 29
12,189, 880. 35
1, 777,046. 33
104, OIO 20
ft 297, 221.42

$177, 862, 704. 79
2,117, 613.14
3ft 313,139. 34
18, 562. 934.87
133,638, 720 13
7, 637, 077.40
966,442,19
84, 655, 381.98

52, 054,178. 30

47, 767, 480 77

455, 754, 013. 84

208

REPORT OF THE SECRETARY OF THE TREASURY

Classification of public buildings under the control of the Treasury Department
by titles, showing expenditures in each class to June 30, 1932, prepared pursuant
to act approved June 6, 1900 (31 Stat. 592)—Coxiiimxed.
Outstanding liabilities chargeable against appropriations
Cost of sites
Sites
Post-office, courthouse, customhouse buildings, etc
--Courthouse buildings
Customhouse buildings
Marine hospital buildings
Post-office buildings
Quarantine station buildings
.Miscellaneous buildings
Unallotted appropriation (lump sum)
Total-

Buildings

Unencumbered balance
of appropriations

$45,422, 216. 65 $144, 693. 00 $35,127, 776.14
4, 241, 474. 69
9,360. 00
1, 715, 777. 63
3, 886, 922. 33
21, 215. 88
889, 238. 97
3, 630, 872. 53
63, 043,186. 90 1, 623, 561. 08 36, 731, 602. 54
328, 837. 60
87, 480. 93
53, 987, 660. 21 "240,"878.'00' 42, 671, 296. 41

$471,871. 61
33, 271. 43
10, 254. 90
139, 093. 08
1, 001, 937. 61
92, 787. 92
4, 848, 660. 67
658. 661. 99

171, 799, 537. 35

7, 256, 539. 21

119, 986, 022. 06

Personnel
The personnel in the Office of the Supervising Architect includes
200 architects, 197 engineers and architectural engineers, 215 district
and construction engineers, inspectors, etc. (field force), and 381
clerks and general office workers. Of these, 109 have been added
to the force during the fiscal year 1932. In addition, 250 architectural firms throughout the country are engaging in work for the
Office of the Supervising Architect, 172 of these having been added
to the list during the fiscal year 1932,
DIVISION OF SUPPLY

The Division of Supply 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 (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 oif 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, and for printing and binding,
are under its administrative control.
Expenditures 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
which allotments were made to the division to cover expenditures
made by it, and also purchases chargeable to appropriations from
which no aUotments were made, are shown in the following table:

209

REPOKT OF THE SECRETARY OF THE TREASURY
Expenditures hy Division of Supply for the fiscal years 1928 to 1932, by
appropriations
B u r e a u s a n d offices, a n d titles of
appropriations
Chief Clerk a n d S u p e r i n t e n d e n t :
C o n t i n g e n t expenses, T r e a s u r y
Department- -.
C a r p e t s a n d repairs
F i l e holders a n d cases
F r e i g h t , telegrams, etc -'.
F u e l , etc
. . .
.
F u r n i t u r e , etc
Gas, etc
.
M o t o r vehicles
Miscellaneous i t e m s
N e w s p a p e r clippings a n d b o o k s - - .
Labor-saving m a c h i n e s
O p e r a t i n g expenses—
Treasurv D e p a r t m e n t Annex D a r b y Building
- _ Library
Total

Division of S u p p l y :
Stationery, Treasury D e p a r t m e n t .
Printing and binding, Treasury
Department..
Postage, T r e a s u r y D e p a r t m e n t . . .
General S u p p l y C o m m i t t e e , salaries
a n d expenses
.Total
D i v i s i o n of B o o k k e e p i n g a n d W a r r a n t s , c o n t i n g e n t expenses, p u b l i c
moneys
.
B u r e a u of C u s t o m s :
Collecting t h e r e v e n u e from customs
-E q u i p m e n t , appraisers' stores.
New York
Total -

1928

1929

$929.75
7,966. 51
35.00
19,169. 44
6,104. 52
1, 079. 55
23,425.88
lft 946. 33
934. 49
39, 016.44

$977.83
7, 969. 07
52. 81
16,115. 60
6, 513. 52
922.89
24, 288. 56
11, 549.10
981. 57
31,475. 24

2, 224. 25
1, 466. 56
1, 000. 00

3,167. 60
1, 634.44
990. 53

993. 7c

927. 71

890.07

114, 298. 72

10ft 638. 76

131, 760 81

165, 952. 29

146,193. 75

446, 043. 39

432, 741. 00

435,81015

402,206.97

397, 242.19

1930

$13ft 767. 06

1 892,136. 93 1 792, 634.45 1802,883.72
999.96
1, 000. 00
986. 76
114, 705. 20

128, 215.82

133,110 00

1931

$165, 024. 58

1932

$145, 303.68

1 704, 612.00 1 714, 482.32

CO
155, 396. 78

(0
11, 074.99

1,453,885. 52 1, 354, 578. 03 1, 372, 803.83 1, 262, 215. 75 1,122, 799, 50
•

2,875. 39

4, 478. 23

1,849.14

3, 941.35

5,220. 57

216,122.10

395, 473.19

'598, 229. 68

463,165.84

470,105.91

598, 229. 68

463,165.84

470,105.91

59,161. 48
216,122.10

454, 634. 67

P u b l i c H e a l t h Service:
P a y of personnel a n d m a i n t e n a n c e
of hospitals
. 1, 794, 610. 31 1, 766, 715. 26 1, 980, 768. 61 2,163, 695. 32 2, 538, 513.72
347,858.12
292, 784. 45
318, 214.44
239,179.88
276, 242. 06
Q u a r a n t i n e service
1, 427. 52
759. 76
2, 463.23
502.74
I n t e r s t a t e q u a r a n t i n e service
3, 520. 65
M a i n t e n a n c e of—
34,115.92
33, 287. 36
34, 250. 06
Hygienic Laboratory
32,159. 77
37, 606. 90
N a t i o n a l I n s t i t u t e of H e a l t h . .
67, 979. 07
27, 077. 31
2ft 937.79
Field investigations
. .
.
78,369.38
23,851.61
P r e v e n t i n g t h e spread of epidemic
35, 597. 34
44,186.84
50,864.00
36, 957. 06
32,711.21
diseases
E x p e n s e s , Division of Venereal
4, 710. 52
6,183. 32
3,937.09
4, 373.97
3, 040. 74
Diseases
- .
18, 099.98
19,461.86
Control of biologic p r o d u c t s
19, 663,41
19, 815. 91
16, 482.83
500.17
490. 60
Books
- --494,
66
497.96
434.15
23. 45
S t u d i e s of r u r a l s a n i t a t i o n
72.75
S u r v e y of salt m a r s h areas, S o u t h
1, 083.94
1, 734.84
A t l a n t i c a n d Gulf States
1, 736.13
1, 295. 37
E d u c a t i o n a l exhibits
4, 358. 75
N a r c o t i c farms
•
E x p e n s e s , D i v i s i o n of M e n t a l
2, 748. 24
H y g i e n e . _.
-M o s q u i t o control i n D i s t r i c t of
1, 337. 39
636. 63
Columbia
-.
( D e p a r t m e n t of Justice transfers to
P u b l i c H e a l t h Service)
M e d i c a l a n d hospital services,
1, 706.83
penal i n s t i t u t i o n s
U n i t e d States P e n i t e n t i a r y , A t 26,482. 07
14, 620. 68
lanta, Ga
United States Penitentiary, Atl a n t a , Ga., b u i l d i n g s a n d e q u i p 34,150.12
m e n t 1931 a n d 1932
U n i t e d States P e n i t e n t i a r y , L e a v 30, 009.68
41, 111. 13
enworth, Kans

1 Includes receipts from sales of customs forms (reimbursed to the appropriation) and certain expenditures for printing and binding from appropriations otlJer than printing and binding.
2 Included with contingent expenses, Treasury Department.

210

REPORT OF.THE SECRETARY OF THE TREASURY
Expenditures by Division of Supply for the fiscal years 1928 to 1932, by
appropriations—Continued

B u r e a u s a n d offices, a n d titles of
appropriations.

1928

1929

•

1930

Public H e a l t h Service—Continued,
U n i t e d States P e n i t e n t i a r y , M c Neil I s l a n d , W a s h
Prison camps
..I...
F e d e r a l jails . . . U n i t e d States i n d u s t r i a l Reforma t o r y , Chillicothe, Ohio
F e d e r a l I n d u s t r i a l I n s t i t u t e for
Women, maintenance
United States Penitentiary, Leave n w o r t h , K a n s , , rnachinery
and equipment
Total

1931

1932

$1, 230. 72

$32, 016. 68
7, 710. 72
6, 639,86

3,467.11

12, 059,18

11, 910. 62

9,124.23

27, 063. 78
$2,195,203.63 $2,176, 731.38 $2,414, 661. 77 2, 779, 943. 74 3,132,285.03

....:

S u p e r v i s i n g A r c h i t e c t (account p u b lic b u i l d i n g s ) :
Repairs and preservation
Mechanical equipment
V a u l t s a n d safes.General expenses
.. ..
F u r n i t u r e a n d repairs
O p e r a t i n g supplies

123, 795.17
117, 656. 04
111,515.06
lift 680.30
104, 692.86
99,428. 72
12ft 336. 76
lift 102. 97
105, 392.15
101,009. 61
91, 659. 72
93,424. 59
145, 640. 63
84,689.83
100,310.02
65,949. 34 - 131,244.81
167,281.8946, 924.19
33, 705. 64
966,127.02 1,29ft 136.47
86ft 967,47
874, 740. 96
619,069.99
1,097,299,34 1,114, 359,98 1,068,265.90 1, 042, 678.42 1,023, 749.69'
2, 056,087.46 2, 345, 787,41 2, 316, 226.33 2,448,694. 73 2,876,839.40

Total . . - .
B u r e a u of I n t e r n a l R e v e n u e , collecting t h e i n t e r n a l r e v e n u e
_
B u r e a u of P r o h i b i t i o n , enforcement of
narcotic a n d n a t i o n a l p r o h i b i t i o n
acts
B u r e a u of Narcotics, salaries a n d expenses
B u r e a u of I n d u s t r i a l Alcohol, salaries
a n d expenses
.
P u b l i c D e b t Service:
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) P u b l i c D e b t Service
Total

T o t a l a p p r o p r i a t i o n s a n d allotments
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 no a l l o t m e n t s were m a d e s

235,890. 74

194,449,29

274,423.27

225, 267. 08

145,194.94

144, 512.10

240,022. 46

156, 628.72

18, 959.44

8, 728.34

52, 220. 72

46,454.33.

27,182. 47
23, 066.11

3,168. 57
28, 224,80

1,913,66
16, 677, 58

1, 668.63
17,079.67

1, 629. 5016,804.40'

50, 248. 68

31, 393. 37

18,491.24

18, 748.30

18,333,90'

ft 64ft 879,12 6, 813,886. 08 7,272, 857.17 7,453,864. 62 7,983, 489,45^
107,144. 60

96, 593.86

213, 788.89

92, 265. 39

122, 741, 60>

6, 667, 023. 62 6,91ft 479. 94 7, 486, 646. 06 7, 646,130. 01 8,106, 230, 95-

G r a n d total

8 Appropriation accounting by bureaus and offices for which purchases were made.

The foregoing expenditures involved the preparation of specifications, the solicitation of quotations, the writing of purchase orders, and
the examination and audit of vouchers for payment through the
disbursing clerk of the Treasury Department.
Number of vouchers audited and purchase orders written during the fiscal years 1928'
to 1932
Vouchers
examined

Fiscal year

1928
1929
1930
1931
1932

...

94,402
103,243
lift 100
12ft 281
123,360

Purchase
orders
written
4ft 700
42,171
48, 571
. 15ft 594
1 5ft 212

1 Exclusive of 5,781 quarterly and annual contracts in 1931, and 6,374 in 1932, made to cover the purchase .•
of ice, wood, coal, fuel oil, subsistence stores, drayage, etc.

REPORT OF THE SECRETARY OF THE TREASURY'

211

During the last five years the number of vouchers increased 30%
per cent and the number of purchase orders increased 38 per cent.
The purchase orders in 1932 required the preparation of 9,800 sets of
specifications and the circulation of 75,985 invitations to dealers to
submit quotations, as compared with 10,000 sets of specifications in
1931.
Stationery supplies
T h e appropriations, reimbursements, and expenditures for articles
of stationery for the past five years are summarized in the following
table:
Appropriations, reimbursements, and expenditures for stationery for the fiscal years
1928 to 19S2

Appropriations...
Reimbursements
Available credits, i
Total expenditures
Balance

1928

1929

1930

1931

1932

$47ft 000. 00
16,166. 26
48ft 166. 25
446,043. 39
40,122. 86

$420,000. 00
13, Oil. 00
433, Oil, 00
432, 741, 00

$425,000. 00
11,43L 15
43ft 431.15
435,810 16
62L00

$404, 200. 00
13,107. 00
417,307.00
402,206.97

, $404,200.00
17,080.05
421, 280, 06
397, 242.19

15,100. 03

24,037. 86

270. 00

The value of stationerjT^ supplies issued to each bureau, office, and
service of the department durmg each of the last five fiscal years is
shown in the following table:
Issues of stationery supplies to bureaus, offices, and services of the Treasury
Department for the fiscal years 1928 to 1932
B u r e a u , office, or service
Secretary, U n d e r Secretary, a n d A s s i s t a n t
Secretaries
A p p o i n t m e n t s Division
_
B o a r d of T a x A p p e a l s
Division of B o o k k e e p i n g a n d W a r r a n t s . . . .
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
.
B u r e a u of t h e B u d g e t
D i v i s i o n of S u p p l y
General Supply Committee
•Chief C l e r k a n d S u p e r i n t e n d e n t
Division of A c c o u n t s a n d Deposits
Comptroller ofthe C u r r e n c y . . . . .
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
C u s t o d i a n of p u b l i c b u i l d i n g s
C u s t o m s Service
Collector, S a n J u a n , P . R
Disbursing Clerk.
Federal F a r m Loan Board
Federal Reserve Board
Government Actuary
I n s o l v e n t n a t i o n a l b a n k fund
I n t e r n a l R e v e n u e Bm-eau
Federal F a r m Board
C u s t o m s Service, St. T h o m a s , Virgin
Islands
Mint Bureau
National bank examiners
National B a n k R e d e m p t i o n Agency
Prohibition Bureau
B u r e a u of I n d u s t r i a l A l c o h o l .
B u r e a u of Narcotics
P u b l i c D e b t Service
E x p e n s e s of loans
P u b l i c H e a l t h Service
S e c r e t Service
S u p e r v i s i n g Architect
Treasurer ofthe United States...
Coast Guard-L...
W a r F i n a n c e Corporation
P e r s o n n e l Classification B o a r d
1 I n c l u d e d u n d e r Supervising A r c h i t e c t .

1928

1929

$1,042,38
626.39
136,50
1,096, 26
6,924, 79
358. 28
ft 886. 96
1,020, 76
1,767.38
1,027.06
5,429. 24
6L41
1,627. 69
72,030.83
806.86
671. 29
3, 979.86
4, 249. 96
14,16
1, 023. 77
195,135.01

$1,026. 37
430. 62
162,82
1, 718.68
7,187.14
634,12
2,886, 27
1,119. 27.
1,664. 20
430,76
ft 712.82
54.08
1,407,81
Oft 425,59
722,90
778. 48
3,681. 73
3,977,02
23.48
884.06
191, 611. 70

1,134. 70
1,315.10
1, 666. 92
6ft 420,09

921. 76
1,473. 24
1,303. 31
46,973, 39

175.85
943. 91
1, 767, 22
1,560. 04
46,798.86

2ft 581. 34
2,664, 77
22,120. 62
929.27
ft 338. 76
9, 678. 39
25,640.16
12,84

2ft 025.07
203. 06
21, 703.45
1,001.47
8,481.09
8,175. 67
27, 709. 58
14.67

12,726,03
33.20
22,178. 21
1,220.16
lft 347.03
7,173.37
33, 266.00
21.73

1932

1930

$939. 63
446. 27

$1,120 06
649,80

$1, 765.49
928.83

1,064.49
4,986.83
643.57
2,919.40
1,198.97
1,386.36
596.27
11,056. 51
99.00
1,391.16
77, 260.11
797.00
511,04
2,914, 25
2, 736.30
23.36
680. 28
172, 658. 02
102. 71

1,395,07
6,489.42
652, 56
2,035.18
1, 249. 64
2,107.93
620.30
ft 150. 79
81.16

1,765.66
4,791. 61
690.42
2,306.59
1,39L44
1.665.05
1,006.39
4,466.87
38.93

(0
73,405. 24
613. 97
668,02
4, 251.46
3,152.02
20 25
1.156.17
17ft 244. 86
93,01

56,468. 26
450.40
859.03
2,224.17
3.164.06
16.28
1,588. 68
159,993.40
. L92

35.02
913.16
2,170. 76
813, 69

9L07
1,060.06
1,692.87
643. 23

24,865.31
5, 548. 67
16,346.40

19,904. 67
3,998.46
16,336.62

21,854, 73
967.12
2ft 482.10
8, 233. 58
2ft 983.33

21,616. 69
1,084.75
29,687. 95
8,220.01
34, 563.94

71.56

212

REPORT OF THE SECRETARY OF THE TREASURY

Issues of stationery supplies to bureaus, offices, and services of the Treasury
Department for the fiscal years 1928 to 1932—Continued
1929

1928

B u r e a u , office, or service
S e t t l e m e n t of w a r claims act
D e p a r t m e n t of Justice, penal i n s t i t u t i o n s
Reconstruction Finance Corporation
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 charge t o s t a t i o n e r y appropriation

1930

1932

1931
$16. 64

$0 55
86.15
6, 607. 60

18,000. 00
$2ft 335. 68 $2ft 010. 70 $19, 500. 00
468, 534. 43 451, 326. 27 44ft 922. 03 426, 356. 85
13,107. 00
13, Oil. 00
11, 431.15
lft 166. 25

17,000. 00
406,845. 68
17,080.05

413, 249. 85

38ft 765. 63

452, 368.18

438,315. 27

429, 490. 88

Sffipments of stationery and miscellaneous supplies from the warehouse of the Division of Supply in Washington to field offices were as
follows:
Shipments of stationery supplies to field offices for the fiscal years 1930 to 1932

'
s t a t i o n e r y a n d miscellaneous supplies:
F r e i g h t a n d express
Parcel post
.
F r a n k e d parcels
B l a n k books a n d forms b y m a i l
Total shipments
G o v e r n m e n t bills of lading u s e d for
freight a n d express s h i p m e n t s

11,977
552
4,278
92,408
109,215

Weight

1, 306,362
ft 077
17, 483
711, 045
2, 043, 967

1932

1931

1930
Packages

Packages

ft 819
839
7,310
71,941
86,909

3,342

Weight

1, 056, 934
13, 319
21, 930
635, 409
1. 727. 592

Packages

ft 851
893
7,605
69,479
83,828

2,563

Weight

1,01ft 329
lft 258
22, 815
691,190
1. 739. 592

2,729

Printing and binding
The appropriation for printing and binding for the fiscal year 1932
was $693,900. Of tffis amount $691,214.96 was expended, leaving an
unencumbered balance of $2,685.04. To these expenditures should be
added $22,788.15 reimbursed from sales of customs forms and $64,558.51 expended from other appropriations. Thus there were total
expenchtures of $778,561.62 for all classes of printing and bindffig
handled through the Division of Supply.
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 for the
fiscal year years 1928 to 1932 i
SUMMARY
1928

1929

1930

1931

1932

Appropriations printing a n d binding.
Treasury Department
.
- $820, OOO 00 $71ft OOO 00 $715, ooa 00 2 $693,900 00 $693,90O 00
R e i m b u r s e m e n t s from sales of c u s t o m s
42, 586.14
forms
-.
- ..
44, 085.18
4ft 639.19
22, 788.15
33, 049. 69
62, 097. 88
34, 895. 98
51, 611.12
E x p e n d e d from other a p p r o p r i a t i o n s
34,194. 38
64, 558. 51
T o t a l available
92ft 183. 06 79ft 535.17 809,197. 26
761,144. 07 781, 246. 66
Total expenditures
: . 892, 095. 22
792, 634. 45 802, 883. 72
738, 656. 69 778 561. 62
Balance
.._
34, 087. 84
ft 313. 54
2, 90O 72
22, 487. 38
2 685. 04
1 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 Original appropriation was $716,000; transfer of $21,100 was made to Department of Justice ($19,000 for
prohibition, $1,600 for Court of Customs and Patent Appeals, $500 for Customs Court), leaving an available
balance of $693,900.

REPORT OF THE SECRETARY OF THE TREASTJRY

213

Appropriations, expenditures, and reimbursements for printing and binding for the
fiscal year years 1928 to 1932—Continued
EXPENDITURES

FROM APPROPRIATIONS FOR PRINTING
BUREAUS, OFFICES, A N D DIVISIONS
1928

1929

1930

AND

BINDING,

1931

1932

Secretary, U n d e r Secretary, a n d A s s i s t a n t
Secretaries
$13, 737. 30
$11, 899. 00 $11, 472. 45
$11, 603. 35 $lft 669. 91
A p p o i n t m e n t s D ivision
1, 210 78
218. 99
946.43
1, 569. 68
1, 275. 68
Bookkeeping and Warrants Division
11, 541. 61
14, 082. 00
23, 747. 91
26, 645. 00
11,530 20
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
5, 723. 40
ft 161.90
6, 623. 07
7, 753. 40
ft 891. 55
23, 737. 68
28, 227. 89
B u r e a u of I n d u s t r i a l Alcohol
ft 840 26
..Bureau of Narcotics
7, 703. 81
B u r e a u of P r o h i b i t i o n 3
- . 71, 315. 06
50. 888. 98
75,107. 76
(3)
(3)
Chief Clerk a n d S u p e r i n t e n d e n t
1, 641. 78
1, 690 23
i; 005. 28
4, 829. 39
1, 531. 08
Coast Guard:
23, 824. 35
Bureau...'
4 2ft 717. 73 4 3ft 634. 42 < 37,971.49 4 37,839. 96
Service
22,-378.10
1, 282,11
C o m m i s s i o n e r of A c c o u n t s a n d D e p o s i t s - .
82.95
70 47
123. 55
123.53
23, 764. 88
32,158,64
Comptroller ofthe Currency
27, 952. 32
2ft 618. 08
25, 709. 69
1,393.35
C u s t o d i a n s of p u b l i c b u i l d i n g s
1. 002. 08
1, 592.19
1,061.89
1, 709. 38
Customs:
4, 066. 58
Bureau
35, 968. 54 5 34, 622. 88 5 48, 045.10 5 27, 844. 42 5 27, 213. 36
Service
434. 69
Special a.gency
599. 27
649. 69
454. 46
D i s b u r s i n g Clerk
230. 49
758. 43
3ft 141. 79
lft 014. 65
7,980. 86
D i v i s i o n of S u p p l y .
17,152.10
12,162. 27
36, 005. 28
57, 370 16
General S u p p l y C o m m i t t e e
27, 691. 01
3ft 967. 56
38, 037. 62
1, 962, 35
1, 652. 28
Government Actuary
1, 603. 24
1, 614. 27
1, 667. 98
Internal Revenue:
8ft 777. 77
Bureau
211, 310 33 ^^263,655.90 < 24ft 533. 00 4 23ft 949, 06 124ft 637, 83
Service
-2, 814. 17
Loans and Currency Division 6
Mint:
3, 662.18
Bureau
4 7, 733, 48
4 7, 216. 94 4 6, 678, 73
2, 940 12 \ 4 5,751.94
Service
1, 982. 53
2, 561. 54
2, 019. 04
1. 990 55
1, 868. 45
N a t i o n a l b a n k depositaries
lft 642. 74
P u b l i c D e b t Services
.__..
2ft 000. 68
12, 637. 85
lft 080. 94
15, 848. 86
Public Health:
88,129. 44 [4102, 264. 76
Bureau
4101, 084. 19 4 94, 517.11 4 91, 734, 28
8,107. 57
Service
.
382. 91
493.14
553. 88
535. 26
503. 93
Secret Service
ft 956.18
3, 041. 80
6, 658. 29
5, 938. 80
6,90O 17
Supervising A r c h i t e c t . .
11,472. 23
11,109. 45
T r e a s u r e r o f t h e U n i t e d States
12, 966. 83
12, 524. 83
11, 733. 36
7ft 882. 01
53, 847. 64
7ft 787. 48
57, 50O 05
67, 859. 98
Miscellaneous
Total-

78ft 912.16

712, 099. 28

708., 686, 46

REIMBURSED AND EXPENDED FROM OTHER
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 c u r r e n c y . . .
C u s t o m s Service, b l a n k forms "^
E n f o r c e m e n t of narcotic a n d national proh i b i t i o n acts
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)
Expenses, s e t t l e m e n t of w a r claims, act of
1928-..
F e d e r a l F a r m L o a n B u r e a u (miscellaneous expenses)
G e r m a n special deposit account
I n s o l v e n t national b a n k fund
Mixed Claims Commission
..
N a t i o n a l b a n k examiners .
National Bank Redemption Agency
P u b l i c D e b t Service
..
Salaries a n d expenses. B u r e a u of I n d u s trial Alcohol
Total

$313.72
48.10
846.14
33, 049. 69

$3, 420. 92
50 10
1, 602. 03
22, 788.15

1, 646. 04

828. 42

1, 758.13

91.28

194.84

248. 05

lft 564. 91

9, 819. 28

11, 881. 04

1, 601. 33
151. 39
12,130 68
3, 930 61

i, 668. 97

ft 941. 83

lft 313. 69
262. 69
lft 281. 92

18, 055. 77
9, 048. 82

lft 095. 86
"2,808.99

12, 826. 88
13, 074. 66

235. 44

2, 719. 44

8ft 535.17

94,197. 26

67, 244. 07

87, 346. 66

$2, '398. 39
55.50
666. 75
4ft 639.19

$2, 806. 85
428. 30
4, 597. 38
42, 586.14

142. 66

3, 448. 43

24, 249. 84

3,117. 63
136.13

ft 440.16
2, 393.18

10ft 183. 06

691, 214,96

APPROPRIATIONS

$1,582.99
17.56
3, 562. 08
44, 085.18

12,182. 61
11,630 46
39.00

671, 412, 62

3 I n c l u d e d u n d e r B u r e a u of I n t e r n a l R e v e n u e prior t o 1927; activities relating t o p r o h i b i t i o n enforcement
transferred to D e p a r t m e n t of J u s t i c e on J u l y 1, 1930, w i t h organization of B u r e a u of I n d u s t r i a l Alcohol a n d
B u r e a u of Narcotics i n t h e T r e a s u r y D e p a r t m e n t .
4 I n c l u d e s b u r e a u a n d service.
« I n c l u d e s b u r e a u , service, a n d special agency.
6 P u b l i c D e b t Service includes Register of t h e T r e a s u r y for 1928,1929,1930,1931, a n d 1932, a n d t h e greater
p a r t of L o a n s a n d C u r r e a c y for all years.
7 Reimbursed to printing and binding appropriation.

214

REPORT OF THE SECRETARY OF THE TREASURY

Department advertising

Authorizations to pubhsh advertisffig were issued to 3,774 newspapers and periodicals in the fiscal year 1932, compared with 3,868
ffi 1931, a decrease of 94, wffile expenditures thus authorized increased from $34,360.40 in 1931 to $39,174.65 in 1932, an mcrease
of $4,814.25.
Engraving work
A total of 68,423,775 certificates, checks, commissions, drafts, liquor
permits, transportation requests, and warrants was approved by this
office for execution by the Bureau of Engravmg and Printmg for the
several departments and establishments of the Government durffig
the fiscal year 1932, compared with 59,428,917 in the preceding year.
TREASURER OF THE UNITED STATES

Total ordinary receipts from all sources, exclusive of postal revenues, and expenditures chargeable against ordinary receipts are shown
for the fiscal years 1931 and 1932 in the following table, classified
according to fund accounts. (For explanation of fund accounts, see
p. 338.) The figures for 1931 are on the basis of daily Treasury statements, unrevised, the revised figures for tffis classification being
unavailable; and the figures for 1932 are on an unrevised basis for
comparison and also on a revised basis. (For explanation of bases,
see p. 337.)
Total receipts and expenditures, classified according to fund accounts, for the fiscal
years 1931 and 1932
1932
1931, unrevised

Account

General fund:
Ordinary receipts, exclusive of postal
revenues
Expenditures chargeable against ordinary
receipts.Deficit...

$3,103,764, 828, 41
ft 987,434,521, 50
883,66ft 693.09

Special funds:
Receipts
Expenditures

Unrevised

Revised

$1, 97ft 545, 842,44

$1,974,861,178.67

4,81ft 922, 598, 90

4,806,176, 978.01

2,837,376,756.46

2,831,314,799.34

85.873, 803, 79
104,163,190, 99

29,179, 594. 70
71, 987, 087, 23

2ft 013,784.89
72,029,079.46

lft 289, 387. 20

42, 807, 492. 53

4ft 01ft 294. 67

127,694, 861. 61
12ft 352, 626. 39

lift 502, 568. 91
12ft 68ft 618. 94

114, 217,935. 45
lift 68ft 200.60

.--.

757, 764. 78

5,178, 050. 03

6,47ft 266.15

General, special, and trust funds combined:
Receipts
--.
Expenditures

ft 317, 233,493.81
4,219, 95ft 338.88

2,121, 22ft 006. 05
ft 006,59ft 305. 07

2, lift 092,899. 01
4, 997,893,258. 07

2,886, 362, 299. 02

2,879, 800, 359. 06

Deficit.--

-..

Trust funds:
Receipts
Expenditures
Deficit

Deficit

902, 716, 845. 07

Attention is called to the fact that figures used throughout this
section of the report (pp. 214 to 217, inclusive), except as otherwise
stated, are on the basis of daily Treasury statements, revised.

REPORT-OF.THE SECRETARY OF THE TREASURY

215

Receipts for 1932, as shown above, include Panama Canal toUs,
etc., amounting to $22,448,911.57 as against $26,534,587.74 last year.
There, were no receipts from the proceeds of sales of obligations of
foreign governments in 1932, whereas last year the receipts from
this source amounted' to $236,062,755.75. Expenditures for 1932
include $10,735,623.17 for the operation of the Panama Canal,
$202,876,340.63 for the postal deficiency, $500,000,000 for the purchase of capital stock of the Reconstruction Finance Corporation,
and $125,000,000 for the purchase of capital stock of Federal land'
banks. Expenditures for 1931 for operation of the Panama Canal
were $9,428,059.23 and for the postal deficiency $145,643,613.12.
There were no purchases of capital stock durmg 1931.
The receipts and expenditures on account of the principal.of the
public debt during the fiscal year 1932 are shown in the following
statement:
Receipts on account of—
Treasury bills
.
Certificates of .indebtedness
Certificates ofindebtedness (adjusted service certificate fund series)
Treasury notes (foreign service retirement fund series)
Treasury notes (civil service retirement fund series)
Treasury notes (Canal Zone retirement fund series)
. Treasury notes
Treasury bonds.-.
Treasury savings securities..
_Postal savings bonds
' Deposits for retirement of national bank notes (act of July 14, 1890)

TotalExpenditures on account of—
Treasury bills
' Certificates ofindebtedness. _.
Certificates of indebtedness (adjusted service certificate fund series)
Treasury notes (foreign service retirement fund series)
Treasury notes (civil service retirement fund series)
Treasury notes (Canal Zone retirement fund series)
Treasury notes
Treasury bonds
War savings securities
Treasury savings securities
First Liberty bonds
Second Liberty bonds
_
Third Liberty bonds
Fourth Liberty bonds
Victory notes
..' Postal savings bonds
Other debt items
National bank notes and Federal reserve bank notes. Total
--..
-.Reconstruction Finance CorporationPurchases of obligations of the corporation
Balance to credit of corporation

.$2,33ft 64ft OOO 00
4,707,307,050.00
393,300,000.00
453,000.00
46,800,000.00
2,070,000.00
. 1, 261,28ft 600,00
80ft 424,000.00
291.11
lft 871,880.00
73,067,135.00
9,634,22ft 956.11
.1 2,15ft 724,000.00
3, 762,251,550.00
410,100,000.00
136,000,00
-_
14,400,000,00
6,000.00
47ft 527,650 00
94,26ft 550,00
35,875.00
356,412,00
314,200,00
913,450,00
1,447,050,00
lift OOO 00
13ft 400.00
45ft 120.00
64,024.44
37,454,052.60

6, 94ft 701, 333.94
$350,000, 000.00
66,270,423.39
;

283, 72ft 576. 61

Public debt retirements chargeable agamst ordinary receipts,
included in the above expenditures, were as foUows:
Cumulative sinking fund
..-_
.-.
-.
$412,554,750.00
Received for estate taxes
..
1,000.00
Purchases and retirements from franchise tax receipts (Federal intermediate credit banks).
21,000.00
Forfeitures, gifts, etc
.
_
.
63,000.00
Total.—

412,629,750 00

The gold holdings of the Treasury, largely held in trust against
specific obligations, were reduced durffig the fiscal year 1932, due
chiefly to an excess of exports over imports. The total imports of
gold during the year, as reported by the Department of Commerce,
were $520,028,017 and the exports $1,233,843,540. The gold holdings

216

REPORT OF THE SECRETARY OF THE TREASURY

of the Treasury on June 30, 1931 and 1932 are shown in the followffig
table:
Account

June 30, 1931

Increase (+) or
decrease ( - )

June 3ft 1932

$1,701,514,389.00 $1, 49ft 69ft 969. 00 -$21ft81ft420.00
For redemption of gold certificates outstanding
1, 776, 69ft 377. 86 1, 23ft 73ft 771. 58 -54ft 953, 606. 28
Gold fund. Federal Reserve Board
15ft 039, 088. 03
i5ft 039, 088. 03
Gold reserve.- - ' -Gold in general fund (including amount held for
-f 14, 25ft 836. 00
61, 83ft 014.10
7ft 085, 850.10
the redemption of Federal reserve notes)
3, 69ft 07ft 868. 99 2, 95ft 56ft 678. 71

Total

-737, 51ft 190 28

Public moneys on deposit in designated Government depositaries
on June 30, 1932, exclusive of items in transit on that date, amounted
to $436,572,610.06 and were distributed as follows:
Federal reserve banks and branches
Special depositary banks (war loan deposit accounts)
General depositary banks (exclusive of foreign)
Limited depositary banks (exclusive of foreign)
Foreign depositary banks (general and hmited)
Treasury of the Philippine Islands
Total--

$3, 758,367.94
.405,648, 239.95
13,126,710.04
..L. 12,676,894. 24
785,023.66
677,374,23
43ft 572,610,06

Interest at the rate of one-half of 1 per cent per annum accrued
on balances held by general and limited depositary banks, including
foreign, in the amount of $137,405.24 and on balances in special
depositary banks arising from the sales of Treasury bonds, notes, and
certificates of indebtedness in the amount of $1,662,082.78, making
a total of $1,799,488.02.
United States paper currency shipped from the Treasury in Washington to Treasury offices. Federal reserve banks and branches, and
others amounted to $1,227,811,885 as compared with $1,687,480,999
for the previous year.
United States paper currency (gold certificates, silver certificates,
and United States notes) issued during the year amounted to
$1,272,424,000 as against $1,752,014,000 for the previous year.
The redemptions, including Treasury notes of 1890, amounted to
$1,192,507,800 as against $1,511,807,350 for the fiscal year 1931,
leaving $2,684,949,688 outstanding at the end of the year. Trea.sury
notes of 1890 are no longer issued, and the amount outstanding is
gradually being redeemed.
The proceeds of currency counted into the Treasurer's cash by
the National Bank Redemption Agency amounted to $425,164,804.97.
Of this sum, $390,149,009 was in national bank notes, $185,733 in
Federal reserve bank notes, $34,649,985 in Federal reserve notes,
and $180,077.97 in United States currency.
Canceled Federal reserve notes amounting to $921,330,460 were
received from Federal reserve banks and branches for credit of
Federal reserve agents.
During the year the Treasurer's office authorized and directed
shipments or transfers of gold bars and of current gold, silver, and
minor coins to or from the Treasury, the mints, the assay office in
New York, and the Federal reserve banks and branches for use in
public disbursements and for special purposes in an aggregate amount
of $1,191,293,814.67. Shipments and transfers of uncurrent and

REPORT OF THE SECRETARY OF THE TREASURY

217

lightweight coins to the mffits from the Treasury in Washington
and from the Federal reserve banks and branches were authorized
in the amount of $11,810,700.10.
„
Funds were advanced to United States disbursing officers by
accountable warrants issued in an aggregate amount of
$3,594,333,570.69. Warrants aggregating $7,898,655,609.47 were
also issued covering public debt principal, interest, and premium
payments by the Treasurer. Treasurer's checks aggregating
$731,711,481.70 were issued on settlement warrants in payment of
claims settled by the Comptroller General. Drafts in payment of
claims settled in foreign currencies by the Comptroller General were
purchased to the number of 628 at a total cost of $18,836.68 and for
other departments and bureaus of the Government to the number
of 1,070 at a cost of $77,076.76.
Checks drawn on this office by Government disbursing officers
were paid during the fiscal year 1932 to the number of 37,931,376,
an increase of 1,449,680 checks, as compared with the previous
fiscal year. Balances to the credit of disbursing officers and Government agencies in 3,151 accounts on June 30, 1932, amounted to
$365,222,710.57, an increase of $26,331,191.80 over the total of such
balances in 3,131 accounts on June 30, 1931.
WAR FINANCE CORPORATION
^

(In liquidation)

The liquidation of the War Finance Corporation, which began on
January 1, 1925, was continued during the year. By the act approved March 1, 1929, the liquidation of the corporation's assets
remaining at the close of April 4, 1929, and the winding up of the
affairs of the corporation thereafter were transferred to the Secretary
of the Treasury, who, for such purpose, was given all the powers
and duties of the board of directors of the corporation under the
War Finance Corporation act of April 5, 1918, as amended. To
carry out the program of liquidation, the Secretary of the Treasury,
pursuant to authority contained in the law, assigned to a liquidating
committee the exercise and performance, under his general supervision and direction, of all powers and duties vested in him by the
act approved March 1, 1929. The liquidating committee consists of
two officers of the United States in the Treasury Department who
serve without compensation from the corporation.
Only $10,000 of the corporation's original capital of $500,000,000
is outstanding, $499,990,000 of capital stock having been canceled
and retired at par. In addition, the corporation has paid into the
Treasury $64,531,271.70 on'account of earnings.
The amount advanced by the corporation for all purposes, from
its creation, was $690,431,100, of which $688,423,686 has been repaid.
The amount carried on the corporation's books on October 15, 1932,
was $211,762.29, of which $170,480 represented war loans and
$41,282.29 agricultural and hvestock loans (including expense advances of $406.69). During the year ended October 15, 1932, no
expense advances were made. The repayments during this period on
account of the corporation's agricultural and livestock loans, totaled
$4,389.21.

EXHIBITS

219

EXHIBITS
T H E PUBLIC D E B T
I s s u e s of Treasury notes and certificates of i n d e b t e d n e s s
EXHIBIT

Oifering of Treasury notes, Series 1932 (3}i per cent) and certificates of indebtedness.
Series T J - 1 9 3 2 l2y4 per cent) and Series TS2-1932 {3 per cent) (press release,
December 7, 1931, with Department Circulars Nos. 451 and 4-52)
The Treasury is to-day offering for subscription a t p a r a n d accrued interest,
t h r o u g h t h e Federal reserve banks, S}i per cent 1-year Treasury notes, 2% per
cent 6-month certificates of indebtedness, a n d 3 per cent 9-month certificates of
indebtedness. The a m o u n t of t h e Treasury note offering is $600,000,000, or
t h e r e a b o u t s ; t h e a m o u n t of t h e offering of 6-month certificates of indebtedness is
$300,000,000, or t h e r e a b o u t s ; a n d t h e a m o u n t of t h e offering of 9-month certificates of indebtedness is $400,000,000, or thereabouts.
The Treasury notes will be dated December 15, 1931, a n d will bear interest
from t h a t date a t t h e r a t e of Zyi per cent- per a n n u m , payable semiannually.
They will m a t u r e on December 15, 1932, a n d will not be subject to call for
redemption prior t o t h a t d a t e .
Both series of certificates of indebtedness will be dated a n d bear interest from
December 15, 1931. One series, T J - 1 9 3 2 , for 6 m o n t h s , with interest a t t h e rate
of 2% per cent per a n n u m , will m a t u r e on J u n e 15, 1932, a n d t h e other series,
TS2-1932, for 9 months, with interest a t t h e r a t e of 3 per cent per a n n u m , will
rnature on September 15, 1932.
The principal a n d interest of t h e Treasury notes a n d of b o t h series of certificates
of indebtedness will be payable in United States gold coin of t h e present s t a n d a r d
of value.
.
The Treasury notes a n d Treasury certificates of indebtedness of b o t h series will
be exempt, b o t h as to principal a n d interest, from all taxation (except estate or
inheritance taxes) now or hereafter imposed by t h e United States, a n y State, or
a n y of t h e possessions of t h e United States, or by any local taxing a u t h o r i t y .
Applications will be received a t t h e Federal reserve banks. The Treasury will
accept in p a y m e n t for t h e new Treasury notes a n d certificates of indebtedness,
a t par, t h e 3 ^ per cent Treasury notes of Series C-1930-32, with coupons dated
J u n e 15 a n d December 15, 1932, attached, which were called for redemption on
December 15, 1931, by Treasury D e p a r t m e n t Circular No. 439, dated J u n e 8,
1931, a n d Treasury certificates of indebtedness of Series T D - 1 9 3 1 a n d T D 2 - 1 9 3 1 ,
both m a t u r i n g December 15, 1931.
Subscriptions for t h e Treasury notes for which p a y m e n t is to be tendered in
3}^ per cent Treasury notes of Series C-1930-32 (called for redemption on Decem' ber 15,. 1931) a n d Treasury certificates of indebtedness of Series T D - 1 9 3 1 and
T D 2 - 1 9 3 1 (both m a t u r i n g December 15, 1931) will be given preferred allotment
up t o t h e a m o u n t of t h e offering of Treasury notes. Subscriptions for t h e
Treasury certificates of indebtedness for which p a y m e n t is to be tendered in 3K
per cent Treasury notes of Series C)-1930-32 a n d Treasury certificates of indebtedness of Series T D - 1 9 3 1 a n d T D 2 - 1 9 3 1 wiU be given preferred allotment up t o t h e
a m o u n t of each offering.
The Treasury notes will be issued in bearer form only, in denominations of $100,
$500, $1,000, $5,000, $10,000, a n d $100,000, with t w o interest coupons a t t a c h e d
payable on J u n e 15, a n d December 15, 1932. The certificates of indebtedness of
b o t h series will be issued in bearer form only, in denominations of $500, $1,000,
$5,000, $10,000, a n d $100,000. The certificates of Series T J - 1 9 3 2 will h a v e
one interest coupon attached, payable J u n e 15, 1932, a n d t h e certificates of Series
TS2-1932 two interest coupons attached, payable March 15, and September 15,
1932.
The 3J^ per cent Treasury notes of Series C-1930-32 were called for redemption
on. December 15, 1931, a n d will cease to bear interest on t h a t date. About
$452,000,000 of these notes are now outstanding. I n addition, about $543,000,000
of Treasury certificates of indebtedness a n d a b o u t $95,000,000 in interest on the
public debt become due a n d payable on December 15, 1931.
221

222

REPORT OF THE SECRETARY OF THE TREASURY^

The texts of t h e ofiicial circulars follow:
[Department Circular N.o. 451]

The Secretary of t h e Treasury, under t h e a u t h o r i t y of the. act approved Sept e m b e r 24, 1917, as amended, offers for subscription, a t p a r a n d accrued interest,
t h r o u g h t h e Federal reserve banks, Treasury certificates of indebtedness, in t w o
series, b o t h d a t e d a n d bearing interest from December 15, 1931, t h e certificates
of Series T J - 1 9 3 2 being payable on J u n e 15, 1932,. with, interest a t t h e rate of 2 ^
per cent per a n n u m , payable on a semiannual basis, a n d t h e certificates of Series
TS2-1932 being payable on September 15, 1932, with interest a t t h e r a t e of 3
per cent per a n n u m , payable on a semiannual basis. The principal a n d interest
of t h e certificates wiU be payable in United States gold coin of t h e present s t a n d a r d
of value.
Applications will be received a t t h e Federal reserve banks.,
; •
Bearer certificates will be issued in denominations of $500, $1,000, $5,000,
$10,000, a n d $100,000. The certificates of Series t j - 1 9 3 2 will have one interest
coupon attached, payable J u n e 15, 1932, a n d t h e certificates of Series TS2-1932,
two interest coupons attached, payable M a r c h 15, a n d September 15, 1932.
The certificates of "these series shall be exempt, both as to-principal a n d interest,
from all t a x a t i o n (except estate a n d inheritance taxes) now or hereafter imposed
b y t h e United States, a n y State, or a n y of t h e possessions of t h e United States,
or by a n y local taxing a u t h o r i t y .
The certificates of these series wiU be accepted a t p a r during such time a n d under
such rules a n d regulations as shall be prescribed or approved b y t h e Secretary of
t h e Treasury, in p a y m e n t of income a n d profits taxes payable a t t h e m a t u r i t y of
the,certificates. The certificates of these series will be acceptable t o secure
deposits of public moneys, b u t will h o t bear t h e circulation privilege.
•' The right is reserved t o reject a n y subscription a n d t o - a l l o t less t h a n t h e
a m o u n t of certificates of either or b o t h series applied for a n d t o closie t h e s u b scriptions as t o either or b o t h series a t a n y time without notice. The Secretary
of t h e Treasury also reserves t h e right t o m a k e aUotment in full upon applications
for smaller a,mounts, t o m a k e reduced allotments upon, or t o reject, applications
for larger a m o u n t s , a n d t o m a k e classified allotments and allotments upon a
g r a d u a t e d scale; a n d his action in these respects will be final. Allotment notices
w i l l b e sent o u t p r o m p t l y upon allotment, a n d t h e basis of t h e allotment will'be
publicly announced.
P a y m e n t a t p a r a n d accrued interest for certificates allotted m u s t be m a d e on
or before December 15, 1931, or on later allotment. After allotment a n d upon
p a y m e n t Federal reserve b a n k s m a y issue interim receipts pending delivery of
t h e definitive certificates. Any qualified depositary will be permitted t o m a k e
p a y m e n t by credit for certificates allotted t o it for itself a n d its customers up t o
any a m o u n t for which it shall be qualified in excess of existing deposits, when so
notified b y t h e Federal reserve b a n k of its district. The 3}^ per cent Treasury
notes of Series C-1930-32, with coupons dated June 15 a n d December 15, 1932,
attached, which were called for redemption on December 15, 1931, by Treasury
D e p a r t m e n t Circular No. 439, d a t e d J u n e 8, 1931, a n d Treasury certificates of
indebtedness of Series T D - 1 9 3 1 a n d T D 2 - 1 9 3 1 , b o t h m a t u r i n g December 15,
1931, will be accepted a t p a r in p a y m e n t for a n y certificates of t h e series now
offered which shall be subscribed for a n d allotted, with an adjustment of t h e interest accrued, if any, on .the certificates of t h e series so paid for.
As fiscal agents of t h e United States, Federal reserve b a n k s are authorized a n d
requested t o receive subscriptions a n d t o make allotments on t h e basis and up
t o t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal reserve
b a n k s of t h e respective districts.
A. W.

MELLON,

Secretary of the Treasury.
TREASURY DEPARTMENT,
O F F I C E OF T H E SECBETAKY,

December 7, 1931.
To the investor:
Almost any banking institution in the United States will handle 3'our 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 pmchase, 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.
[Department Circular No. 452]

The 'Secretary of t h e Treasury offers for subscription, a t par a n d accrued
interest, t h r o u g h t h e Federal reserve banks, $600,000,000, or thereabouts, 3K per

REPORT OF THE SECRETARY OF THE TREASURY

223

cent Treasury notes of Series 1932, of an issue of gold notes of the United States
authorized by the act of Congress approved September 24, 1917, as amended.
DESCRIPTION OF NOTES

The notes will be dated and bear interest from December 15, 1931, will be payable on December 15, 1932, and will bear interest at the rate of 3J4 per cent per
annum, payable semiannually on June 15, and December 15, 1932. The notes
will not be subject to call for redemption prior to maturity. The principal and
interest of the notes will be payable in United States gold coin of the present
standard of value.
Bearer notes with interest coupons attached will be issued in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000. The notes will not be issued
in registered form. The notes will be acceptable to secure deposits of public
moneys, but will not bear the circulation privilege.
The notes of this series shall be exempt, both as to principal and interest, from
all taxation (except estate or inheritance taxes) 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.
The notes 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 incomxC and
profits taxes payable at the maturity of the notes.
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.
Subscriptions for which payment is to be tendered in 3J^ per cent Treasury
notes of Series C-1930-32 (called for redemption on December 15, 1931) and
Treasury certificates of indebtedness of Series rD-1931 and TD2-1931 (both
maturing December 15, 1931) will be given preferred allotment up to the amount
of the offering.
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; 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, 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 allotment will be publicly announced.
PAYMENT

Payment at par and accrued interest for any notes allotted must be made on or
before December 15, 1931, or on later allotment. Any qualified depositary will
be permitted to make payment by credit for notes allotted to it for itself and
its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal reserve bank of its district. The
S}( per cent Treasury notes of Series C-1930-32, with coupons dated June 15
and December 15, 1932, attached, which were called for redemption on December
15, 1931, by Treasury Department Circular No. 439, dated June 8, 1931, and
Treasury certificates of indebtedness of Series TD-1931 and TD2-1931, both
maturing December 15, 1931, wiU be accepted at par in payment for any notes
of the series now offered which shall be subscribed for and aUotted, with an
adjustment of the interest accrued, if any, on the notes of the series so paid for.
GENERAL PROVISIONS

The Federal reserve banks, as fiscal agents of the United States, are authorized
and requested to receive subscriptions for Treasury notes hereunder, 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.
141810—32
15

224

REPORT OF THE SECRETARY OF THE TREASURY
FURTHER DETAILS

Any further information which may be desired as to the issue of Treasury
notes under the provisions of this circular may be obtained upon apphcation 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, and
may terminate the offer at any time in his discretion.
A, W.

MELLON,

Secretary ofthe Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

December 7, 1931,

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 Treasury notes of Series
C-1930-32 may be accepted in payment for the Treasury notes offered.

EXHIBIT 2

Subscriptions and allotments. Treasury notes. Series 1932, and certificates ofindebtedness. Series TJ-1932 and Series TS2-1932 {from press releases, December 11, 12,
and 14,1931, revised ^)
Secretary Mellon announced that the subscription books for the current offering
of 12-month 3J4 per cent Treasury notes of Series 1932, maturing December 15,
1932, for $600,000,000; 9-month 3 per cent Treasury certificates of indebtedness,
Series TS2-1932, maturing September 15, 1932, for $400,000,000; and 6-month
2% per cent Treasury certificates of indebtedness. Series TJ-1932, maturing
June 15, 1932, for $300,000,000, closed at the close of business, Thursday, December 10, 1931.
TREASURY NOTES, SERIES 1932

For the offering of 3}4 per cent Treasury notes of Series 1932, total subscriptions aggregated $703,703,400. Of these subscriptions $225,530,800 represented
exchange subscriptions in payment for which d% per cent Treasury notes, caUed
for redemption on December 15, 1931, and Treasury certificates of indebtedness
of Series TD-1931 and Series TD2-1931, both maturing December 15, 1931, were
tendered. Such exchange subscriptions were aUotted in full. AUotments on
cash subscriptions for the Treasury notes of series 1932 were made as foUows:
Subscriptions in amounts not exceeding $100,000 were aUotted 90 per cent, but
not less than $100 on any one subscription; subscriptions in amounts over $100,000
but not exceeding $1,000,000 were aUotted 80 per cent, but not less than $90,000
on any one subscription; and subscriptions in amounts over $1,000,000 were
allotted 75 per cent, but not less than $800,000 on any one subscription.
TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TS2-1932

For the offering of 3 per cent Treasury certificates of indebtedness of Series
TS2-1932, total subscriptions aggregated $460,650,000. Of these subscriptions
$30,985,000 represented exchange subscriptions in payment for which Treasury
notes, called for redemption on December 15, 1931, and Treasury certificates of
indebtedness of Series TD-1931 and Series TD2-1931, both maturing December
15, 1931, were tendered. Such exchange subscriptions were allotted in fuU.
Allotments on cash subscriptions for the certificates of Series TS2-1932 were made
as foUows: Subscriptions in amounts not exceeding $1,000,000 were allotted in
full. Subscriptions in amounts over $1,000,000 were allotted 80 per cent, but not
less than $1,000,000 on any one subscription.
TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TJ-1932

For the offering of 2% per cent Treasury certificates of indebtedness of Series
TJ-1932, total subscriptions aggregated $619,715,500. Of these subscriptions
1 Revised January 14, 1932.

REPORT OF THE SECRETARY OF THE TREASURY

22e5

$324,578,500 represented exchange subscriptions in paym.ent for which 3}^ per cent
Treasury notes, called for redemption on December 15, 1931, and Treasury
certificates of indebtedness of Series TD-1931 and Series TD2-1931, both
maturing December 15, 1931, were tendered. In accordance with previous
announcement, exchange subscriptions were given preferred allotment. All of
such subscriptions were allotted in full, and all cash subscriptions were rejected.
Subscriptions and allotments for the three issues were divided among the several
Federal reserve districts and the Treasury as follows:

Federal reserve district

Total subscriptions
received

Total exTotal
Total cash
subsubscriptions change
scriptions subscriptions
allotted
received
received
Treasury notes. Series 1932

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

$24,081,300
35ft 290,600
37, 743,000
32, 639,100
32, 628, 700
18,06ft 800
89,102,000
14,388,000
• 4, 689,400
6,807,200
22, 705,400
63, 755, 500
1, 806,400

$lft 36ft 100
211,961,200
3ft 014,100
29,06ft 800
29,930, 500
16,58ft 800
57,980,800
6,230, 200
3, 530,600
4,055,800
21, 213,700
47,167,100
8ft 900

$8,721,200
143,329,400
1,728,900
3,578,300
2,698,200
1, 486,000
31,121, 200
9,157,800
1,158,800
2,751,400
1,491, 700

lft 588,400
1, 71ft 600

$22,007,000
305,476,400
29,429, 700
26,748,500
26,746,500
16, 776, 300
7ft 391, 700
13, 592,600
4,130,800
6,162,800
19,380,300
52,805, 600
1, 79ft 000

Total...

703, 70ft 400

47ft 172, 600

22ft 53ft 800

600,44ft 200

Treasury certificates ofindebtedness. Series TS2-1932
Boston
NewYork
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Treasury

12,066,500
292. 272, 500
24, 345, 000
2ft 014, 600
7, 829,000
17, 355,000
23, 217, 600
ft 169, 000
ft 00ft 500
3, 417, 000
lft 29ft 500
34,107, 000
55ft 000

lft 373,500
274, 819, 500
24,287,000
19, 981, 000
7. 701.000
17, 032, 600
19,194, 500
5,148, 000
1, 776,000
2, 597, 500
lft 23ft 600
3ft 521,000

1, 693, 000
17,45ft 000
58, 000
33, 500
128,000
322,600
4, 023.000
1.021,000
1,229, 600
81ft 500
63,000
3, 58ft 000
55ft 000

12, 066,500
241, 772, 600
21, 045,000
lft 048, 600
7, 829, 000
16, 950,000
22. 027, 500
6,169. 000
3,005, 500
ft 417, 000
lft 296, 500
29,007, 000
555, 000

Total...

46ft 65ft 000

429, 66ft 000

3ft 98ft 000

39ft 22ft 000

Treasury certificates of indebtedness, Series TJ-1932
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Treasury

11,83ft 500
40ft 911,500
43.699,000
lft 139, 600
5,447,000
15.631, 500
7ft 621, 000
ft 392, 000
. 4, 519, 000
lft 12ft. 500
4, 331,000
lft 05ft 000
lft 000

• ft 262, 500
171, 872, 500
35, 243, 000
14, 92ft 500
6,437, 000
15, 43a 000
14, 081, 500
ft 602, 500
1,49ft 000
ft 10ft 500
4, 321,000
11, 33ft 000
lft 000

2, 56ft 000
229.039, COO
8.456, 000
21ft 000
lft 000
201, 500
64, 539, 500
789, 600
ft 024, 000
12,017, 000
lft 000
3, 714, 000

2, 56ft 000
229,03ft 000
ft 45ft 000
21ft 000
lft 000
201, 500
64,539,600
789, 500
3,024,000
12, 017, 000
lft 000
3, 714, 000

Total...

61ft 71ft 500

29ft 137,000

324, 57ft 500

226

REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 3

Offering of certificates of indebtedness, Series A-1932 {Sy^ per cent) and Series A-1933
{SYk per cent) {press release, January 25, 1932, with Department Circular No.
454)
The Treasury is to-day offering for subscription, at par and accrued interest,
through the Federal reserve banks, $350,000,000, or thereabouts. Treasury certificates of indebtedness in two series, both dated and bearing interest from February
1, 1932; one series, A-1932, being for 6 months, with interest at the rate of Z%
per cent, and maturing August 1, 1932, and the other series, A-1933, being for 12
months, with interest at the rate of 3 ^ per cent, and maturing February 1, 1933.
The amount of each series to be issued will be in the proportion tJiat the total
subscriptions for that series bears to the total subscriptions received for both
series. The aggregate amount of the two series to be issued will be $350,000,000,
or thereabouts.
Applications will be received at the Federal reserve banks. The Treasury will
accept in payment for the new certificates of either or both series, at maturity
value. Treasury bills dated November 2, 1931, which mature on February 1, 1932,
and subscriptions in payment of which such Treasury bills are tendered will be
given preferred allotment.
Bearer certificates will be issued in denominations of $500, $1,000, $5,000,
$10,000, and $100,000. The certificates of Series A-1932 wiU have one interest
coupon attached, payable August 1, 1932, and the certificates of Series A-1933,
two interest coupons attached, payable August 1, 1932, and February 1, 1933.
These certificates will be exempt, both as to principal and interest, from all
taxation, except estate and inheritance taxes.
These certificates are being issued in order to make funds available to meet
initial needs under the President's emergency program, and will provide for the
payment of $60,000,000 of maturing Treasury bills.
The text of the official circular follows:
[Department Circular No. 464]

The Secretary of the Treasury, under the authority of the act approved Sep>
tember 24, 1917, as amended, off"ers for subscription, at par and accrued interestthrough the Federal reserve banks, $360,000,000, or thereabouts. Treasury
certificates of indebtedness, in two series, both dated and bearing interest from
February 1, 1932, the certificates of Series A-1932 being payable on August 1,
1932, with interest at the rate of 3J^ per cent per annum, payable on a semiannual
basis, and the certificates of Series A-1933 being payable on February 1, 1933,
with interest at the rate of 3 ^ per cent per annum, payable semiannually. The
amount of each series to be issued will be in the proportion that the total subscriptions for that series bears to the total subscriptions received for both series.
The aggregate amount of the two series to be issued will be $350,000,000, or
thereabouts.
The principal and interest of the certificates will be payable in United States
gold coin of the present standard of value.
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 A-1932 wiU have one interest
coupon attached, payable on August 1, 1932, and the certificates of Series A-1933
will have two interest coupons attached, payable on August 1, 1932, and February
1, 1933, respectively.
The certificates of these series shall be exempt, both as to principal and interest,
from all taxation (except estate and inheritance taxes) 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.
The certificates of these series will be acceptable to secure deposits of public
moneys. They will not be acceptable in payment of taxes, and will not bear the
circulation privilege.
The right is reserved to reject any subscription, in whole or in part, 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 notica.
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, and to make classified allotments and

REPORT OF THE SECRETARY OF THE TREASURY

227

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 February 1, 1932, 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 bills dated
November 2, 1931, which mature on February 1, 1932, will be accepted at
maturity value in payment for any certificates of either or both 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. Subscriptions for
which payment is to be tendered in Treasury bills dated November 2, 1931, and
maturing on February 1, 1932, will be given preferred allotment.
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,

January 25, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. 222.")

EXHIBIT

Subscriptions and allotments, certificates of indehtedness, Series A-1932 and Series
A-1933 {from press releases, January 28, 29, and 30, 1932)
Secretary Mellon announced that the subscription books for the current
offering of 6-month 3J4 per cent Treasury certificates of indebtedness of Series
A-1932, maturing August 1, 1932, and 12-month 3% per cent Treasury certificates
of indebtedness of Series A-1933, maturing February 1, 1933, closed at the close
of business Wednesday, January 27, 1932.
TREASURY C E R T I F I C A T E S O F I N D E B T E D N E S S , S E R I E S A-1932

For the offering of SYs per cent Treasury. certificates of Series A-1932 total
subscriptions aggregated $395,938,500. Of these subscriptions $4,616,000
represented exchange subscriptions in payment for which Treasury bills, dated
November 2, 1931, maturing February 1, 1932, were tendered. Such exchange
subscriptions were allotted in full. Allotments on cash subscriptions for the
certificates of Series A-1932 were made as follows: Subscriptions in amounts not
exceeding $10,000 were allotted in full. Subscriptions in amounts over $10,000,
but not exceeding $100,000, were allotted 80 per cent, but not less than $10,000
on any one subscription; subscriptions in amounts over $100,000, but not exceeding $1,000,000, were allotted 65 per cent, but not less than $80,000 on any one
subscription; and subscriptions in amounts over $1,000,000 were allotted 50 per
cent, but not less than $650,000 on any one subscription.
TREASURY CERTIFICATES O F I N D E B T E D N E S S , S E R I E S A-1933

For the offering of 3 ^ per cent Treasury certificates of indebtedness of Series
A-1933, maturing February 1, 1933, total subscriptions aggregated $250,148,000.
Of these subscriptions $43,037,000 represented exchange subscriptions in payment
for which Treasury bills dated November 2, 1931, maturing February 1, 1932,
were tendered. Such exchange subscriptions were allotted in full. Allotments
on cash subscriptions for the certificates of Series A-1933 were made as follows:
Subscriptions in amounts not exceeding $10,000 were allotted in full. Subscriptions in amounts over $10,000 but not exceeding $100,000 were allotted 80 per
cent, but not less than $10,000 on any one subscription; subscriptions in amounts
over $100,000, but not exceeding $1,000,000, were allotted 60 per cent, but not
less than $80,000 on any one subscription; and subscriptions in amounts over
$1,000,000 were allotted 40 per cent, but not less than $600,000 on any one
subscription.

228

REPORT OF THE SECRETARY OF THE TREASURY

Subscriptions and allotments for the two issues were divided among the several
Federal reserve districts and the Treasury as follows:
F e d e r a l reserve district

T o t a l cash
subscriptions
received

T o t a l exchange s u b scriptions
received

Total subscriptions
received

T o t a l subscriptions
allotted

T r e a s u r y certificates of i n d e b t e d n e s s . Series A-1932
Boston..
N e w York
Philadelphia..
Cleveland-..-.
Richmond
Atlanta
Chicago
S t . Louis
Minneapolis..
Kansas City..
Dallas
—
S a n Francisco.
Treasury
Total--.

$43,452,

$66,000
3,650,000

1,00ft 000

391,322, 500

4, 61ft 000

$43, 61ft 000
272, 71ft 600
17,330,500
12, 541,000
7,940,000
7,899,000
13,112, 500
1,611,000
1,76ft 000
1,93ft 500
ft 101,000
7,451,000
11, 500

319,000
145, 13ft 500
11, 350, 000
398,000
995, 600
709,000
531, 500
190,500
456, 500
468, 600
934, 600
129, 500

.395,938, 600

227, 631,000

lft 000

T r e a s u r y certificates of i n d e b t e d n e s s , Series A-1933
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas C i t y . .
Dallas
S a n Francisco.
Treasury

$2,820,600
151,970,500
20,020,000
8,627, 500
4,174,000
4,383, 500
2,299, 500
1, 228,000
2,420,600
1,07ft 500
3, 671,500
4, 516,000
4,000

Total--.

207, 111, 000

25,000

$2,820, 500
194,632, 500
20,020,000
ft 627, 500
4,174,000
4,683,500
2,299, 500
1, 228,000
2, 470, 600
1,075, 500
3, 571, 500
4, 516,000
29,000

$2, 065, 500
108, 501,000
12, 05ft 000
5, 437,000
2, 793,000
3, 560,000
1, 641,000
1, 022,000
1, 225,000
800,500
2, 642,000
2, 706,000
29,000

43,037,000

250,148,000

144,372,000

$42,662,000

300,000
60,000

EXHIBIT 5

Offering of Treasury certificates. First Series {2 per cent) {press releases, February
20 and March 6,1932, and Department Circular No. 456, March 5, 1932)
FEBRUARY 20,

1932.

Secretary MiUs to-day announced that in connection with the campaign
initiated by the President to put idle money to work, the Treasury Department
proposes to offer, on or about March 7, a special Treasury certificate. The certificates will probably have a maturity of a year and will be redeemable upon 60
days' notice by the holders. The interest rate will be announced at the time of
the formal offering, but in all probability will be in line with the current yield
on 60-day Government obligations, and not less than IJ^ per cent. The certificates will be issued only in coupon form and in denominations of $50, $100,
and $500.
The certificates will be available to purchasers through the banks. The
banks, in turn, can, if they so desire, obtain the certificates through the so-called
War Loan Deposit Account with the Federal reserve banks. Under the wellestablished War Loan deposit system banks may subscribe for Government
obligations and pay for them by means of a deposit to the credit of the Federal
reserve banks as fiscal agents of the United States. Inasmuch as payment by
means of this method is in the form of credit, should funds for the purchase of
certificates be withdrawn by depositors of the subscribing bank, they wiU automatically be replaced by a Government deposit, which will remain with the
bank until called for by the Treasury.
Should the certificates be purchased with currency held outside of banks, the
banks receiving the subscriptions will gain the cash deposited by the subscriber,
while they may pay for the certificates delivered to the subscriber by means of a
deposit credit for the account of the Government.

REPORT OF THE SECRETARY OF THE TREASURY

229

Those banks which are not at present designated to act as War Loan liepositaries may, upon complying with the Treasury regulations, obtain a depositary
designation.
The offering of these special certificates will be entirely independent of the
Treasury's March financing program.
MARCH 6,

1932.

The Secretary of the Treasury yesterday announced that the Treasury offers
for subscription, at par and accrued interest, through the Federal reserve banks,
United States Treasury certificates. First Series, dated March 15, 1932, with
interest from that date at the rate of 2 per cent per annum, maturing March 15,
1933, and redeemable before maturity at the option of the holders, at par and
accrued interest, on 60 days' notice.
Almost any banking institution will handle subscriptions for these certificates
or subscriptions may be made through the Federal reserve banks. The Secietary~
of the Treasury reserves the right to close the offering without prior notice.
The certificates will be issued only in bearer form and in denominations of
$50, $100, and $500, with two interest coupons attached paj^able September 15,
1932, and March 15, 1933, respectively.
The principal and interest of the certificates wiU be payable in United States
gold coin of the present standard of value.
These certificates will be exempt, both as to principal and interest, from aU
taxation, except estate and inheritance taxes.
The offering of these special certificates is not part of the Treasury's March
financing program which will be separately announced, but is being made in
connection with the campaign to put idle money to work, which campaign was
initiated by the President and is now being conducted by the Citizens' Reconstruction Organization under the direction of Colonel Frank Knox.
A copy of the official circular is attached.
[Department]Circular No. 466]

The Secretary of the Treasury offers for subscription, at par and accrued
interest, through the Federal reserve banks, 2 per cent 1-year United States
Treasury certificates. First Series, of an issue of certificates of indebtedness
authorized by Section 5 of the act of Congress approved September 24, 1917, as
amended.
DESCRIPTION OF CERTIFICATES

The certificates of this series will be dated March 15, 1932, and will bear interest
from that date at the rate of 2 per cent per annum,' payable semiannually. The
certificates will be payable on March 15, 1933, and wUl be redeeiriable before
maturity, at the option of the holders, at par and accrued interest, on 60 days'
advance notice by the holders. The principal and interest of the certificates
will be payable in United States gold coin of the present standard of value.
Bearer certificates will be issued in denominations of $50, $100, and $500, with
two interest coupons attached payable September-15, 1932, and March 15, 1933,
respectively. Provision may be made for the interchange of certificates of
different denominations, without charge by the United States, under rules and
regulations prescribed by the Secretary of the Treasury. The certificates will not
be issued in registered form.
The certificates of this series shall be exempt, both as to principal and interest,
from all taxation (except estate and inheritance taxes) 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.
The certificates of this series wUl 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 cei tificates will be acceptable to secure deposits
of public moneys, but will not bear the circulation privilege.
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.
The right is reserved to reject any subscription, in whole or in part, and to
allot less than the amount of certificates applied for and to close the subscriptions

230

REPORT OF THE SECRETARY OF THE TREASURY

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, and to make
classified allotments, and allotments upon a graduated scale; and his action in
these respects will be final. Allotment notices wiU be sent out promptly upon
allotment, and the basis of aUotment will be publicly announced.
PAYMENT

Payment at par and accrued interest for certificates allotted must be made on
or before March 15, 1932, or on later allotment. If payment is made after
March 15, 1932, it must include accrued interest from that date. 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.
REDEMPTION BEFORE MATURITY

In order to secure redemption before maturity of certificates issued hereunder, a
demand therefor in writing, describing the certificates by denomination, serial
number, and aggregate amount, must be made by the holder; and the certificates,
with unmatured coupons attached, accompanied by such demand, must be forwarded or delivered to a Federal reserve bank, at the holder's risk and expense.
Sixty days after receipt of the certificates and demand at a Federal reserve bank,
payment, at par and accrued interest, wiU be made.
GENERAL PROVISIONS

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

March 5, 1932.
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, allotment, and redemption as stated above.

EXHIBIT 6

Allotments, Treasury certificates. First Series {from press release, April 12,1932, and
from letter of Under Secretary Ballantine, April 25, 1932)
Secretary of the Treasury Mills announced that subscription books for the
offering of 2 per cent United States Treasury certificates. First Series, dated
March 15,1932, maturing March 15,1933, closed at the close of business, Wednesday, April 13, 1932. AUotments were made for the several Federal reserve
districts and the Treasury as follows:
Boston
NewYork
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

-•
-.-

Total

ft
:

$671,250
75ft 600
1,53ft 950
2,442,750
1,531,700
05ft 550
lft 23ft 750
1,692,600
.—
58ft 800
2,43ft 050
2,929,100
1,08ft 700
lft 750
34,95ft 650

REPORT OF THE SECRETARY OF THE TREASURY

231

EXHIBIT 7

Offering of certificates of indehtedness. Series TO-1932 {3)i per cent) and Series
TM-1933 {SYi per cent) {press release, March 7, 1932, with Department Circular
No. 458)
The Treasury is to-day offering for subscription, at par and accrued interest,
through the FederaLl reserve banks, $900,000,000, or thereabouts. Treasury certificates of indebtedness in two series, both dated and bearing interest from IVIarch
15, 1932; one series, TO-1932, being for 7 months, with interest at the rate of
3>^ per cent, and maturing October 15, 1932, and the other series, TM-1933,
being for 12 months, with interest at the rate of 3% per cent, and maturing March
15, 1933. The amount of the offering of 3J4 per cent 7-month certificates is
$300,000,000, or thereabouts, and the amount of the offering of 3 ^ per cent
12-month certificates is $600,000,000, or thereabouts.
Applications mil be received at the Federal reserve banks. The Treasury will
accept in payment for the new certificates of either or both series, at par, Treasury
certificates of indebtedness of Series TM-1932, maturing March 15, 1932, and
subscriptions in payment of which such Treasury certificates of indebtedness are
tendered will be given preferred allotment.
Bearer certificates will be issued in denominations of $500, $1,000, $5,000,
$10,000, and $100,000. The certificates of Series TO-1932 wiU have one interest
coupon attached, payable October 15, 1932, and the certificates of Series T M 1933, two interest coupons attached, payable September 15, 1932, and March
15, 1933, respectively.
These certificates will be exempt, both as to principal and interest, from all
taxation, except estate and inheritance taxes.
About $624,000,000 of Treasury certificates of indebtedness and about $35,000,000 in interest payments oh the public debt become due and payable on
March 15, 1932.
The text of the official circular follows:
[Department Circular No. 468]

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, $900,000,000, or thereabouts. Treasury
certificates of indebtedness, in two series, both dated and bearing interest from
March 15, 1932.
The certificates of Series TO-1932 wiU be payable on October 15, 1932, with
interest at the rate of 3J^ per cent per annum, payable on an annual basis. The
amount of the offering of this series wiU be $300,000,000, or thereabouts.
The certificates of Series TM-1933 wiU be payable on March 15, 1933, with
interest at the rate of 3% per cent per annum, payable semiannuaUy. The
amount of the offering of this series wiU be $600,000,000, or thereabouts.
The principal and interest of the certificates will be payable in United States
gold coin of the present standard of value.
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 TO-1932 wiU have one interest
coupon attached, payable on October 15, 1932, and the certificates of Series
TM-1933 will have two interest coupons attached, payable on September 15,
1932, and March 15, 1933, respectively.
The certificates of these series shall be exempt, both as to principal and interest,
from all taxation (except estate and inheritance taxes) 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.
The certificates of these series wiU 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, in whole or in part, 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 fuU
upon applications for smaller amounts, to make reduced allotments upon, or to
reject, applications for larger amounts, and to make classified aUotments and

232

REPORT OF THE SECRETARY OF THE TREASURY

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 aUotted must be made on
or before March 15, 1932, 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 reserye bank of its district. Treasury certificates of
indebtedness of Series TM-1932, maturing March 15, 1932, 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. Subscriptions for which payment is to
be tendered in Treasury certificates of indebtedness of Series TM-1932, maturing
March 15, 1932, will be give preferred allotment.
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.
OGDEN L . MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

March 7, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. 222.)

EXHIBIT 8

Subscriptions and allotments, certificates of indebtedness. Series TO-1932 and Series
TM-1933 {from press releases, March 9, 11, and 12, 1932, revised^)
Secretary Mills announced that the subscription books for the current offering
of 7-month 3J^ per cent Treasury certificates of indebtedness of Series TO-1932,
maturing October 15, 1932, and 12-month 3% per cent Treasury certificates of
indebtedness of Series TM-1933, maturing March 15, 1933, closed at the close of
business, Tuesday, March 8, 1932.
Secretary Mills called attention to the fact that this notice of closing relates to
the SYs per cent and 3% per cent Treasury certificates of indebtedness, and does
not apply to the 2 per cent Treasury certificates, First Series, offered in connection
with the campaign of the Citizens' Reconstruction Organization. The subscription books for the 2 per cent Treasury certificates will remain open until further
notice.
TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TO-1932

Reports received from the Federal reserve banks showed that for the offering
of Z}i per cent certificates of 'indebtedness of Series TO-1932, which was for
$300,000,000, or thereabouts, total subscriptions aggregated $952,619,500. Of
these subscriptions $82,593,500 represented exchange subscriptions in payment
for which Treasury certificates of indebtedness maturing March 15, 1932, were
tendered. Such exchange subscriptions were allotted in full. Allotments on
cash subscriptions for the certificates of Series TO-1932 were made as follows:
Subscriptions in amounts not exceeding $1,000 were aUotted in 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 $100,000, were allotted 60 per cent, but not less than
$8,000 on any one subscription; subscriptions in amounts over $100,000, but not
exceeding $1,000,000, were allotted 40 per cent, but not less than $60,000 on any
one subscription; subscriptions over $1,000,000, but not exceeding $10,000,000,
were allotted 25 per cent, but not less than $400,000 on any one subscription; and
subscriptions in amounts over $10,000,000 were allotted 15 per cent, but not less
than $2,500,000 on any one subscription.
1 Revised Mar, 24.1932,

REPORT OF THE SECRETARY OF THE TREASURY

233

T R E A S U R Y C E R T I F I C A T E S O F I N D E B T E D N E S S , S E R I E S TM-1933

For the offering of 3% per cent Treasury certificates of indebtedness of Seriei^
TM-1933, which was for $600,000,000, or thereabouts, total subscriptions aggregated $2,450,606,000. Of these subscriptions, $414,071,500 represented exchange
subscriptions in payment for which Treasury certificates of indebtedness maturing
March 15, 1932, were tendered. Such exchange subscriptions were allotted in
full. Allotments on cash subscriptions for the certificates of Series TM-1933 were
made as follows: Subscriptions in amounts not exceeding $10,000 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, were allotted 30 per cent, but
not less than $5,000 on any one subscription; subscriptions in amounts over
$100,000, but not exceeding $1,000,000, were allotted 15 per cent, but not less than
$30,000 on any one subscription; subscriptions in amounts over $1,000,000, but
not exceeding $25,000,000, were allotted 10 per cent, but not less than $150,000
on any one subscription; and subscriptions in amounts over $25,000,000 were
allotted 5 per cent, but not less than $2,500,000 on any one subscription.
Subscriptions and allotments for the two issues were divided among the several
Federal reserve districts and the Treasury as follows:

Federal reserve district

T o t a l cash
subscriptions
received

T o t a l exchange s u b criptioris received

T o t a l subscriptions received

Total subscriptions
allotted

T r e a s u r y certificates of i n d e b t e d n e s s , Series TO-1932
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis-Kansas City..
Dallas
S a n Francisco
Treasury..
Total...

$77,88ft 000
469, 848, 000
40, 866, 000
39, 582, 500
46, 816,500
35,99ft 000
46, 284, 500
ft 500, 500
8,199, 000
5, 888, 500
18,134, 000
73, 943, 500
75, 000

$2, 417, 000
52, 340, 000
1, 77ft 000
421, 500
105,000
292, 000
lft 699, 500
267, 500
39ft 000
3, 73ft 000
295,000
3, 852, 000

$80, 306,000
52ft 188, 000
42, 641,000
40,004,000
46, 921, 500
3ft 291,000
62,984,000
ft 76ft 000
8, 598,000
ft 618,500
18,42ft 000
77, 795, 500
75, 000

$2ft693,500
16ft 191, 500
lft 275, 000
lft 038, 600
13, 682, 500
18, 217, 000
30, 226, 500
3,624, 500
3, 734,500
6, 450,000
lft 122, 000
lft 192,000
4ft 000

87ft 026, 000

82, 593, 500

952, 61ft 600

333,492,500

T r e a s u r y certificates o f i n d e b t e d n e s s , Series TM-1933
Boston
New York....
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas C i t y . .
Dallas
San Francisco
Treasury
Total...

$81,611,
., 122, 473,
16ft 40ft
87, 752,
66, 589,
67, 918,
173,19ft
19, 852,
31,16ft
24, 862,
" 34,71ft
15ft 900,
82,
2, 03ft 61ft 500

$2ft 214, 500
309, 359, 500
9, lift 000
898, 000
142, 000
505,000
548, 500
761, 000
48ft 500
504, 000
87ft 000
246, 500
415, 000

$10ft 826, 000
1, 431,83ft 500
17ft 515, 500
88, 650, 000
66, 731, 600
69, 441, 000
21ft 74ft 000
2ft 613, 000
3ft 647, 000
34, 36ft 500
36, 594; 000
166,146, 500
2,497, 500

$38, 798, 500
419, 842,000
33, 350,000
14, 885, 500
11, 341, 500
16, 267, 000
68,52ft 500
ft 35ft 000
6, 558, 500
13, 352,000
ft 123, 500
lft 880,000
2, 441, 500

414, 071, 500

ft 450,60ft 000

66ft 715, 500

EXHIBIT 9

Offering of certificates of indehtedness. Series B-l933 {2 per cent) and Treasury
notes Series A-1934 (^ V^f cent) {press release, April 25, 1932, with Department
Circulars Nos. 4^0 and 4^1)
The Treasury is to-day offering for subscription at par and accrued interest,
through the Federal reserve banks, $225,000,000, or thereabouts, 3 per cent 2year Treasury notes of Series A-1934, and $225,000,000, or thereabouts, 2 per
cent 1-year certificates of indebtedness of Series B-1933.

234

REPORT OF THE SECRETARY OF THE TREASURY

The Treasury notes will be dated May 2, 1932, and will bear interest from that
date at the rate of 3 per cent per annum, payable semiannually. They will mature
on May 2, 1934, and will not be subject to call for redemption prior to that date.
The certificates of indebtedness will be dated May 2,1932, and will bear interest
from that date at the rate of 2 per cent per annum, payable semiannually. They
will mature on May 2, 1933.
The principal and interest of the Treasury notes and Treasury certificates of
indebtedness will be payable in United States gold coin of the present standard of
value.
The Treasury notes and Treasury certificates of indebtedness will be exempt,
both as to principal and interest, from all taxation (except estate or inheritance
taxes) 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.
Applications will be received at the Federal reserve banks.
The Treasury notes will be issued in bearer form only, in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000, with interest coupons attached
payable semiannually on November 2 and May 2 in each year. The certificates
of indebtedness will be issued in bearer form only, in denominations of $500,
$1,000, $5,000, $10,000, and $100,000, with two interest coupons attached, payable
November 2, 1932, and May 2, 1933, respectively.
The present offering of certificates and notes is made in accordance with the
financial program of the Treasury projected in January when it was estimated
, that the amount which would be required to be borrowed during the remainder of
the fiscal year, in addition to amounts for refunding, would be approximately
$1,500,000,000. The estimate then made appears to have been substantially
correct.
[Department Circular No. 460]

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 tlie Federal reserve banks, $225,000,000, or thereabouts,
Treasury certificates of indebtedness of Series B-1933, dated and bearing
interest from May 2, 1932.
DESCRIPTION OF CERTIFICATES

The certificates of this series will be payable on May 2, 1933, with interest at
the rate of 2 per cent per annum, payable semiannually.
The principal and interest of the certificates will be payable in United States
gold coin of the present standard of value.
Bearer certificates will be issued in denominations of $500, $1,000, $5,000,
$10,000, and $100,000. The certificates wiU have two interest coupons attached,
payable on November 2, 1932, and May 2, 1933, respectively.
The certificates of this series shall be exempt, both as to principal and interest,
from all taxation (except estate and inheritance taxes) 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.
The certificates of this series will not be acceptable in payment of taxes.
The certificates of this series will be acceptable to secure deposits of pubUc
moneys, but will not bear the circulation privilege.
APPLICATION AND ALLOTMENT

Applications will be received at the Federal reserve banks.
The right is reserved to reject any subscription, in whole or in part, 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, 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 wiU be publicly announced.
PAYMENT

Payment at par and accrued interest for certificates allotted must be made on
or before May 2, 1932, or on later allotment. Any qualified depositary will be

REPORT OF THE SECRETARY OF THE TREASURY

235

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.
GENERAL PROVISIONS

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. After allotment and upon payment Federal
reserve banks may issue interim receipts pending delivery of the definitive
certificates.
OGDEN L . MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

April 25, 1932.
(For letter to the investor see Exhibit 1, Department Circular No. 451, p. 222.)
[Department Circular No. 461]

The Secretary of the Treasury offers for subscription, at par and accrued
interest, through the Federal reserve banks, $225,000,000, or thereabouts, 3 per
cent Treasury notes of Series A-1934, of an issue of gold notes of the United
States authorized, by the act of Congress approved September 24, 1917, as
amended.
DESCRIPTION OF NOTES

The notes will be dated and bear interest from May 2, 1932, will be payable on
May 2, 1934, and will bear interest at the rate of 3 per cent per annum, payable
semiannually on November 2 and May 2 in each year. The notes will nbt be
subject to call for redemption prior to maturity.
The principal and interest of the notes will be payable in United States gold
coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000. The notes wiU not be issued
in registered form.2 * * *
*

OGDEN L . MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

April 25, 1932.
(For letter to the investor see Exhibit 1, Department Circular No. 451, p. 222.)

EXHIBIT

Subscriptions and allotments, certificates of indebtedness, Series B-l933, and
Treasury notes, Series A-1934 {from press releases, April 26, 28, and SO, 1932)
Acting Secretary Ballantine announced that the subscription books for the
current offering of 1-year 2 per cent Treasury certificates of indebtedness of
Series B-1933, maturing May 2, 1933, and 2-year 3 per cent Treasury notes of
Series A-1934, maturing May 2, 1934, closed at the close of business, Monday,
April 25, 1932.
TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES B-1933

Reports received from the Federal reserve banks showed that for the offering
of 2 per cent Treasury certificates of indebtedness of Series B-1933, which was
for $225,000,000, or thereabouts, total subscriptions aggregated $1,699,868,000.
Allotments on subscriptions for this series of certificates were made as follows:
Subscriptions in amounts not exceeding $10,000 were allotted 50 per cent, but
not less than $500 on any one subscription; subscriptions in amounts over $10,000,
2 Omitted portions are simDar to corresponding sections of Department Circular No. 460, p 234,

236

REPORT OF THE SECRETARY OF THE TREASURY

but not exceeding $100,000, were allotted 40 per cent, but not less than $5,000
on any one subscription; subscriptions in amounts over $100,000, but not exceeding $1,000,000, were allotted 20 per cent, but not less than $40,000 on any one
subscription; subscriptions over $1,000,000, but not exceeding $5,000,000, were
allotted 10 per cent, but not less than $200,000 on any one subscription; and
subscriptions in amounts over $5,000,000 were allotted 7 per cent, but not less
than $500,000 on any one subscription.
TREASURY

NOTES,

SERIES

A-1934

For the offering of 3 per cent Treasurv notes of Series A-1934, which was for
$225,000,000, .or thereabouts, total subscriptions aggregated $2,496,928,700.
AUotments on subscriptions for this series of notes were made on the basis
explained above for certificates of Series B-1933, except for subscriptions in
amounts over $5,000,000, which were allotted 4 per cent, but not less than
$350,000 on any one subscription.
Subscriptions and allotments fOi. the two issues were divided among the
several Federal reserve districts and the Treasury as follows:

.Federal reserve district

Total subscriptions
received

Total subscriptions
allotted

.Federal reserve district

Total

_ . $123, 731,000
976,844, 500
136, 70ft 000
64,919, 500
39, 218, 000
. .
63,165, 000
104, 328, 500
23, 346,000
lft 015, 500
lft 505,000
20, 31ft 500
119, 782, 500

$21, 755, 500
106,844,500
25,960, 000
lft 206, 500
7, 528, 000
20, 228, 000
16, 564, 000
4,178, 500
ft 364, 000
1, 941, 500
5, 92ft 500
13, 706,000

Total subscriptions
allotted

T r e a s u r y notes, Series
A-1934

T r e a s u r y certificates of
indebtedness,
Series
B-1933
Boston
New York
Philadelphia
Cleveland
_
Richmond
Atlanta
Chicago
St Louis
Minneapolis
Kansas Citv
Dallas
S a n Francisco

Total subscriptions
received

Boston. _.
NewYork
Philadelphia
Cleveland....
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
.
Kansas City
Dallas
San FranciscoTreasury

1, 699,868,000 23ft 197, 000

EXHIBIT

TotaL...

$13ft 846, 700
1, 355, 426, 000
23ft 50ft 000
85, 203, 500
73, 21ft 500
8ft 271, 000
205, 422, 300
26, 32ft 000
.17, 365,100
19, 050, 400
24, 359, 700
238, 942, 500
ft 000

$18, 423,800
105, 34ft 800
27,870, 000
11, 22ft 800
12,041,000
17, 322, 200
19, 518, 400
4,13ft 100
2,095, 700
3,107,000
5, 659,100
17, 494, 200
ft 500

2, 496, 928, 700

244, 234, 600

Offering of certificates of indebtedness. Series TJ-1933 {l}i per cent) and Treasury
notes. Series A-19S5 {3 per cent) {press release, June 6, 1932, with Department
Circulars Nos. 462 and 463)
The Treasury is to-day offering for subscription at par and accrued interest,
•through the Federal reserve banks, $400,000,000, or thereabouts, 3 per cent
3-year Treasury notes of Series A-1935, and $350,000,000, or thereabouts,
IY2 per cent 1-year certificates of indebtedness of Series TJ-1933.
The Treasury notes will be dated June 15, 1932, ahd will bear interest from
that date, at the rate of 3 per cent per annum, payable semiannually. They
will mature June 15, 1935, and will not be subject to call for redemption prior
to that date.
The certificates of indebtedness will be dated June 15, 1932, and will bear
interest from that date at the rate of 1^2 per cent per annum, pavable semiannually.
Tliey wUl mature June 15, 1933.
The principal and interest of tne Treasury notes and Treasury certificates of
indebtedness will be payable in United States gold coin of the present standard
of value.
The Treasury notes and Treasury certificates of indebtedness will be exempt,
both as to principal and interest, from all taxation (except estate or inheritance
taxes) 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.
Applications will be received at the Federal reserve banks. The Treasury will
accept in payment for the new Treasury notes and certificates of indebtedness.

REPORT OF THE SECRETARY OF THE TREASURY

237

at par. Treasury certificates of indebtedness of Series TJ-1932, maturing June
15, 1932, and subscriptions in payment of which such Treasury certificates of
indebtedness are tendered will be given preferred allotment.
The Treasury notes will be issued in bearer form only, in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000, witn interest coupons attached
payable semiannually on December 15 and June 15 in each year. The certificates of indebtedness will be issued in bearer form only, in denominations of
$500, $1,000, $5,000, $10,000, and $100,000, with two interest coupons attached,
payable on December 15, 1932, and June 15, 1933.
About $324,578,500 of Treasury certificates of indebtedness and about $100,000,000 in interest payments on the public debt become due and payable on
June 15, 1932.
The texts of the official circulars follow:
[Department Circular No. 462]

The certificates ofthis series will be dated June 15, 1932, and will bear interest
from that date at the rate of V/i per cent per annum, payable semiannually.
They will be payable on June 15, 1933.
The principal and interest of the certificates will be payable in United States
gold coin of the present stiandard of value.
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 on December 15, 1932, and June 15, 1933.
The certificates of this series shall be exempt, both as to principal and interest,
from all taxation (except estate and inneritance taxes) 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.
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.
APPLICATION AND ALLOTMENT

Applications will be received at the Federal reserve banks.
Subscriptions for which payment is to be tendered in Treasury certificates of
indebtedness of Series TJ-1932, maturing June 15, 1932, will be given preferred
allotment.
The Secretary of the Treasury reserves the right to reject any subscription,
in whole or in part, 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
smaUer amounts, 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 shall be final. Allotment notices
will be sent out promptly upon allotment, and the basis of the allotment will be
publicly announced.
PAYMENT

Payment at par and accrued interest for certificates allotted must be made on
or before June 15, 1932, or on later allotment. Any qualified depositary will be
permitted to make payment by credit for certificates allotted to it for itself and
its customers up to ariy amount for whicn it shall be qualified in excess of existing
deposits, when so notified by the Federal reserve bank of its district. Treasury
certificates of indebtedness of Series TJ-1932, maturing June 15, 1932, will be
accepted at par in paj^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.

238

' i -REPORT OF THE SECRETARY OF THE TREASURY
GENERAL

PROVISIONS

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
tne amounts indicated by the Secretary of the Treasury to the Federal reserve
banks of the respective districts. After allotment and upon payment Federal
reserve banks may issue interim receipts pending delivery of the definitive
certificates.
OGDEN L .

MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

June 6, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. .222)
[Department Circular No. 463]

The Secretary of the Treasury offers for subscription, at par and accrued
interest, through the Federal reserve banks, $400,000,000, or thereabouts, 3 per
cent Treasury notes of Series A-1935, of an issue of gold notes of the tJnited
States authorized by the act of Congress approved September 24, 1917, as
amended.
DESCRIPTION OF NOTES

The notes will be dated June 15, 1932, and will bear.interest from that date a t
the rate of 3 per cent per annum, payable semiannually on December 15 and
June 15 in each year. They will mature June 15, 1935, and will not be subject
to call for redemption prior to maturity.
The principal and interest of the notes will be payable in United States gold
coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000.; The notes wiU not be issued
in registered form.^ * * *
OGDEN L .

MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

June 6, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 461, p. 222.)

EXHIBIT

Subscriptions and allotments, certificates of indehtedness, Series TJ-193S, and
Treasury notes, Series A-1935 {from press releases, June 8, 10, and 15,1932)
Secretary Mills to-day announced that the subscription books for the current
offering of 1-year IY2 per cent Treasury certificates of indebtedness of Series
TJ-1933, maturing June 15, 1933, and 3-year 3 per cent Treasury notes of Series
A-1935, maturing June 15, 1935, closed at the close of business, Tuesday, June 7,
1932.
TREASURY CERTIFICATES OF INDEBTEDNESS, S E R I E S TJ-1933

Reports received from the Federal reserve banks showed that for the offering
of m per cent Treasury certificates- of indebtedness, Series TJ-1933, which was
for $350,000,000, or thereabouts, total subscriptions aggregated $1,653,814,000.
Of these subscriptions $113,131,500 represented exchange subscriptions in
payment for whicii Treasury certificates of indebtedness, maturing June 15, 1932,
were tendered. Such iexchange subscriptions were allotted in full. AUotments
on cash subscriptions for the certificates of Series TJ-1933 were made as follows:
Subscriptions in amounts not exceeding $10,000 were allotted 50 per cent, but not
less than $500 on any one subscription; subscriptions in amounts over $10,000,
»Omitted portions are similar to corresponding.sections of Department Circular N o . 462, p. 237.

REPORT OF THE SECRETARY OF THE TREASURY

239

but not exceeding $100,000, were allotted 40 per cent, but not less than $5,000 on
any one subscription; subscriptions in amounts over $100,000, but not exceeding
$1,000,000, were allotted 20 per cent, but not less than $40,000 on any one
subscription; and subscriptions in amounts over $1,000,000 were allotted 10 per
cent, but not less than $200,000 on any one subscription.
TREASURY NOTES, SERIES A-1935

For the offering of 3 per cent Treasury notes of Series A-1935, which was for
$400,000,000, or thereabouts, total subscriptions aggregated $1,143,563,400. Of
these subscriptions $134,759,300 represented exchange subscriptions in payment for which Treasury certificates, maturing June 15, 1932, were tendered.
Such exchange subscriptions were allotted in full. Allotments on cash subscriptions for the Treasury notes of Series A-1935 were made as follows: Subscriptions
in amounts not exceeding $10,000 were allotted 80 per cent, but not less than $100
on any one subscription; subscriptions in amounts over $10,000, but not exceeding
$100,000, were allotted 50 per cent, but not less than $8,000 on any one subscription; subscriptions in amounts over $100,000, but not exceeding $1,000,000,
were allotted 30 per cent, but not less than $50,000 on any one subscription; subscriptions in amounts over $1,000,000, but not exceeding $25,000,000, were
aUotted 20 per cent, but not less than $300,000 on any one subscription; and
subscriptions in amounts over $25,000,000 were allotted 15 per cent, but not less
than $5,000,000 on any one subscription.
Subscriptions and aUotments for the two issues were divided among the several
Federal reserve districts and the Treasury as follows:

Federal reserve district

Total exchange sub- Total subscripscriptions
tions received
received

Total cash
subscriptions
received

Total subscriptions
allotted

Treasury certificates ofindebtedness. Series TJ-1933
Boston...
New York
Philadelphia-.
Cleveland
Richmond
Atlanta...
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco
Treasury
Total.-

$67,141,000
80ft 881,000
114,989,500
7ft 231,000
51,661,000
63,961,000
137, 529, 000
13,617,000
11, 339, 500
17,19ft 600
4ft 129,000
13ft 981, 000
3ft 000

$6,62ft 500
64,100,000
1, 780, 000
714,500
467,000
426,000
23, 30ft 600
4,606,000
1, 06ft 000
3,236, 600
4ft 500
6,822, 600
46, 600

$73,761,600
869,981,000
116,769,500
7ft 94ft 500
62,128,000
64,386,000
16ft 837, 600
lft 123, 000
12, 401, 600
20,429,000
46,171, 500
13ft 803,600
76,600

$2ft 992, 600
178,239, 500
24,800,000
17,024,000
14,149,000
19,144, 000
46,12ft 500
7,504,000
2,775,000
6,726,600
12,891,000
24,428, 000
68,600

1,. 54ft 68ft 500

113,131,600

1,663,814,000

373,856,500

Treasury notes. Series A-1936
Boston...^-.,..
New York
Philadelphia...
Cleveland.
Richmond
Atlanta
Chicago
St. Louis
_.
Minneapolis--.
Kansas City...
Dallas
San FranciscoTreasury
Total-

141810—32

$43,84ft 400
473, 767,900
73,816, 600
71,12ft 900
22, 770, 400
23,780, 200
106,665,400
18, 637, 500
13, 552,000
26,376, 000
27,189, 300

$3,647,000
83,644, 300
698, 000
245, 000
62,000
617,000"
25,311, 600
6,38ft 000
2,833, 000
4,287, 000

10ft 276,100
11, 600
1, 00ft 804,100

$47; 387,400

4,159,600
3, 08ft 000

13ft 976,900
25,022, 500
16,385,000
3ft 663, 000
27,189, 300
lift 43ft 600
ft 091, 600

$2ft 974,300
201,167, 500
21, 60ft 000
2ft 821,300
ft 251,600
lft 577,400
57,44ft 300
lft 791,900
6,698,800
11,991,600
11,928,300
27,47ft 600
3,08ft 20()

134, 75ft 300

1,143, 663,400

416,602,800

657,412,200
74,614,600
71, 365,900
22,822,400
24,297,200

240

REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 13

Offering of Treasury notes. Series B-1934 {2Ys per cent) and Series A~19S6 {SY^ per
cent) {press release, July 25, 1932, with Department Circular No. 465)
The Treasury is to-day offering for subscription, at par and accrued interest,
through the Federal reserve banks, $650,000,000, or thereabouts. Treasury notes
in two series, both dated and bearing interest from August 1, 1932. One series,
offered in the amount of $325,000,000, or thereabouts, is for two years, with
interest at the rate of 2J^ per cent, and matures on August 1, 1934. The other
series also offered in the amount of $325,000,000, or thereabouts, is for four years,
with interest at the rate of 3J4 per cent, and matures on August 1, 1936. Thie
notes will not be subject to call for redemption prior to maturity.
The principal and interest of the notes will be payable- in United States gold
,coin of the present standard of value.
The notes will be exempt, both as to principal and interest, from all taxation
(except estate or inheritance taxes) 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.
Applications will be received at the Federal reserve banks. The Treasury will
accept in payment for the new Treasury notes, at par, Treasury certificates of
indebtedness of Series A-1932, maturing August 1, 1932, and subscriptions in
payment of which such Treasury certificates of indebtedness are tendered will
be given preferred allotment.
The Treasury notes will be issued in bearer form only, in denominations of
:<$100, $500, $1,000, $5,000, $10,000, and $100,000. The interest on the notes
will iDe payable semiannually on February 1 and August 1, in each year.
Outstanding certificates of indebtedness in the amount of $227,631,000 are due
•on August 1, 1932. The new offering will provide funds for this maturity, and
.also to meet current financial requirements, principally for the Reconstruction
Finance Corporation.
The text of the official circular follows:
[Department Circular No. 465]

The Secretary of the Treasury, under the authority of the act approved
iSeptember 24, 1917, as amended, offers for subscription, at par and accrued interest, through the Federal reserve banks, $650,000,000, or thereabouts. Treasury
notes, in two series.
D E S C R I P T I O N OF NOTES

The notes of Series B-1934 will be dated August 1, 1932, and will bear interest
-from that date at the rate of 2J4 per cent per annum, payable semiannually on
February 1 and August 1 in each year. They will mature August 1, 1934, and will
not be subject to call for redemption prior to maturity. The amount of the
.offering of this series is $325,000,000, or thereabouts.
The notes of Series A-1936 will be dated August 1, 1932, and will bear interest
from that date at the rate of 3J4 per cent per annum, payable semiannually on
February 1 and August 1 in each year. They will mature August 1, 1936, and
wiU not be subject to call for redemption prior to maturity. The amount of the
offering of this series is $325,000,000, or thereabouts.
The principal and interest of the notes will be payable in United States gold
<5oin of the present standard of value.
Bearer notes with interest coupons attached will be issued in denominations of
:$100, $500, $1,000, $5,000, $10,000, and $100,000. The notes wiU not be issued
iin registered form.
The notes shall be exempt, both as to principal and interest, from aU taxation
.(except estate or inheritance taxes) 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.
The notes will not be acceptable in payment of taxes.
The notes will be acceptable to secure deposits of public moneys, but will not
besLT the circulation privilege.

REPORT OF THE SECRETARY OF THE TREASURY

241

APPLICATION AND ALLOTMENT

Applications will be received a t t h e Federal reserve banks.
Subscriptions for which p a y m e n t is t o be tendered in Treasury certificates of
indebtedness of Series A-1932, m a t u r i n g August 1, 1932, wiU be given preferred
allotment.
T h e Secretary of t h e Treasury reserves t h e right t o reject a n y subscription, in
whole or in p a r t , a n d to allot less t h a n t h e a m o u n t of notes of either or both
.series applied for a n d to close t h e subscriptions as t o either or both series a t a n y
time without notice; t h e Secretary of t h e Treasury also reserves t h e right t o m a k e
•allotment in full upon applications for smaller amounts, to m a k e reduced allotm e n t s upon, or t o reject, applications for larger a m o u n t s , a n d t o m a k e classified
.allotments a n d allotments upon a graduated scale; a n d his action in these respects
,shall be final. Allotment notices will be sent o u t p r o m p t l y upon allotment, a n d
t h e basis of t h e allotment will be publicly announced.
PAYMENT

P a y m e n t a t p a r a n d accrued interest for notes allotted m u s t be m a d e on or
before August 1, 1932, or on later allotment. Any qualified depositary will be
permitted to m a k e p a y m e n t by credit for notes allotted t o it for itseff a n d its
customers u p t o a n y a m o u n t for which it shall be qualified in excess of existing
deposits, when so notified by t h e Federal reserve bank of its district. Treasury
•certificates of.indebtedness of Series A-1932, maturing August 1, 1932, will be
.accepted a t p a r in p a y m e n t for a n y notes of t h e series now offered which shall be
subscribed for a n d allotted, with a n adjustment of t h e interest accrued, if a n y ,
on t h e notes of t h e series so paid for.
G E N E R A L PROVISIONS

As fiscal agents of t h e United States, Federal reserve banks are authorized a n d
r e q u e s t e d t o receive subscriptions a n d to m a k e allotments on t h e basis a n d up t o
t h e a m o u n t s indicated b y t h e Secretary of t h e Treasury to t h e Federal reserve
banks of t h e respective districts. After allotment a n d upon p a y m e n t Federal
jeserve banks m a y issue interim receipts pending delivery of t h e definitive notes.
O G D E N L. M I L L S ,
Secretary of the Treasury.

TREASURY DEPARTMENT,
O F F I C E OF T H E S E C R E T A R Y ,

J u l y 25, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. 222,)

E X H I B I T 14

.Subscriptions and allotments. Treasury notes. Series B-1934 <^^<^ Series A-1936
(from press releases, J u l y 26 and 28 and August 2, 1932)
Secretary Mills to-day announced t h a t t h e subscription books for t h e current
•offering of 2-year 2\i per cent Treasury notes of Series B-1934, m a t u r i n g August
1, 1934, a n d 4-j^ear 3% per cent Treasury notes of Series A-1936, m a t u r i n g August
.1, 1936, closed a t t h e close of business, Monday, July 25, 1932.
TREASURY NOTES, SERIES B-1934

Reports received from t h e Federal reserve b a n k s showed t h a t for t h e offering of
2}^ per cent Treasurv notes of Series B-1934, maturing August 1, 1934, which was
for $325,000,000, o f thereabouts, t o t a l subscriptions aggregated $1,706,626,800.
Of these subscriptions, $37,740,000 represented exchange subscriptions, in paym e n t for which Treasury certificates of indebtedness, maturing August 1, 1932,
were tendered. Such exchange subscriptions were allotted in full. Allotments on
<jash subscriptions for t h e Treasury notes of Series B-1934 were m a d e as follows:
Subscriptions in a m o u n t s n o t exceeding $10,000 were allotted 60 p e r cent, b u t
not less t h a n $100 on a n y one subscription; subscriptions in a m o u n t s over $10,000,
b u t n o t exceeding $100,000, were allotted 40 p e r cent, b u t n o t less t h a n $6,000
o n a n y one subscription; subscriptions in a m o u n t s over $100,000, b u t n o t exceeding $500,000, were allotted 30 per cent, b u t n o t less t h a n $40,000 on a n y one subscription; subscriptions in a m o u n t s over $500,000, b u t n o t exceeding $1,000,000,

242

REPORT OF THE SECRETARY OF THE TREASURY

were allotted 20 per cent, but not less than $1-50,000 on any one subscription;,
subscriptions in amounts over $1,000,000, but not exceeding $25,000,000, were
allotted 15 per cent, but not less than $200,000 on any one subscription; subscriptions in amounts over $25,000,000, but not exceeding $100,000,000, were allotted.
10 per cent, but not less than $3,750,000 on any one subscription; and subscriptions in amounts over $100,000,000 were allotted 5 per cent, but not less than.
$10,000,000 on any one subscription.
TREASURY NOTES, SERIES A-1936

For the offering of 3 ^ per cent Treasury notes of Series A-i936, maturing A u gust 1,1936, which was for $325,000,000, or thereabouts, total subscriptions aggregated $3,804,722,700. Of these subscriptions $139,466,500 represented exchange
subscriptions in payment for which Treasury certificates, maturing August 1,.
1932, were tendered. Such exchange subscriptions were allotted in full. Allotments on cash subscriptions for the Treasury notes of Series A-1936 were made
as follows: Subscriptions in amounts not exceeding $1,000 were allotted 50 per
cent, but not less than $100 on any one subscription; subscriptions in amounts
over $1,000, but not exceeding $10,000, were allotted 25 per cent, but not less,
than $500 on any one subscription; subscriptions in amounts over $10,000, butnot exceeding $100,000, were allotted 10 per cent, but not less than $2,500 on.
any one subscription; subscriptions in amounts over $100,000, but not exceeding
$1,000,000, were allotted 8 per cent, but not less than $10,000 on any one subscription; subscriptions in amounts over $1,000,000, but not exceeding $10,000,000, were allotted 5 per cent, but not less than $80,000 on any one subscription; subscriptions in amounts over $10,000,000, but not exceeding $100,000,000,
were aUotted.3 per cent, but not less than $500,000 on any one subscription;;
and subscriptions in amounts over $100,000,000 were allotted 2 per cent, but not
less than $3,000,000 on any one subscription.
Subscriptions and allotments for the two issues were divided among the
several Federal reserve districts and the Treasury as foUows:

Federal reserve district

Total cash
subscriptions
received

Total exchange subscriptions
received

Total subscriptions
received

Total subscriptions
allotted

Treasury notes, Series B-1934

1,000
lft 000
1, 600,000

$62, 559, 500
893. 534,200
92,02ft 000
79.725,500
36,782.500
51,10ft 000
7ft 08ft 700
ft 551,600
ft 68ft800
15.566,000
25,034,100
352,976.000

$17,911,70O
189,141,400
2ft 20ft 000'
lft 214,900
12,024,90O
16,81ft 40O
23,051, OOO
2,387,50O
2,320,300ft 634,400
8,66ft 600'
2ft 927,600

37,740,000

1,70ft 626,800

345,292,600-

Boston.NewYork
Philadelphia..
Cleveland..^.Richmond
Atlanta
ChicagoSt. Louis
Minneapolis...
Kansas C i t y . . .
Dallas
--.
San Francisco..

$62,101,500
866,812,200
92,02ft 000
79,465, 500
3ft 657, 500
61,106,000
71,56ft 700
ft 527,600
ft 683,800
16, 564, 000
25,022,100
351,376,000

$468,000
27,722, 000

Total--..

1,66ft 886,800

27ft 000
12ft 000
7,528,000
24,000

T r e a s u r y notes, Series A-1936
Boston
New Y o r k . . .
Philadelphia.
Cleveland
Richmond...
Atlanta
Chicago
St. Louis..-...
Minneapolis..
Kansas City..
Dallas
-.
San Francisco
Treasury

$191,41ft 000
1.845,95ft 000
35ft 21ft 400
19ft 431,900
71,984.200
122,647,100
298,782,200
46,941,600
lft 07ft 400
33,128,200
64,860,400
41ft 893,200
19,700

$lft 933. 500
101,219, 500
1,261,500
854, 500
27ft 000
230,000
11,807, 500
1,864,000
186,000
593,000
44,000
ft 118.000
9ft 000

$207, 35ft 500
1,947, 178,500
36ft 467,900
196. 286,400
72, 259, 200
122, 777,100
31ft 689,700
48, 805, 500
18, 259,400
33. 721,200
64. 904,400
422, Oil, 200
109,700

$32,71ft 700'
207,837, 500
22.92ft OOO
14,86ft 900
ft 961,800^
12,30ft 7003ft 71ft 100'
ft 576,100-1,883,800
3,40ft600
6,672,200
lft 17ft OOO96,700^

Total--.

ft 66ft 256.200

139,46ft 600

3,804,72ft 700

36ft 13ft 000^

REPORT OF THE SECRETARY OF THE TREASURY

243

EXHIBIT 15

•Offering of Treasury notes, Series A-1937 {SYA per cent) and certificates of indebtedness, Series TS-l 933 {IY4. per cent) {press release, September 6, 1932, with Department Circulars Nos. 468 and 469)
The Treasury is to-day offering for subscription at par and accrued interest,
•through the Federal reserve banks, $750,000,000, or thereabouts, 3K per cent 5.year Treasury notes of Series A-1937, and $400,000,000, or thereabouts, l>i per
-cent 1-year certificates of indebtedness of Series TS-1933.
The Treasury notes will be dated September 15, 1932, and will bear interest
irom that date at the rate of 3J4 per cent per annum, payable semiannually.
They will mature on September 15, 1937, and will not be subject to call for redemption prior to that date.
The certificates of indebtedness will be dated September 15, 1932, and will bear
interest from that date at the rate of 1J4 per cent per annum, payable semiannually. They will mature on September 15, 1933.
The principal and interest of the Treasury notes and Treasury certificates of
indebtedness will be payable in United States gold coin of the present standard
of value.
The Treasury notes and Treasury certificates of indebtedness will be exempt,
both as to principal and interest, from all taxation (except estate or inheritance
taxes) 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.
Applications will be received at the Federal reserve banks. The Treasury will
accept in payment for the new Treasury notes and certificates of indebtedness,
•at par. Treasury certificates of indebtedness of Series TS-1932 and TS2-1932,
both maturing September 15, 1932, and subscriptions in payment of which such
Treasury certificates of indebtedness are tendered will be given preferred allotment.
The Treasury notes will be issued in bearer form only, in denominations of
$100, $500, $1,000, $5,000, $10,000, and $1(J0,000, with interest coupons attached
payable semiannually on March 15 and September 15 in each year. The certificates of indebtedness will be issued in bearer form only, in denominations of $500,
$1,000, $5,000, $10,000, and $100,000, with two interest coupons attached,
payable March 15, 1933, and September 15, 1933.
About $712,504,500 of Treasury certificates of indebtedness and about
$50,000,000 in interest payments on the public debt become due and payable on
•September 15, 1932.
The texts of the official circulars follow:
[Department Circular No. 468]

The Secretary of the Treasury offers for subscription, at par and accrued
interest, through the Federal Reserve Banks, $750,000,000, or thereabouts, 3J4 per
cent Treasury notes of Series A-1937, of an issue of gold notes of the United States
authorized by the act of Congress approved September 24, 1917, as amended.
DESCRIPTION OF NOTES

The notes will be dated September 15, 1932, and will bear interest from that
•date at the rate of 3}4 per cent per annum, payable semiannually on March 15
^nd September 15 in each year. They will mature September 15, 1937, and will
not be subject to call for redemption prior to maturity.
The principal and interest of the notes will be payable in United States gold
•coin of the present standard of value.
Bearer notes with interest coupons attached wiU be issued in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000. The notes wiU not be issued
in registered form.
The notes shall be exempt, both as to principal and interest, from all taxation
(except estate or inheritance taxes) 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.
The notes will be accepted at par, during such time and under such rules and
regulations as shall be prescribed or approved by the Secretary of the Treasury,
in payment of income and profits taxes payable at the maturity of the notes.
The notes wUl be acceptable to secure deposits of public moneys, but will not
bear the circulation privilege.

244

REPORT OF THE SECRETARY OF THE TREASURY
APPLICATION AND ALLOTMENT

Applications will be received at the Federal reserve banks.
Subscriptions for which payment is to be tendered in Treasury certificates of
indebtedness of Series TS-1932 and TS2-1932, both maturing September 15,.
1932, will be given preferred allotment.
The Secretary of the Treasury reserves the right to reject any subscription, in.
whole or in part, and to allot less than the amount of notes applied for and toclose the subscriptions at any time without notice; the Secretary of the Treasury
also reserves the right to make aUotment in full upon applications for smaller
amounts, 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 shall be final. Allotment notices will be
sent out promptly upon aUotment, and the basis of the allotment will be publicly
announced.
PAYMENT

Payment at par and accrued interest for notes allotted must be made on or
before September 15, 1932, or on later allotment. Any qualified depositary will
be permitted to make payment by credit for notes 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
certificates of indebtedness of Series TS-1932 and TS2-1932, both maturing
September 15, 1932, will be accepted at par in payment for any notes of the seriesnow offered which shall be subscribed for and allotted, with an adjustment of the
interest accrued, if any, on the notes of the series so paid for.
GENERAL PROVISIONS

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 t a
the amounts indicated by the Secretary of the Treasury to the Federal reserve
banks of the respective districts. After allotment and upon payment Federal
reserve banks may issue interim receipts pending delivery of the definitive notes.
OGDEN L . MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

September 6, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. 222.)
[Department Circular No. 469]

The certificates of this series will be dated September 15, 1932, and will bear
interest from that date at the rate of 1J4 per cent per annum, payable semiannually. They will be payable on September 15, 1933.
The principal and interest of the certificates will be payable in United States
gold coin of the present standard of value.
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 on March 15, 1933, and September 15, 1933.^ * * *
OGDEN L . MILLS,

Secretary of the Treasury.
TREASURY DEPARTMENT,
OFFICE OF THE SECRETARY,

- September 6, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 451, p. 222.)
< Omitted portions are similar to corresponding sections of Department Circular No. 468, p. 243.

REPORT OF THE SECRETARY OF THE TREASURY

245

EXHIBIT 16

Subscriptions and allotments. Treasury notes. Series A-1937, and certificates of
indehtedness. Series TS-l933 {from press releases, September 7, 10, and 14,
Secretary Mills announced that the subscription books for the current offering
of 1-year 1}4 per cent Treasury certificates Of indebtedness, Series TS-1933,
maturing September 15, 1933, and 5-year 3>i per cent Treasury notes of SerieS:
A-1937, maturing September 15, 1937, closed at the close of business Tuesday,
September 6, 1932.
TREASURY NOTES, SERIES A-1937

Reports received from the Federal reserve banks showed that for the offering of
3K per cent Treasury notes of Series A-1937, which was for $750,000,000 or thereabouts, total subscriptions aggregated $4,351,749,900. Of these subscriptions,.
$408,439,000 represented exchange subscriptions, in payment for which Treasury
certificates of indebtedness maturing September 15, 1932, were tendered. Such
exchange subscriptions were allotted in full. Allotments on cash subscriptions:
for the Treasury notes of Series A-1937 were made as follows: Subscriptions in
amounts not exceeding $1,000 were allotted 50 per cent, but not less than $100'
on any one subscription; subscriptions in amounts over $1,00Q but not exceeding
$10,000 were allotted 30 per cent, but not less than $500 on any one subscription;
subscriptions in amounts over $10,000 but not exceeding $100,000 were allotted
20 per cent, but not less than $3,000 on any one subscription; subscriptions in
amounts over $100,000 but not exceeding $500,000 were allotted 15 per cent, but
not less than $20,000 on any one subscription; subscriptions in amounts over
$500,000 but not exceeding $1,000,000 were allotted 10 per cent, but not less than
$75,()00 on any one subscription; subscriptions in amounts over $1,000,000 but
not exceeding $100,000,000 were allotted 8 per cent, but not less than $100,000
on any one subscription; and subscriptions in amounts over $100,000,000 were
allotted 4 per cent, but not less than $8,000,000 on any one subscription.
TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TS-1933

Reports received from the Federal reserve banks showed that for the offering of
1% per cent Treasury certificates of indebtedness of Series TS-1933, which was for
$400,000,000 or thereabouts,, total subscriptions aggregated over $3,069,449,000.
Of these subscriptions, $195,157,000 represented exchange subscriptions, in payment for which Treasury certificates of indebtedness maturing September 15,
1932, were tendered. Such exchange subscriptions were allotted in full. Allotments on cash subscriptions for the Treasury certificates of indebtedness of Series
TS-1933 were made as follows: Subscriptions in amounts not exceeding $10,000
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 were allotted 20 per
cent, but not less than $5,000 on any one subscription; subscriptions in amounts
over $100,000 but not exceeding $1,000,000 were allotted 10 per cent, but not less
than $20,000 on any one subscription; subscriptions in amounts over $1,000,000
but not exceeding $10,000,000 were allotted 7 per cent, but not less than $100,000
on any one subscription; subscriptions in amounts over $10,000,000 but not
exceeding $100,000,000 were allotted 5 per cent, but not less than $700,000 on
any one subscription; and subscriptions in amounts over $100,000,000 were
allotted 3 per cent, but not less than $5,000,000 on any one subscription.
Subscriptions and allotments for the two issues were divided among the several
Federal reserve districts and the Treasury as follows:

246

REPORT OF THE SECRETARY OF THE TREASURY

Federal reserve district

Total cash
subscriptions
received

Total exchange subscriptions
received

Total subscriptions
received

Total subscriptions
allotted

TREASUKY NOTES, SERIES A-1937

Boston
New York
Philadelphia..
•Cleveland
Richmond
Atlanta
'Chicago
:St. Louis
Minneapolis-.
Kansas City..
Dallas
;San Francisco.
Treasury

$241, 22ft 600
2, 023, 551, 300
28ft 85ft 400
21ft 797, 000
96, 41ft 100
124, 26ft 500
407,485, 800
54, 367, 200
2ft 581, 800
6ft 091, 900
89,189, 500
32ft 463, 500
34, 300

$2ft 473, 500
23ft 10ft 000
14, 33ft 000
ft 139, 500
2, 51ft 000
3,13ft 500
Oft 85ft 600
17, 674, 000
4, 391, 000
11, 65ft 000
63ft 000
lft 66ft 000
ft 96ft 000

$261, 699,100
2, 255, 65ft 300
297, 187, 400
222, 93ft 500
98, 92ft 100
127, 391, 000
477, 33ft 300
72, 041,200
3ft 972,800
63, 743, 900
89, 82ft 600
34ft 032, 500
5, 994, 300

$57, 947, 500
42ft 997,900
4ft 20ft 000
3ft 71ft 700
lft 075, 200
2ft 787, 200
lift 85ft 400
25, 343, 300
7, 953, 000
17, 82ft 300
lft 40ft 200
43, 31ft 600
ft 971, 200

Total...

3, 94ft 31ft 900

40ft 439, 000

4,351, 74ft 900

834,401, 500

TREASURY CERTIFICATES OF INDEBTEDNESS, SERIES TS-1933

Boston
New York
Philadelphia...
^Cleveland
Richmond
Atlanta
'Chicago
:St. Louis
Minneapolis...
Kansas City...
Dallas
.San Francisco..
Treasury
Total.

4ft 20ft 000
683, 000
644, 000
1, 40ft 500
41, 000
ft 90ft 000
3ft 500

$15ft 21ft 000
1, 78ft 93ft 500
19ft 247, 000
164, 92ft 000
4ft 08ft 500
113, 05ft 500
214, 603, 600
32, 65ft 500
ft 933, 000
29, 028, 600
4ft 99ft 500
26ft 731, 000
3ft 600

$2ft 889, 000
26ft 16ft 500
21, 55ft 000
lft 963, 000
ft 61ft 500
lft 787, 000
63, 31ft 000
4, 291, 500
1, 51ft 000
ft 91ft 600
ft 878, 600
lft 625, 000
3ft 600

19ft 157, 000

ft 06ft 449, 000

461, 447, 000

$153, 577, 000
1, 652,05ft 500
19ft 107, 000
164, 47ft 000
47, 86ft 500
lift 05ft 600
16ft 39ft 600
32, 067, 500
9, 289, 000
27, 62ft 000
4ft 956, 600
25ft 82ft 000

$1, 641, 000
134, 87ft 000
3,14ft 000
445, 000
229, 000

2,874, 292, 000

EXHIBIT

'Offering of Treasury notes, Series B-1937 {3 per cent) {press release, October 6,
1932, with Department Circular No. 470)
The Treasury is to-day offering for subscription at par and accrued interest,
through the Federal reserve banks, $450,000,000, or thereabouts, 3 per cent
4}4-year Treasury notes of Series B-1937.
The notes will be dated October 15, 1932, and will bear interest from that
'•date at the rate of 3 per cent per annum, payable semiannually. They wiU
mature on April 15, 1937, and will not be subject to call for redemption prior to
that date.
The principal and interest of the notes will be payable in United States gold
-coin of the present standard of value.
The notes wiU be exempt, both as to principal and interest, from all taxation
(except estate or inheritance taxes) 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.
Applications will be received at the Federal reserve banks. The Treasury
will accept in payment for the new notes, at par. Treasury certificates of indebtedness of Series TO-1932, maturing October 15, 1932, and subscriptions in
payment of which such Treasury certificates of indebtedness are tendered will
be given preferred aUotment.
The notes will be issued in bearer form only, in denominations of $100, $500,
$1,000, $5,000, $10,000, and $100,000, with interest coupons attached payable
:;semiannually on April 15 and October 15 in each year.
H About $333,492,500 of Treasury certificates of indebtedness and about
$155,000,000 in interest payments on the public debt become due and payable
•on October 15, 1932.
The text of the official circular follows:

REPORT OF THE SECRETARY OF THE TREASURY

247

[Department Circular No. 470]

The Secretary of the Treasury offers for subscription, at par and accrued
interest, through the Federal reserve banks, $450,000,000, or thereabouts, 3 per
cent Treasury notes of Series B-1937, of an issue of gold notes of the United
States authorized by the act of Congress approved September 24, 1917, as
amended.
DESCRIPTION OF NOTES

The notes will be dated October 15, 1932, and will bear interest from that
date at the rate of 3 per cent per annum, payable semiannually on April 15 and
October 15 in each year. They will mature April 15, 1937, and will not be
subject to call for redemption prior to maturity.
The principal and interest of the notes will be payable in United States gold
coin of the present standard of value.
Bearer notes with interest coupons attached will be issued in denominations of
$100, $500, $1,000, $5,000, $10,000, and $100,000. The notes wiU not be issued
in registered form.
The notes shall be exempt, both as to principal and interest, from all taxation,
(except estate or inheritance taxes) now or hereafter imposed by the United
States, any State, or any of the possessions of the United States, or by any
local taxing authorit5^
The notes will be accepted at par, during such time and under such rules andregulations 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.
The notes will be acceptable to secure deposits of public moneys, but will notbear the circulation privilege.
APPLICATION AND ALLOTMENT

Applications will be received at the Federal reserve banks.
Subscriptions for which payment is to be tendered in Treasury certificates of
indebtedness of Series TO-1932, maturing October 15, 1932, will be given
preferred aUotment.
The Secretary of the Treasury reserves the right 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; 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, and to make classified allotments and allotments upon a graduated scale; and his action in these respects shall be final. AUotment notices
will be sent out promptly upon allotment, and the basis of the aUotment will be
publicly announced.
PAYMENT

Payment at par and accrued interest for notes allotted must be made on or
before October 15, 1932, or on later allotinent. Any qualified depositary will be
permitted to make payment by credit for notes aUotted 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
certificates of indebtedness of Series TO-1932, maturing October 15, 1932, will
be accepted at par in payment for any notes of the series now offered which shall
be subscribed for and allotted, with an adjustment of the interest accrued, if
any, on the notes of the series so paid for.
GENERAL PROVISIONS

As fiscal agents of the United States, Federal reserve banks are authorized.
£.nd requested to receive subscriptions and to make allotments on the basis and.
up to the amounts indicated by the Secretary of t h ^ Treasury to the Federal
reserve banks of the respective districts. After allotment and upon paymentFederal reserve banks may issue interim receipts pending delivery of the definitivenotes.
A. A.

BALLANTINE,

Acting Secretary of the Treasury.
TREASURY

DEPARTMENT,

Office of the Secretary,
Octoher 6, 1932.
(For letter to the investor, see Exhibit 1, Department Circular No. 461, p; 222.)

248

REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 18

.Subscriptions and allotments. Treasury notes. Series B-1937 {from press releases,
Octoher 7, 11, and 13, 1932, revised i)
Acting Secretary Ballantine announced that the subscription books for the
•current offering of 4}^-year 3 per cent Treasury notes of series B-1937, maturing
April 15, 1937, closed at the close of business, Thursday, October 6, 1932.
Reports received from the Federal reserve banks showed that for this offering,
ivhich was for $450,000,000, or thereabouts, total subscriptions aggregated
$8,368,343,700. Of these subscriptions, $318,141,000 represented exchange subscriptions in payment for which Treasury certificates of indebtedness maturing
October 15 were tendered. Such exchange subscriptions were aUotted in full.
Allotments on cash subscriptions were made as follows: Subscriptions in amounts
not exceeding $1,000 were allotted 10 per cent, but not less than $100 on any one
subscription; subscriptions in amounts over $1,000 but not exceeding $50,000
were allotted 5 per cent but not less than $100 on any one subscription; subscriptions in amounts over $50,000 but not exceeding $500,000 were allotted 3
per cent but not less than $2,500 on any one subscription; and subscriptions
in amounts over $500,000 were aUotted 2 per cent but not less than $15,000 on
any one subscription.
Subscriptions and aUotments were divided among the several Federal reserve
•districts and the Treasury as follows:

Federal reserve district

Total exTotal cash sub- change
subscriptions
scriptions
received
received

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

$45ft 682.100
4,17ft 672,800
627, 775, 200
387, 394,800
162, 089,800
302, 087, 000
844, 037, 500
8ft 57ft 300
4ft 599,100

Total...

Total subscriptions
received

Total subscriptions
allotted

107, 773, 500
98, 732, 400
753, 536,700
1, 23ft 500

$14, 572, 600
23ft 151, 500
. 6, 682, 500
82ft 000
ft 221, 500
694, 000
40,402,000
4, 858, 000
1,01ft 500
3,15ft 500
164, 000
11, 304, 000
99, 000

$474, 254, 600
4,408; 824,300
634, 457,700
3Sft 244,800
164, 311,300
302,781,000
884,439, 600
9ft 428, 300
44,616, 600
lift 930, 000
98,88ft 400
764,84ft 700
1, 329, 600

$28, 294,100
325,373, 000
21,05ft 000
9,807,100
7, 201,800
9,88ft 600
Oft 486, 000
7,139, 600
2, 219,200
5,806, 700
3, 617,300
27,319,000
12ft 600

8, 05ft 181, 700

31ft 141, 000

8,368, 343, 700

508,328,900

1 Revised October 22, 1932.

Issues of Treasury bills
EXHIBIT

Inviting tenders for Treasury hills dated Novemher 9, 1931, and maturing February
8, 1932 {press release, Novemher 2, 1931)
The Secretary of the Treasury gives notice that tenders are invited for Treasury
bills to the amount of $75,000,000, or thereabouts. They wiU be 91-day bills,
a,nd will be sold on a discount basis to the highest bidders. Tenders will be
received at the Federal reserve banks, or the branches thereof, up to 2 o'clock
p. m., eastern standard time, on Friday, November 6, 1931. Tenders will not be
received at the Treasury Department, Washington.
The Treasury bills will be dated November 9, 1931, and will mature on February 8, 1932, and on the" maturity date the face amount will be payable without
interest. They wiU be issued in bearer form only, and in amounts or denominations of $1,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value).
It is urged that tenders be made on the printed forms and forwarded in the
special envelopes which will be supplied by the Federal reserve banks or branches
upon application therefor.
No tender for an amount less than $1,000 will be considered Each tender
must be in multiples of $1,000. The ]Drice offered must be expressed on the basis
of 100, with not more than three decimal places, e. g., 99.125. Fractions must
not be used.

REPORT OF THE SECRETARY OF THE TREASURY

249

Tenders wiU be accepted without cash deposit from incorporated banks and
trust companies and from responsible and recognized de'klers in investment
securities. Tenders from others must be accompanied by a deposit of 10 per
•cent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust
^company.
Immediately after the closing hour for receipt of tenders on November 6, 1931,
•all tenders received at the Federal reserve banks or branches thereof up to the
closing hour will be opened and public announcement of the acceptable prices
will follow as soon as possible thereafter, probably on the following morning.
The Secretary of the Treasury expressly reserves the right to reject any or all
tenders or parts of tenders, and to allot less than the amount applied for, and his
action in any such respect shall be final. Those submitting tenders will be
:advised of the acceptance or rejection thereof. Payment at the price offered for
Treasury bills allotted must be made at the Federal reserve banks in cash or other
immediately available funds on November 9, 1931.
The Treasury bills will be exempt, as to principal and interest, and any gain
from the sale or other disposition thereof will also be exempt, from all taxation,
^except estate and inheritance taxes. No loss from the sale or other disposition
•of the Treasury bills shall be aUowed as a deduction, or otherwise recognized, for
"the purposes of any tax now or hereafter imposed by the United States or any of
its possessions.
Treasury Department Circular No. 418, as amended, and this notice prescribe
the terms of the Treasury bills and govern the conditions of their issue. Copies
^of the circular may be obtained from any Federal reserve bank or branch thereof.

EXHIBIT 20

Acceptance of tenders for Treasury bills dated Novemher 9, 1931, and maturing
February 8, 1932 {press release, Novemher 7, 1931)
Secretary of the Treasury Mellon announced to-day that the tenders for
:$75,000,000, or thereabouts, of 91-day Treasury bills dated November 9, 1931, and
maturing February 8, 1932, which were offered, on November 2, were opened at
the Federal reserve banks on November 6.
The total amount applied for was $301,633,000. The highest bid made was
'99.550, equivalent to an interest rate of about 1.78 per cent on an annual basis.
The lowest bid accepted was 99.458, equivalent to an interest rate of about 2.14
per cent on an annual basis. The total amount of bids accepted was $75,173,000.
The average price of Treasury bills to be issued is 99.492. The average rate on a.
bank discount basis is about 2 per cent.

250

REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 21

Press releases pertaining to Treasury bill issues subsequent to November 9,.
1931, were similar in form to the foregoing and are therefore not here reproduced.
The essential details regarding each issue are summarized in the following table:
Summary of information contained in press releases issued in connection with
Treasury hills offered from Novemher 9, 1931, to October 26, 1932
B i d s accepted

D a t e of issue

D a t e of m a t u r i t y

1931

Total
amount
[Days to' applied
matu- I for (in
rity
thousands)

Highest

Price (per| E q u i v a - Price (per E q u i v a h u n d r e d ) lent r a t e ^ h u n d r e d ) lent r a t e ^

$301,633
255,289
173, 213
235, 485
19ft 072

$99. 660
99. 550
2 99. 500
3 99.430
99,650

P e r cent
1,780
L780
21,935
3 2,206
1,780

16ft 337
191, 681
19ft 873
211,872
19ft 183
292,984
36ft 198
39ft 374
289, 740
241,451
351, 661
39ft 069
334, 818
296, 503
29ft 881
273, 658
241, 256
191, 613
33ft 468
333, 747
347,816
463, 281
41ft 610

99. 368
99. 500
99.450
4 99.400
99. 377
99. 450
99. 545
99,736
99.876
99.853
99.880
99. 900
99. 945
99,975
fi 99.939
8 99,915
99.917
99.930
99.899
99. 881
99. 897
99.922
99,958

2.600
1,935
2.129
4 2. 323
2.465
2.176
L800
1,044
.491
.682
.475
.396
.218
.099
8.241
6. 340
.328
.277
.400
.471
.407
.309
.166

259, 468
252,465
227,202

99,955
99,967
99.970

.176
.131
.119

1932

Nov. 9
N o v . 16
N o v . 23
N o v . 30
D e c , 30

Feb. 8
F e b . 15
F e b . 24
Mar. 2
M a r . 30

Lowest

$99.468
99.469
9ft 381
99. 296
99. 077

P e r cent
2,144
2.101
2.39&
2,725
3,651

1932
J a n . 13J a n , 25
Feb, 8
F e b . 15
F e b . 24
Mar, 2
M a r . 30
A p r , 13
A p r , 20
A p r , 27
M a y 11
M a y 18
M a y 25
June 1
J u n e 29
J u l y 13
J u l y 20
J u l y 27
A u g , 10
A u g . 17
A u g . 24
A u g . 31
S e p t . 28
Oct. 11
Oct. 19
Oct. 26_

A p r . 13
A p r . 27.
Mayll
M a y 18
M a y 25
June 1
J u n e 29
J u l y 13
J u l y 20
July 27......
A u g , 10
A u g , 17
A u g , 24
A u g , 31
Sept. 28
Oct, 11
Oct, 1 9 — . . .
Oct. 26
Nov. 9
N o v , 16
N o v . 23
N o v , 30
D e c , 28

99. 245
99. 332
99.292
99.267
99. 307
99. 368
99. 459
99. 700
99. 826
99.836
99.817
99.892
99.927
99.915
99.886
99.901
99.887
99.877
99.853
99.869
99.894
99.915
99. 940

2.987
2,586
2,741
2,837
2,742
2.500
2.140
L187
.688
.649
.724
.427
.280
.336
.451
.396
,447
,487
.682
.618
.419
.336
.237

99.950
99,960
99.946

.196
.168
.214

1933
J a n . 11
Jan.18
J a n . 25

1 Bank discount rate,
2 E x c e p t for one bid for $16,000 at an
3 E x c e p t for one bid for $50,000 at an
< E x c e p t for one bid for $10,000 a t a n
6 E x c e p t for t h r e e b i d s aggregating
0.138 per cent,
6 E x c e p t for t h r e e b i d s aggregating
0.180 per cent.

average price of $99,620, e q u i v a l e n t to a n interest rate.of 1.471 per c e n t .
average price of $99,640, e q u i v a l e n t to a n interest r a t e of 1.781 per c e n t .
average price of $99,600, e q u i v a l e n t to a n interest r a t e of 1.648 per c e n t ,
$149,000 at prices averaging $99,965, e q u i v a l e n t to a n interest r a t e of
$15,000 a t prices averaging $99,955, e q u i v a l e n t to a n interest r a t e af

REPORT OF THE SECRETARY OF THE TREASURY

251

Summary of information contained in press releases issued in connection with
Treasury hills offered from Novemher 9, 1931, to October 26, i^5^—Continued
Bids accepted
Date of issue

Nov, 9...
Nov, 16-.
Nov, 23..
Nov, 30..
Dec, 30-.
Jan, 13—
Jan. 25—
Feb. 8 . . .
Feb. 15-.
Feb. 24..
Mar. 2-_Mar. 30Apr, 13-Api,20-.
Apr. 27..
May 11..
May 18-.
May 2 5 June 1--June29-July 13-July20-July27-Aug. 10Aug, 1 7 Aug. 24-.
Aug. 3 1 Sept. 28..
Oct. 1 1 - .
Oct. 19...
Oct. 26...

1931

1932

Average
Amount
(in thousands) Price (per Equivahundred) lent rate ^

Dates of press releases

Date of
closing

$75,173
76, 410
Oft 082
10ft 490
101, 332

$99.492
99. 489
99.411
99. 332
99,178

Per cent
2.009
2.024
2. 281
2.585
3.253

1931
Nov. 2 and 7
Nov, 9 and 14
Nov. 16 and 21
Nov. 23 and 28
Dec, 23 and 29

1931
Nov, 6
Nov. 13
Nov. 20
Nov, 27
Dec. 28

5ft 175
5ft 937
7ft 399
75, 689
62,851
101,412
10ft 169
76, 200
7ft 600
51, 550
76, 744
75,000
60, 050
10ft 022
10ft 466
75, 278
7ft 923
83, 317
7ft 217
7ft 016
62, 350
10ft 500
10ft 665
75, 954
7ft 110
80, 295

99. 272
99.358
99. 314
99. 287
99.315
99. 369
99.474
99.735
99.843
99. 841
99.829
99.893
99.927
99.919
99.897
99; 904
99.899
99.882
99.866
99.878
99.894
99. 918
99. 941
99. 951
99. 965
99. 951

2.879
2.483
2.655
2.761
2.709
2.495
2.079
1.049
.621
.630
.676
.425
.289
.321
.408
.385
.400
.466
.529
.485
.419
.325
.233
.192
.140
.195

1932
Jan. 7 and 12
.
Jan. 18 and 22
Feb. 1 and 5....
Feb. 8 and 12
Feb. 16 and 20
Feb. 25 and Mar, 1
Mar, 24 and 29.....
Apr, 7 and 12
Apr. 14 and 19
Apr. 21 and 26
May 5 and 1 0 . . . .
May 12 and 17
May 19 and 24
May 25 and 28
June 23 and 28
.Tuly 7 and 12
July 14 and 19
July 21 and 26
Aug. 4 and 9
Aug. 11 and 16
Aug. 18 and 23
Aug. 25 and 30
Sept. 22 and 27
Oct. 4 and 8
Oct. 13 and 18
Oct. 20 and 25

1932
Jan, 11
Jan. 21
Feb, 4
Feb. 11
Feb. 19
Feb. 29
Mar. 28
Apr. 11
Apr. 18
Apr. 25
May 9
May 16
May 23
May 27
June 27
July 11
July 18
July 25
Aug. 8
Aug. 15
Aug. 22
Aug. 29
Sept. 26
Oct. 7
Oct. 17
Oct. 24

1 Bank discount rate.

http://fraser.stlouisfed.org/
^
Federal
Reserve Bank of St. Louis

252

REPORT OF THE SECRETARY OF THE TREASURY
THE BUDGET
EXHIBIT 22

The National Budget and the Public Credit, an address hy Under Secretary of the
Treasury Mills, December I4, 1931, before the Economic Club of New York,.
New York City
You have invited me to discuss this evening the financial position of the United
States Government and the many fiscal problems which confront our Government in these difficult times. I was very pleased indeed to accept, for I know of
no subject in which all of our people, irrespective of whether they contributedirectly to the Federal Government or not, are more vitally interested, or onewhich it is more important that they should understand. Adequate comprehension and support on the part of the Nation is essential to the Government in.
the performance of its fiscal functions.
We closed the last fiscal year with a deficit of $903,000,000. We are confronted
this year with a prospective deficit of $2,123,000,000, and it is estimated that
expenditures will exceed receipts by no less than $1,417,000,000 in the fiscal year
1933. If we contrast these figures with a surplus of $184,000,000 in 1930, one of
$185,000,000, in 1929, and of $399,000,000, in 1928, we are shocked at the violence
and suddenness of the change. For, while I am sorry to say that a falling off in
income is an all too common experience these days, yet our Federal Government
is so strong, and our national resources are so great, that somehow or other we
feel that our Government should be superior to the ills to which individual citizens are subject. Indeed, there is so much truth in this conception, that, as we
shall see, the Government has but to make a further call upon available resources
to put its financial house in order.
To grasp not only what has happened in the immediate past, but what should
be done in the immediate future, it is necessary to understand our revenue system,
and to note the essential fact that it rests on a very narrow base. Take the fiscal,
year 1930 as an example: We find that in that year, out of total receipts from
taxation of $3,626,000,000, no less than $2,411,000,000, or two-thirds was contributed by income taxpayers, corporate and individual, $587,000,000, or 16 per
cent, from customs duties, and $628,000,000, or 17 per cent, from misceUaneous.
internal revenue taxes, of which the tax on tobacco contributed $450,000,000, and
the stamp taxes chiefly on the issue and transfer of securities about $69,000,000.
These taxes are comparatively few in number, and all, with the exception of
the tobacco taxes, which have steadily grown in years of prosperity and remained:
comparatively stable even under adverse conditions, are susceptible to very widevariations, in accordance m t h changing business conditions. This is obviouslytrue in the case of customs receipts, which, with imjDorts reduced both in quantity
and value, feU from $587,000,000, in the fiscal year 1930, to $378,000,000, in 1931.
The direct relationship between business prosperity and the net income of
corporations, upon which the income tax is based, needs no elaboration, and thesharp drop from $1,118,000,000, collected in 1930, to the $550,000,000 which it is.
estimated we will collect in 1932 is but another indication of the extent of the
depression. A falling off in activity in the security markets must be accompanied
by a sharp reduction in receipts from stamp taxes.
But it is when we come to the income tax on individuals that the dangers
incident to too narrow a tax base are most strikingly exemplified. The number
of individual returns for the calendar year 1928 aggregated 4,071,000. Of this:
number, 382,000 taxpayers contributed $1,128,000,000 and the other 3,689,000>
individuals who made returns contributed but $36,000,000. Clearly, under oursystem, large and moderately large incomes, bear practically the full burden of the^
individual income tax. Now, these incomes, as we shall see, are the very ones;
subject to the widest fluctuations, since they include business profits, and more
particularly because in recent years the element of gain and loss resulting from
the purchase and sale of capital assets has had on them a preponderating influence. In so far as tax receipts are concerned, these fluctuations are magnified',
by our progressive rates which necessarily result in taxes rising at a more rapid;,
rate than incomes as the latter move forward into higher, and, on the other hand,,
falling with greater abruptness as they recede into lower brackets.
Taxes returned on individual incomes fell from $1,164,000,000 for the calendaryear 1928 to $474,000,000, according to available information for 1930. The.-.
numlDer of returns of those with incomes of from $5,000 to $10,0.00, fell from.

REPORT OF THE SECRETARY OF THE TREASURY

253

561,000 to 506,000, while the tax paid feU from $21,000,000 to $17,000,000, or
22 per cent. Of those with incomes from $10,000 to $100,000, the number feU
from 360,000 to 252,000, and the tax from $409,000,000 to $208,000,000, or 49
per cent; while of those with incomes of $100,000 and over, the number fell from
15,780 to 6,152, and the tax from $700,000,000 to $238,000,000, or 66 per cent.
While income from all sources declined, the one chiefly responsible for this
almost perpendicular drop was gains from the sale of capital,assets.
If we take the returns of individuals with net incomes of $5,000 and over, we
find that the aggregate net income returned fell from $16,299,000,000, in 1928,
to $10,119,000,000, in 1930, or a decrease of $6,180,000,000, and of this amount
no less than $4,230,000,000, or about 68 per cent, is accounted for by the reduction
in net profits in excess of losses, resulting from the sale of capital assets.
The question of taking into consideration, in the determination of taxable
income, gains and losses from the purchase and sale of capital assets, has been the
subject of much discussion. Many people believe that this feature of our income
tax law should be eliminated, on the ground that it tends to promote, rather than
to discourage, speculation in periods of expansion, and that it has a depressing
effect in times of recession. I am inclined to think that this criticism is too sweeping, and that the supporting data are inadequate. Does any one really believe tliat
events would have been very different if we had had no income tax? If so, how
are we to account for similar experiences in the past? And if it be urged that the
magnitude of this folly was greater than ever before, my answer is that we made
bigger fools of ourselves this time because our resources and the opportunities
afforded us were infinitely greater. Certain it is that over a 10-year period this
particular provision of our income tax law has been extremely fruitful. Moreover, we must not forget that our conception of capital gain as income is an
integral part of our income tax law, woven into its structure, and that it can not
be eliminated without a complete rewriting of the law, and undoing the results of
many years of trial and uncertainty, during which the interpretation of the law
became clarified through administrative and court decision, and its administration reached a point where certainty began to take the place of arbitrariness and
blind groping. Do we want to travel back over that long hard trail for so doubtful a benefit? For who can contend, as a matter of principle, that the handsome
gain yielded without effort by a quick turn in the market is a less legitimate object
of taxation than a hard-earned salary or the remuneration of doctors, lawyers,
engineers, and other professional men, whose earning capacity is developed only
through years of constant application and unremitting effort?
In passing, while we are on the subject of income tax statistics, there is a fallacy
which I would like to correct. When the figures for the calendar year 1929 were
published, a number of gentlemen who think that all is for the worst in the worst
of worlds claimed that here at last was the final decisive proof of the concentration of wealth, in the United States in a few hands. They eagerly seized on tho
fact that 504 individuals reported incomes of a million and over, and that no less
than 967 individuals had reported incomes of between $500,000 and a million;
but when the returns for 1930 came in, we found that the former group had shrunk
to 149, and the latter to 311, as compared with 206 and 376, respectively, in
1916. On the other hand, the number of individuals returning incomes of from
$5,000 to $10,000 had grown from 150,000 in 1916 to 505,000, in 1930. The
truth is that income-tax returns in any given year are unreliable guides in estimating the distribution of national income or wealth.
To summarize, our Federal Government relies on a very limited number of
taxes, subject, generally speaking, to extreme fluctuations. It places its chief
reliance on an income tax which, because of the character of its structure and the
narrowness of its base, is susceptible to sharp increases and precipitous drops.
As a result, our budget lacks stability, and is particularly vulnerable to a depression as sweeping as the one wliich has overtaken us. In consequence, our total
receipts from taxation have shrunk from $3,626,000,000 in the fiscal year 1930
to an estimated $2,094,000,000 in the current fiscal year. Of this loss of
$1,530,000,000, no less than $1,271,000,000 is accounted for by a falling, off in
income-tax collections.
In the meanwhile expenditures are estimated at $4,482,000,000 for 1932 compared with an actual total of $3,994,000,000 for 1930, an increase of about
$490,000,000. Of this increase approximately $350,000,000 is attributable to the
estimated increase iii expenditures for construction activities, including additional
work on roads, public buildings, and a variety of emergency construction activities. It is estimated that the Veterans' Administration will require $231,000,000
more in 1932 than in 1930, reflecting an increase of $88,000,000 in funds required
to meet loans to veterans on adjusted-service certificates and an increase of

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REPORT OF THE SECRETARY OF THE TREASURY

$143,000,000 for military and naval compensations and other services for veterans.
Expenditures for the postal deficiency will be $103,000,000 larger than in 1930.
The more important decreases include $54,000,000 for interest paid on the public
debt, largely as a result of lower interest rates; $145,000,000 for public retirements principally due to the proposed postponement of payments by foreign
governments for 1932, and $68,000,000 for refunds of receipts. It should be
•observed that total expenditures for 1932, aggregating almost $4,500,000,000,
include about $1,000,000,000 for interest on the public debt and sinking fund
retirements and a similar amount to cover expenditures for veterans of all wars.
Neither of these major outlays is subject to reduction at will, so that the opportunity for reducing expenditures is limited to the balance of some $2,500,000,000.
Present estimates indicate a reduction in expenditures between 1932 and 1933 of
about $370,000,000.
It is estimated that we will close the fiscal year 1932 with a deficit of $2,123,000,000. The outlook for 1933 is, however, a little more cheerful. Revenue from taxation rises from $2,094,000,000 to $2,168,000,000, and total receipts from $2,359,000,000 to $2,696,000,000, while, as I have pointed out, expenditures are cut by about
$370,000,000, stiU leaving, however, an estimated deficit of $1,417,000,000. The
•combined deficits for the three years aggregate approximately $4,400,000,000,
and after deducting debt retirements effected through the sinking fund and by
virtue of other statutory requirements, indicate an increase in the public debt
of approximately $3,250,000,000.
There is the situation. Before discussing, however, why something must be
done about it, and what that something should be, let us glance briefly at our
public-debt figures. These have a direct bearing on the national credit. The
problem of inadequate revenue and excessive expenditures can not be considered
solely from the standpoint of providing for our immediate needs. The effect
which these two diverging factors, unless remedied, will have on the public credit
is of infinitely greater concern. Its maintenance is of supreme importance to
us all.
Our gross debt, which had fallen steadily from $25,485,000,000, on June 30,
1919, to $16,185,000,000, on June 30, 1930, increased to $17,310,000,000 on
November 30, 1931. During the past 17 months, Government securities in the
hands of the public were increased by $850,000,000 through the liquidation of
Treasury notes held in the adjusted-service certificate fund in connection m t h
the financing of additional loans to veterans, chiefly as a result of the legislation
enacted at the last session of Congress. Of the total interest-bearing debt,
aggregating $17,040,000,000, $14,310,000,000 consists of long-term bonds, some
of which are callable in 1932, others in 1933; after the December financing,
about $2,200,000,000 of open-market issues of certificates and notes having
maturities of a year or less; and some $576,000,000 of 90-day issues of Treasury
bills. These last may be rolled over, and offer, therefore, no particular problem.
Thanks to three bond issues, made in March, June, and September, and the
reduction effected in our short-term debt since January 1, 1931, the difficulties
of financing the deficit in the current year have been lessened. The $2,200,000,000
of certificates and notes can readily be handled in quarterly tax-payment months,
particularly as all of the quarter-days, beginning January 1, 1933, are open.
But if we are called upon to finance, through borrowing, another huge deficit in
1933, and all manner of unwise and uneconomic expenditures in the meanwhile,
leaving aside for the moment the general effect on the credit of the Government,
our difficulties become very serious indeed. In November, 1933, $6,268,000,000
of fourth Liberty loan 4J4 per cent bonds become callable. They mature as early
as 1938, and this immense issue must be retired, or refunded, over the comparatively
short period of five years.
If, on the other hand, the increase in the public debt can be arrested during the
fiscal year 1933, the Treasury's general debt retirement and refunding program,
somewhat modified, of course, by the events of the last two years, is definitely
manageable.
I do not mean to suggest that the addition of $3,000,000,000, or even $4,000,000,000 to our national debt could conceivably impair the national credit. That
debt stood at $25,000,000,000 a decade ago, and the national credit was unimpaired, but I do say, with all the force at my command, that any temporizing with
this situation, any failure to take the steps necessary to bring our budget into
balance within a reasonable time, any misuse of the public credit, would furnish
such evidence of lack of sound financial principles as might well result in shaken
confidence and in apprehension lest these conditions prevail long enough to result
in real damage. Our long-term bonds are selling to-day at a discount, even those

REPORT OF THE SECRETARY OF THE TREASURY

255

bearing as high an interest rate as 3 ^ per cent. Allowing for tightened money
conditions, and for all the unusual circumstances which surround us, there is no
doubt but that some of the weakness manifested reflects the response of the
investing public to the possibility that we may be confronted with a rapid increase
in the public debt, and in the volume of Government securities outstanding:
There is fear of further huge grants to veterans, there is fear of major drains on
the Treasury through uneconomic expenditures, there is fear of growing and unremedied deficits. All of this fear can be swept away only by adherence to sound
financial principles and the development of a program of restricted expenditures
and of increased revenues, which, if they do call for temporary sacrifices on the
part of our people, will, in the long run, bring them infinite benefit.
In this period of deep uncertainty, the unimpaired credit of the Federal Government is the most priceless possession of the people of the United States. We
assume its existence as we assume the continuance of unlimited supplies of air
and sunlight. It has been established through the pursuance of sound fiscal
policy in the past and so must it now be preserved. The immediate cost in
increased taxes is small in comparison with the immediate and lasting benefit to
the Nation.
Let me at this point take the liberty of quoting briefly from the speech of a very
great man, the late Senator Dwight Morrow, who, in describing, how individuals
take their own money with its present command over goods and services, and
surrender it not only to their own Government, but to the governments of nations
on the other side of the earth, and receive in exchange for it a promise, went on
to say:
'^The question may be asked: Nothing more than a promise? To which
answer may be made: Nothing less than a promise.
" I remember reading some years ago a letter of Thomas Bailey Aldrich written
to WiUiam Dean Howells. Aldrich is writing of a friend who has just died, and
whose body is resting in 'a dismal London burying ground.' He says to Howells
that it is not worth three pins to be a great novelist, or a great general or a great
anything else. Then he winds up his letter with this whimsical expression: 'Yet
with a sort of hopeful vivacity I have just bought two 5 percent railway bonds
that expire in 1967. Who will be cutting off the coupons long before that? Not
I.' There was Aldrich,, despondent because of the transitoriness of life, taking
his savings and putting them in railway bonds that matured long after his life
would end. Every day investors are buying bonds, domestic and foreign, although they have every reason to wonder who will collect the coupons. Human
lives stop. Promises go on. The civilized world today is run on the basis of a
belief in promises. Whatever our doubts about the meaning of modern civilization, w^e may at least take some comfort in the trust which men show in each
other's promises.".
Now, this belief in promises, this credit structure of ours, depends to a very
great extent upon the confident belief that the Government wiU meet its financial
obligations promptly and punctiliously, on every occasion and in every emergency. Our currency rests predominately upon the credit of the United States.
Impair that credit and every dollar you handle will be tainted with suspicion.
The foundation of our commercial credit system, the Federal reserve banks, and
all other banks which depend upon them, are inextricably tied into and dependent
upon the credit of the United States Government. Impair that credit to-day,
and the day after, thousands of development projects—they are still going on—
will stop; thousands of business men dependent upon credit renewals will get
refusals from their bankers; thousands of mortgages that would otherwise be
renewed or extended, will be foreclosed. Merchants who would buy on credit
will cancel orders; factories that would manufacture on part capacity at least
will close down.
It is true that a distressingly large minority of the wage earners of this country
are now out of work. But we must not forget that a majority still have enough
work to make a living. We have lost much; but we have infinitely more to lose.
What we still have, what we hope for in the future, are dependent in a large
degree upon the preservation, unimpaired, of the credit of the United States.
It will cost something to preserve it. The cost is additional taxation. The
wealthy, the captains of industry, the bankers, must contribute to meet this cost;
but the small business man, the white-collar man, the farmer, and the wage
earner, have an equally vital stake in the preservation of the Nation's credit;
The new taxes will cut into the incomes of the rich, and they will affect by some
sraaU amount the contributions made to the Government by those in moderate
circumstances. But the result—the preservation of the Nation's credit—is
141810—32
^17

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REPORT OF THE SECRETARY OF THE TREASURY

worth this cost, and for that matter, an even much greater one, to all who are
called upon to make some temporary sacrifice.
It is sometimes urged that, since in the course of 11 years prior to the fiscal year
1931 we had retired some $3,460,000,000 of debt from surplus receipts, we are
justified in incurring deficits up to that amoimt. There is some force to the argument. We have created something in the nature of a reserve which we are warranted in drawing on, certainly to some extent. But there are definite limitations. In the first place, in the early years of the decade, a large part of the current surpluses were due to the sale or.other disposal of capital assets, the returns,
from which could most properiy be applied to debt reduction, and other receipts
of a nonrecurring character. In the second place, w^hen the sinking fund was;
created, it was assumed that loans to foreign governments would be repaid in full>.
and would be applicable to the retirement of a very large part of our public debt;
whereas the amounts due us from abroad, have since then been whittled down by
the debt-funding agreements. And, finally, even if we assume that we are justified in borrowing up to the full amount of $3,460,000,000, that sum will be almost
absorbed by last year's and this year's deficits.
As the Secretary of the Treasury pointed out in his Annual Report, there are
certain basic principles in the conduct of public finances which can not be disregarded by any nation. First, the sinking fund, designed for gradual retirement
of the public debt, must be maintained, and when of necessity the public debt is.
increasing, the regular sinking-fund appropriations must be accepted in the accounts' Of. the Government as fixed charges against revenues. Second, over a,
period of years, revenues must be equal to expenditures. Deficiency for a time
may be inevitable, but-the principle of a balanced Budget must never be abandoned, and when emergency conditions upset the balance,' every effort must be
naade to restore it at the earliest possible opportunity.
Bearing constantly in mind that additional taxes should not be so great as to<
retard the business recovery, upon which the restoration of the normal flow of
revenue depends, the Treasury program submitted to the Congress last Wednesday'has three deflnite objectives: First, a reduction in the prospective deficit
this fiscal year; second, no further increase in the public debt in the fiscal year
1933; third, a balanced Budget in 1934. We do not feel justified in asking for
more; we would have failed in our duty had we recommended less.
The attainment of our goals necessitates additional revenue in excess of $900,000,000 in the year 1933. In the development of a program, we considered many
forms of taxation. We weighed, for instance, the merits of the general-sales or
turnover tax, but rejected it, not only because it bears no relation to ability to
pay, and is regressive in character, but because of the enormous administrative
difficulties and the almost inevitable pyramiding of the tax in the course of successive sales.
We studied the limited manufacturers' or producers' sales tax, which is being^
administered with a fair degree of success in Canada, In Canada a tax is imposed,
at the rate of 4 per cent on the manufacturers' sale price, or the import value of all
goods not exempt, which are produced or manufactured in Canada or imported
into Canada, Retailers are exempt. It is distinctly not a turnover tax. Practically all raw materials of farms, mines, fisheries, etc, are exempt, as are most,
small manufacturers and producers, such as customs tailors, shoemakers, plumbers, opticians, et al. The extent of the exemptions is very great. They fill 10'
closely printed pages and cover thousands of specific items and classes of items.
Pyramiding is avoided by a mechanism of licenses and certificates, Ever}^ manufacturer and wholesaler is required to take out a hcense. If one licensed manufacturer buys from another licensed manufacturer Or licensed wholesaler, he notes,
his certificate number on the order; this is noted on the sales invoice, and the sale:
is exempt, When the last licensed taxpayer sells to an unlicensed purchaser, the
tax is collected. Administrative discretion is granted to an extent unheard of in.
this country, and which I doubt Avhether our Congress Avould ever be willing to
grant. Not only has the Minister of Finance final power to fix the wholesale
price or value to which the tax rate is applied in uncertain cases, not onl}^ are deductions and refunds discretionary, but from 1922 until 1931 the Governor in
Council had power to exempt articles from the sales tax. The success of the tax
appears to be due not only to good administration but to this very wide administrative discretion. The tax is unquestionably passed on, and adds, therefore, tothe cost of living.
With some 200,000 manufacturing establishments in the United States, our
much more extensive and complicated industrial mechanism, our tendency to set
out administrative procedure with almost meticulous accuracy in our statutes,,
and our reluctance to grant administrative discretion, or the authority to adminis

REPORT OF THE SECRETARY OF THE TREASURY

257

trative officers to make final decisions, it is more than doubtful whether the Canadian sales tax would meet with the success in our country that it has across the
border. Certain it is that many months would elapse before the necessary administrative machinery could be set up, and a number of years before such a new
form of taxation could be firmly established in this country. And we are in need
of additional revenue now.
In any event, we concluded that, on the whole, it is wiser for us to resort to
those forms of taxation with which we have had experience and are thoroughly
familiar rather than to embark on new and untried ventures. If this conception
is sound, we have but to take a step backward and to relinquish temporarily the
benefits of the tax reductions effected in the period of expanding revenues. It
isn't necessary to retrace many steps and to return either to the revenue act of
1918 or of 1921, but what we desire can be accomplished by returning in principle
to the general plan of taxation existing under the revenue act of 1924, with such
changes as are appropriate in the light of existing conditions. The advantages
of such a program are manifest. From an administrative standpoint, we have
not only had the necessary experience, but we are so organized as to take on this
new burden without difficulty. From the standpoint of the taxpayer and of the
Nation, there is no occasion for alarm, for we are simply reimposing upon ourselves,
for the time being, taxes which we didn't find too burdensome ahd the existence
of which proved no impediment to business expansion and growing prosperity.
It is unnecessary to describe the program in detail, for I doubt not all of you
have read it with interest, and I trust without concern. Generally speaking, it
provides for the retention and, in some instances, an increase in existing excise
taxes, a restoration of the manufacturers' sa]es tax on automobiles, trucks, and
accessories, of the stam]D tax on conveyances of realty, and of the tax on telephone,
telegraph, radio, and cable messages, and the imposition of new taxes on manufacturers' sales of radio and phonograph equipment, and on checks and drafts. The
rate of tax on corporate income is increased but slightly from 12 to 12}^ per cent.
We have refrained from recommending the restoration of the capital-stock tax,
which was in the 1924 law, not only because it was an unfair and unequal tax,
involving most difficult administrative problems, but with a view to placing not
too great a burden on business at the present time. A return to the 1924 act
necessarily involves a sharp increase in the rates applicable to individual incomes
and the taxing of many taxpayers, who since 1924, owing to very high exemptions,
have been relieved from the obligation of contributing to the support of their
Goverriment, though ienjoying a very genuine ability to contribute certainly the
very moderate amounts, demanded by the 1924 act.
When the 1924 act was before the House of Representatives, no one fought
harder than I did to reduce the rates to the point later established b}^ the 1926 act.
I believed then, and I believe now, that under normal conditions a 20 per cent rate
is sounder than a 40 per cent rate, not only frorh the standpoint of our general
economy but, in the long run, from the standpoint of productivity. But these
are not normal times. There is an emergency, and we are proposing emergency
measures to meet it. Men who still have very large incomes can not object,
under the circumstances, to contributing largely.^ Men with comparatively large
incomes should be willing to do their share, and those in more moderate, but comfortable, circumstances will surely feel that they can.spare sorhething for the support of their Government, I am confident that, if only there be a proper understanding of the necessities of the case, the temporary sacrifices demanded mil be
met, if not joyfully, at least wholeheartedly, and with philosophy and good himior.
After all, even in these days, which appear so dark, we are still fortunate as
contrasted with other nations. After a hard-boiled Treasury has done its worst,
and wlien you gloomily view the approach of the Ides of INlarch, I suggest that
you place these figures on your desk as you make out your income-tax return:
A married man with one dependent, and with an income of $5,000, will pay, under
ouf Treasury's proposal, $31.50 in taxes; a man similarly situated in Great Britain
pays, under Mr. Snowden's latest budget proposals, $650. A man with an income
of $10,000 pays $153 in the United States and $1,800 in Great Britain. One with
$100,000 pays $22,030 in the United States and $48,000 in Great Britain. We
would grant an exemption of $1,000 for a single man, $2,500 for a married man,
and $400 for each dependent. Great Britain's exemptions are as follows: For a
single man, $485; for a married man, $730; for the first dependent child, $245; and
for each other child, $195.
If our program is adopted, it is estimated that we shall obtain during the full
fiscal year 1933 an additional $60,000,000 from corporations, $185,000,000 additional from individual income taxpayers, $11,000,000 additional from estates, and

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REPORT OF THE SECRETARY OF THE TREASURY

$514,000,000 additional ftom miscellaneous internal-revenue taxes. In addition,
we have recommended that postal rates be so adjusted that the Post Office Department's revenues will cover, by a reasonable margin, its expenditures, exclusive of
such special services as the cost of free postal services performed for Government
departments and agencies, the excess of the cost of air-mail services over revenues,
and the cost of special fates paid to ocean mail carriers under American registry.
There is no reason why the pubhc should not pay the cost of the service it receives
from the Post Office Department, or why the latter, as an essentiaUy business
institution, should not be self-supporting.
I have no illusions as to the feelings with which a program of drastic tax
increases is received, and I can assure you that it is anything but a pleasant task
to participate in the preparation and submission of such a program, but no
man, whether he be a Treasury official or a taxpayer, can open-mindedly examine
the existing situation and not reach the conclusion that the alternative for
increased taxation is infinitely worse for the Nation. I find some consolation in
the thought that the contribution to be made by people with moderate incomes is
still fairly light, and that those whose incomes remain in the upper brackets in.
times like these are in such a preferred class as to occasion little concern for them,
though if circumstances permitted I should much prefer to see them buy bonds
rather than pay additional income taxes. When we come to the miscellaneous
group, the rates are not so high as to interfere with the flow of goods or sefvicesj
or to constitute a real burden on those who buy or enjoy thern. Can we seriously
complain if cigarettes and radios and admissions to places of amusement—yeSj
even seminecessities such as automobiles—are to cost a trifle more, or if we are
to pay 2 cents for the privilege of using checks and an additional cent on transfer
of securities? These are not intolerable burdens, particularly when we are asked
to assume them to meet the necessities of a real emergency.
But, let me add that if the people of the United States make this sacrifice and
furnish almost a billion dollars of additional funds to their Government, they
have the right to insist, and I hope that they wiU, that not one penny is expended
extravagantly, politicaUy, or unwisely, but that just as enforced rigid economy
prevails throughout the country, so wiU it be observed in Washington.
Let me close with a general observation or two. The problems at home and
abroad which appear so great are not insoluble. They will yield readily enough
to a resolute, courageous, and inteUigent attack. The real difficulties in the
present situation are those inherent in human nature, in the element of fear which
seems to possess the souls of men in the face of an uncertain future and in fixed
conceptions and attitudes. There is more to fear from frozen minds than frozen
assets. We can not look to governments or to a few leaders. The necessary
measures must be taken and the recuperative forces must be set in motion by
the great masses of the people themselves.
But if the nations and the individuals who compose them, laying aside preconceived notions, prejudices, and above all, fear, will face the realities of the
situation and will look to the future rather than to the past, then we can fairly
hope to emerge from this deep valley at a comparatively early period. There
must, of course, be guidance and leadership, but the real responsibility rests on
each and every one of us, and our failure to meet our daily problems with inteUigence and courage is not only a betrayal of others, but of our own cause.

EXHIBIT 23

The Revenue Bill, a radio address hy Secretary of the Treasury Mills, March 12,
1932, for the Columhia Institute of Public Affairs
I have been asked to discuss this evening the revenue measure now pending
in the House of Representatives, intended to balance the Budget of the next
fiscal year in the sense that there wiU be no further increase in the public debt.
I am glad to do so. It is essential that the American people should have a
thorough understanding of the financial problems confronting their Government
.and the means proposed to solve them.
For over two months the members of the Ways and Means Committee have
studied aU phases of the situation. They have heard the views of the Treasury
Department. They have held extensive hearings at which ample opportunity
to be heard was afforded aU concerned. They have worked diligently, painstakingly and unselfishlv and without the semblance of oartisanship, actuated

REPORT OF THE SECRETARY OF THE TREASURY

259

solely by the purpose to do the very best they knew how for the country. One
and all, and more particularly the acting chairman, Mr. Crisp, are entitled to our
appreciation for their patriotic efforts. Their views and recommendations are
entitled to our confidence and support..
This does not mean that I agree with every part of the proposed revenue law.
If anyone wants to be entirely satisfied.with a tax bill, he must write it himself,
and even then, unless supported by the valor of ignorance, he must, underexisting conditions, have grave misgivings. The bill differs in many respects
from the recommendations made by the Treasury Department. We are prepared, however, to accept the conclusions of the committee, and to support the
measure which they recommend. It conforms to sound tax principles, the
difficulties of administration are not insuperable, and, above all, it makes possible
the attainment of the one vital objective—a balanced Budget.
What do we mean by a balanced Budget? Why is it so vital to the welfare of
the country? By a balanced Budget we mean that the Government will live
within its income; that current receipts will be adequate to cover current expenditures, and that borrowing will not be resorted to to pay the ordinary running
expenses of the Government. The situation is not fundamentally different from
that of the individual. If a man lives persistently beyond his means and resorts
to the bank to provide the funds to meet the monthly biUs of himself and of his
family, we all know that he is headed for disaster. The same is true of nations—
even the strongest. Their credit depends on the observance of sound financial
principles and on the certainty that they wiU at all times and under all circumstances meet the promises to pay they have issued in the form of government
obligations. Ultimately all government obligations must be met from taxes,
and a country which is unwilling to tax itself in order to meet its current
expenditures inevitably brings into question its willingness ultimately to tax
itself to meet the mountain of debt piled up through lack of courage and through
the profligate use of the public credit. I am not talking, of course, of lack of
balance in the Budget of a single year, or of budgets unbalanced in moderate
amounts. These may be unavoidable. But, when the United States Government closed the fiscal year 1931 with a deficit of over $900,000,000; when it will
close the fiscal year 1932 with a deficit of as much as two and a half billions of
dollars, and when the prospective deficit of the fiscal year 1933 amounts to more
than $1,700,000,000, the time has come beyond all question to put our financial
house in order. Unless we do, the soundness of our credit must inevitably be
questioned, for why should lenders voluntarily advance their funds to a government that would fail to meet so serious a situation with courage and determination, and would be willing to foUow for an indefinite period a policy of living
beyond its means.
This is not an academic discussion. The problem is one of immediate and,
enormous practical importance. It is my very firm belief that the later phases
of the long business depression from which we are suffering are due chiefly to a
credit crisis, exemplified by liquidation which far exceeds what one would expect
in the way of necessary readjustment following a period of wild expansion and
speculation. The decline in the volume of bank credit has been the largest ever
experienced in this country. It has been accompanied by very serious disorganization of our credit facilities. It is generally admitted that before we can
emerge from the valley it is necessary to arrest this contraction and to stabilize
and strengthen our general credit structure. We have made great progress along
these lines through the creation of the Reconstruction Finance Corporation,
which has been performing admirable service for the last four weeks; through
the passage of the so-called Glass-Steagall banking act, and through the other
remedial measures with which you are unquestionably familiar. But the keystone of the arch is a balanced budget and the unimpaired credit of the United
States Government.
As I have had occasion to say before, our private credit structure is inextricably bound to the credit of the United States Government. Our currency
rests predominantly upon the credit of the United States. Impair that credit
and every dollar you handle will be tainted with suspicion. The foundation of
our commercial credit system, the Federal reserve banks, and all other banks
which depend upon thein, is tied into and dependent upon the credit of the
United States Government. Impair that credit to-day, and the day after
thousands of development projects—they are still going-on—will stop; thousands
of business men dependent upon credit renewals will get refusals from their
-bankers; thousands of mortgages that would otherwise be renewed or extended
will be foreclosed. Merchants who would buy on credit will cancel orders;

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REPORT OF THE SECRETARY OF THE TREASURY

factories that would manufacture on part capacit}^ at least will close down.
Impair the credit of the United States Government and all that we have sought
to accomplish in the course of the last few months is, to a large extent, nullified.
The renewed courage and confidence that have replaced the fear and uncertainty,
which prevailed almost universally, will once more grow weak and hesitant.
Our economic troubles and all of the hardships which they entail are not to be
swept away by the magic formula, or outside help. We have got to do the job
ourselves. The way to begin is to make those first common-sense steps which
we all recognize to be essential, no matter what initial hardships they may entail.
You can not climb a hill without effort. You can not throw off the burden
of depression without feeling some weight. The country's representatives in
Congress are facing a most exacting duty. Let the united voice of a determined
and courageous people assure them full cooperation and support in the carrying
out of this essential task. As other great nations have tightened their belts and
tackled even more difficult financial and economic problems than we are called
upon to face, so must the patriotism and resourcefulness of the American people
be equal to this emergency.
The reason for the critical fiscal situation is simple enough. There has been a
colossal falling off in the revenue of the Government, due to a general curtailment of the national income and accentuated by the character of our tax system.
We place our chief reliance on income taxes applied in so far as individuals are
concerned at progressive rates and with very liberal exemptions. Practically
all of this tax is paid by some 350,000 people. Their income has, to a very large
extent, melted away from a variety of causes, such as decreased profits, reduced
dividends, and large losses. Incidentally, the drying up of the larger incomes
necessarily increases the difficulties involved in finding the additional revenue
required.
The total receipts of the Government in 1930 aggregated $4,178,000,000. It
is estimated that receipts will amount to $2,242,000,000 this year, and to $2,375,000,000 next year. Or, in other words, our total revenues have just about
been cut in half. Current collections of individual income tax have dropped from
$1,061,000,000 in 1930 to but an estimated $275,000,000 in 1933, while the corporation income tax has dropped from $1,118,000,000 in 1930 to an estimated
$382,000,000 in 1933. Customs receipts show a reduction of nearly $160,000,000,
while miscellaneous internal revenue receipts have been more stable, having
faUen off from $628,000,000 in 1930 to an estimated $550,000,000 in 1933.
The problem created by this drastic curtailment of revenue must be met in
two ways: First, by a program of rigid economy, and, second, by drawing
. further on available resources. When it is realized that we are spending on
various forms of relief to our veterans and their families a billion dollars this
year, and that the interest on the public debt and the sinking fund account for
over a billion dollars, so that these two items alone approximately exhaust our
total available receipts, it is evident that the Budget can not be balanced through
economies alone. The figures submitted in the annual Budget message contemplate a reduction in expenditures for 1933 of $370,000,000. The Ways and
. Means Committee recommends a further reduction of $150,000,000, making a
total savings of approximately half a billion dollars. If realized, this constitutes a very substantial achievement. Such a figure, however, is impossible
of attainment, unless the Congress abstains from all legislation that will increase
expenditures, and unless in the carrying out of this essential program of retrenchment, the representatives of the people have the full support of the people themselves and are protected from the insistent pressure exerted by organized groups
furthering pet projects.
But a saving of half a billion dollars still leaves us very far from our goal.
It is still necessary to provide approximately $1,100,000,000 in additional revenue. The Treasury Department recommended a broadening of the income tax
base, an increase in the normal tax, the doubling of the surtax rates applicable
to tlie higher brackets, an increase in the estate tax to a maximum of 25 per
cent, and a series of excise taxes applied to selected articles, the competitive
position of which would not be affected by the application of the tax. The
Ways and Means Committee, in the main, follows the Treasury recommendations regarding income taxes, making the new rates applicable, however, to
1932, rather than 1931 income. They recommend an increase in estate-tax
rates to a maximum of -40 per cent, which, in my judgment, is too high, and
which in a ^number of cases may even prove confiscatory, unless estates are
granted a longer period in which to pay the tax than is now permitted. For the
protection of the estate and income taxes from evasion they have provided a

REPORT OF THE SECRETARY OF THE TREASURY

261

gift tax, with rates running up to 30 per cent. In order to stop the practice
which has evidently grown up of wiping out other income by means of losses
on security transactions, which in actual practice are frequently nothing more
than paper losses, the Ways and Means Committee recommends limiting the
losses which may be taken on the sale of securities to deductions from gains
realized by the sale of securities, thus preventing the wiping out of income
derived from such items as salaries, business profits, dividends, and interest.
This may work an injustice in some cases, but it seems to be necessary in order
to put a stop to a growing abuse. This, and other administrative changes should
correct abuses and prevent evasion. These changes, it is estimated, will increase
revenue by $100,000,000.
In lieu of a series of special excise taxes, the Ways and Means Committee
recommends the imposition of a general manufacturers' sales tax, modeled on
the Canadian law, imposed at a rate of 2)^ per cent, and with liberal exemptions covering agricultural products, fertilizer, seeds and feeds for livestock and
poultry, fresh, dried and salted meat, fish, poultry, butter, cheese, milk, eggs,
bread, flour, sugar, salt, tea and coffee, or, in other words, essential food products.
The tax is imposed on imported as well as domestic articles, though exported
articles are exempt. It is to be paid by the manufacturer on his wholesale selling
price. Pyramiding is avoided through a system of licenses by means of which
the ta'x can only apply on the sale of the finished product by the final manufacturer. I may add that long experience in Canada has demonstrated that such
a system does prevent pyramiding. The tax has been successfully imposed in
Canada and Australia, at a rate in Canada of 4 per cent, and in Australia of 6
per cent. Administration presents a very real difficult}^, but the administrative
provisions as drafted are such that, with the discretion granted the Bureau of
Internal Revenue, most of the doubts which the Treasury at one time entertained have been removed. If Canada and Australia can successfully administer
such a tax; if European countries can administer with more or less success still
more complicated sales taxes, there is no reason why we can not undertake the
task, particularly as the committee seems to have profited by the experience of
other countries and to have avoided many of the mistakes made by them.
The time at my disposal necessarily limits me to a very sketchy outline.
Perhaps the quickest way to present the picture to you is to give you the amounts
that it is estimated will be raised during the fiscal year 1933 by the different taxes,
old and new, which will be imposed should the committee's program be adopted.
Customs duties wiU yield $430,000,000; income taxes, $1,100,000,000; estate
and gift taxes, $80,000,000; manufacturers' and excise taxes, $595,000,000; miscellaneous internal-revenue taxes, $738,000,000; or a total of tax revenue of
$2,943,000,000. It will be observed that of this amount, direct taxes contribute
approximately $1,180,000,000 and indirect taxes $1,760,000,000. Generally
speaking, direct taxes can not be passed on; indirect taxes may be. I must
admit that I should feel happier if the percentage of direct tax were higher than
40 per cent of the total tax revenue. But we are confronted not with a theory,
but with hard, inescapable facts. The yield .from direct taxes is not greater,
not because the committee has been lenient in fixing the rates, quite the contrary,
since they propose to tax higher incomes at 46 per cent and the larger estates
at 40 per cent, but because the base to which income tax rates apply has temporarily been so narrowed by the depression that adequate revenue can not be
derived from these sources, no matter what rates are applied. For example, it
is estimated that at the present rates the current individual income tax wiU yield
$275,000,000 in the fiscal year 1933, Even with the rates in the higher brackets
doubled, only approximately $110,000,000 more is derived. To the extent that
incomes are still availal^le, this bill reaches them at high progressive rates, but
if the Budget is to be balanced we have to look elsewhere for additional revenue.
I happen to be one who in the past has not favored a sales tax. I prefer a
tax system consisting of a progressive tax on individual incomes with a broad
base, a corporation income tax, an estate tax, customs duties, and a selective
group of excise taxes. But in a national emergency of this character who can
refuse to accept a bill which, while placing the fuUest possible burden upon those
best able to pay, demands some element of sacrifice from all? Viewed as a
whole, the bill reported iDy the Ways and Means CommJttee faithfully observes
the doctrine of ability to pay. It can fairly be challenged only by those who
contend that, irrespective of their ability to make some smaU contribution, certain
groups of our citizens should not be asked to make any contribution whatever
to the support of the National Government even in times of emergency.^ Are
not some of us really being frightened by a word? A sales tax sounds formidable

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REPORT OF THE SECRETARY OF THE TREASURY

as involving possibly a burden to the consumer. But, when all is said and done,
a contribution of $600,000,000 imposed on aU of 120,000,000 people, can not
under any conceivable circumstances mean any great individual burden to any
one of them. The base to which this 2J4 per cent rate is to be applied—and
that is a low rate, and a low rate will cure most of the defects of even a very
bad tax—is so immense, aggregating as it does more than $26,000,000,000, that
I do not believe it will have anj'- discernible effect or that anyone wiU really
feel it.
May I repeat: In a great national emergency the Ways and Means Committee
has drafted a revenue measure which makes possible the attainment of the main
objective—a balanced Budget which is based definitely on the principle that
those best able to should contribute in accordance with their ability to do so,
and which calls upon all American citizens to make some contribution to the
support of the national credit. That there would be some disagreement as to some
parts of the bill was to be expected. But as to the necessity for so comprehensive a measure, and as to the broad principles upon which it is based, there
can be no disagreement.
There is no more important issue before the country. The foundation upon
which the structure of restored prosperity must rest is the unimpaired credit of
the National Government. The cost is increased taxation. But the word ". cost"
in a sense is not the proper one. No better investment can be made to-day by
any American than a contribution to the strengthening of this foundation. Any
weakening of that must inevitably threaten the economic welfare and security
which we have rightly considered as an essential feature of the American heritage.
Our difficulties are great. The path is not easy, but I am confident that American courage and resourcefulness will be equal to the task and that our hard
common sense wUl lead us along the right road, even if it is not the easiest one.

EXHIBIT 24

Statement by Secretary ofthe Treasury Mills, April 6, 1932, before the Senate Finance
Committee with reference to H. R. 10236, the revenue bill of 1932
The revenue for the fiscal year 1932-33 under existing laws, it is estimated,
will amount to $2,375,000,000. Expenditures, likewise under existing laws, are
estimated at $4,113,000,000. Thus the prospective deficit amounts to $1,738,000,000. If we exclude sinking-fund requirements, the amount needed to balance
the Budget in the sense that current expenditures will be covered by adequate
receipts and that thefe will be no increase in the public debt, is $1,241,000,000.
This must be obtained through decreased expenditures and increased taxes.
The Treasury's position is that the Budget must be balanced in the sense above
described. There is no need of my presenting to this committee the compelling
and unanswerable arguments in favor of a balanced Budget. It is essential to
preserve unimpaired the credit of the United States Government. Bring that
credit into question and our present difficulties, great as they are, become infinitely
greater. New dangers and evils will appear and recovery will be indefinitely
ostponed. The House has declared its determination to balance the Budget,
am confident the Treasury Department will have the support and cooperation
of the Senate in maintaining the finances of our Government on a sound basis.
The House proposes to balance the Budget by raising, according to our estimates, $1,030,000,000 in additional revenue and by reducing expenditures by
$200,000,000, in addition to those reductions already provided for in the annual
Budget submitted to the Congress in December. The Treasury Department
urges the necessity of reducing expenditures. When asked to assume an enormously heavy tax burden the people are entitled to have the cost of Government
reduced to a minimum and every expenditure not essential to the proper functioning of Government eliminated. I need not point out to this committee that
to accomplish any such reduction as $200,000,000 in expenditures wiU require
amendments to existing law, relieving the departments and independent estabr
lishments of obligations now existing. This is one of the essential tasks which
confront the executive and legislative branches of the Governnient. It is a
fundamental and indispensable element in our program. The more you examine
the difficulties of raising adequate revenue, the more you will appreciate the
compelling necessity of addressing yourselves as well to the task of reducing the
cost of Government.

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263

The causes which have led up to our present critical situation are weU known
to you. Our expenses in the fiscal year 1933, including sinking-fund requirements,
are estimated at $4,113,000,000, as compared with $3,994,000,000 in 1930;
whereas, under existing law our revenues in the next fiscal year are estimated
as $2,375,000,000, as compared with $4,178,000,000 in 1930. It is apparent that
our budgetary problem arises from a coUapse in our revenue collections due to
the business depression acting directly on a tax system particularly sensitive to
business fluctuations.
It is no easy task to raise a billion dollars in additional taxes, or an amount
which exceeds half the revenue provided for under existing statutes. If we
except the estate tax, broadly speaking, there are only three ways in which
money can be raised by the Government through taxation: First, by a tax on
income; secondly, by a tax on outgo; or, third, by a combination of the two.
The income tax is in many respects an ideal tax. Advantages of this tax are as
follows: It is direct and unconcealed so that each man knows what government
is costing him. It can be made td yield a very large revenue even in slack times
if applied on a broad base. It reaches only those who have ability to pay and
through a progressive rate compels those best able to contribute to pay relatively
most.
Disadvantages are: As a practical matter it is very difficult to impose on all
citizens having tax-paying ability. Being direct it is felt, and being felt it is
unpopular. Consequently, the tendency is to impose it on fewer and fewer taxpayers. This enormously limits its usefulness as a money raiser and weakens its
fundamental fairness. It involves trouble to the taxpayer and administrative
difficulties to the Government. It is neither easy, unnoticed, nor painless.
Therefore, in practice we limit its application and even in ordinary times look
elsewhere for additional revenue.
Under the income-tax system developed in this country high exemptions relieve
people of small and moderate means from contributing to the support of the
Federal Government in the form of income taxes. Because of the great
volume of tax-exempt securities, which, as long as 10 years ago, the Treasury
urged Congress to do away with througli a constitutional amendment, the application, of the income tax to the large income derived from inherited or accumulated wealth is necessarily limited. The result is that our income tax of necessity
rests essentially on the active American business man and on the successful
professional classes.
In times of active business when their capital is fruitfully employed and profits
are large the Government collects from them considerable revenue. When industry and commerce go flat, capital ceases to work, and profits disappear, their
income likewise vanishes and so do our taxes. That is why the income tax as
applied to individuals has failed us in this emergency. The large profits and the
big incomes have melted away. Taxes on incomes of $100,000 and over fell off
by 66 per cent from 1928 to 1930, and have fallen off to a great extent since then.
]\ien talk of doubling or tripling the rates on the very large incomes; Those
that remain would probably seek isles of safety. But that isn't the point.
Raising the rates on the larger incomes does not solve our problem. They are no
longer there. There is no nourishment in the hole in a doughnut.
What I wish to bring home to you very definitely is that if we turn to the
income tax as a means of furnishing in large measure the additional revenue
required, we can not think of the problem in terms of simply raising the rates
on those who already pay income taxes. To raise greatly increased revenue
through income taxation we must be prepared to lower the exemptions to as
low a point probably as England does, and to impose a substantial normal tax
on all taxpayers, even in the lower brackets. While recommending some broadening of the base, the Treasury Department has not advocated such a course.
In spite of its theoretical advantages there are very cogent arguments against it.
For a long period of years we have relied on a limited rather than a general
income tax. We have become accustomed to high exemptions and very low rates
on the smaller taxable incomes. That is our fixed conception of an income tax,
and it is very difficult as a practical matter to change fixed conceptions of this
character. Moreover, it must not be forgotten that the real burden.of taxation
in this country is due for the most part to local and State taxes, and they are
borne, generally speaking, by people of small and moderate means.
There is a very real justification, therefore, for hesitation when it comes to the
adoption of a Federal income tax which would really reach the lower incomes.
But, having reached that conclusion, the next conclusion becomes inevitable,
and that is that we must look to other forms of taxation in order to fill the greater

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REPORT OF THE SECRETARY OF THE TREASURY

portion of the gap in our revenues. To impose the full weight of the additional
taxes on the present income tax-paying class would make their burden almost
unbearable and would so penalize the capital actually employed in business as to
seriously affect the general economy of the Nation.
In its study of the problem the Treasury early realized that it was necessary
to look elsewhere than to the income tax for the necessary revenue. We recommended, to be sure, a broadening of the income tax base by a reduction of the exemptions and an increase in the surtax rates to the level of the 1924 act, which
meant a doubling of the rates in the upper brackets, as a means not only of obtaining such revenue as these measures would yield, moderate though the amounts
are, but because we recognized that if ever there were a time when the doctrine
of ability to pay should apply, it is now. In searching for additional sources
of revenue, we canvassed the entire field.
We considered a general sales or turnover tax, and rejected it because of administrative difficulties and because we considered it unsound in principle.
We considered the manufacturers' sales tax as exemplified by the Canadian
law. And I want to make a very sharp distinction between a manufacturers'
sales tax and a general sales, or turnover tax. They are something totally
different, from the administrative standpoint, from the standpoint of pyramiding,
and from the standpoint in many cases of incidence. In the recent debates
which took place in the House, a general sales tax was frequently confused with
the manufacturers' sales tax reported by the Ways and Means Committee, and
on more than one occasion the Treasury's opposition to a general sales tax was
quoted in opposition to the Canadian manufacturers' tax system. This was
unwarranted.
We gave very serious consideration indeed to the Canadian manufactuiers'
sales tax. Doctor Adams and Mr. Alvord made a special trip to Canada at our
request to report as to the workings of this tax. We did not recommend it because we concluded that there exist in this country administrative difficulties
tnat might be hard to overcome, and because, on the whole, we felt it was safer
to travel along known roads rather than to venture into untried paths.
We decided to recommend instead a series of selective excise taxes, applied to
subjects which, generally speaking, had a broad base; which would yield in each
case a very considerable revenue; involve no administrative difficulties; were
not open to evasion; and would not affect the competitive position of tne subjects taxed. The articles or services selected were, therefore, picked for very
definite reasons. They may be summarized as follows: Ease in administration;
large revenue yield; lack of effect on the competitive position of the industry;
and the fact that the purchase of the article or service would, generally speaking,,
indicate tax-paying ability.
The Treasury program, whicri I am submitting herewith in detailed form in
Schedule A, comprised, generaUy speaking, a progressive income tax at increased
rates; a progressive estate tax at increased rates; a series of selective excise taxes,
following in the main the lines of the 1921 and 1924 acts; and increased rates on
postage adequate to put the Post Office Department on a self-sustaining basis.
The Ways and Means Committee reported a bill in which the income tax rates
were increased substantially along the lines of the Treasury recommendations;
the estate-tax rates were sharply increased over the recommendations of the
Treasury; a gift tax was included; generally speaking, in lieu of the series of
excise taxes recommended by the Treasury, wtiile some were retained, a manufacturers' sales tax, based on the Canadian model, though more comprehensive
in character and at a lower rate, was substituted. An increase in postal rates
was not recommended.
The details of the Ways and Means Committee bill and the revenue yield
under each head appear in Schedule B, hereto attached.
The Treasury stated that while the recommendations of the committee did
not conform to those originally made, nevertheless the bill was acceptable.
The bill now before you lowers the income tax exemptions from $3,500'
to $2,500 for married couples, and from $1,500 to $1,000 for individuals; it
increases the normal income tax rates to 2, 4, and 7 per cent; does away with the
exemption of dividends from the normal tax; and sharply increases surtaxes,
particularly those applicable to the upper brackets; it provides for much higher
estate-tax rates than have ever existed in this country, even in war time, and
supplements them with a gift tax at correspondingly higher rates; it raises the
corporation income tax rate from 12 to 13}^ per cent, and for corporations filing
consolidated returns to . 15 per cent; it provides for a very great number of
manufacturers' excise taxes, which, generally speaking, seem to be directed at

REPORT OF THE SECRETARY OF THE TREASURY

265

what might be described as luxuries, though I am a little at a loss to know
why soap and tooth-paste should be included in this category; it imposes two
new tariff duties; and provides increased postal charges calculated to yield
approximately $165,000,000.
The details are presented in Schedule C, hereto attached.
The great merit of this bill is that it raises $1,030,000,000 of new revenue, and
that, from the standpoint of the Treasury, is a most vital consideration. It is,
however, susceptible to improvement in a number of important respects. I
. should like to mention the more important features which we think subject to
criticism and submit as a part of this report a more detailed analysis of the principal sections of the bill.
I believe that the corporation income-tax rate is too high; that there is no
justification for compelling corporations to pay for the privilege of filing incometax returns in accordance with their usual method of doing business and keeping
their books; that the concealed double taxation involved in discontinuing the
exemption of dividends from normal tax is unsound, resulting as it does in discrimination against the corporate form of doing business, with particular hardship
to the smaller corporation as compared with a partnership; that completely doing
away with the net loss provision is hard to justify in times like these; that the
stock transfer tax is excessive under existing conditions; and that the estate-tax
rates are too high.
It must not be forgotten that the bill already provides for a sharp increase in
normal and surtax rates; that losses on the sale of stocks and bonds are to be
limited to any gains which happen to be derived from the sale of capital assets
in the same year; that the Treasury Department and the Ways and Means Committee were ready to limit the net loss carry-over provision to one year, and that
very heavy taxes indeed were proposed in the Ways and Means Committee
bill on the issuance and transfer of securities.
The cumulative effect of all these provisions is very great. They tend to
converge the full weight of each of them upon capital actively employed in business, and to discourage the normal flow of capital into industry and commerce
at a time when business men are hesitant and industry stagnant. Their combined restrictive effect magnified by the deadening influence of the depression
will in my judgment tend to retard business recovery.
What we want to accomplish above all else at the present time is to break down
the vicious circle of deflation of credit, industrial stagnation, falling prices, and
loss of purchasing power. To put men to work capital must go to work. Credit
must be sought and freely offered. But capital must see some chance of profit
to compensate for the risk. Business men will not borrow and banks will not
lend unless the enterprise offers some fair prospect of return.
Yet the particular provisions to which I refer, and which were written into the
bill at the very last minute, certainly without an}^ great amount of consideration,
have a definitely inhibiting effect. On the one hand, at a period when losses are
only too real and too common they would deny to business the right it now enjoys
to carry over the losses from this, a very bad year, to next year, which it is hoped
will be a better one; and on the other hand, the tax on any possible profits is very
greatly increased. To illustrate: Take the case of a corporation that sustains a
loss of $200,000 this year and makes a profit of say $100,000 next year. Its
operations over a 24-month period show a loss of $100,000. Yet under this bill
it will be taxed at higher rates on the $100,000 which is earned, and at still higher
rates on what it distributes, whUe no recognition whatsoever is to be given to the
$200,000 loss.
The corporation income tax is to be increased in some cases to 13}4 per cent,
and in others to 15 per cent, and on top of this distributed profits are to bear an
additional tax of 7 per cent, making in the one case a tax of 20J^ per cent, and in
the other 22 per cent, as compared with 12 per cent to-day. This is apart from
the fact that the stockholder in any event is to pay increased surtaxes.
For the purpose of illustration, consider the case of the railroads. Their bonds
are largely held by the great insurance companies, savings banks, and other
fiduciary institutions, or, in other words, the savings of the American people are
invested in them to a very great extent. These bonds are much depreciated in
value. A diminished earning power is of course largely responsible, though
fixed charges are for the most part being earned. But the serious part of the
situation is that the equities back of these bonds are gradually being eaten away.
With the heavy taxes proposed on future possible railroad earnings and on railroad
dividends, coupled with the inhibition on carrying over losses from one year to
another, the restoration of equity values essential to the restoration of the high

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REPORT OF THE SECRETARY OF THE TREASURY

standing of the underlying securities and of the ability of the railroads tb obtain
necessary capital, becomes more difficult.
In this connection it should not be forgotten that railroads ordinarily spend
annually anywhere from $600,000,000 to $800,000,000 for capital improvements,
giving employment directly to thousands of men and indirectly to many thousands
of others through the orders they place. These funds must be obtained from
investors through the security markets.
I do not want the committee to understand that my criticism is directed to the
bill as a whole. There are, however, certain important features with which the
Treasury does not agree, and which I trust your committee will either eliminate
or modify.
I wish now to turn to the analysis of some of the more important provisions of
the bill, a discussion of which I hope may prove helpful to this committee.
Corporation income tax.—The bill increases the rate of corporation income tax
from 12 to 13}^ per cent. As I have said, I think that this increase may be too
great. In dealing with the rate of the corporation income tax, it is to be borne in
mind that the income which we refer to as the income of the corporation is in
reality the income of a group of individual stockholders. The tax imposed upon
the corporation may fall unfairly upon the individual stockholders. It cannot
be apportioned or levied with reference to the individual status of the different
stockholders. When the corporation rate is increased, the increase affects equally
stockholders of small means and stockholders of large means, and does not rest
fairly on these different classes of stockholders. It is also to be borne in mind that
when it comes to a relatively high rate for incomes of corporations, the relation
of the income of the corporation to the capital involved in the enterprise is a
very important factor. An increase in the corporation rate may be entirely
bearable by a corporation which is fortunate enough to be earning a high rate of
return on its capital. In the case of a corporation, however, which is earning a
low rate of return upon its capital, the increase in the fiat rate of the corporation
income tax may bear with great hardship. The increase in the rate of the.flat
corporation income tax should be kept within bounds. I felt some doubt as to
the soundness of recommending, as we did, that the corporation income tax
rate be increased from 12 to 13 per cent.
Consolidated returns of corporations.—Certain income-tax provisions relate to
the treatment under the tax law of business enterprises conducted through the
medium of corporations. I refer first to the wholly novel treatment in this bill
of consolidated returns of corporations. The bill provides that consolidated
returns may be made by corporations having subsidiaries, but that for the right
to make such return the corporations shall pay a price in the form of 1}^ per cent
more of their net incomes than would be required as tax in the case of a corporation filing a separate return. I can conceive of no sound argument for putting a
price upon the right to file a particular kind of income-tax return.
The provision for consolidated returns should be retained as part of the law,
like other parts of the law which recognize sound business practices and are
designed to permit following of such practices in the computation of taxable
income. When the revenue act of 1928 was enacted, it was determined to confine
the use of consolidated returns to cases in which affiliation rests upon 95 per cent
ownership of the voting stock by another corporation. It has been the practice
of most corporations operating with subsidiary corporations to file consolidated
returns of income and of operations of the group, and under this provision the
income and operation of the group are reported for tax purposes in the same manner in which they are reported and dealt with in the corporation's reports for
stockholders, banks, and other purposes. Dealing with income returns of corporations in this way, with the elimination of the effect of purely intercompany
transactions, causes the tax to rest upon the true net income of the group as a
whole. This provision eliminates the necessity of going into questions of intercompany accounting, and eliminates artificial effects upon income which might
be harmful to the revenue resulting from considering the operations of single
subsidiaries, without regard to what may be offsetting or modify ing. operations
of other subsidiaries.
The provision in the bill following the carefully considered provisions of the
present revenue act, treats affiliated corporations on a basis which accords with
business practice, which appears to be sound and practicable in the light of many
years of experience of the Treasury with such returns, and any departure from the
. use of that basis in the law would be a backward step. The novel idea of putting
a price upon the use of sound accounting methods by affiliated corporations,
should be eliminated from the bill.

REPORT OF THE SECRETARY OF THE TREASURY

267

The statement of this committee on the subject of consolidated returns in
reporting the revenue bill of 1928, was in part as follows: ''Your committee has
considered the matter very carefully and is convinced that the elimination of the
consolidated returns provision will not produce any increase in revenue, will not
impose any greater taxes on corporations and will in all probability permit of
tax avoidance to such an extent as to decrease revenues."
Changed treatment of dividends.—A new feature of great importance embodied
in this biU is the giving up of the exemption of dividends on corporate stock
from normal tax. Under all of the revenue acts since 1913, dividends received
by individuals have been exempt from normal tax. The reason for this treatment of dividends was, of course, the idea that the actual receipt by the individual
stockholder of a portion of the income of the corporation, which had already been
subjected to the basic income tax, should not create a new liability to the same
basic normal tax. You will recall that under the first income tax, the rate of
normal tax upon individuals was 1 per cent, and the rate of tax upon the net
income of corporations was also 1 per cent. It was believed that when the
income of the corporation had been subjected to the 1 per cent tax, it should not
again be subjected to the same tax when received by the individual stockholder.
It was concluded that unless dividends received by individual stockholders were
made exempt from normal tax, there would be a duplication of tax in the case of
income realized by individuals through the medium of corporations.
This treatment of dividends in the manner to prevent what was regarded as a
duplication of normal tax and a discrimination against the use of the corporate
form, was continued, as I have said, under all the succeeding revenue acts. The
exemption of corporate dividends of normal tax may be said to be one of the basic
ideas or principles which has hitherto been foUowed in the structure of our income
tax. There can be no doubt that the financing of business enterprises has been
based to some extent upon the expectation of the continuance of this treatment
of corporations' dividends under the law. Exemption of dividends from normal
tax has played an important part in the securing of equity money for business
enterprises. It has- been a consideration of particular importance in. connection
with the financing through the sale of preferred stock. The exemption of dividends from normal tax gives the preferred stock some compensating attraction
as compared with the bond, which, while ranking ahead of the preferred stock,
does not have this exemption.
It will, of course, be borne in mind that the iriterest paid ori the bond constitutes
a deduction by the corporation in computing its net income and hence has not
been subjected to the corporation income tax rate, as are the earnings from which
preferred and other dividends are paid.
The changed treatment of dividends found in the House bill would rest with
particular hardship on small corporations. It is obvious that in the case of
enterprises controlled by a few individuals, carried on in a corporate form, the
change would mean that the income from the business having been subjected to
the corporation income tax at an increased rate, would, when distributed as
dividends, be subjected to the normal tax; while, if the business were carried on
under the partnership form the income would be subject to the normal tax only.
Exemption of dividends from normal tax does not fully equalize discrimination
which has been involved ever since the corporation income tax rate was made to
exceed the normal tax rate. Taking away that exemption, however, materially
increases discrimination against the corporate form. Some effort was made in
the bill to relieve against this effect in the case of small corporations by providing
that dividends should be exempt where received from a corporation the gross
income of which in the previous year did not exceed $25,000. This provision is
obviously not inclusive and would be difficult of satisfactory application.
Notwithstanding the large amount of revenue which this change would yield,
I think that it is a sounder course to adhere to the treatment of dividends which
has been followed in all the revenue acts up to the present time, and not to
embark now upon a novel treatment of that subject. Business recovery depends
in a very material degree upon the securing of capital for new enterprises and more
capital for existing enterprises. The most needed funds are those which should
be brought in through investments in stock. The securing of such funds will be
rendered more difficult by the proposed change and the discrimination against the
using of corporations for the conduct of business would be sharply increased.
Net losses.—Another change embodied in the bill, which is likely to have
adverse effect upon the conduct of business enterprises, is the change which denies
to any business the right to carry over as a deduction for a succeeding year a net
loss which may be the result of the operations in a particular year. Under our

268

REPORT OF THE SECRETARY OF THE TREASURY

law the computation of taxable income is, in general, required to be made upon
the basis of annual accounting periods. For many years, however, it has been
recognized that in the case of business enterprises continuously carried on, the
requirement that each year should be treated as a unit without reference to what
happened in other years, works a hardship. If no recognition whatever were to
be permitted of losses for particular years in businesses continually carried on,
the result, of course, is that business enterprises will actually be required to pay
tax on more income thari they have had, because the income over a sefies of
years represents the combined effect of gains and losses for these years.
In reporting the bill, the Ways and Means Committee recommended that the
net loss deduction be confined to a deduction for the year immediately succeeding
the year of the loss, cutting off the right to a deduction fof a second succeeding
year. The bill, as it passed the House, however, provides that until 1935. there
shall be no deduction of a loss for a prior year. I believe that the net loss provisions of the recent revenue acts rested upon sound principle; I believe that it
was justifiable, in view of the existing emergency, to qualify the application of
that principle to the extent of limiting the right to carry over the loss to a succeeding year. But the total elimination of recognition of the effect of losses for
particular years upon the income account and the hardship which results from
always having to pay tax on profit for a good year, without any right to offset
profits by losses of a bad year, is unsound.
Limitation on the deduction of losses.—Another provision which should, in my
opinion, be amended, is the section limiting the right to deduct losses on transac-:
tions in securities to the offsetting of gains from similar transactions in the same
taxable year, as provided in section 23. In recent years income from business
profits, from salaries, and from other sources, has in many cases been offset by
losses on security transactions. It is the effect of such losses in diminishing the
tax upon forms of income, such as I have mentioned, which, to a considerable
extent, is responsible for the diminished yield of the income tax in these years.
Undoubtedly, a very serious case can be made for continuing the right to so deduct
such losses. In many cases, however, the losses thus deducted may be said to
be paper or fictitious losses. In place of the securities in which the losses were
taken, other securities were purchased without substantial change in income.
.The Treasury was disposed to agree that it was not unreasohable under present
conditions to deny to taxpayers the privilege of offsetting forms of ordinary
income through security losses. I think, however, that banks should be excepted.
Banks, as a part of their regular business, purchase securities for investment
purposes, which become an important element in their necessary secondary
reserves. Speculation is not involved, nor is the question of protecting the
revenues from improper deductions. It is my opinion that, particularly in the
case of banks, a tax upon the gains and a denial of the losses is not necessary and
can not be justified. I also recommend that the provision do not apply to bonds,
which are normally purchased and held for investment purposes and which are
not susceptible of manipulation so as to create fictitious losses.
Estate tax.'—The recommendation of the Treasury with regard to additional
estate tax was that it should be such as to increase the rates to the level of the
1921 act." This would have increased the maximum rate from 20 to 25 per cent.
It was proposed that this tax be so framed as to constitute an additional tax to
which credits for the payment of State inheritance or estate taxes, as permitted in
the amount of 80 per cent against the present estate tax, should not apply. In
the House bill the-^recommended basis for the treatment of additional estate tax
is preserved, but the rates are drastically increased. The schedule begins with
amounts in excess of $50,000 instead of $100,000 as at present; is graded sharply
upward with narrow brackets and reaches a maximum rate of 45 per cent. The
effect of the steeper gradation of a tax wiU be seen when it is observed that under
the present law the maximum rate on an estate of $500,000 is 5 per cent, while
in the new law it would be 13 per cent. The maximum rate is 80 per cent higher
than the highest rate employed during the war, and the gradation upward is
very much more rapid than under the war-time schedule.
So far as the production of additional revenue in the immediate emergency is
concerned, the estate tax is not an available source, for the reason that new rates
apply only to estates coming irito existence after the passage of the act and the
tax is not due until one year after the date of the death, and the time for payment
may be long extended. In the bill it is recogriized that the higher rates necessitate
the allowance of a much longer period fof payment, and it is provided that in
the case of tax shown to be due by the return the period may be extended up to
eight years, while in the case of deficiencies the period may be extended to four

REPORT OF THE SECRETARY OF THE TREASURY

269

years. In the case of any extension, interest must be paid at the rate of. 6 per
cent. The total amount of additional revenue from the estate tax during the
fiscal year 1933 is estim.ated at $20,000,000.
The additional estate tax is thus not in substance a part of the emergency
revenue program. The problem of fixing the rates is essentially one of long-time
legislative policy. Taking a long-time view of the matter, the probable effect of
much higher rates on the whole national economy must be taken into account.
It is obvious that in very many cases executors or administrators will find great
difficulty in making payment of such nigh estate taxes for the reason that they
will not have available sufficient assets which can be readily turned into cashi
I t is by no means certain that this problem can be satisfactorily solved by allowance of longer periods of time for payrnent. The necessity of paying such high
taxes will, in iriany instances, operate so as to bring about the sacrifice of capital
values and the disruption of businesses.
There is an immediate adverse effect upon business recovery through the
impositiori of drastic estate-tax rates. . Unquestionably there wiU be strong
pressure on constructive business men whose activities normally result in the
building up of new or enlarged business enterprises to refrain ffom employing
their capital in such enterprises and to put it instead in forms in which it can be
feadily liquidated. When account is taken of this effect it is not clear that the
imposition of very high estate-tax rates will not tend to decrease the revenue
from various sources and to check business developments whicn might help in
the field of employment and in many other ways. From a broad economic standpoint I think you should consider the danger of irripairing the working capital of
the Nation by this form of capital levy imposed at very high rates.. It is my
uriderstanding that there exists in England a considerable body of opinion on the
part of relatively disinterested observers that the high estate and income tax
rates there in force have been a serious adverse economic factor.
The rates in the case of the gift tax are logically made dependent upqn the
rates of the estate tax. They are so constructed as to provide a differentialof
25 per cent in favor of the gift tax; that is, the gift tax upon the disposition of a
given amount of property is 25 per cent less than the total estate taxes would be
upon the same property. So far as the gift tax is applied as a source of additional
revenue there is question as to whether the provision of a greater differential
would not operate to increase the revenue.
Manufacturers' excise taxes.—The manufacturers' excise taxes provided for
under Title IV of the act include a considerable list, a number of them of a
very minor character so far as expected revenue is coricerned. These contrast
with the relatively few taxes of much larger expected yield embodied in tne
Treasury proposals and with the manufacturers' excise tax as appearing in the
bill reported by the Ways and Means Committee.
Those taxes which are in effect protective tariff duties present problems usually
dealt with under a tariff act. Whether they should be included in a revenue bill
is a matter of policy for the Congress to determine.
Each of the special sales taxes is deserving of being studied with reference to
its scope and its effect on the competitive position of the article.
A question also arising with reference to the special group of manufacturers'
taxes is as to whether a tax is imposed in any case with reference to an industry
perhaps less well situated to bear the tax burden than other industries which
are not taxed.
Sales taxes appljdng to great numbers of small establishments with no exemptions are, of course, very much more difficult and costly to administer and more
subject to evasion than the broader taxes.
Tax on transfers of^ stock.—The provision for additional tax on transfers of
capital stock and similar interests, introduces a new principle of basing the tax,
not upon the number or par value of the shares, or certificates, but upon the
selling price of the shares in case there is a seUing price. It is provided that the ,
transfer tax imposed shall.not in any case be less than one-fourth of 1 per cent of
the selling price. The additional taxes to be imposed must be considered in the
light of the recerit doubling of the transfer tax imposed by the State of New York.
As to whether the proposed tax is so high as to seriously interfere with the
volume of security transactions in normal times the Treasury Department has
not the information upon which to base an opinion. In view, however, of the
present conditions existing in the security markets, it is a doubtful wisdom to
attempt an experiment of this kind. Indeed, those men competent to know
advise us that such a tax will seriously curtail legitimate and necessary activity
on the security markets.

270

REPORT OF THE SECRETARY OF THE TREASURY

The provision appearing as section 723 (b), intended to effect the application
of the stock-transfer tax to transfers occurring outside the United States, calls
for close study. Obviously, there is doubt as to the legal power to give the tax
extraterritorial effect and doubt as to whether the provisions of this section are
capable of administration, or of just application.
From the administrative standpoint, there is some objection to basing a stamp
tax liability upon a consideration of selling price or value instead of upon the
simpler consideration of number or par value of shares which permit the tax to
be most readily and definitely determined.
Tax on the transfer of bonds.—The biU includes a tax upon the transfer of bonds,
which is to be 2 cents on each $100 or a fraction thereof, but not less than oneeighth of 1 per cent of the selling price. (Section 724.) No tax on transfers of
bonds was included in the war revenue acts, or in any subsequent act. The
reason for this sprang, undoubtedly, from the fact that bonds are, in general,
negotiable instruments in bearer form, which can be transferred from hand to
hand by mere delivery without the use of any instruments of transfer. In view
of this freedom of transfer, the imposition of the tax upon a transfer is peculiarly
difficult to enforce. It seems impossible to avoid widespread evasion of such tax.
The larger proportion of transfers of bonds does not occur through established
exchanges.
The introduction of the determiriation of the tiax by the selling price has the
objection of making the tax less easy to determine automaticaUy and does not
seem to be suitable for a stamp tax.
In conclusion, may I reemphasize the vital importance of balancing the Budget
and the need of very greatly increasing our revenues, after making allowance
for possible economies. So far as changes which I have recommended would
decrease the revenue, I call attention to alternatives in the Treasury proposals
summarized in Schedule A. I need hardly add that during the consideration of
this bill the personnel of the Treasury will at all times be at the service of the
committee.
SCHEDULE

Summary df Treasury Budget proposals as submitted to the House Committee on.
Ways and Means
[Millions of dollars]
Estimated results for the fiscal
year 1933
Proposals Supplesubmitted mental
Decem- proposals!
ber, 1931
Revenue proposals:
' Corporation income (2)—
Increase of one-half of 1 per cent in rate, elimination of exemptionFiscal year
First 6 months
L
Second 6 months
Additional increase of one-half of 1 per cent in r a t e Fiscal year
First 6 months .
Second 6 months
.
Individual income («)—
Basis of 1924 rates and exemptions—
Fiscal year.

[il
17 j
(8)
(9).
-..

First 6 months
Second 6 months
Additional surtax increaseFiscal year
First 6 months
Second 6 months
Additional tax on estates (basis 1921 act), without credit against additional tax for State inheritance taxes 3 paid
_
_

69(34>
(35>

134
(53)
(81)
60

184-

gsi

(73>
(111)

» F r o m letter of Secretary Mills, F e b . 16, 1932, to t h e H o u s e C o m m i t t e e on W a y s a n d M e a n s .

2 Increases assumed to be efi:ective on 1931 incomes. For details, see table on p. 274.
3 Increase assumed to be effective Mar. 1, 1932, will not affect collections until Mar. 1, 1933.

Total

271

REPORT OF THE SECRETARY OF THE TREASURY

Summary of Treasury Budget proposals as submitted to the House Committee on
Ways and Means—Continued
[Millions of dollars]
Estimated results for the fiscal
year 1933
Proposals Supplesubmitted mental
Decem- proposals
ber, 1931
Revenue proposals—Continued.
Tobacco manufactures, except cigars (increase one-sixth).
Conveyances of realty (basis 1924 act)
Sales or transfers of capital stock (increase 1 cent)
Sales or transfers of capital stock (additional 1 cent)
Automobiles and accessories (basis 1924 act)
Passenger autos, 6 per cent
Trucks, 3 per c e n t . . . .
:
Accessories, 2 ^ per cent
..
Admissions (1 cent per 10 cents on admissions over 10 cents).
Radio and phonograph (equipment and accessories, 6 per cent)
Telephone and telegraph messages (basis 1921 act)
Checks and drafts (2 cents each)
Gasoline tax (1 cent per gallon)
:......
Domestic consumption of electricity and gas (7 per cent)
Postal deficit
Reduction in expenditures

Total

10
22
IOO

100
73
6
21
..-.

11
50
95

...

Total..

118

110
11
50
95
165
94
150
118

455

1,241

786

165
94

SCHEDULE B

Budget program of the Committee on Ways and Means as submitted'^ to the House of
Representatives.

H. R. 10236:
Manufacturers' excise tax, at 2H percent
1
Income t a x Individual: normal rates of 2, 4, and 6 per cent; surtaxr ates graduated from 1 per
cent beginning at $10,000 to 40 per cent on amounts of net income in excess of
$100,000
Corporation: rate of 13 per cent; specific exemption for corporations with small .net
income reduced from $3,000 to $2,000
..
Administrative changes
.1
Additional estate tax and gift tax (estimates nominal)
Admissions tax, at 10 per cent on admissions of 25 cents and over
.:...._—
Stock transfers and sales, increase from present rate of 2 to 4 cents, and application of
tax of 4 cents to loans of stocks
:
Lubricating oil, 4 cents per gallon...
..Malt sirup, 35 cents; wort, 6 cents per gallon; and grape concentrates, 40 per cent...
Telegraph, telephone^ and radio messages, 5 cents on messages costing 31 to 49 cents and
10 cents on messages costing 60 cents or more
Gasoline, gas oil, fuel oil, and crude oil imports, 1 cent per gallon
^Total additional revenue
Reduction in expenditures (including postal deficit, $25,00ft000)
Total additional revenue and reduction in expenditure..
Amount required to balance the Budget 2
-.
Excess over requirements
1 As originally submitted, increase assumed to be effective Mar. 1,1932.
> Exclusive of statutory debt retirements.

141810—32

Estimated
additional
revenue for
the fiscal
year 1933
$695,000,000

112,000,000
21,000, 000
100,000,000
* 35,000,000
90,000,000
28,000,000
25,000,000
50,000,000
35,000,000
6,000,000
1,09ft 00ft 000
16ft 000,000
1,246,000,000
1,241,000,000
6,000,000

272

REPORT OF T H E SECRETARY OF T H E TREASURY
SCHEDULE

Summary of H. R. 10236 as passed hy the House
[Millions of dollars]
Treasury
estimates
of
additional
revenue,
fiscal year
1933,
revised
Title I.—Income tax:
Individual income tax-—
H. R. 10236, as introduced
.
Amendment increasing highest normal rate to 7 per cent
Additional surtax brackets, beginning $6,000
Dividends subject to normal tax..
..—...
Total
Corporation income tax—
H. R. 10236, as introduced
,
Reduction in exemption from $2,000 to $1,000
.—
Further increase in rate, 13 to 13^^ per cent
Additional increase in rate from 1 3 ^ to 15 per cent for consolidated returns
Total
Other income tax changes, largely administrative—
H. R. 10236 (administrative changes In bill as introduced)
Repeal of net loss provisions
Dividends (sec. 116b)
_
Dividends (sec. 115d)
Revision of depletion allowance
:
..--.
Dividends, tax on foreign corporations and nonresident aliens
:
Total
,
Title IL—Additional estate tax (H. R. 10236, as amended)
^
Title III.—Gift tax (H. R. 1023ft as amended)
—Title IV,—Manufacturers' excise tax:
Lubricating oils (4 cents per gallon)
Brewer's wort and malt sirup; (6 cents and 36 cents per gallon); grape concentrates (40 per cent)
Imported gasoline, fuel oil, etc. (1 cent per gallon)
Imported coal ($2 per ton)
Toilet preparations (10 per cent manufacturers' sales)
Furs (10 per cent manufacturers' sales)
Jewelry (10 per cent manufacturers' sales)
Passenger automobiles (3 per cent manufacturers' sales)
Trucks (2 per cent manufacturers' sales)
^
Accessories (1 per cent manufacturers' sales)
Yachts, motor boats, etc. (above $16 value, 10 per cent)
Radio and phonograph equipment and accessories (6 per cent manufacturers' sales)
Mechanical refrigerators (6 per cent manufacturers' sales)
Sporting goods and cameras (10 per cent manufacturers' sales)
Firearms and shells (10 per cent manufacturers' sales)
Matches (4 cents per 1,000)
Candy (6 per cent manufacturers' sales)
Chewing gum (6 per cent manufacturers' sales)
Soft drinks (basis 1921 act)
1
Total
,
_.
_
Title v.—Miscellaneous taxes:
Part I.—Telephone, telegraph messages, etc., except newspapers (5 cents on messages costing 31 to 49 cents and 10 cents on messages costing 50 cents or more)
Part IL—Admissions (1 cent for each 10 cents on admissions over 46 cents)
•—
Part IIL—Stamp t a x e s Issues of bonds and capital stock, etc. (10 cents per $100)
Transfer of stocks, etc. (4 cents per $100 par value, or 4 cents per share no par, but not
less than one-fourth of 1 per cent, 4 cents to apply to loans of stock)
—
Transfer of bonds, etc. (2 cents on each $100 par value, but not less than one-eighth of 1
percent)
Conveyances, basis 1924 act (50 cents on $100 to $500; 50 cents per $600 in excess)
Sales of produce for future dehvery (6 cents per $100)
Part IV.—Oil transported by pipe line (8 per cent of charge)
—
Part v.—Leases of safety deposit boxes (10 per cent of rental)
Total
Total additional taxes
Title VIIL—Increased postage rates and other postal provision (estimate of the Committee
on Ways and Means)...
Total
-.
Required to balance budget (excluding debt retirement)
—
Deficit
-.-

112
3
7
21L0

8.4
8.0
43.4

100
7
6
2
1

2 6.0
36
46
6

.i
20
15
15
44
4
.5
11
6
6.5
2.6
11
12
3
10
255.0
33
40

26
10
6
20
1
213.0
S66.4
1, 031. 9
1, 241, 0

1 Assuming collections beginning May 1, 1933.
2 Assuming tax effective beginning J uly 1, 1932.
8 Includes estimated eft'ect on budget of H, R. 10236 and of other bills recently passed by the House.

273

REPORT OF THE SECRETARY OF THE TREASURY
SCHEDULE D

Customs and internal revenue receipts, actual fiscal year 1931 and estimated fiscal
years 1932 and 1933, on basis of law prior to the revenue act of 1932
[Millions of dollars]
1931
Actual
Customs ..
Internal revenue:
Income t a x e s Current corporation . .
. __
..
Current individual—
Normal
Surtax tax less earned income credit
.
,. .
12H per cent tax on gains less 12H per cent tax credit on losses
from sale of capital assets held more than 2 years
Total current individual
Back taxes
Total income taxes
Miscellaneous internal revenueEstate tax
Alcoholic spirits, etc..
Tobacco taxes
,
Admissions and dues
_Stamp taxes, including playing cards
Oleomargarine, process butter, e t c . *
Miscellaneous, including narcotic taxes, delinquent taxes under
repealed laws, etc ; .
.
•
Total miscellaneous internal revenue
Total internal revenue
Total customs and internal revenue. . .

1932

1933

Estimated, Feb. ft
1932

378

375

430

892

517

382

124
447
159
730
239
1, 861

82
234

67
208

23
339
220
L076

275
210
867

55
10
410
14
34
2

45
10
434
15
43
2

1
526
1,602
1,977

1
550
L417
1, 847

48
10
444
14
47
3
3
569
2,430
2,808

•

EXHIBIT 25

Letter of Secretary of the Treasury Mills to the Chairman of the Senate Finance
Committee, April 18, 1932, with reference to the Treasury's proposals in connection with the revenue hill of 1932
MY DEAR MR. CHAIRMAN: In accordance with the request made to me, I am
submitting a summary of the Treasury's revenue proposals brought up to date.
As I stated to the Finance Committee, the Treasury Department has no new
program. It adheres to the program originally submitted in the report of the
Secretary of the Treasury, supplemented by our additional suggestions made to
the Ways and Means Committee and by the administrative changes written in
cooperation with the Ways and Means Committee, and now modified to take
advantage of prospective economies larger than originally anticipated.
The program follows, in the main, the principles of the 1924 act. As the Secretary of the Treasury stated in his Annual Report submitted to the Congress
in December, which set forth our revenue program in detail: ' ' I advise that the
Congress consider returning in principle to the general plan of taxation existing
under the revenue act of 1924. The country knows the burdens to be expected
under such a law. It paid taxes under that law and, notwithstanding the higher
rates and broader scope of that act, found that these taxes did not constitute an
unbearable burden nor prevent increased prosperity. Instead of embarking on
new and untried ventures in taxation, it is wiser to utilize a known general plan
with such changes as may be appropriate in the light of altered conditions."
As I pointed out to your committee, in bringing the plan submitted to the
Ways and Means Committee up to date, it seems necessary to make certain
modifications to meet altered conditions. Thus, the Treasury Department
originally recommended that the 1924 income-tax rates be made applicable to
1931 income. Owing to our failure to secure the approval of the Congress, and
the time having passed when this suggestion can be made effective, it is necessary to withdraw it, occasioning a loss in revenue for the fiscal year 1933. The
loss is offset by the increased revenues which it is estimated will be made avaUable by the tightening of the law through administrative changes provided for
by the joint study and action of the Ways and Means Committee and the
Treasury Department.

274

REPORT OF THE SECRETARY OF THE TREASURY

At the time the program was submitted to the Ways and Means Committee
there was not sufficient information relating to possible economies to justify in
my judgment budgeting on the basis of an estimated reduction in cost of Government in excess of $120,000,000. I am now confident that at least $200,000,000
may be expected as a result of the reduced cost of Government. This additional
saving coupled with a proposed tax on malt sirup and wort, worked out in conjunction with the Ways and Means Committee, enables me to eliminate entirely
the suggested tax on gas and electricity domesticaUy consumed, and to reduce
the suggested gasoline tax to be paid at the refinery from 1 cent a gallon to
three-fourths of a cent a gallon.
As I stated to your committee, we now include in our program a gift tax as a
safeguard to the integrity of the income and estate taxes, though it can not be
looked upon as a strictly revenue producing measure.
There are two minor changes in the estimates: The one affecting the yield of
the estate tax and occasioned by the delay in enactment of the legislation; and
the other affecting postal receipts, due to a revised estimate of the Post Office
Department.
I am attaching hereto a table summarizing the Treasury's proposals brought
up to date.
Senator Harrison made a request of me which, if I understand it correctly,
contemplates taking the bill as it passed the House of Representatives and while
endeavoring to preserve as many of its provisions as possible, eliminating the
most objectionable ones, more particularly the taxes which I indicated would
impede economiic recovery and resumption of. employment, and substituting
therefor other revenue proposals adequate to offset the resulting loss in revenue.
I have tried to carry out Senator Harrison's directions. The result,of that effort
is the summary attached hereto. This is not my program and I am not submitting it as representing the Treasury's views as to the proper revenue measure or
as my recommendations to the committee. To rewrite the bill to conform to
the Treasury's views would make the summary essentiaUy the same as the
summary of the Treasury Budget proposals brought up to date, which is attached
to this letter. As far as the substitute revenue proposals are concerned, there
are, of course, others which the committee should consider if it decides to follow
Senator Harrison's plan.
May I add that I am ready to cooperate in any way possible.
Sincerely yours,
(Signed)

OGDEN L . MILLS,

Secretary of the Treasury.
Hon.

REED SMOOT,

Chairman Committee on Finance,
United States Senate.
Summary of Treasury Budget proposals brought up to date, April 18, 1932.
Emergency program to terminate in 1934
[Millions of dollars]
Estimates
of additional
revenue
for the
fiscal year
1933
Income taxes:
CorporationIncrease in rate from 12 to 13 per cent and elimination of present exemption of $3,000;
effective beginning with incomes for calendar year 1932
IndividualExemptions: $2,500 and $1,000.
Normal rates: 2, 4, and 6 per cent.
Surtax rates: $6,000-$10,000, 1 per cent; $10,000-$12,000, 2 per cent; thereafter, 1924
rates, plus 2 per cent (maximum rate, 42 per cent). Effective beginning with incomes for calendar year 1932
Limitation on deduction of security losses and other changes, largely administrative
Estate tax (basis 1921 act, specific exemption $50,000, maximum rate of 25 per cent)
Gift tax (rates and exemption as provided for estates in revenue act of 1921)
1 Assuming collections beginning May 1,1933; previous estimate assumed earlier effective date.
2 Assuming tax effective beginning July 1,1932.

Ill
100
23

REPORT OF THE SECRETARY OF THE TREASURY
Summary of Treasury Budget proposals brought up to date,
to terminate in 1934—Continued

275

Emergency program

[Millions of dollars)
Estimates
of additional
revenue
for the
fiscal year
1933
Miscellaneous taxes:
Tobacco manufactures, except cigars (increase present rates by one-sixth)
,
Conveyances of realty (basis 1924 act and included in H. R. 10236)
Sales or transfers of capital stock (increase rate to 4 cents)
—
Automobiles and accessories:
Passenger automobiles, 6 per cent
Trucks, 3 per cent
»
Accessories, 2H per cent
Admissions (1 cent per 10 cents on admissions in excess of 10 cents)Radio and phonograph equipment and accessories, manufacturers' sales, 6 per cent (in. eluded in H. R. 10236)
—.
Telephone and telegraph messages (basis 1921 act, i. e., 6 cents on messages costing 16 to
60 cents, 10 cents on messages costing over 50 cents)
Checks and drafts (2 cents each)...
Gasoline tax at three-fourths of 1 cent per gallon (paid at refinery).
Malt sirup and brewer's wort, 35 and 5 cents per gallon; grape concentrates, 40 per cent...
Postal deficit—Revised estimates of Post Office Department.....

58
10
22
73
6
21
110
11
60
96
124
46
166
1,033
1,241

Total
Required to balance the Budget 3
Deflciency to be met by reduced expenditures.

208

3 Exclusive of statutory debt retirement.

Summary prepared in response to request of Senator Harrison
[Millions of dollars]
Estimates
of additional
revenue
for the
fiscal year
1933
Income tax:
Individual income tax (H. R, 10236 as passed by the House, except dividends not subject to normal tax)
Corporation income tax: Increase in rate from 12 to 13 per cent, elimination of exemption
Limitation on deduction of security losses and other changes, largely administrative
Additional estate tax (basis of 1921 act)
^
Gift tax (rates and exemption as provided for estates in revenue act of 1921)
Manufacturers' excise taxes:
Lubricating oils (4 cents per gallon)
Brewer's wort and malt (6 and 35 cents per gallon); grape concentrates (40 per cent)
Imported gasoline, fuel oil, etc. (1 cent per gallon)
Imported coal ($2 per t o n ) . . .
Toilet preparations (10 per cent manufacturers' sales)
Furs (10 per cent manufacturers' sales).--!
Jewelry (10 per cent manufacturers' sales)-,Passenger automobiles (6 per cent manufacturers' sales)
Trucks (3 per cent manufacturers' sales)
-.Accessories (2H per cent manufacturers' sales)
Yachts, motor boats, etc. (above $15 value,.10 per cent)..
Radio and phonograph equipment and accessories (5 per cent manufacturers' sales)
Mechanical refrigerators (6 per cent manufacturers' sales)
Sporting goods and cameras (10 per cent manufacturers' sales)
Firearms and shells (10 per cent manufacturers' sales)
".
Matches (4 cents per 1,000).^
._
Candy (5 per cent manufacturers' sales)
Chewing gum (6 per cent manufacturers' sales)
. Soft drinks (basis of 1921 act)
Total
* Assuming collections beginning May 1,1933.
2 Assuming tax effective beginning July 1, 1932.
3 The Treasury expresses no opinion as regards these items.

122
35
109
13
23

35
46
35
3,5
20
16
15
73
21
,5
ll'

„.
.....

6,6
2,5
11
12
3
10
299

276

REPORT OF THE SECRETARY OF THE TREASURY

Summary prepared in response to request of Senator i^amson—Continued
[Millions of dollars]
Estimates
ot additional
revenue
for the
fiscal year
1933
Miscellaneous taxes:
Telephone, telegraph messages, etc., except newspapers (5 cents on messages costing 31
cents to 49 cents and 10 cents on messages costing 50 cents or more)
--.
Admissions (1 cent for each 10 cents on admissions over 10 cents)
Stamp taxes:
Issues of bonds and capital stock, etc, (10 cents per $100)..Transfer of stocks, etc. (4 cents per $100 par value, or 4 cents per share no par, 4 cents
to apply to loans of stock)
Conveyances (50 cents on $100 to $500, 60 cents per $500 in excess)
—
-.
Sales of produce for future delivery (5 cents per $100)
Oil transported by pipe line (8 per cent of charge)
Leases of safety deposit boxes (10 per cent of rental)
-_Checks and drafts (2 cents each)..
Total
-..
Total additional taxes
Title VIIL—Increased postage rates and other postal provisions (revised estimate of the
Post Office Department)
Total
..-.Required to balance Budget (excluding debt retirement)
Deficit
-

33
110
28
10
6
20
1
96

1,037
1,241
-204

* Includes estimated effect on Budget of H. R. 10236 and of other bills recently passed by the House.
EXHIBIT 26

Statement by Secretary of the Treasury Mills before the Senate Finance Committee,
May 31, 1932, submitting further proposals in connection with the revenue hill
of 1932
Events during the last two months, and more particularly the last few weeks,
necessitate taking into account a changed situation as affecting the estimates of
old and new revenue made by the Treasury Department in February. The
estimates were predicated on a prompt enactment of a revenue bill furnishing a
basis for, first, a stabilization of economic conditions, and then a gradual rise.
Instead, there has been a marked contraction of economic activity and a further
fall in commodity and security prices, so that not only has the date of recovery
been postponed, but recovery starts from a lower level. This is bound to have
an adverse effect on prospective revenues.
The Treasury recommended in February $1,125,000,000 in new taxes. That
is the amiount needed to-day.
The bill now before the Senate, even with the Finance Committee items still
to be voted on, wiU bring in but $840,000,000, as compared with the $965,000,000
estimated under the old figures. Thus, there is a shortage of revenue iDetween
the amount originally estimated by the Treasury as necessary and the yield
of the bill as it now stands of $285,000,000. The difference is due to a reduction
by the Congress in new taxes amounting to $160,000,000—of which about
$100,000,000 was agreed to by the Treasury in its eagerness for prompt action—
and $125,000,000 is accounted for by changed conditions.
In other words, assuming that the expenditure figures are reduced below those
submitted in the Budget message by not less than $350,000,000, $285,000,000
of additional revenue is needed to-day to balance the Budget. In order to bridge
this gap, I unqualifiedly recommend turning to the manufacturers' excise tax
along the lines of Senator Walsh's pending amendment. While the Treasury
Department has hitherto refrained from recommending this tax, I had occasion
to give it close study during its consideration by the Ways and Means Committee
and I unhesitatingly indorse it to-day as the most effective means of balancing
the Budget and giving assurance of yielding the needed revenue.
I further recommend the adoption of the so-called Connally income tax amendment, which means a return to the 1922 income tax rates, which 1 have hitherto
opposed, but the necessity of balancing the Budget is so great that objections
which up to the present time justified opposition to a particular tax can in this
emergency no longer be considered valid.

REPORT OF THE SECRETARY OF THE TREASURY

277

If t h e Senate is unwilling to follow w h a t 1 deem to be the wise course, I suggest
as a possible alternate p r o g r a m : (1) T h e Connally a m e n d m e n t , yielding approximately $70,000,000; (2) a gasoline t a x of 1 cent, yielding approximately
$150,()00,000; and,. (3) restoration of t h e exemption on admissions to 10 cents,
which will yield $55,000,000 more t h a n is now provided for; or a total of
$275,000,000.
E X H I B I T 27

Summary of Treasury estimates of additional revenue for the fiscal year 1933, prepared M a y 31, 1932, and released J u n e 4, 1932, by the House and Senate conferees on the revenue hill of 1932
[In millions of dollars]
Title I.—Income tax:
IndividualNormal tax rates, 4 and 8 per cent (exemptions $2,600 and $1,000)
-..
63
Surtax rates, 1 per cent on net income in excess of $6,000 to 66 per cent on net income in excess
of $1,000,000
88
No earned income credit
.
27
Total
_
.
.178
Corporation—
'
Rate, increased from 12 to IZ% per cent
22
Exemption, eliminated
16
Consolidated return, additional rate of three-fourths of 1 per cent
3
Total
41
Limitation of security losses and other changes, largely administrative
80
Title IL—Estate tax
(0
Title III.—Gift tax, rates of three-fourths of 1 to 33 H per cent
25
Title IV,—Manufacturers' excise taxes:
Lubricating oU, 4 cents per gallon
33
Brewer's wort, 15 cents per gallon
1
Malt sirup, 3 cents per pound
>
82
Grape concentrates, 20 cents per gallon!
Imported gasoline, crude oil, etc.; coal, lumber, and copper
6.6:
Tires and tubes, 2K and 4 cents per pound
33
Toilet preparations, 10 per cent (except dentifrices, soaps, etc., 5 per cent)
13.6'
Furs, 10 per cent
12
Jewelry, 10 per cent on amounts over $3 (plated silverware exempt)
.9
Passenger automobiles, 3 per cent (tires and tubes exempt)
-.
:
32
Trucks, 2 per cent
3
Parts and accessories, 2 per cent (tires and tubes exempt)
1
7
Radio and phonograph equipment and accessories, 5 per cent
9
Mechanical refrigerators, 5 per cent
6
Sporting goods and cameras, 10 per cent
6
Firearms and shells, 10 per cent
2
Matches, wood, 2 cents per thousand; paper, one-half cent per thousand
4
Candy, 2 per cent
4
Chewing gum, 2 per cent..
1
Soft drinks, various rates
.7
Electrical energy, 3 per cent on sales for domestic and commercial purposes
39
Gasoline, 1 cent per gallon (sales at refinery)
160
Total, Title IV
'.
-..
457
Title v.— Miscellaneous taxes:
Part I. Telephone, telegraph messages, etc.—
Telephone, 10 cents, messages costing 50 cents to $1; 15 cents, $1 to $2; 20 cents, $2 and more..]
Telegraph, 5 per cent
.> 22. 5
Cable and radio, 10 cents each
-]
Part II, Admissions, 1 cent per 10 cents on admissions over 40 cents (educational and Olympic
exemption eliminated)
--..
42
Part III. Stamp ta.xes—
Issues of bonds or capital stock, 10 cents per $100
6. 5Transfers of stock 4 cents per $100 par value, or 4 cents per share no par, 6 cents for shares
selling over $20 (rates to apply to loans of stock)
20
Transfers of bonds, 4 cents per $100 par value
6
Conveyances, 50 cents on $100-$500; 50 cents per $500 in excess.
8
Sales of produce for future delivery, 6 cents per $100-..
6
Part IV. Oil transported by pipe line, 4 per cent of charge
8
Part V. Leases of safety deposit boxes, 10 per cent of rental
1
Part VI, Checks, 2 cents each
78
Part VIL Boats, various rates
^
Total, Title V
197.5
Total additional taxes..
958.5
Title VIIL—Increased postage rates (and other postal legislation)
3 IQQ
Total additional taxes and postal revenue
1,118.5'
1 Assuming collections, beginning after June 30, 1933.
2 Assuming tax eflective, beginning July 1, 1932,
3 This item, as it affects the Budget, would be reflected in a reduction in the postal deficit and not in arr
increase in ordinary receipts.

278

REPORT OF THE SECRETARY OF THE TREASURY
TAXATION
EXHIBIT 28

Financial Relations of the Federal and State Governments, paper read hy Secretary
of the Treasury Mills, April 29,1932, before the Association of the Bar of the City
OJ New York, New York City
I
Taxation in this country has becorpe a matter of dominant national importance.
The aggregate tax burden is so great as to constitute an economic factor of such
prime importance as to affect directly or indirectly almost every sphere of public
and private activity.
In 1930, according to a study just completed by the National Industrial Conference Board, the taxes collected by the Federal, State, and local governments
reached the staggering sum of $10,266,000,000, amounting to 14.4 per cerit, or
one-seventh, of the estimated national income of $71,000,000,000 for that year.
The increase in total tax collections between 1923 and 1930 was 42 per cent.
Part of this increase may be explained, of course, by the growth in population,
but even on a per capita basis the increase during that 7-year period was 28.5
per cent; and converting the per capita tax payments into dollars of the same
purchasing power, the increase was nearly 50 per cent (49.8 per cent).
Take, for instance, our largest tax, the property tax. According to the study
which I have mentioned, property taxes in 1929 accounted for more than 76
per cent of the total State and local taxes, and over 50 per cent of the total taxes
€ollected by aU jurisdictions. Some idea of the menacing pace at which tne
burden of this tax has been advancing may be gathered from the following statement by the Committee on Taxation of the President's Conference on Home
Building and Home Ownership:
. "Too; rates upon real estate.—The burden imposed by trie property tax upon
real estate is nearly everywhere heavy and in many communities destructive.
In 1910 the average rate of the general property taxes imposed by cities having
more than 30,000 inhabitants was 18.9 miUs on the assessed valuation. This
average rate rose to 20.2 miUs iri 1918, and to 27 mills in 1928. In addition, State
taxes (averaging 2 miUs) were coUected in the majority, county taxes (averaging
5.9 miUs) in a large number, and special taxes (averaging 1.2 mills) in a very
small number of these cities. While no weighted general average covering State,
county, city, and special levies can be accurately computed, it is highly probable
that this general average exceeds 30 mills for the year 1931. Approximately half
of the taxpayers are above the average, i. e., pay more than 30 mills at the present
time. . It is among those taxpayers that the hardship is greatest. In general,
property is still assessed at less than full value. But in millions of cases to-day the
assessed value equals or exceeds the actual market value. Such properties are
paying to the State and local governments an annual average fate which frequently exceeds 3 per cent upori their full capital value.
"A useful measure of the burden of the property tax is found in the proportion
of rental income (before taxes) taken by the tax. The results of studies of urban
property taxes in nine States are thus summarized by Whitney Coombs in his
Taxes on Farm Propertv (p. 32): Arkansas (1923-1925), 17.1 per cent; Colorado
(1926), 27.1 per cent; Indiana (1922-23), 30.6 per cent; Iowa (1927), 31.3
per cent; North Carohna (1927), 29.5 per cent; Pennsylvania (1924-25), 20.9 per
<;ent; South Dakota (1922-1926), 29.9 per cent; Virginia (1926), 16 per cent;
Washington (1924-1926), 31.7 per cent."
Speaking of financial conditions in the States and cities, this committee con€luded that "the present situation is characterized by excessive public spending,
excessive reliance by local governments on the property tax, and by excessive
concentration of the property tax on real estate." This last factor—the excessive concentration of the property tax on real estate—is itself responsible for a
major social evil. It "discourages and materially restricts home ownership"
while it creates a tax load which bears with crushing weight upon the debtridden farm owners.
I quote from an address before the 1931 Conference of National Tax Assoeiation by Dr. Eric Englund, assistant chief of the Bureau of Agricultural
Economics:
"Studies in several States from 1922 to 1927 showed that real-estate taxes
took an average of about one-third of the net rent of farms. Judging by the
trends of farm prices and of farm taxes since triat period, the ratio of taxes

REPORT OF THE SECRETARY OF THE TREASURY

279

to net rent in the past year, no doubt, was much higher, taxes probably absorbing
the whole rent in the case of a substantial portion of the farms, especiaUy in
regions of higher tax levies."
Of course the people are in large measure themselves to blame. They have not
only tolerated, but given encouragement to an ever-expanding cost of government.
The spenders were the ones elected to office; and bond issues voted with cheerful
alacrity. It is true that President Coolidge succeeded in dramatizing economy,
but I remember in our State when Governor Miller, under the urging of the
electorate, resumed the practice of law, it was openly said that economy in government would not be a successful issue in New York State in many a year.
And it has not been. Not only are our taxes too high, but if we view our Federal,
State, and local taxes as a whole, we do not find anything that faintly resembles
a logical and coordinated plan, but rather a number of unrelated systems, frequently overlapping and existing in a state of confusion that gives rise to all
manner of maladjustments, duplications, and irregularities.
II
There is a growirig conviction, which I share, that the time has ceased when the
Federal and State Governments may safely chart separate and unrelated courses
over the troubled financial waters which they must now all traverse. The time
for drifting has passed. The time for considerate and conscious coordination
has arrived.
. '
The Federal Constitution segregates in rudimentary and imperfect fashion a
few of the sources of Federal and State taxation. In practical effect it prevents
the Federal Government from imposing property and poll taxes, and denies the
States, without the consent of the Congress at least, power to levy taxes upon
imports and exports or to burden interstate commerce by direct taxation. But
here, practically, separation of sources stops and joint use begins. Both State
and Federal Governments may, at one and the same time, tax incomes, sales,
production, consumption, privileges, and the transfer or inheritance of property.
While this concurrent power over taxation has been enjoyed by both the State
and the Federal Governments since the birth of the Nation (except with respect
to the income tax, which was not conclusively brought within the Federal powers
until the adoption of the sixteenth amendment), it created no serious difficulties
until recent years. During most of our history, the main sources of revenue used
respectively by the States and by the Federal Government were distinct and
separate. In the period between the War of 1812 and the Civil War, the Federal
Government derived its revenue almost wholly from duties on imports; while
the States relied almost entirely upon the property tax. During the Civil War
and the period immediately following that conflict, the Federal Government
was compeUed to utilize additional sources of revenue, such as income, inheritance, sales and miscellaneous excise taxes. But by 1883 these additional taxes,
except for the taxes upon tobacco arid liquor, had been discarded; and until the
end of the flrst decade of this century, customs and tobacco and liquor taxes furnished practically all the tax revenue received by the Federal Government.
Meanwhile the State and local governments continued to rely primarily on the
property tax, although they made increasing use of corporation taxes, licenses,
and death duties. Until about 1910, however, each department of government
gave free steer age way to the other. Conflicts of jurisdiction arose and gave rise
to important interpretations of our constitutional law. But neither department
of government exercised its taxing powers so as seriously to embarrass the other.
Since 1910 the picture has materially changed. Pressure for additional revenue
has forced the States and the Federal Government to bear heavily upon the same
sources of revenue. The Federal Government adopted a full-fledged income tax
in 1913, an estate tax in 1916; and it seems plain that, as a consequence of the
World War and changed economic conditions, it must continue to occupy,
though not necessarily to the exclusion of the States, this field of taxes upon
wealth and income-—a field which the States had never thoroughly exploited.
On the other hand, the States during the same period substantially increased
their revenues from the inheritance tax and revived the iricome tax. Beginning
with Wisconsin, in 1911, State after State adopted an income tax, though at very
moderate rates, until to-day there are 22 with this form of taxation. The States
have also invaded the field of consumption taxes, formerly used almost exclusively by the Federal Government. To-day every State imposes a gasoline tax,
and 13 make use of taxes on tobacco or cigarettes, and State taxes upon amuse^
ments and semUuxuries are spreading.

280

REPORT OF THE SECRETARY OF THE TREASURY

This sim,ultaneous and overlapping use of tlie same tax sources by the State
and the Federal Governments has come gradually, almost stealthily, without
the guidance of any broad policy or plan of national finance. It subjects us to a
haphazard scheme rather than an ordered system of taxation, which lacks uniformity and coordination, involves government and taxpayer alike in serious
difficulties, and is growing steadily worse.
Ill
Triere is nothing inherently wrong in the use by both the Federal Government
and the States of trie same source of revenue. But when it is done without agreement or understanding between the competing jurisdictions and without the
restraint of a superior power, it may easily result in a combined burden heavy
enough to cripple the source. The danger is especially great in the case of
"popular" taxes, such as the income and inheritance taxes, popular because they
are so levied as to reach comparatively few people. There is a growing dispostion to rely more and more heavily upon these taxes, and since this tendency
characterizes both the State and the Federal Governments, the result mav be
serious, not only to those subject to the tax but to the governments and the
national economy as well, because of the decreased yield that inevitably follows
excessive taxation.
This danger is by no means imaginary. For example, Wisconsin recently
doubled its personal-income tax rates on 1931 income, bringing the tax to more
than 15 per cent on income in excess of $12,000. If Wisconsin should find it
necessary or desirable to continue this emergency tax for another year, as is not
altogether improbable, and the Federal rates adopted by the House are enacted
into law, the combined State and Federal tax on residents of Wisconsin, with
respect to income earned this year, would range from 17 per cent to 22 per cent on
income in excess of $12,000, up to 62 per cent on income in excess of $100,000.
Similarly, if the income tax rates of the House bill (H. R. 10236) are adopted and
Wisconsin continues its corporation income-tax rate beyond 1931, income derived
by corporations from property located and business transacted in Wisconsin, wiU
pay a combined rate of more than 20 per cent.
Or, take the gasoline tax which is now imposed by every State in the Union.
The rates range from 2 to 7 cents per gaUon, and are steadily being increased.
In some places the tax is in excess of the market price of gasoline at the refinery.
In its pressing need for money, the Federal Government may legitimately feel
that it is entitled to use this source to a moderate extent, especially in view of the
fact that the Federal Government grants the States substantial monetary aid in
their roadbuilding programs—the .very purpose for which the gasoline tax was
primarily introduced. Yet, because of the preemption or prior use of this tax
by the States, and the high rates in force in some States, the Federal Government
must pause and consider before adding a Federal tax, though Federal entry into
this field might help the States in the administration of the tax, which is tending
in sonie places to break down because of the bootlegging of gasoline.
. Or, consider the tobacco taxes. The Federal Government has imposed these
taxes since the Civil War, and the rates are high. The State governments claim
that they are entitled to use consumption taxes on "articles of widespread use
but not of first necessity." Moreover, in States like North Carolina, in which
large amounts of tobacco are grown and in which great tobacco factories are
located, there is a natural feeling that since tobacco represents one of their major
industries they should be entitled to a substantial revenue from this source. But
the Federal tax stands in the way. Even so, 13 States levy taxes on tobacco or
•cigarettes in addition to the Federal taxes.
A striking illustration of the danger of joint use of the same source is found in
the stamp taxes on stock transfers. In its present mood public opinion is not
sympathetic either towards the stock broker or the stock market, particularly in
those districts which contain no stock exchange and comparatively few stock
brokers. Spurred by revenue riecessities, the State of New York recently doubled
its stock transfer tax at a time when the Federal Government was moved by a
similar impulse. The result is a proposal or biU from the House of Representatives which imposes a minimum tax of 4 cents on each share of stock transferred
and a maximum tax of one-fourth of 1 per cent of the seUing price, while the exemption upon stock loans for short selling has been repealed, thus subjecting short
sales to double the ordinary rates. This proposal if enacted into law may be
enough, with the New York tax, to restrict activity in the chief security market.

REPORT OF THE SECRETARY OF THE TREASURY

281

Joint taxation of this character entails another evil which should, if possible,
be eliminated. This is the waste involved in the duplication of administration,
and the correlative annoyance to taxpayers arising from the necessity of complying with two or more sets of requirements with respect to the same kind of tax.
The amount of money which such duplication involves probably runs into large
figures.
IV
Interstate Commerce Complications.
Another major problem affecting the financial relations of the State and Federal
Governments aris.es from those constitutional provisions which have been interpreted to inhibit the States from hindering interstate trade or commerce by direct
taxation. The uncertainty of the constitutional law involved and the changing
subtleties of the decisions which interpret that law deprive the States—it is
hardly too much to sa}^—of the free and natural use of those taxes most suited to
-corporations engaged in interstate commerce. A recent and learned commentator, E. F. Albertsworth, professor of law at Northwestern University, says
that the States are "hemmed in and hamstrung" by the decisions declaring taxes
or licenses to be direct restraints or burdens upon interstate trade.
After many years of serious thought, some of our most qualified students of
taxation have reached the conclusion—which I still hesitate to share—that
State taxation on business should be based upon or measured by gross receipts
or gross income rather than net income. Such a tax is comparatively easy to
administer; it yields a substantial revenue which is not subject to as wide fluctuations as is the net income tax; and it is possibly the best available measure of the
benefit which business receives from government and for which business should
legitimately be asked to pay. But with business partaking tosuph a large extent
of the character of interstate commerce, the usefulness of a gross receipts tax is
materiaUy circumscribed by the inability of the State to tax directly the receipts
from such commerce. Not only is the possible yield of such a tax greatly reduced,
but there is unjustifiable discrimination in favor of those taxpayers engaged to a
considerable extent in interstate commerce and against those who are primarily
engaged in business within the confines of a particular State, The difficulties
which the States have had in the taxation of public utilities doing an interstate
business—particularly the railroads and telephone companies—are well known.
The same obstacle stands in the wa}^ of effective use of sales taxes, except those
sales taxes which are most difficult to administer, that is, retail sales taxes. And
even with respect to retail sales taxes, the interstate commerce restriction has,
indirectly, an adverse affect.
In the first place, there is the uncertainty as to when and under what conditions
such sales taxes represent a direct burden upon interstate commerce. Our law
books are replete with decisions dealing with this question, but it arises again and
again. Only recently the Supreme Court was caUed upon to decide the question
as to whether gasoline used in busses or airplanes carrying passengers in interstate traffic could be taxed by the State in which the gasoline was purchased:^
Secondly, the inability of States to tax interstate commerce leaves such sales
taxes vulnerable to easy violation. Take the gasoline tax. There has developed
a gasoline bootlegging racket of quite sizable proportions which, according to one
competent authority, is depriving the States of $100,000,000 of revenue yearly.
Much of this evasion is directly attributable to the purchase of gasoline in a State
with a low rate of tax and its sale in a State with a high tax. The States can not
adequately check the purchases and sales of the retail service station. Their
control must depend largely upon supervision and check upon the refineries, the
large distributors, and the shipments by the recognized carriers. But supervision falls down when the carrier is a bootlegger with a fleet of tank wagons, who
can bring gasoline into the State without interference under the protection of the
interstate commerce clause.
The same situation is found in connection with State tobacco taxes. A study
recently made of the administration of State taxes on cigarettes shows that
whereas in 1930 the per capita consumption of cigarettes in the entire country
averaged 975, the five States which in that year levied a tax solely on cigarettes
collected, on the average, taxes on only 431 cigarettes per capita. While we may
not assume that the average actual consumption in these five States was the same
as the average for the country, yet the figures would indicate that many a cigarette
was smoked in these States on which the State tax had not been paid.
In addition to violation of the law, the restrictive effect of the interstate
commerce clause upon State sales taxes produces a considerable amount of
inequity. Such taxes, of course, find their way usuaUy into the price at which

282

REPORT OF THE SECRETARY OF THE TREASURY

the taxed article is sold to the ultimate consumer. Retailers in the taxing State
who are located at or near the border of a State which does not tax that article,
or which taxes it at a lower rate, are likely to find themselves in the unenviable
position of having to absorb the tax themselves or of seeing their customers cross
the line into the neighboring State in order to purchase the article at a lower
price. It is not uncommon, for instance, to find service stations near State lines
selling gasoline at the same price as that which obtains in the next State, in which
the tax is lower. Similarly, the competition which the merchant in the taxing
State must meet from the mail-order houses which can sell free of tax, since such
sales are interstate commerce, is a serious evil.
Governor Gardner speaking before the North Carolina General Assembly said
about a year ago: "Any tax that we add to sales within the State helps to turn
the scale against business in North Carolina and in favor of business outside of
North Carolina. I can not favor any system of taxation that imposes this additional burden on the retail merchants of North Carolina, and that penalizes
business within and encourages business without the State."—U. S. Daily,
March 26, 1931.
V
Other Constitutional Limitations on State Taxation.
Because they are rather closely related to the problems already discussed, and
because their solution may go hand in hand with the solution of the conflicts in
State and Federal taxation, mention may be made of certain active problems
arising from constitutional limitation upon State taxing powers, although these
problems are not involved in the relationship between the State and Federal
taxing powers. These problems are (1) the taxation of the obligations and
instrumentalities of other jurisdictions, and (2) the allocation to a particular
State, for purposes of taxation, of the appropriate share of a subject of taxation
which can not be wholly assigned to one State. Both of these problems have
particular reference to State income taxes. These are extremely difficult questions, and the specific forms in which they arise require that they be submitted
again and again to the courts for determination. We can never be sure, in many
cases, about the validity of certain provisions of State income tax laws until
their effect is determined by the courts of last resort. And even then we can
not be certain, as will be readily understood by those who have been interested
in the recent decisions of the Supreme Court as to the power of a State to include
income from bonds and instrumentalities of the Federal Government in a franchise or excise tax measured by net income.
In May, 1929, the Supreme Court rendered its decision in Macallen Co. v.
Mass. (279 U. S. 620) holding that under the Massachusetts corporation excise
. tax, interest from Federal bonds could not be included in the measure of the tax.
Because of the stress laid by the decision on the necessity of considering the true
substance and operation of State tax laws rather than their form or name, and
the finding that the Massachusetts law "in substance and effect imposes a tax
upon^Federal bonds and securities," the decision was believed by many of our
best lawyers and tax experts to be a substantial modification, if not a reversal,
of a long line of prior decisions which drew a distinction between direct taxes on
income or capital stock and excise taxes measured by income or capital stock—a
distinction with little economic or practical difference.
But in less than two years, in January, 1931, came the decision in Eductional
Films Corp. v. Ward (282 U. S. 379) holding that roya-lties derived from Federal
copyrights might be included in the measure of the New York corporation franchise tax. The decision reaffirmed the distinction which was thought to have been
discarded in the Macallen case.
And on the 11th of this month, came the decision in Pacific Co. v. Johnson,
holding that the inclusion of interest from Federal bonds in the measure of the
California corporation franchise tax, was permissible. The decision reached was
contrary to that made in the Macallen case, yet it would be most difficult to
find any substantial distinction in the facts presented in the two cases. Though
the court does not admit it in so many words, it is plain that in less than three
years after its promulgation, the Macallen decision has been definitely overruled.
As stated in the minority opinion, "We think there is no escape from the conclusion that if the Miller and Macallen cases were followed the legislation here
under review would be condemned. To base a distinction of these cases from
the pending case upon differences so lacking in substance as to be in effect no
differences at all, simply adds to the confusion already too great in this field of
taxation."

REPORT OF THE SECRETARY OF THE TREASURY

283

Similar confusion exists with respect to the power of the Federal Government
to tax the income derived from State instrumentalities, as is amply shown by
such confficting cases as Gillespie v. Oklahoma (257 U. S. 501), Group No. 1 Oil
Corp. v. Bass (283 U. S. 279), and Burnet v. Coronado Oil and Gas Co., decided
less than three weeks ago.
A more important problem—perhaps the most important problem involved in
the use of an income tax by the States—is the question of allocating or apportioning the net income of corporations engaged in interstate business to the
particular States in which they operate. Nearly every conceivable formula for
apportioning such income is to be found in our State laws. Some States allocate
solely on the basis of one factor, such as tangible property, or gross sales; others
allocate on the basis of a combination of factors, with varying methods of combination. Under such different measuring sticks, it is not difficult to see how a
corporation may well be taxed on more than its entire net income. To state a
simplified case, a corporation which did all its manufacturing in Connecticut,
but sold all its product in South Carolina, would theoretically be taxed on its
entire net income by each of these States, since Connecticut's allocation formula
is based solely on property, while South Carolina's is based solely on sales. It
is true that cases as bad as this seldom, if ever, arise, but there can be no doubt
that serious inequity arises ffom lack of uniformity in these allocation formulas.
The problem of apportionment, moreover, which has caused much trouble to
the courts, and to the taxpayers, has been so difficult that the courts are inclined
to sustain any method of apportionment prescribed by the statute, provided it
is not deliberately unfair or discriminatory. On the other hand, the Supreme
Court has recently (in Hans Rees Sons v. North Carolina, 283 U. S. 123) invalidated a tax levied by North Carolina, under an apportionment formula based on
property, where the taxpayer "proved" that it earned within that State less
income than the amount reached by use of the formula. But the court's decision
will probably be of little help, as the average corporation doing interstate business
would find it most difficult to furnish such convincing proof as that supplied
by the taxpayer in the North Carolina case. We can not and should not rely on
the courts to solve this problem. While the courts may continue to render sound
and helpful decisions in isolated cases, inequitable treatment, disputes, disgruntled feelings, and waste of time arid money will continue until the problem
is deliberately met with a cooperative effort to solve it. Certainly it is not too
much to ask that the States shall join in a determined effort to avoid multiple
taxation upon the income of corporations doing interstate business.
Such, then, is the pass to which we have come as a result of the short-sighted
drifting course we have pursued and our failure to view in a comprehensive way
the effects of the relationships between the Federal and State governments and
between the States in matters of taxation. Our present system of taxation, if
we can be said to have a system, is permeated by inequity, uncertainty, and
administrative difficulties; the cost of collecting taxes is much too great, as is
also the cost to the taxpayer in determining his tax liability and in furnishing
the tax collector with the information required for the same purpose. We have
too much tax competition, too much litigation and dispute. State tax systems
have been prevented from developing along logical and effective lines, and the
tax burden has fallen with unequal and crushing weight upon real property. We
are sorely in need of simplification and uniformity; we need a much greater degree
of cooperation and coordination in the framing of fiscal policies.
How can we achieve a better ordered, coordinated scheme of State and Federal
taxes? Not by hasty action; but by beginning at once to give the subject the
sustained study and discussion without which no satisfactory answer can ever be
reached. One solution that has been advanced is a thoroughgoing separation
of the revenue sources of Federal and State revenues. Much of our difficulty
would be solved if we could assign certain forms of taxes to the.Federal Government alone, and others to the States alone. Overlapping would be eliminated,
cost of administration would be reduced, and each jurisdiction would be free to
exploit its revenue sources without the necessity of keeping an eye open to what
the other is doing. Something could undoubtedly be done along this line, but
it is doubtful that this remedy would be sufficient. It seems impracticable to
assign to either the States or the Federal Government alone such important types
of taxes as the income tax and the estate tax. Under any logical plan of separation the Federal Government would be assigned those taxes which it can administer more effectively than the States—yet the States have particular need for
these taxes. To take them away completely from the States would only result
inja still heavier burden on real estate. Furthermore any complete plan of

284

REPORT OF THE SECRETARY OF THE TREASURY

separation would probably prove too inflexible in t h e long r u n and might become
a source of friction between t h e States a n d the Federal Government.
Recognizing these difficulties, some observers advocate an extension of t h e
principle now used in t h e Federal estate t a x — t h e allowance of a limited credit
against t h e Federal t a x for a similar t a x levied b y t h e States. Perhaps, if such
a credit were m a d e conditional upon t h e State t a x being administered u n d e r
certain uniform provisions (excepting rates, of course), a large degree of simplification would be achieved. For example, a uniform m e t h o d of allocation a n d
a p p o r t i o n m e n t of income arising from interstate business might be secured.
B u t here again there are serious objections. Such a credit would practically
force t h e States to a d o p t t h e taxes involved a n d to a d o p t such rates as would
t a k e up t h e full credit, as t h e experience with t h e Federal estate t a x credit h a s
amply demonstrated. I a m opposed to such a solution as tending further t o
undermine t h e sovereignty of t h e States, to concentrate a u t h o r i t y in Washington, a n d to lessen t h e supervision and control which t h e t a x p a y e r should exercise
over t h e taxing power.
A third remedy which has been suggested is t h e e n a c t m e n t by Congress of a
law permitting t h e States to t a x directly interstate commerce under prescribed
conditions a n d in accordance with specified methods—somewhat along t h e lines
of t h e Federal act governing t h e taxation of national b a n k s by t h e States. There
is much to be said in favor of such a proposal. I t would solve t h e difficulties
arising from t h e restrictions upon t h e State in t h e taxation of interstate business,
which I h a v e already discussed, a n d would foster n a t u r a l a n d effective methods
of State taxation of business a n d S t a t e taxes upon sales or consumption. B u t
such a law might be unconstitutional, although a strong case m a y be m a d e out
for its validity, if properly drawn. There is a good chance t h a t t h e court would
uphold a law designed to promote equitable taxation, which would permit and
compel t h e equal taxation of interstate a n d i n t r a s t a t e business, a n d which would
relieve t h e courts of constant wrestling with t h e nice problem of determining
whether a t a x operates to p u t a direct burden on interstate commerce or only a n
indirect and incidental burden.
Others have stressed t h e urgent need of uniform State legislation with respect
to some forms of taxation, particularly t h e income tax. If such uniformity could
be secured, undoubtedly m a n y difficulties could be erased. B u t t h e a t t e m p t to
bring t h e States together a n d effect a compromise of their conflicting interests
would obviously be a formidable task, t h o u g h it might be accomplished if t h e
taxpayers affected—chiefly corporations doing an interstate business—would
array themselves solidly behind such a movement.
Considering t h e obvious objections a n d limitations to t h e various plans for
eliminating or reducing t h e evils which beset us in this field, t h e only safe conclusion is t h a t there exists a n urgent need for systematic, unbiased, a n d comprehensive study of these problems, before we can hope to secure t h e coordination in our State a n d Federal systems of taxation which we so sorely need. Such
a study should be m a d e by some commission on which t h e Federal a n d S t a t e
governments shall be adequately represented by men of ability a n d b r e a d t h of
view. Half of t h e members of this commission could be appointed by t h e President and half by t h e governors' conference. I have no d o u b t t h a t t h e funds
necessary to defra}^ t h e small expenses of t h e commission for research a n d investigation could be secured without great difficulty, even in these times of financial
stringency a n d enforced economj^, for t h e possible benefits to be gained would
far outweigh t h e cost. Though t h e task is a formidable one, t h e longer we delay
tackling it, t h e more difficult it will become. I n view of t h e immense popular
interest which now undoubtedly exists, this would seem to be an auspicious
m o m e n t to m a k e a start.

EXHIBIT

Federal Income Tax Procedure, remarks of Under Secretary of ihe Treasury Ballantine,
August 1, 1932, at ihe Symposium on Taxation ai Columbia University, New
York City
T h e high rates imposed by t h e new revenue act bring out t h e importance of
Federal income-tax procedure. Determination with reasonable promptness of
t h e precise a m o u n t which settles t h e t a x account with t h e Government is particularly i m p o r t a n t to t h e business m a n . T h e technique and personnel which
t h e Treasury has developed under past laws will help in minimizing uncertainties
a n d delay under t h e new law.

REPORT OF THE SECRETARY OF THE TREASURY

285

A distinctive feature of Federal income-tax procedure is what may be referred
to as self-assessment. Under our system, designed to accomplish prompt payment for the convenience of the Government, the amount of the original payments by taxpayers is computed by the taxpayers themselves upon their returns.
Subsequent check by the Treasury is, of course, required by law and in any. case
may result in an additional assessment or in a refund. The war-tax measures
contained many novel provisions which it took years to work out. Incometax provisions can not be made entirely simple; facts in particular cases are frequently complicated, and adjustments from amounts originally paid in must be
a normal incident of the application of the Federal income tax law. Failure to
understand the nature of Federal income-tax procedure has been the cause of
criticism of tax administration which is entirely unwarranted.
The process of determination upon additional assessments and refunds called
for by the law is conducted by the Treasury with every safeguard and check to
insure sound results. In every case the procedure calls for field examinations
or field-office audits by trained auditors acting in groups or under group supervision. A physical examination of the books of the taxpayers is required in all
cases involving any doubt. The field examination is followed by determination
in Washington, in which especially trained officers deal with special questions.
There is a large engineering force for questions of valuation and a large legal
staff for legal questions. The determination of the audit or audit review in
Washington is reexamined by the Commissioner of Internal Revenue, who has
immediately about him a corps of trained technical advisers.
Reaching a decision in a case where any considerable amount is involved requires the participation of many individuals trained for their work and fully
aware of their responsibilities. Most of these trained employees occupy their
positions under Civil Service requirements. Under this procedure a result in a
particular case dictated, by. the desire on the part of some officials either to harm
or to benefit a taxpayer is out of the question.
In the case of any refund of the amount of $20,000 or over a public decision
is made setting forth the fact of the refund and the grounds/or the decision. In
the case of every refund or credit to the amount of $75,000 or over, there must be
a special review^ by the General Counsel and his staff, and the proposed refund, or
credit must also be submitted to the Joint Committee on Internal Revenue Taxation, composed of five members of the Senate and five members of the House,
operating with a permanent staff. Submission to this committee of Congress
must be made 30 days before the refund .or credit is made, accompanied by a
statement of the facts and of the reasons for the proposed action. . The Treasury
annually submits to Congress a list of allrefunds of $500 and over and the Joint
Committee annually publishes a report on refunds of $75,000 or over, with its
comments. The Joint Committee of Congress has never attacked the motive of
the Treasury in making any refund.
The checking of. taxpayers' liabilities by the Treasury has resulted in very
large net additional payments to the Government. During the period beginning
with the fiscal year 1917 and including the first nine months of the fiscal year
1932, the Bureau of Internal Revenue has been called upon to administer collections of $47,696,120,436.97 in ta.xes and to deal with 119,098,969. returns. During this period, in dealing with this mass of returns, the Treasury has assessed
additional taxes to the amount of $5,981,632,503; has made refunds totaling
$1,384,352,575.09, and has credited or abated tax in the amount of $2,661,509,775.01. The total of additional tax assessed during this period has thus exceeded
the total of the amounts refunded and the amounts credited or abated by
$1,935,770,152.90.
In the case of the proposed assessments of additional taxes, the taxpayer has
the right before payment is made to secure a determination by the United States
Board of Tax Appeals. This body, entirely independent of the Treasury, is substantially a court and proceeds as sucli. Through further intensive consideration
cases pending before the board may, however, be disposed of without actual
trial, and for that purpose the Treasury maintains a body of experienced officials
known as the Special Advisory Committee. It is the position of the Treasury
that the tax law should be enforced by administration rather than by litigation,
and that in any ordinary case it should be possible for the taxpayer and the
Treasury to arrive at a determination of the tax liabilities.
Finality in tax determinations has been promoted by the provisions of the
law authorizing final agreements with the taxpayer settling tax questions, and
these provisions of law have been widely used.

286

REPORT OF THE SECRETARY OF THE TREASURY

A prompt and fair disposition of tax cases depends on the taxpayer as well as
well as upon the tax officials. The Treasury, through publishing and keeping
up to date its regulations interpreting the law and- otherwise, takes pains to
advise the taxpayers as fully as possible as to their rights and obligations. The
task of publishing regulations and issuing requested rulings under the new revenue
act has been an arduous one, particularly as only 15 days intervened between the
signing of the new law and the effective date of most of the new taxes imposed.
The importance of. certainty and clarity as to meaning and operation of the
new law is realized by the Treasury with a view to minimizing the confusion and
uncertainties in business transactions affected by the new taxes. To this end
the department is making every effort to act promptly on all requests for rulings
arising under the new revenue act.

OBLIGATIONS OF FOREIGN GOVERNMENTS
EXHIBIT 30

World War Deht Postponement, an excerpt from the message of the President to
the Congress ori our foreign affairs ^ Decemher 10, 1931
With the support of a large majority of the individual Members of the Senate
and House, I informed the governments concerned last June that—
"The American Government proposes the postponement during one year of
aU payments on intergovernmental debts, reparations, and relief debts, both
principal and interest, of course not including obligations of governments held
by private parties. Subject to confirmation by Congress, the American Government will postpone all payments upon the debts of foreign governments to the
American Government payable during the fiscal year beginning July 1 next,
conditional on a like postponement for one year of aU payments on intergovernmental debts owing the important creditor powers."
In making this proposal, I also publicly stated:
,
"The purpose of this action is to give the forthcoming year to the economic
recovery of the world and to help free the recuperative forces already in motion
in the United States from retarding influences from abroad.
"The world-wide depression has affected the countries of Europe more severely
than our own. Some of these countries are feeling to a serious extent the drain
of this depression on national economy. The fabric of intergovernmental debts,
supportable in. normal times, weighs heavUy in the midst of this depression.
"From a variety of causes arising out of the depression, such as the fall in the
price of foreign commodities and the lack of confidence in economic and political
stability abroad, there is an abnormal movement of gold into the United States
which is lowering the credit stability of many foreign countries. These and the
other difficulties abroad diminish buying power for our exports and in a measure
are the cause of our continued unemployment and continued lower prices to our
farmers.
"Wise and timely action should contribute to relieve the pressure of these
adverse forces in foreign countries and should assist in the reestablishment of
confidence, thus forwarding political peace and economic stability in the world.
"Authority of the President to deal with this problem is limited, as this action
must be supported by the Congress. It has been assured the cordial support of
leading members of both parties in the Senate and the House. The essence
of this proposition is to give time to permit debtor governments to recover their
national prosperity. I am suggesting to the American people that they be wise
creditors in their own interest and be good neighbors.
" I wish to take this occasion also to frankly state my views upon our relations
to German "reparations and the debts owed to us by the allied Governments of
Europe. Our Government has not been a party to, or exerted any voice in
determination of, reparation obligations. We purposely did not participate iri
either general reparations or the division of^colonies or property. The repayment of debts due to us from the AUies for the advance for war and reconstruction
were settled upon a basis not contingent upon German reparations or related
thereto. Therefore, reparations is necessarily wholly a European problem with
which we have no relation.
" I do not approve in any remote sense of the cancellation of the debts to us.
World confidence would not be enhanced by such action. None of our debtor
nations have ever suggested it. But as the basis of the settlement of these debts

REPORT OF THE SECRETARY OF THE TREASURY

287

was the capacity under normal conditions of the debtor to pay, we should be
consistent with our own policies and principles if we take into account the abnormal situation now existing in the world, I am sure the American people have
no desire to attempt to extract any sum beyond the capacity of any debtor to
IDay, and it is our view that broad vision requires that our Government should
recognize the situation as it exists,
"This course of action is entirely consistent with the policy which we have
hitherto pursued. We are not involved in the discussion of strictly European
problems, of which the payment of German reparations is one. It represents our
willingness to make a contribution to the early restoration of world prosperity
in which our own people have so deep an interest.
" I wish further to add that while this action has no bearing on the conference
for limitation of land armaments to be held next February, inasmuch as the
burden of competitive armaments has contributed to bring about this depression,
we trust that by this evidence of our desire to assist we shall have contributed
to the good will which is so necessary in the solution of this major question."
All the important creditor governments accepted this proposal. The necessary
agreements among them have been executed, and creditor governments have
foregone the receipt of payments due them since July 1, 1931.
The effect of this agreement was instantaneous in reversing the drift toward
general economic panic and has served to give time to the peoples of those couritries to readjust their economic life. The action taken was necessary. I am
confident it commends itself to the judgment of the American people.
Payments due to the United States Government from many countries, both
•on account of principal and interest, fall due on December 15th. It is highly
desirable that a law should be enacted before that date authorizing the Secretary
•of the Treasury, with the approval of the President, to postpone all payments
due us on account of debts owed by foreign governments to the United States
Government during the year ending June 30, 1932, and to provide for their payment over a 10-year period, beginning July 1, 1933.
As we approach the new year it is clear that a number of the governments
indebted to us will be unable to meet further payments to us in full pending
recovery in their economic life. It is useless to blind ourselves to an obvious fact.
Therefore it will be necessary in some cases to make still further temporary
adjustments.
The Congress has shared with the Executive in the past the consideration of
questions arising from these debts. I am sure that it will commend itself to the
Congress, that the legislative branch of the Government should continue to share
this responsibility. In order that we should be in position to deal with the situation, I recommend the re-creation of the World War Foreign Debt Commission,
with authority to examine such problems as may arise in- connection with these
debts during the present economic emergency, and to report to the Congress
its conclusions and recommendations.

EXHIBIT 31

.Statement by Secretary of the Treasury Mellon relative to the foreign debts and the
re-creation of the World War Foreign Debt Commission {.press release, Decemher
12, 1931)
There should be no misinterpretation as to the administration's recommendations to the Congress relating to the debts due us from foreign governments and
the re-creation of the World War Foreign Debt Commission. The administration
is opposed to cancellation. No recommendation made carries any such implication. It is, however, the duty of those in authority to deal with realities, and
there is no escaping the fact that some of our debtors can not meet in fuU the
payments due us until there has been a substantial measure of economic recovery,
.and that the position of others is so changed as to call for consideration of their
present situation in the light of existing circumstances. Our debt settlements
were effected on the basis of the capacity of the debtors to pay. As the President
isaid in his statement of June 20, "as the basis of the settlement of these debts
was the capacity under normal conditions of the debtor to pay, we should be
•consistent with our own policies and principles if we take into account the
abnormal situation now existing in the world."
Take the case of Great Britain, our best customer, which even in the depression
3^ear 1930 took $678,000,000 worth of American agricultural and industrial
141810—32^
19

288

REPORT OF THE SECRETARY OF THE TREASURY

products. T h e economic and financial changes of t h e p a s t year have immensely
increased t h e burden of her p a y m e n t s to us. T h e series of events through which
G r e a t Britain was forced off t h e gold s t a n d a r d are too recent to require enumeration. To-day t h e p o u n d sterling is selling a t $3,315 to t h e pound, which is a
32 per cent discount as compared with last year when it stood a t p a r i t y or $4,866.
All debts to G r e a t Britain from foreign governments, except reparation p a y m-ents, which are not being collected a t all this year and are not likely to b e
collected in full next year, are payable in sterling. Her debt to us is payable in
gold dollars. T h e combined effect of these unfavorable factors results in an
enormously increased burden for t h e people of Great Britain.
P a y m e n t s due during t h e present fiscal year will serve to exemplify t h e magnit u d e of t h e additional burden. W i t h t h e p o u n d sterling a t par, t h e British
treasury needs 32,800,000 pounds in order to p a y us $159,500,000. W i t h t h e
p o u n d sterling a t t h e r a t e a t which it sold on December 10, 1931, it would t a k e
48,100,000 pounds, or an increase of i5,300,00() pounds, or 47 per cent. Or in
other words, t h e burden on t h e British taxpayer is increased by almost one-half.
When t h e British debt settlement was m a d e it was estimated t h a t its present
value a t a 4}4 per cent interest r a t e was 80 per cent of t h e t o t a l a m o u n t due prior
to funding.. If t h e a m o u n t to be raised in pounds sterling to meet t h e obligations
. to us in dollars is increased by 47 per cent, it becomes a p p a r e n t t h a t from t h e
standpoint of' t h e British taxpayer he is asked to meet not t h e obligation a s
• established by our d e b t commission b u t an a m o u n t considerably in excess of
such; obligation.
Nothing could more forcibly illustrate t h e changed situation which places on
t h e executive as well as t h e legislative branches of govefnment t h e d u t y of reexamining t h e obligations of our^ debtors and their ability to meet t h e m during
a period of world-wide economic depression.
.
Does any one believe t h a t Austria or Hungafy should be asked to p a y t h e installments due from t h e m in view of t h e extraordinarily straitened circumstances
in which t h e people of those two countries find themselves and t h e great difficulty
which t h e y experience in obtaining foreign exchange for t h e purpose of carrying
on even t h e m i n i m u m of essential commerce with t h e rest of t h e world?
Does a n y one believe t h a t G e r m a n y should be asked by t h e United S t a t e s
Government to meet her p a y m e n t s on t h e costs of t h e Army of Occupation when
such a d e m a n d by us m u s t be irievitably followed by demands of other creditors
to p a y her reparations in full?
. ' These instances should suffice to demonstrate t h a t to stand on t h e letter of
our bond, a n d to refuse t o investigate or to consider t h e facts, is to fail in our
resporisibility to t h e American people whom we represent a n d t o t h e d e b t o r s
whose capacity to pay we ourselves undertook to determine.
W h a t intelligent business m a n or banker would blindly refuse to investigate or
to consider t h e altered circumstances of a debtor whose unsecured obligation h e
held?
T h e situation of our debtors has been immensely altered during t h e course of
the last two years. New questions in relation to these debts are bound to. arise
in t h e course of t h e next few m o n t h s . T h e Congress should be in a position
through a commission created by it a n d composed in p a r t of its own members t o
ascertain w h a t t h e facts actually are a n d to deal with these new probleins a s
they arise.
I t is with such t h o u g h t s as these in mind t h a t t h e President recommended t h e
re-creation of t h e World W a r Foreign D e b t Commission. I a m confident t h a t
upon m a t u r e consideration this recommeridaitiori will commend itself to t h e
Congress.

EXHIBIT

Statement hy Under Secretary of ihe Treasury Mills concerning the postponement of
payments of foreign governments due December 15, 1931 {press release, December
14, 1931)
There seems to be some confusion as to t h e discussion of yesterday betweenseveral Senators a n d myself, accompanied by Mr. Feis of t h e State Department,,
in respect of t h e postponement of p a y m e n t s on foreign debts during this fiscal
year.
Installments are due on December 15 from a n u m b e r of debtor nations. Since
t h e appropriate committees of the Congress can not hold hearings on t h e proposed,
legislation until next week, it is obvious t h a t t h e Congress can not act by t h e 15th.

REPORT OF THE SECRETARY OF THE TREASURY

289

However, inasmuch as 68 Senators and 276 Members of the House have already
pledged themselves to support the legislation, it is equally obvious that when
circumstances permit the action of Congress will be favorable.
In the meantime, some answer has to be given to representatives of foreign
debtor governments in response to their inquiries as to the existing situation.
Should such inquiries be made, the Secretary of State proposed to say verbally
something along the following lines:
"The President's proposal for a debt suspension of one year has been submitted to the Congress. Owing to the fact that the Congress only met last Monday and that the appropriate committees of the Senate and of the House of
Representatives are not in a position to consider the proposed legislation prior to
the 15th of December, it will be impossible for the debt suspension legislation to
be enacted by that date. While recognizing that neither the President of the
United States nor any of the executive departments of the Government has power
to alter the terms of the debt agreements now in force, I desire to advise you that
under the special circumstances in which the proposal was made and accepted
and without intending in any way to vary the legal rights of this country, it
appears to this Government that a postponement on the part of your Government
of December 15 payments pending action by the Congress would not be subject
to any just criticism."
As a matter of courtesy, and in order to keep Members of Congress fully informed, this proposed answer was shown by me to the Senators attending the
meeting yesterday, as it had previously been shown to some Members of the
House.
No Senator or Representative was asked to sign or approve such statement
3^esterday or at any time. No Senator was asked to commit himself, and this
seemed to be fully understood. I simply told them that I was there to keep them
informed and to ascertain whether anyone saw any objection to a statement made
•verbally in that form. No objection was voiced by anyone present.
Subsequent to the meeting this was fully explained to the representatives of the
press in the presence of Senators Watson and Smoot.
May I add that there has never at any time been any intention of couphng the
President's proposal to re-create the World War Foreign Debt Commission with
the proposal for a one year's suspension of payments on foreign debts. The bill
introduced by Senator Smoot and Representative Collier covering the latter
proposal was prepared in the legislative drafting bureau of the House at the
suggestion of the Treasury, given b}^ the Treasury to Senator Smoot and Representative Collier, and contains no reference to the re-creation of a debt funding
commission.
EXHIBIT

Joint resolution to authorize the postponement of amounts payable to the United
States from foreign governments during the fiscal year 1932, and their repayment
over a ten-year period beginning July 1, 1933
[PUBLIC RESOLUTION—NO, 5—72D CONGRESS—H. J. RES. 147]

Resolved hy the Senate and House of Representatives of the United States of
America in Congress assembled. That in the case of each of the following countries:
Austria, Belgium, Czechoslovakia, Estonia, Finland, France, Germany, Great
Britain, Greece, Hungary, Italy, Latvia, Lithuania, Poland, Rumania, and
Yugoslavia, the Secretary of the Treasury, with the approval of the President, is
authorized to make, on behalf of the United States, an agreement with the
government of such country to postpone the payment of any amount payable
during the fiscal year beginning July 1, 1931, by such country to the United States
in respect of its bonded indebtedness to the United States, except that in the.
case of Germany the agreement shall relate only to amounts payable by Germany
to the United States during such fiscal year in respect of the costs of the Army
of Occupation.
SEC. 2. Each such agreement on behalf of the United States shall provide for
the payment of the postponed amounts, with interest at the rate of 4 per centum
per annum beginning July 1, 1933, in 10 equal annuities, the first to be paid
during the fiscal year beginning July 1, 1933, and one during each of the nine
fiscal years following, each annuity to be payable in one or more installments.
SEC. 3. No such agreement shall be made with the government of any country
unless it appears to the satisfaction of the President that such government has

290

REPORT OF THE SECRETARY OF THE TREASURY

made, or has given satisfactory assurances of willingness and readiness to make,
with the government of each of the other countries indebted to such country in
respect of war, relief, or reparation debts, an agreement in respect of such debt
substantially similar to the agreement authorized by this joint resolution to be
made with the government of such creditor country on behalf of the United States.
SEC. 4. Each agreement authorized by this joint resolution shall be made so
that payments of annuities under such agreement shall, unless otherwise provided in the agreement (1) be in accordance with the provisions contained in the
agreement made with the government of such country under which the payment
to be postponed is payable, and (2) be subject to the same terms and conditions
as payments under such original agreement.
SEC. 5. It is hereby expressly declared to be against the policy of Congress
that any of the indebtedness of foreign countries to the United States should be
in any manner canceled or reduced; and nothing in this joint resolution shall be
construed as indicating a contrary policy, or as implying that favorable con.sideration will be given at any time to a change in the policy hereby declared.
Approved, December 23, 1931.
ExHrBiT 34

Agreement with Finland, May 23, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of iis indehtedness to the United States
AGREEMENT, made the 23d day of May, 1932, at the City of Washington, District
of Columbia, between the Government of the Republic of Finland, hereinafter
called Finland, party of the first part, and the Government of the United States
of America, hereinafter called the United States, party of the second part.
Whereas, under the terms of the debt funding agreement between Finland and
the United States, dated May 1, 1923, there is payable by Finland to the United
States during the fiscal year beginning July 1, 1931, and ending June 30, 1932, in
respect of the bonded indebtedness of Finland to the United States, the aggregate
amount of $312,295, including principal and interest; and
Whereas, a joint resolution of the Congress of the United States, approved
December 23, 1931, authorizes the Secretary of the Treasury, with the approval
of the President, to make on behalf of the United States an agreement with
Finland on the terms hereinafter set forth, to postpone the payment of the
amount payable by Finland to the United States during such year in respect
of its bonded indebtedness to the United States;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, it is agreed as follows:
1. Payment of the amount of $312,295, payable by Finland to the United
States during the fiscal year beginning July 1, 1931, and ending June 30, 1932,
in respect of the bonded indebtedness of Finland to the United States, according
to the terms of the agreement of May 1, 1923, above mentioned, is hereby postponed so that such amount, together with interest thereon at the rate of 4 per
centum per annum from July 1, 1933, shall be paid by Finland to the United
States in 10 equal annuities of $38,061 each, payable in equal semiannual installments on December 15 and June 15 of each fiscal year beginning with the
fiscal year July 1, 1933, and ending June 30, 1934, and concluding with the fiscal
year beginning July 1, 1942, and ending June 30, 1943. The bond numbered 9,
dated December 15, 1922, matured December 15, 1931, in the principal amount
of $55,000, and delivered by Finland to the United States under the agreement
of May 1, 1923, shall be retained by the United States untU the annuities due
under this agreement shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, payments
of annuities under this agreement shall be subject to the same terms and conditions as payments under the agreement of May 1, 1923, above mentioned.. The
proviso in paragraph 2 of such agreement, authorizing the postponement of payments on account of principal, and the option of Finland provided for in paragraph 4, to pay in obligations of the United States, shall not apply to annuities
payable under this agreement.
3. The agreement of May 1, 1923, between Finland and the United States,
above mentioned, shaU remain in aU respects in full force and effect except so
far as expressly modified by this agreement.
4. Finland and the United States, each for itself, represents and agrees that
the execution and delivery of this agreement have in all respects been duly

REPORT OF THE SECRETARY OF THE TREASURY

291

authorized and t h a t aU acts, conditions, and legal formahties which should have
been completed prior t o t h e making of this agreement have been completed as
required by t h e laws of Finland and t h e United States, respectively, and in
conformity therewith.
5. This agreement shall be executed in two counterparts, each of which shall
h a v e t h e force a n d effect of an original.
I n witness whereof, Finland has caused this agreement to be executed on its
behalf by its envoy extraordinary and minister plenipotentiary a t Washington,
t h e r e u n t o duly authorized, and t h e United States has likewise caused this agreem e n t to be executed on its behalf by t h e Secretary of t h e Treasury, with the
approval of t h e President, p u r s u a n t to a joint resolution of Congress approved
December 23, 1931, all on t h e day and year first above written.
By

T H E R E P U B L I C OF F I N L A N D ,
L E O N A R D ASTROM,

Envoy Extraordinary and. Minister Plenipotentiary.
By

T H E U N I T E D S T A T E S OF A M E R I C A ,
OGDEN L . MILLS,

Secretary of the Treasury.
Approved:
HERBERT

HOOVER,

President.
EXHIBIT

Agreement with Greece, M a y 24, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of its indebtedness to the United States
A G R E E M E N T , m a d e t h e 24th day of M a y , 1932, a t t h e City of Washington, District
of Columbia, between t h e (government of t h e Hellenic Republic, hereinafter
called Greece, p a r t y of t h e first part, and the Government of the United States
of America, hereinafter called t h e United States, p a r t y of t h e second p a r t .
Whereas, under the terms of t h e debt funding agreement between Greece and
t h e United States, dated M a y 10, 1929, there is payable by Greece to the United
States during t h e fiscal year beginning July 1, 1931, and ending J u n e 30, 1932,
in respect of t h e bonded indebtedness of Greece to t h e United States, t h e aggregate a m o u n t of $220,000 under P a r t I of such agreement, and t h e aggregate
a m o u n t of $889,080, including principal a n d interest, under P a r t I I of such agreem e n t ; and
Whereas, a joint resolution of t h e Congress of t h e Uriited States, approved
December 23, 1931, authorizes ohe Secretary of t h e Treasury, with t h e approval
of t h e President, to m a k e on behalf of t h e United States an agreement with
Greece on t h e t e r m s hereinafter set forth, t o postpone t h e paynient of t h e a m o u n t
payable by Greece to t h e United States during such year in respect of its bonded
indebtedness to t h e United States; and
Whereas, Greece hereby gives assurance to t h e satisfaction of t h e President of
t h e United States of t h e willingness and readiness of Greece to make with t h e
Government of each country indebted t o Greece in respect of war, relief, or reparation debts, an agreement in respect of t h e p a y m e n t of t h e a m o u n t or a m o u n t s
payable to Greece with respect to such debt or debts during such fiscal year,
substantially similar t o this agreement authorized by t h e joint resolution above
mentioned;
Now, therefore, in consideration of the premises and of the m u t u a l covenants
herein contained, it is agreed as foUows:
1. (a). P a y m e n t of t h e a m o u n t of $220,000 payable by Greece to the United
States during t h e fiscal year beginning July 1, 1931, and ending J u n e 30, 1932, in
respect of t h e bonded indebtedness of Greece to the United States, according t o
t h e terms of P a r t I of the agreement of M a y 10, 1929, above mentioned, is hereby
postponed, so t h a t such a m o u n t , together with interest thereon a t t h e rate of 4
per centum per a n n u m from July 1, 1933, shall be paid by Greece to the United
States in 10 equal annuities of $26,338.90 each, payable in equal semiannual
installments on July 1 and J a n u a r y 1 of each fiscal year, beginning with t h e
fiscal year July 1, 1933, and ending J u n e 30, 1934, and concluding with the fiscal
year beginning July 1, 1942, and ending J u n e 30, 1943. The bonds numbered
7 and 8, dated J a n u a r y 1, 1928, m a t u r e d July 1, 1931, and J a n u a r y 1, 1932,
respectively, in the p r i n c i p a t a m o u n t of $110,000 each, and delivered by Greece
t o t h e United States under P a r t I of t h e agreement of M a y 10, 1929, shall be

292

REPORT OF THE SECRETARY OF THE TREASURY

retained by the United States until the annuities due under this paragraph shall
have been paid.
(b) Payment of the amount of $889,080 payable by Greece to the United States
during the fiscal year beginning July 1, 1931 and ending July 1, 1932, in respect of
the bonded indebtedness of Greece to the United States, according to the terms of
Part II of the agreement of May 10, 1929, above mentioned, is hereby postponed
so that such amount, together with interest thereon at the rate of 4 per centum
per annum from July 1, 1933, shall be paid by Greece to the United States in 10
equal annuities of $107,935.86 each, payable in equal semiannual installments on
November 10 and May 10 of each fiscal year beginning with the fiscal year July 1,
1933 and ending June 30, 1934, and concluding with the fiscal year beginning
July 1, 1942 and ending June 30, 1943. Bond numbered 5, dated May 10, 1929,
matured November 10, 1931, in the principal amount of $218,000, and bond
numbered 6, dated May 10, 1929, matured May 10, 1932, in the principal amount
of $222,000, and delivered by Greece to the IJnited States under Part II of the
agreement of May 10, 1929, shall be retained by the United States until the annuities due under this paragraph shall have been paid.
' 2. Except so far as otherwise expressly provided in this agreement, payments of
annuities under this agreement shall be subject to the same terms and conditions
as payments under the agreement of May 10, 1929, above mentioned. The
proviso in paragraph 2 of Part I of such agreement, authorizing the postponement
of payments on account of principal, and the option of Greece provided for in
paragraph 4 of Part I to pay in obligations of the United States, shall not apply to
annuities payable under this agreement.
3. The agreement of May 10, 1929, between Greece and the United States,
above mentioned, shall remain in all respects in full force and effect except so far
as expressly modified by this agreement.
4. Greece and the United States, each for itself, represents and agrees that the
execution and delivery of this agreement have in all respects been dul}^ authorized
and that all acts, conditions, and legal formalities which should have been completed prior to the making of this agreement have been completed as required by
the laws of Greece and the United States, respectively, and in conformity
therewith.
5. This agreement shall be executed in two counterparts, each of which shall
have the force and effect of an original.
In witness whereof, Greece has caused this agreement to be executed on its
behalf by its envoy extraordinary and minister plenipotentiary a t Washington,
thereunto duly authorized, subject, however, to ratification, if necessary, and
the United States has likewise caused this agreement to be executed on its behalf
by the Secretary of the Treasury, with the approval of the President, pursuant to
a joint resolution of Congress approved December 23, 1931, all on the day and
year first above written.
T H E HELLENIC REPUBLIC,
By CHARALAMBOS SIMOPOULOS,

Envoy Extraordinary and Minister Plenipotentiary.
T H E UNITED STATES OF AMERICA,
By OGDEN L . MILLS,

Secretary of the Treasury.

Approved:
HERBERT HOOVER,

President.
EXHIBIT 36

Agreement with Germany, May 26, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of its indebtedness to the United States
AGREEMENT, made the 26th day of May, 1932, at the City of Washington, District
of Columbia, between the Government of the German Reich, hereinafter called
Germany, party of the first part, and the Government of the United States of
America, hereinafter called the United States, party of the second part.
Whereas, under the terms of the debt funding agreement between Germany and
the United States, dated June 23, 1930, there is payable by Germany to the United
States during the fiscal year beginning July 1, 1931, and ending June 30, 1932, in
respect of bonded indebtedness of Germany to the United States on account o

REPORT OF THE SECRETARY OF' THE TREASURY

293

t h e costs of t h e American Army pf Occupation, the aggregate a m o u n t of 25,300,000
reichsmarks; and
Whereas, t h e Secretary of t h e Treasury, with approval of the President, is
authorized to m a k e on behalf of t h e United States an agreement, relating to costs
of t h e American Army of Occupation, with Germany on the terms hereinafter
set forth, to postpone t h e p a y m e n t of the a m o u n t payable by Germany to the
United States during such year in respect of its bonded indebtedness to the
United States on account of t h e American Army of Occupation;
Now, therefore, in consideration of the premises and of the m u t u a l covenants
herein contained, it is agreed as follows:
1. P a y m e n t of t h e a m o u n t of 25,300,000 reichsmarks payable by G e r m a n y
t o t h e United States during t h e fiscal year beginning July 1, 1931, and ending
J u n e 30, 1932, in respect of t h e bonded indebtedness of Germany to t h e United
States on account of t h e costs of t h e American Army of Occupation, according t o
t h e terms of t h e agreement of J u n e 23, 1930, above mentioned, is hereby postponed so t h a t such a m o u n t , together with interest thereon a t t h e r a t e of 4 per
centum per a n n u m from July 1, 1933, shall be paid by Germany to t h e United
States in 10 equal annuities of 3,058,098.90 reichsmarks each, payable in equal
semiannual installments on September 30 and March 31 of each fiscal year
beginning with t h e fiscal year July 1, 1933, and ending "June 30, 1934, a n d concluding with t h e fiscal year beginning July 1, 1942, and ending J u n e 30, 1943.
T h e bonds numbered 4 - B a n d 5 - B , dated September 1, 1929, m a t u r i n g on Sept e m b e r 30, 1931, and March 31, 1932, respectively, in t h e principal a m o u n t of
12,650,000 reichsmarks each, and delivered by Germany to t h e United States
under t h e agreement of J u n e 23, 1930, shall be retained by t h e United States
until t h e annuities due under this agreement shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, t h e provisions of t h e agreement of J u n e 23, 1930, between Germany and t h e United
States, relating to costs of t h e American Army of Occupation, shall remain in
all respects in full force a n d effect. T h e p a y m e n t of annuities under this agreem e n t shall be subject to t h e same terms and conditions as t h e p a y m e n t s under
t h e agreement of J u n e 23, 1930, above mentioned. T h e proviso in p a r a g r a p h 5
of t h e agreement of J u n e 23, 1930, authorizing t h e postponement of p a y m e n t s on
account of principal, shall not apply to annuities payable under this agreement.
Nothing in this agreement shall be construed as to affect in any respect other
provisions of t h e agreement of J u n e 23, 1930.
3. Germany and t h e United States, each for itself, represents and agrees t h a t
t h e execution a n d delivery of this agreement h a v e in ail respects been duly
authorized and t h a t all acts, conditions, and legal formalities which should have
been completed prior to t h e execution of this agreement have been completed as
required by t h e laws of Germany a n d t h e United States, respectively, and in
conformity therewith. I t is understood, however, t h a t this agreement is subject
t o ratification by Germany.
4. This agreement shall be executed in two counterparts, each of which shall
h a v e t h e force and effect of an original.
I n witness whereof, Germany has caused this agreement to be executed on its
behalf by its ambassador extraordinary and plenipotentiary a t Washington,
t h e r e u n t o duly authorized, and t h e United States has likewise caused this agreem e n t to be executed on its behalf by t h e Secretary of t h e Treasury, with t h e
approval of t h e President, p u r s u a n t t o . a joint resolution of Congress approved
December 23, 1931, all on t h e day and year first above written.
By

T H E GERMAN REICH,
F R I E D R I C H W . VON P R I T T W I T Z UND

GAFFRON,

Ambassador Extraordinary and Plenipotentiary.
By

T H E U N I T E D S T A T E S OF A M E R I C A ,
OGDEN L . MILLS,

Secretary of the Treasury.
Approved:
HERBERT

HOOVER,

President.

294

REPORT OF THE SECRETARY OF THE TREASURY
EXHIBIT 37

Agreement with Hungary, May 27, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of its indehtedness to the United States
A G R E E M E N T , m a d e t h e 27th day of May, 1932, a t t h e City of Washington, District of
Columbia, between t h e Government of the Kingdom of H u n g a r y , hereinafter
called H u n g a r y , p a r t y of t h e first p a r t , and the Government of t h e United S t a t e s
of America, hereinafter called t h e United States, p a r t y of t h e secorid p a r t .
Whereas, under t h e t e r m s of t h e debt funding agreement between H u n g a r y
a n d t h e United States, dated April 25, 1924, there is payable by H u n g a r y to t h e
United States during t h e fiscal year beginning July 1, 1931, and ending J u n e 30,
1932, in respect of t h e bonded indebtedness of H u n g a r y to t h e United States,
t h e aggregate a m o u n t of $69,342,75, including principal and interest; a n d
Whereas, a joint resolution of t h e Congress of t h e United States, approved
December 23, 1931, authorizes t h e Secretary of t h e Treasury, with t h e approval
of t h e President, to m a k e on behalf of t h e United States an agreement with
H u n g a r y on t h e terms hereinafter set forth, to postpone t h e p a y m e n t of t h e
a m o u n t payable by H u n g a r y to t h e United States during such year in respect of
its bonded indebtedness to t h e United States;
Now, therefore, in consideration of t h e premises a n d of t h e m u t u a l covenants
herein contained, it is agreed as follows:
1. P a y m e n t of t h e a m o u n t of $69,342,75 payable by H u n g a r y to t h e United
States during t h e fiscal year beginning July 1, 1931, and ending J u n e 30, 1932, in
respect of t h e bonded indebtedness of H u n g a r y to t h e U n i t e d States, according
to t h e terms bf t h e agreement of April 25, 1924, above mentioned, is hereby postponed so t h a t such amount, together with interest thereon a t t h e r a t e of 4 p e r
centum per a n n u m from July 1, 1933, shall be paid by H u n g a r y to t h e United
States in 10 equal annuities of $8,451.16 each, payable in equal semiannual
installments on December 15 a n d J u n e 15 of each fiscal year beginning with t h e
fiscal year July 1, 1933 and ending J u n e 30, 1934, a n d concluding with t h e fiscal
year beginning July 1, 1942 and ending J u n e 30, 1943. T h e bond numbered 8,
dated December 15, 1923, m a t u r e d December 15, 1931, in t h e principal a m o u n t
of $12,000, and delivered by H u n g a r y to t h e United States under t h e agreement
of April 25, 1924, shall be retained by t h e United States until t h e annuities d u e
under this agreement shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, p a y m e n t s
of annuities under this agreement shall be subject to t h e same terms and conditions
as p a y m e n t s under t h e agreement of April 25, 1924, above mentioned. T h e
proviso in p a r a g r a p h 2 of such agreement, authorizing t h e postponement of p a y m e n t s on account of principal, a n d t h e option of H u n g a r y provided for in p a r a graph 4, to p a y in obligations of t h e United States, shall not apply t o annuities
payable under this agreement.
3. T h e agreement of April 25, 1924, between H u n g a r y aind t h e United States,
above mentioned, shall remain in all respects in full force a n d effect except so
far as expressly modified by this agreement.
4. H u n g a r y and theUnited States, each for itself, represents and agrees t h a t the execution and delivery of this agreement have in all respects been duly authorized and
t h a t all acts, conditions, and legal formalities which should have been completed
prior to the making of this agreement have been completed as required by t h e laws
of H u n g a r y and the United States, respectively, and in conformity therewith.
5. This agreement shall be executed in two counterparts, each of which shall
have the force and effect of an original.
I n witness whereof, H u n g a r y has caused this agreement to be executed on its
behalf by its envpy extraordinary and minister plenipotentiary a t Washington,
thereunto duly authorized,, subject, however, to ratification, and t h e United
States has likewise caused this agreement to be executed on its behaU by t h e
Secretary of t h e Treasury, with the approval of the President, p u r s u a n t to a joint
resolution of Congress approved December 23, 1931, all on the day and year
first above written.
T H E G O V E R N M E N T OF T H E K I N G D O M OF H U N G A R Y ,
By LASZLO S Z E C H E N Y I ,

Envoy Extraordinary and Minister Plenipotentiary.
T H E U N I T E D S T A T E S OF A M E R I C A ,
By O G D E N L . M I L L S ,

Secretary of the Treasury.
Approved:
HERBERT

HOOVER,

President.

REPORT OF THE SECRETARY OF THE TREASURY

295

EXHIBIT 38

Agreement with Italy, June 3, 1932, for the postponement of the payments due during
the fiscal year 1932 on account of its indebtedness to the United States
AGREEMENT, made the 3d day of June, 1932, at the City of Washington, District
of Columbia, between the Government of the Kingdom of Italy, hereinafter
called Italy, party of the first part, and the Government of the United States
of America, hereinafter called the United States, party of the second part.
Whereas, under the terms pf the debt funding agreement between Italy and
the United States, dated November 14, 1925, there is payable by Italy to the
United Sates during the fiscal year beginning July 1, 1931, and ending June 30,
1932, in respect of bonded indebtedness of Italy to the United States, the aggregate amount of $14,706,125, including principal and interest; and
Whereas, a joint resolution of the Congress of the United States, approved
December 23, 1931, authorizes the Secretary of the Treasury, with the approval
of the President, to make on behalf of the United States an agreement with
Italy on the terms hereinafter set forth, to postpone the payment of the amount
payable by Italy to the United States during such year in respect of its bonded
indebtedness to the United States; and
Whereas, the Government of Italy hereby gives assurance, to the satisfaction
of the President of the United States, of the willingness and readiness of Italy to
make with the Government of each country indebted to Italy in respect of war,
relief, or reparation debts an agreement in respect of the payment of the amount
or amounts payable to Italy with respect to such debt or debts during such fiscal
year, substantially similiar to this agreement authorized by the joint resolution
above mentioned;
Now, therefore, in consideration of the premises and of the mutual convenants
herein contained, it is agreed as follows:
1. Payment of the- amount of $14,706,125, payable by Italy to the United
States during the fiscal year beginning July 1, 1931, and ending June 30, 1932, in
respect of the bonded indebtedness of Italy to the United States, according
to the terms of the agreement of November 14, 1925, above mentioned, is hereby
postponed so that such amount together with interest thereon at the rate of 4
per centum per annum from July 1, 1933, shall be paid by Italy to the United
States in 10 equal annuities of $1,792,311.76 each, payable in equal semiannual
installments on December 15 and June 15 of each fiscal year beginning with the
fiscal year July 1, 1933, and ending June 30, 1934, and concluding with the fiscal
year beginning July 1, 1942, and ending June 30, 1943. The bond No. 7, dated
•June 15, 1925, maturing June 15, 1932, in the principal amount of $12,200,000,
and delivered by Italy to the United States under the agreement of November
14, 1925, shall be retained by the United States until the annuities due under this
agreement shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, payments
of annuities under this agreement shall be subject to the same terms and conditions
as payments under the agreement of November 14, 1925, above mentioned. The
proviso in paragraph 2 of such agreement, authorizing the postponement of
payments on account of principal, and the option of Italy provided for in paragraph 4, to pay in obligations of the United States, shall not apply to annuities
payable under this agreement.
3. The agreement of November 14, 1925, between Italy and the United States,
above mentioned, shall remain in all respects in full force and effect except so far as
expressly modified by this agreement.
4. Italy and the United States, each for itself, represents and agrees that the
execution and delivery of this agreement have in all respects been duly authorized
and that all acts, conditions, and legal formalities which should have been completed prior to the making of this agreement have been completed as required by
the laws of Italy and the United States, respectively, and in conformity therewith.
5. This agreement shall be executed in two counterparts, each of which shaU
have the force and effect of an original.
In witness whereof, Italy has caused this agreement to be executed on its behalf
by the Royal Italian Ambassador Extraordinary and Plenipotentiary at Washington, thereunto duly authorized, and the United States has likewise caused this
agreement to be executed on its behalf by the Secretary of the Treasury, with the

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REPORT OF THE SECRETARY OF THE TREASURY

approval of the President, pursuant to a joint resolution of Congress, approved
December 23, 1931, all on the day and year first above written. •
T H E KINGDOM OF ITALY,
B y GiACOMo DE

MARTINO,

Ambassador Extraordinary and Plenipotentiary.
T H E UNITED STATES OF AMERICA, •
By OGDEN L . MILLS,

Secretary of the Treasury.

Approved:
HERBERT

HOOVER,

President.
EXHIBIT

Agreement with Great Britain, June 4, 1932, for the postponement of the payments
due during the fiscal year 1932 on account of its indehtedness to the United States
AGREEMENT, made the 4th day of June, 1932, at the City of Washington, District
of Columbia, between the Government of the United Kingdom of Great
Britain and Northern Ireland, hereinafter called the Government of the
United Kingdom, party of the first part, and the Government of the United
States of America, hereinafter called the United States, party of the second
part.
Whereas, under the terms of the debt funding agreement between the Government of the United Kingdom and the United States, dated June 19, 1923, there
is payable by Great Britain to the United States during the fiscal year beginning
July 1, 1931, and ending June 30, 1932, in respect of the bonded indebtedness of
the Government, of the United Kingdom to the United States, the aggregate
amount of $159,520,000, including principal and interest; and
Whereas, a joint resolutiori of the Congress of the United States, approved
December 23, 1931, authorizes the Secretary of the Treasury, with the approval
of the President, to make on behalf of the United States an agreement with tbe
Government of the United Kingdom on the' terms hereinafter set forth, to postpone the payment of the amount payable by the Government of the United
Kingdom to the United States during such year in respect of its bonded indebtedness to the United States; and
Whereas, the Government of the United Kingdom hereby gives assurance, to
the satisfaction of the President of the United States, of its wiUingness and readiness to make with the Government of each foreign country indebted to the
Government of the United Kingdom in respect of war, relief, or reparation debts,
an agreement in respect to the payment of the amount or amounts payable to
the Government of the United Kingdom with respect to such debt or debts during
such fiscal year, substantially similar to this agreement authorized by the joint
resolution above mentioned;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, it is agreed as follows:
1. Payment of the amount of $159,520,000, payable by the Government of the
United Kingdom to the United States during the fiscal year beginning July 1,
1931 and ending June 30, 1932, in respect of the bonded indebtedness of the
Government of the United Kingdom to the United States, according to the terms
of the agreement of June 19, 1923, above mentioned, is hereby postponed so that
such amount together with interest thereon at the rate of 4 per centum per annum
from July 1, 1933, shall be paid by the Government of the United Kingdom to the
United States in 10 equal annuities of $19,441,530.10 each, payable in equal
semianriual installments on December 15 and June 15 of each fiscal year beginning with the fiscal year July 1, 1933 and ending June 30, 1934, and concluding
with the fiscal year beginning July 1, 1942, and ending June 30, 1943.
2. Except so far as otherwise expressly provided in this agreement, payments
of annuities under this agreement shall be subject to the same terms and conditions as payments under the agreement of Jurie 19, 1923, above mentioned.
The proviso in paragraph 6 of such agreement, authorizing the postponement of
paymerits. on account of principal, and the option of the Government of the
United Kingdom provided for in paragraph 3, to pay in obligations of the United
States, shall not apply to annuities payable under this agreement.

REPORT OF THE SECRETARY OF THE TREASURY

297

3. T h e agreement of J u n e 19, 1923, between t h e Government of t h e United
K i n g d o m a n d t h e United States, a b o v e mentioned, shall remain in all respects
in full force a n d effect except so far as expressly modified by this agreement.
4. T h e Government of t h e United Kingdom a n d t h e United States, each for
itself, represents and agrees t h a t t h e execution a n d delivery of this agreement
h a v e in all respects been duly authorized a n d t h a t all acts, conditions, and legal
formalities which should h a v e been completed prior to t h e making of this agreem e n t have been completed as required by t h e laws of t h e United Kingdom and
t h e United States, respectively, a n d in conformity therewith.
5. This agreement shall be executed in two counterparts, each of which shall
h a v e t h e force a n d effect of a n original.
. I n witness whereof, t h e Governmerit of t h e United Kingdom has caused this
agreement to be executed on its behalf by T h e R i g h t Honorable Sir Ronald
Lindsay, Ambassador E x t r a o r d i n a r y a n d Plenipotentiary a t Washington, thereu n t o duly authorized, a n d t h e United States has likewise caused this agreement
to be executed on its behalf by T h e Honorable Ogden L. Mills, Secretary of the
Treasury, with t h e approval of t h e President, p u r s u a n t to a joint resolution of
Congress, approved December 23, 1931, all on t h e day a n d year first above
written.
By

T H E GOVERNMENT
R. C. L I N D S A Y ,

OF T H E U N I T E D

KINGDOM,

Ambassador Extraordinary and Plenipotentiary.
T H E U N I T E D S T A T E S OF A M E R I C A ,
By O G D E N L . M I L L S ,

Secretary of the Treasury.
Approved:
HERBERT

HOOVER,

President.
EXHIBIT

Agreement with Lithuania, J u n e 9, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of its indehtedness to the United States
A G R E E M E N T , m a d e t h e 9th day of June, 1932, a t t h e City of Washington, District
of Columbia, between t h e Government of t h e Republic of Lithuania, hereinafter called Lithuania, p a r t y of t h e first p a r t , and t h e Government of t h e
United States of America, hereinafter called t h e United States, p a r t y of t h e
second p a r t .
Whereas, under t h e t e r m s of t h e d e b t funding agreement between Lithuania
a n d t h e U n i t e d . S t a t e s , dated September 22, 1924, there is payable by Lithuania
t o t h e United States during t h e fiscal year beginning J u l y 1, 1931 a n d ending
J u n e 30, 1932, in respect of t h e bonded indebtedness of Lithuania to the United
States, t h e aggregate a m o u n t of $224,545.46, including principal a n d interest;
and
Whereas, a joint resolution of t h e Congress of t h e United States, approved
December 23, 1931, authorizes t h e Secretary of t h e Treasury, with t h e approval
of t h e President, to m a k e on behalf of t h e United States an agreement with
Lithuania on t h e t e r m s hereinafter set forth, to postpone t h e p a y m e n t of t h e
a m o u n t payable b y Lithuania to t h e United States during such year in respect
of its bonded indebtedness to t h e United S t a t e s ;
Now, therefore, in consideration of t h e premises a n d of t h e m u t u a l covenants
herein contained, it is agreed as follows:
1. P a y m e n t of t h e a m o u n t of $224,545.46 payable by Lithuania to the United
S t a t e s during t h e fiscal year beginning July 1, 1931, and ending J u n e 30, 1932,
in respect of t h e bonded indebtedness of Lithuania to t h e United States, according
t o t h e t e r m s of t h e agreement of September 22, 1924, above mentioned, is hereby
postponed so t h a t such a m o u n t , together with interest thereon a t t h e rate of
4 per centum per a n n u m from J u l y 1, 1933, shall be paid by Lithuania to t h e
United States in 10 equal annuities of $27,366.52 each, payable in equal semia n n u a l installments on December 15 and J u n e 15 of each fiscal year beginning
with t h e fiscal year J u l y 1, 1933, and ending J u n e 30, 1934, and concluding with
t h e fiscal year beginning July 1, 1942, and ending J u n e 30, 1943. T h e bond
n u m b e r e d 8, dated J u n e 15, 1924, m a t u r i n g J u n e 15, 1932, in the principal a m o u n t
of $36,000, and delivered by Lithuania to t h e United States under the agreement

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REPORT OF THE SECRETARY OF THE TREASURY

of September 22, 1924, shall be retained by the United States until the arinuities
due under this agreement shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, payments
of annuities under this agreement shall be subject to the same terms and conditions as payments under the agreement of September 22, 1924, above mentioned. The proviso in paragraph 2 of such agreement, authorizing the postponement of payments on account of principal, and the option of Lithuania provided
for in paragraph 4 to pay in obligations of the United States, shall not apply to
annuities payable under this agreement.
3. The agreement of September 22, 1924, between Lithuania and the United
States, above mentioned, shall remain in all respects in full force and effect except
so far as expressly modified by this agreement.
4. Lithuania and the United States, each for itself, represents and agrees
that the execution and delivery of this agreement have in all respects been duly
authorized and that all acts, conditions, and legal formalities which should have
been completed prior to the making of this agreement have been completed as
required by the laws of Lithuania and the United States, respectively, and in
conformity therewith.
5. This agreement shall be executed in two counterparts, each of which shall
have the force and effect of an original.
In witness whereof, Lithuania has caused this agreement to be executed on its
behalf by its envoy extraordinary and minister plenipotentiary at Washington,
thereunto duly authorized, and the United States has likewise caused this agreement to be executed on its behalf by the Secretary of the Treasury, with the
approval of the President, pursuant to a joint resolution of Congress approved
December 23, 1931, all on the day and year first above written.
T H E REPUBLIC OF LITHUANIA,
By B. K. BALUTIS,

Envoy Extraordinary and Minister Plenipotentiary.
T H E UNITED STATES OF AMERICA,
By OGDEN L . MILLS,

Secretary of the Treasury.

Approved:
HERBERT HOOVER,

President.
EXHIBIT 41

Agreement with Belgium, June 10, 1932, for the postponement of the payments due
during the fiscal year 1932 on account of its indebtedness to the United States
AGREEMENT, made the 10th day of June, 1932, at the City of Washington,
District of Columbia, between the Government of the Kingdom of Belgium,
hereinafter called Belgium, party of the first part, and the Government of
the United States of America, hereinafter called the United States, party of the
second part.
Whereas, under the terms of the debt funding agreement between Belgium
and the United States, dated August 18, 1925, there is payable by Belgium to
the United States during the fiscal year beginning July 1, 1931, and ending
June 30, 1932, in respect of the bonded indebtedness of Belgium to the United
States, the aggregate amount of $7,950,000, including principal and interest; and
Whereas, a joint resolution of the Congress of the United States, approved
December 23, 1931, authorizes the Secretary of the Treasury, with the approval
of the President, to.make on behalf of the United States an agreement with
Belgium on the terms hereinafter set forth, to postpone the payment of the
amount payable by Belgium to the United States during such year in respect of
its bonded indebtedness to the United States; and
Whereas, Belgium hereby gives assurance, to the satisfaction of the President
of the United States, of the willingness and readiness of Belgium to make with
the Government of each country indebted to Belgium in respect of war, relief,
or reparation debts, an agreement in respect of the payment of the amount or
amounts payable to Belgium with respect to such debt or debts during such
fiscal year, substantially similar to this agreement authorized by the joint resolution above mentioned;
Now, therefore, in consideration of the premises and of the mutual covenants
herein contained, it is agreed as follows:

REPORT OF THE SECRETARY OF THE TREASURY

299

1. P a y m e n t of t h e a m o u n t of $7,950,000, payable by Belgium to t h e United
States during the fiscal year beginning July 1, 1931, and ending J u n e 30, 1932, in
respect of t h e bonded indebtedness of Belgium to t h e United States, according
to t h e terms of the agreement of August 18, 1925, above mentioned, is hereby
postponed so t h a t such a m o u n t , together with interest thereon a t t h e r a t e of 4
per centum per a n n u m from J u l y 1, 1933, shall be paid by Belgium to t h e United
S t a t e s in 10 equal annuities of $968,907.76 each, payable in equal semiannual
installments on December 15 and J u n e 15 of each fiscal year beginning with
t h e fiscal year July 1, 1933, and ending J u n e 30, 1934, and concluding with t h e
fiscal year beginning J u l y 1, 1942, a n d ending J u n e 30, 1943. T h e two bonds
numbered 007, dated J u n e 15, 1925, m a t u r i n g J u n e 15, 1932, one in t h e principal
a m o u n t of $2,900,000 for account of t h e pre-armistice d e b t and t h e other in t h e
principal a m o u n t of $1,300,000 for account of t h e post-armistice debt, delivered
b y Belgium to t h e United States under t h e agreement of August 18, 1925, shall
be retained by t h e United S t a t e s until t h e annuities due under this a g r e e m e n t
shall have been paid.
2. Except so far as otherwise expressly provided in this agreement, payments-,
of annuities u n d e r this agreement shall be subject to t h e same terms and conditions as p a y m e n t s u n d e r t h e agreement of August 18, 1925, above mentioned..
T h e proviso in p a r a g r a p h 2 of such agreement, authorizing t h e postponement of
p a y m e n t s on account of principal after J u n e 15, 1935, and t h e option of Belgium
provided for in p a r a g r a p h 5, to pay in obligations of t h e United States, shall n b t
apply to annuities payable under this agreement.
3. T h e agreement of August 18, 1925, between Belgium a n d t h e U n i t e d
States, above mentioned, shall remain in all respects in full force and effect except so far as expressly modified by this agreement.
4. Belgium and t h e United States, each for itself, represents and agrees t h a t
t h e execution and delivery of this agreement h a v e in all respects been duly a u t h o r ized a n d t h a t all acts, conditions, a n d legal formalities which should h a v e been
completed prior to t h e making of this agreement h a v e been completed as required
by t h e laws of Belgium a n d t h e United States, respectively, a n d in conformity
therewith.
5. This agreement shall be executed in two counterparts, each of which shall
have the force and effect of an original.
I N W I T N E S S W H E R E O F , Belgium has caused this agreement to be executed on
its behalf by its ambassador extraordinary and plenipotentiary a t Washington,
thereunto duly authorized, and the United States has likewise caused this agreem e n t to be executed on its behalf by t h e Secretary of t h e Treasury, with t h e
approval.pf t h e President, p u r s u a n t to a joint resolution of Congress approved
December 23, 1931, all on t h e day a n d year first above written.
By

T H E K I N G D O M OF B E L G I U M ,
PAUL MAY,

Ambassador Extraordinary and Plenipotentiary.
By

T H E U N I T E D S T A T E S OF A M E R I C A ,
OGDEN L , MILLS,

Secretary of the Treasury.
Approved:
H E R B E R T .HOOVER,

President.

EXHIBIT

Agreement with Czechoslovakia, J u n e 10, 1932, for the postponement of the payments
due during the fiscal year 1932 on account of its indebtedness to the-United States
A G R E E M E N T , m a d e t h e 10th day of J u n e , 1932, a t t h e City of Washington, Dis:trict of Columbia, between t h e Government of the Czechoslovak Republic,,
hereinafter called Czechoslovakia, p a r t y of the first p a r t , and t h e G o v e r n m e n t
of t h e United States of America, hereinafter called t h e United States, party, of
t h e second p a r t .
Whereas, under the terms of the d e b t funding agreement between Czechoslovakia and the United States, dated October 13, 1925, there is payable by Czechoslovakia to t h e United States during t h e fiscal year beginning July 1, 1931 and!
ending June 30, 1932, in respect of the bonded indebtedness-of Czechoslovakia tot h e United States, the aggregate principal a m o u n t of $3,000,000; and

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REPORT OF THE SECRETARY OF THE TREASURY

Whereas, a joint resolution of t h e Congress of t h e United States, approved
December 23,1931, authorizes t h e Secretary o f t h e Treasury, with t h e approval of
the President, to m a k e on behalf of the United States an agreement with Czechoslovakia ori t h e terms hereinafter set forth, to postpone t h e p a y m e n t of t h e
a m o u n t payable by Czechoslovakia to the United States during such, year in
respect of its bonded indebtedness to t h e United States; and
Whereas, Czechoslovakia hereby gives assurance, to t h e satisfaction of t h e
President of the United States, of the willingness and readiness of Czechoslovakia
to m a k e with the Government of each country indebted to Czechoslovakia in
respect of war, relief, or reparation debts, an agreement in respect of t h e p a y m e n t
of the a m o u n t or a m o u n t s payable

Full text of Annual Report of the Secretary of the Treasury on the State of the Finances : Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1932

FRASER