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ANNUAL REPORT OF THE SECRETARY OF THE TREASURY ONIE STATE OF THE FINANCES FORHSCAL YEAR ENDED JUNE 30,1936 V J- ANNUAL REPORT OF THE SECRETARY OF THE TREASURY ON THE STATE OF THE FINANCES FOR THE FISCAL YEAR ENDED JUNE 30 1936 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1937 For sale by the Superintendent of Documents, Washington, D. C. - - - - - - - - - - - - - Price 55 cents TREASURY DEPARTMENT DOCUMENT N O . Secretary 3079 CONTENTS Page Budget results Receipts Income taxes Miscellaneous internal revenue taxes . Agricultural adjustment and related taxes Customs Miscellaneous receipts Expenditures Deficit The public debt Treasury bonds, notes, and bills issued during the year Refunding of the Fourth Liberty Loan Redemption of the 2 percent bonds Postal savings bonds United States savings bonds-_ Adjusted service bonds Cumulative sinking fund General Fund of the Treasury Emergency legislation Revenue legislation Agricultural adjustment taxes Estimates of receipts and expenditures Fiscal year 1937 Total receipts Income tax Miscellaneous internal revenue taxes Social security and other internal revenue taxes Customs Miscellaneous receipts Fiscal year 1938 Total receipts Income tax • Miscellaneous internal revenue taxes .: Social security taxes Customs Miscellaneous receipts Monetary developments Gold Silver . Silver certificates National bank notes Bureau of Internal Revenue Back taxes on income Alcohol tax administration Construction activities of the Treasury The original public building program Building program in the District of Columbia Program under the Public Works Administration Program under the Emergency Appropriation Acts Program for other departments Treasury activities under the provisions of the Social Security Act Grants to States ... Old-age reserve account Unemployment trust fund Collection of taxes Public health work __ " III • 1 1 3 3 4 5 5 5 10 10 12 17 18 18 19 21 23 23 25 29 32 33 39 39 40 40 41 42 42 42 42 43 43 44 44 44 45 4545 45 46 47 47 47 48 49 49 49 50 50 51 51 51 52 52 52 lY CONTENTS Page Treasury activities under t h e Emergency Relief Appropriation Act of 1935 Administrative expenses Work relief supply fund Work relief projects Public H e a l t h Service Coast Guard Bureau of Internal Revenue Division of Research and Statistics Procurement Division Bureau of Customs Nonfiscal activities Coast Guard Public H e a l t h Service Bureau of Narcotics Organization changes and procedure 52 53 53 53 53 54 54 55 55 55 56 56 57 60 61 A D M I N I S T R A T I V E R E P O R T S OF B U R E A U S AND D I V I S I O N S Accounts and Deposits, Office of t h e Commissioner of Combined s t a t e m e n t of assets and liabilities of governmental corporations a n d credit agencies Securities owned by t h e United States Government Contingent liabilities of t h e United States Federal savings and loan associations Federal home loan banks Federal land banks Capital stock Subscriptions to paid-in surplus and p a y m e n t s on account of reduction in interest rates on mortgages Advances to Federal Reserve banks for industrial loans, etc Accounting a n d disbursing of emergenc}^ relief funds appropriated under t h e Emergency Relief Appropriation Acts of 1935 a n d 1936__ Agricultural Adjustment Act Appropriations authorized under Social Security Act Obligations of foreign governments ,_ Receipts from Germany Army costs Mixed claims, United States and Germany Annuities under moratorium agreement Treasury, administration of alien and mixed claims Mixed Claims Commission: 'Claims against Germany War Claims Arbiter Claims of German nationals Claims.of Hungarian nationals German special deposit account Tripartite Claims Commission Claims against Austria Claims against H u n g a r y Railroad obligations Section 204 . Section 207 Sections 209 a n d 212 Section 210 T r u s t a n d special funds invested b y t h e Treasury Adjusted service certificate fund Civil service retirement and disability fund Foreign service retirement a n d disability fund Canal Zone retirement and disability fund District of Columbia teachers' retirement fund Longshoremen's and harbor workers' compensation fund District of Columbia workers' compensation fund Unemployment t r u s t fund United States Government life insurance fund Library of Congress t r u s t fund National I n s t i t u t e of Health gift fund 65 65 65 67 67 68 69 69 70 73 74 76 76 77 79 79 79 79 80 80 84 84 84 85 85 85 85 86 86 86 87 87 88 88 89 90 91 92 93 94 95 96 98 101 CONTENTS Accounts a n d Deposits, Office of the Commissioner of—Continued. T r u s t a n d special funds invested by t h e T r e a s u r y — C o n t i n u e d . National park t r u s t fund Alien property t r u s t fund General railroad contingent fund Pershing Hall Memorial fund . Special funds Colorado River D a m fund Advances to reclamation fund Division of Deposits Section of Surety Bonds Division of Bookkeeping a n d W a r r a n t s Division of Disbursement Appointments, Division of N u m b e r of employees Retirement of employees Budget and I m p r o v e m e n t C o m m m i t t e e Coast Guard Protection t o navigation Enforcement of customs and other laws Communications Equipment T h e academy, stations, bases, repair depot, engine school, repair base, etc Engineering competition ' Personnel ' Awards of life-saving medals Legislation F u n d s available for t h e Coast Guard Comptroller of t h e Currency Changes in t h e condition of active national banks S u m m a r y of changes in membership in t h e national banking s y s t e m . _ Reorganized national banks Customs, Bureau of Collections Volume of business Law enforcement activities '_ Smuggling Miscellaneoiis Investigative Unit . Engraving a n d Printing, Bureau of Enrollment a n d Disbarment, Committee on Federal Alcohol Administration i Permit Division Label Examination Section Enforcement Division I n t e r n a l Revenue, Bureau of General I n t e r n a l revenue collections Refunds Additional assessm^ents Cost of administration Income Tax Unit . Additional revenue Final notices of deficiency (90-day letters) Claims and overassessments Returns on hand Audit in Washington Audit in the field The Technical Staff Miscellaneous Tax Unit E s t a t e Tax Division L Tobacco Division Sales Tax Division ^ Processing Tax Division Capital Stock Tax Division Bituminous Coal a n d Silver Tax Division Social Security Division V I*age 102 103 104 104 105 105 106 107 108 108 108 109 109 110 110 111 111 112 114 115 117 118 118 118 118 119 120 120 122 123 124 124 124 125 127 127 128 129 132 133 134 134 135 136 136 136 136 137 138 139 139 140 141 141 142 142 143 143 144 145 146 148 151 151 152 VI CONTENTS Internal Revenue, Bureau of—Continued. Alcohol Tax Unit Enforcement Division Audit Division Laboratory Division Field Inspection Division Accounts and Collections Unit Collection Accounting Division ^ Collectors' Personnel, Equipment, and Space Division Disbursement Accounting Division Office of the Assistant General Counsel _' Assistant General Counsel's Committee Reorganization Section Appeals Division . Civil Division Compromise Section Interpretative Division Penal Division 1 . Review Division Legislative and Regulations Division Intelligence Unit Work relief projects ^ Legal Division Mint, Bureau of the 1 Institutions of the Mint Service Coinage Bullion deposit transactions Gold operations Silver operations Refineries Commemorative coins Stock of coin and monetary bullion in the United States Production of gold and silver ' Industrial consumption of gold and silver Housing1 Appropriations, expenses, and income Narcotics, Bureau of Enforcement activities ^ Extent and trend of narcotic traflfic J ' Printing, Division of Printing and binding Stationery supplies Department advertising Engraving work Procurement Division Branch of Supply Public Buildings Branch Office of the Supervising Architect Office of the Supervising Engineer.^ Original public building program : Building program in the District of Columbia Program under the Public Works Administration . Emergency construction program Program for other departments Section of Space Control Section of Painting and Sculpture Treasury Relief Art Project Administration and cost of Federal buildings under the control of the Treasury Department. ' Expenditures Public Debt Service Division of Loans and Currency Register of the Treasury Division of Public Debt Accounts and Audit Division of Paper Custody ^ Destruction Committee Page 152 152 153 153 153 153 153 155 156 156 156 157 157 158 159 160 160 160 161 161 162 162 164 164 164 165 165 165 166 166 167 167 167 168 168 169 169 170 171 171 173 174 174 174 174 177 177 178 178 178 179 179 180 180 182 182 183 183 184 184 189 191 192 192 CONTENTS VII Page Public H e a l t h Service Division of Sanitary Reports and Statistics Division of Foreign a n d Insular Quarantine Division of Scientific Research Public health work under the Social Security Act Domestic Quarantine Division Division of Marine Hospitals and Relief Division of Venereal Diseases Division of M e n t a l Hygiene Division of Personnel and Accounts Research and Statistics, Division of Taxation Federal financing M o n e t a r y problems Actuarial analysis Savings Bonds, Division of Secret Service Division Treasurer of t h e United States War Finance Corporation J 194 194 194 195 198 199 201 202 202 203 204 205 205 205 205 206 206 207 212 EXHIBITS THE PUBLIC DEBT Public issues of Treasury bonds. Treasury notes, and Treasury bills Exhibit 1. Offering of 1% percent Treasury notes of series B-1939 Exhibit 2. Subscriptions and allotments, Treasury notes of series B-1939_ Exhibit 3. Inviting tenders for 2J^ percent Treasury bonds of 1955-60 (additional) Exhibit 4. Acceptance of tenders for Treasury bonds of 1955-60 Exhibit 5. Inviting tenders for 2}^ percent Treasury bonds of 1955-60 (additional) Exhibit 6. Acceptance of tenders for Treasury bonds of 1955-60 Exhibit 7. Inviting tenders for 2}^ percent Treasury bonds of 1955-60 (additional) Exhibit 8. Acceptance of tenders for Treasury bonds of 1955-60 ' Exhibit 9. Offering of 2 ^ percent Treasury bonds of 1945-47 and I j i percent Treasury notes of series C-1939 ^ Exhibit 10. Subscriptions and allotments, Treasury bonds of 1945-47 a n d Treasury notes of series C-1939 Exhibit 11. Offering of 2% percent Treasury bonds of 1945-47 (additional) and l}i percent Treasury notes of series C-1940 Exhibit 12. Subscriptions and allotments, Treasury bonds of 1945-47 (additional) and Treasury notes of series C-1940 Exhibit 13. Offering of 2}i percent Treasury bonds of 1948-51 a n d lYz percent Treasury notes of series A-1941 . Exhibit 14. Subscriptions and allotments. Treasury bonds of 1948-51 and Treasury notes of series A-1941 Exhibit 15. Offering of 2 ^ percent Treasury bonds of 1951-54 a n d V/s percent Treasury notes of series B-1941 Exhibit 16. Subscriptions and allotments. Treasury bonds of 1951-54 a n d Treasury notes of series B-1941 215 216 217 219 219 220 220 221 221 226 227 230 231 233 234 237 Issues of Treasury bills Exhibit 17. Inviting tenders for two issues of Treasury bills dated July 3, 1935 Exhibit 18. Acceptance of tenders for two issues of Treasury bills dated. July 3, 1935 Exhibit 19. Summary, of information contained in press releases issued in connection with Treasury bills offered during t h e fiscal year 1936 238 239 239 VIII CONTENTS United States savings bonds Page Exhibit 20. Offering of United States savings bonds, series B Exhibit 21. Sales of United States savings bonds from March 1, 1935, to June 30, 1936 Exhibit 22. Supplement, September 17, 1935, to Department Circular No. 529, offering for sale United States savings bonds, series A Exhibit 23. Regulations governing United States savings bonds, December 2, 1935 --- 242 245 246 247 Adjusted service bonds Exhibit 24. Issue of adjusted service bonds of 1945, June 15, 1936 Exhibit 25. An act to provide for the immediate payment of World War adjusted service certificates, for the cancelation of unpaid interest accrued on loans secureii by such certificates, and for other purposes, January 27, 1936 Exhibit 26. An act to protect the United States against loss in the delivery .cks in payment of benefits provided for by laws brans' Administration, June 3, 1936_ Exhibit 27. An act to eliminate unnecessary expense in the administration of estates of deceased and incompetent veterans, and for other purposes, June 26, 1936. Exhibit 28. Regulations golverning adjusted service bonds of 1945, Juiie 6, 1936. Exhibit 29. Supplement, Jbne '26, 1936, to Departm.ent Circular No. 560, prescribing regulations g|overning adjusted service bonds of 1945 Exhibit 30. Order of the Ajcting_ Secretary of the Treasury, June 10, 1936, authorizing officers of the Treasury Department to witness and certify requests for payment of ladjusted service bonds 253 253 256 257 257 260 261 Issue of Federal Faihn Mortgage Corporation bonds guaranteed as to interest and principal by the United States Exhibit 31. Inviting tendjers for Federal Farm Mortgage Corporation iy2 percent bonds of Exhibit 32. Acceptance of \jienders for Federal Farm Mortgage Corporation bonds of 1939 (from press irelease, Aug. 29, 1935) 261 263 Miscellaneous Exhibit 33. Receipt of Treasury bonds and Treasury notes for Federal estate or inheritance taxfes Exhibit 34. Letter of the S ecretary of the Treasury, May 27, 1936, to the presidents of the Federa] Reserve banks, relative to the announcements of offerings of and the s libmission of subscriptions for obligations of the United States Exhibit 35. Order of the A|cting_ Secretary of the Treasury, June 10, 1936, authorizing officers of Treasury Department to witness assignments of registered issues of United' States bonds and notes 263 264 265 MONEY Exhibit 36. Joint resolutidn authorizing exchange of coins and currencies and immediate payment of gold clause securities by the United States; withdrawing the right td sue the United States thereon; limiting the use of certain appropriation^ ; and for other purposes, August 27, 1935 Exhibit 37. Regulations g(j)verning the immediate payment of gold clause securities Exhibit 38. Regulations gcjverning the exchange of coins and currencies of the United States Exhibit 39. Proclamation, January 10, 1936, extending powers conferred by section 10 of the Gol^ Reserve Act of 1934 and section 43 of the act approved May 12, 193$ Exhibit 40. Statement b}^ the Treasury Department, August 15, 1935, relative to the new $1 silver certificate Exhibit 41. Issue, exchange.i, and redemption of paper currency and coin. 266 267 269 269 270 272 CONTENTS IX TAXATION Page Exhibit 42. Titles VIII and IX of the Social Security Act (Pubhc No. 271, Aug. 14, 1935) relative to the taxes on employers and employees. _ Exhibit 43. An act to levy an excise tax upon carriers and an income tax upon their employees, and for other purposes, August 29, 1935 Exhibit 44. Major tax rate changes made by the Revenue Acts of 1935 and 1936, and the rates which they superseded, together with legal citations and effective dates Exhibit 45. Processing tax rates under the Agricultural Adjustment Act, and rates of tax on cotton ginning, tobacco sales, and potatoes, during the fiscal year 1936, with effective dates Exhibit 46. Executive order, August 29, 1935, requiring the preparation and publicity of written decisions in respect of overassessments of income, profits, estate, and gift taxes allowed in excess of $20,000 Exhibit 47. An act relating to the filing of copies of income returns, and for other purposes, April 10, 1936 272 279 281 285 287 287 OBLIGATIONS OF FOREIGN GOVERNMENTS Exhibit 48. Correspondence exchanged between the Government of the United States and various foreign governments and statements concerning foreign debts owing to the United States . 288 ORGANIZATION AND PROCEDURE Exhibit 49. Orders changing organization and procedure in the Treasury Department .. Exhibit 50. Regulations governing hours of employment and overtime work Exhibit 51. An act to amend section 304 of the Revised Statutes, as amended, April 24, 1936 Exhibit 52. Offers of compromise under section 194, title 31, United States Code Exhibit 53. Title V of the act (Pubhc No. 724, June 20, 1936) to amend certain acts relating to public printing and binding and the distribution of public documents and acts amendatory thereof 298 299 304 305 306 MISCELLANEOUS Exhibit 54. Amendment to Executive Order No. 6981, March 2, 1935, removing, in certain cases, restrictions imposed by Public Resolution 53, of June 27, 1934, as to payments, transfers, and deliveries of property under the Trading with the Enemy Act and the Settlement of War Claims Act of 1928 Exhibit 55. Joint resolution extending for two years 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 the Tripartite Claims Commission, and extending until March 10, 1938, the time within which Hungarian claimants may make application for payment, under the Settlement of War Claims Act of 1928, of awards of the War Claims Arbiter, June 26, 1936 Exhibit 56. Section 201 of the Social Security Act creating an old-age reserve account Exhibit 57. Letter of the Acting Postmaster General to the Secretary of the Treasury, dated November 10, 1936, certifying extraordinary expenditures contributing to the deficiency of postal revenues for the fiscal j^ear 1936 306 307 307 308 X CONTENTS TABLES Page E x p l a n a t i o n of bases used in tables 311 Description of accounts through which Treasury operations are effected. _ 312 RECEIPTS AND EXPENDITURES General tables Table 1. Details of receipts, by sources and accounts, for the fiscal year 1936 (warrant and daily s t a t e m e n t bases) Table 2. Details of expenditures, by organization units and accounts for t h e fiscal year 1936 (checks issued a n d daily s t a t e m e n t bases) Table 3. Classified receipts and expenditures, monthly July 1935 to J u n e 1936, and annually for t h e fiscal years 1932 to 1936 (daily s t a t e m e n t basis) Table 4. Public debt receipts and expenditures, monthly July 1935 to J u n e 1936, and annuallv for t h e fiscal years 1932 to 1936 (daily s t a t e m e n t basis) ". Table 5. Receipts and expenditures for t h e fiscal years 1789 to 1936 (wara n t and daily statement bases) Table 6. Expenditures for recovery and relief classified as to provisions for r e p a y m e n t , fiscal years 1932 to 1936 . 314 321 337 352 "356 364 Specific receipts and expenditures Table 7. Comparison of detailed internal revenue collections for t h e fiscal years 1935 and 1936 (collection basis) Table 8. I n t e r n a l revenue receipts, by tax sources, for the fiscal years 1916 to 1936 (collection basis) ^.-._. Table 9. Internal revenue receipts, by States and Territories, for the fiscal year 1936 (collection basis) Table 10. Expenses of t h e Internal Revenue Service for t h e fiscal year 1936 (checks-issued basis) Table 11. Customs duties (estimated), value of imports entered for consumption, and ratio of duties to value of dutiable imports and to value of all imports, for the calendar years 1926-35 (on basis of reports of t h e Bureau of Foreign and Domestic Commerce) Table 12. Customs duties (estimated), value of dutiable imports, and ratio of duties to value of dutiable imports, by tariff schedules, for the years 1926-35 (on basis of reports of t h e Bureau of Foreign and-Domestic Commerce) • Table 13. Customs receipts, expenditures, and entries, by districts, fiscal year 1936 (collection basis) . . Table 14. P a n a m a Canal receipts and expenditures for the fiscal years 1903 to 1936 (warrant basis) 366 368 370 372 378 379 381 382 Miscellaneous Table 15. Actual receipts for t h e fiscal years 1935 a n d 1936 and estimated receipts for t h e fiscal years 1937 and 1938, by sources Table 16. Financial status of appropriations provided in t h e Emergency Relief Appropriation Acts of 1935 and 1936, as of J u n e 30, 1936 383 390 PUBLIC DEBT Public debt outstanding Table 17. Public debt outstanding June 30, 1936, by issues (revised daily s t a t e m e n t basis) j Table 18. Description of t h e public debt issues outstanding June 30, 1936 (revised daily statement basis) Table 19. Interest-bearing debt outstanding J u n e 30, 1936, classified according to kind of security and callable period or payable date (revised daily statement basis) Table 20. Principal of t h e pubhc debt outstanding a t t h e end of each fiscal year from 1853 t o 1936 (revised daily s t a t e m e n t basis) Table 21. Composition of t h e public debt, end of each m o n t h , J u n e 1916 t o 1936 (revised daily s t a t e m e n t basis) 396 400 410 411 413 CONTENTS XI Public debt operations Page Table 22. Public debt retirements chargeable against ordinary receipts during the fiscal year 1936, and cumulative totals from July 1, 1917, to June 30, 1935 and 1936, by sources and issues (revised daily statement basis). Table 23. Summary of transactions in interest-bearing and noninterestbearing securities during the fiscal year 1936 (revised daily statement basis) . Table 24. Summary of transactions in interest-bearing securities, by form of issue, during the fiscal year. 1936 (revised daily statement basis) Table 25. Changes in interest-bearing debt, by issues, during the fiscal year 1936 (revised daily statement basis) Table 26. Transactions in noninterest-bearing securities, by issues, during the fiscal year 1936 (revised daily statement basis) Table 27. Issues, maturities, and redemptions of interest-bearing securities, exclusive of trust account and other special issues, July 1935 through June 1936 Table 28. Sources of public debt increase or decrease for the fiscal years 1915 to 1936 (daily statement basis) . Table 29. Transactions on account of the cumulative sinking fund during the fiscal year 1936 (revised daily statement basis) Table 30. Transactions on account of the cumulative sinking fund for the fiscal years 1921 to 1936 (revised daily statement basis) Table 31. Securities retired through the cumulative sinking fund, par amount and principal cost, to June 30, 1936 (revised daily statement basis) . 420 422 424 425 430 435 438 439 440 440 Interest on the public, debt Table 32. Interest on the public debt, payable, paid, and outstanding unpaid for the fiscal year 1936 (revised daily statement basis) Table 33. Interest paid on the public debt, by issues, for the fiscal years 1934 to 1936 (warrant basis) Table 34. Amount of interest-bearing debt outstanding, the computed annual interest charge, and the computed rate of interest, for the fiscal years 1916 to 1936, and by months from July 1929 to June 1936 (revised daily statement basis) 441 441 442 Miscellaneous Table 35. Contingent liabilities of the United States, June 30, 1936 Table 36. Average yield on United States Government bonds, by months, January 1919 to June 1936 444 447 CONDITION OF THE TREASURY EXCLUSIVE OF PUBLIC DEBT LIABILITIES Table 37. Current assets and liabilities of the Treasury at the close of the fiscal years 1934, 1935, and 193.6 (revised daily statement basis) Table 38. Net balance in the General Fund of the Treasury at the end of each month, fiscal year 1936 (daily statement basis) Table 39. Securities owned by the United States Government, June 30, 1936 448 449 450 ASSETS AND LIABILITIES OF GOVERNMENTAL CORPORATIONS AND AGENCIE Table 40. Combined statement of assets and liabilities of governmental corporations and credit agencies of the United States, as of June 30,1936__ Table 41. Proprietary interest of the United States in governmental corporations and credit agencies, as of June 30, 1929 to 1936 453 460 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, June 30, 1913 to 1936 Table 43. Stock of money, by kinds, at the end of each fiscal year from 1913 to 1936 . Table 44. Money in circulation, by kinds, at the end of each fiscal year from 1913 to 1936 Table 45. Stock of money, money in the Treasury, in the Federal Reserve banks, and in circulation, by kinds, June 30, 1936 461 462 463 464 XII CONTENTS TAX-EXEMPT SECURITIES Page Table 46. Estimated amount of securities outstanding, interest on which is wholly or partially exempt from the Federal income tax, June 30, 1913 tol936, by type of obligor Table 47. Estimated amount of securities outstanding, interest on which is wholly exempt from normal income tax and surtax of the Federal Government, June 30, 1913 to 1936, by type of obligor Table 48. Amount of securities outstanding, interest on which is exempt from normal income tax, but not surtax, of the Federal Government, June 30, 1918 to 1936, by direct obligor Table 49. United States (Government direct obligations held b}^ Federal Reserve banks, classified by the degree of exemption of the interest thereon from the Federal income tax, June 30, 1915 to 1936 465 466 468 469 MISCELLANEOUS Table 50. 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, 1936 Table 51. Net expenditures for Federal aid to States, fiscal years 1920, 1935, and 1936, and amounts appropriated for 1937, by appropriations.. Table 52. Expenditures made by the Government as direct payments to States, etc., under cooperative arrangements during the fiscal year 1936. 470 471 474 PERSONNEL Table 53. Number of employees in the departmental service of the Treasury in Washington, by months, from June 30, 1935, to June 30, 1936.. Table 54. Number of employees in the departmental and field services of the Treasury on June 30, 1935, and June 30, 1936 Table 55. Number of persons retired, and number of persons eligible for retirement retained, departmental and field services of the Treasury, August 20, 1920, to June 30, 1936 479 Index 481 478 479 SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES OF THE TREASURY DEPARTMENT DURING THE FISCAL YEARS 1934, 1935, AND 1936,i AND THE PRESIDENT UNDER WHOM THEY SERVED Term of service Official From— Secretary of the Treasury President To— Secretaries of the Treasury Mar. 4,1933 Dec. 31,1933 Jan. 1,1934 William H. Woodin, New York Henry Morgenthau, Jr., New York. Roosevelt. Roosevelt. Under Secretaries May 19,1933 Nov. 17,1933 May 2,1934 Nov. 16,1933 Dec. 31,1933 Feb. 15,1936 Woodin. Dean G. Acheson, Maryland Henry Morgenthau, Jr., New York. Woodin Thomas Jefferson Coolidge, Mas- Morgenthausachusetts. Apr. June June Dec. Feb. Feb. 15,1936 Lawrence W. Robert, Jr., Georgia. Stephen B. Gibbons, New York... Thomas Hewes, Connecticut Josephine Roche, Colorado Wayne C. Taylor, Illinois..- Roosevelt. Roosevelt. Roosevelt. Assistant Secretaries 18,1933 6,1933 12,1933 1,1934 19,1936 Dec. 12,1933 Woodin, Morgenthau.__ Woodin, Morgenthau-__ Woodin . . . Morgenthau. Morgenthau Roosevelt. Roosevelt". Roosevelt. Roosevelt. Roosevelt. 1 For officials since 1789 see Annual Report for 1932, pp. xvii to xxj, and corresponding table in Annual Report for 1933. PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE TREASURY DEPARTMENT AS OF NOVEMBER 15, 1936 OFFICE OF T H E SECRETARY Henry Morgenthau, J r . . . [Vacant] Wayne C. Taylor Stephen B. Gibbons Josephine Roche... Herbert E. Gaston Daniel W. Bell LeRoy Barton... Harold N. Graves Cyril B. Upham Henrietta S. Klotz John Kieley Archie Lochhead Beriah M. Thompson.. Edwin B. Fussell William H. McReynolds W. N. Thompson Charles R. Schoeneman Edwin R. Ballinger Eugene Sloan James W. Bryan Herbert J. Wollner H. R. Sheppard _. Francis C. Rose... Mary E. Switzer F. A. Birgfeld W. H. Moran _ L. C. Spangler James E. Harper Gabrielle E. Forbush _ __ Secretary of the Treasury. Under Secretary of the Treasury. Assistant Secretary of the Treasury. _ Assistant Secretary of the Treasury. Assistant Secretary oi the Treasury. Assistant to the Secretary. Assistant to the Secretary. __ Assistant to the Secretary. Assistant to the Secretary, Assistant to the Secretary. Assistant to the Secretary. Assistant to the Secretary. Technical Assistant to the Secretary. __ Special Assistant to the Secretary. Consulting Expert. Administrative Assistant to the Secretary. Assistant Administrative Assistant to the Secretary. Special Stafl; Assistant. Technical Assistant. Chief, Division of Savings Bonds. _ Chief, Information Section, Division of Savings Bonds. Consulting Chemist. Assistant to Assistant Secretary. Assistant to Assistant Secretary. Assistant to Assistant Secretary. Chief Clerk and Superintendent. Chief, Secret Service Division. Chief, Division of Printing. _ Chief, Division of Appointments. Chief, Correspondence Division. OFFICE OF T H E GENERAL COUNSEL Herman Oliphant John G. Harlan... Clarence V. Opper Clinton M. Hester W. R. Johnson Arthur H. Kent General Counsel. Assistant to the General Counsel. Assistant General Counsel. Assistant General Counsel. Chief Counsel, Bureau of Customs. Acting Chief Counsel, Bureau of Internal Revenue. _ _ OFFICE OF T H E D I R E C T O R OF RESEARCH AND STATISTICS George C. Haas A. S. McLeod Russell R. Reagh Lawrence H. Seltzer Harry D.White Joseph S. Zucker Anna M. Michener Charles S. Bell Director of Research and Statistics. _. Assistant Director. Assistant Director (Government Actuary). Assistant Director. Assistant Director. Assistant Director. Assistant to the Director. Administrative Assistant to the Director. PUBLIC D E B T SERVICE William S. Broughton Edwin L. Kilby Rene W. Barr W. W. Durbin Byrd Leavell.. 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 of the Treasury. Chief, Division of Loans and Currency. Chief, Division of Accounts and Audit. Chief, Division of Paper Custody. _ _ BUREAU OF ENGRAVING AND P R I N T I N G Alvin W. Hall Clark R. Long Jesse E. Swigart _ _ Director of the Bureau of Engraving and Printing. Assistant Director (Administration). Assistant Director (Production). _ OFFICE OF T H E COMMISSIONER OF ACCOUNTS AND DEPOSITS Edward F . Bartelt Maurice Collins.. William T. Heffelfinger Guy F. Allen Joseph Greenberg •_ Edward D. Batchelder Harry R. Schwalm ^ _ Commissioner of Accounts and Deposits. Assistant Commissioner of Accounts and Deposits. Executive Assistant to the Commissioner. Chief Disbursing Officer, Division of Disbursement. Chief, Division of Bookkeeping and Warrants. Chief, Division of Deposits. Chief Examiner, Section of Surety Bonds. XV OFFICE OF THE COMPTROLLER OF THE CURRENCY J. F. T. O'Connor William Prentiss, Jr Eugene H. Gough Gibbs Lyons W. P. Folger George R. Marble _ _ Comptroller of the Currency. Deputy Comptroller. Deputy Comptroller. Deputy Comptroller. Chief National Bank Examiner. Chief Clerk. OFFICE OF T H E TREASURER OF T H E U N I T E D STATES William A. Julian Marion Banister... George 0. Barnes M. E. Slindoe Louis P. Allen Treasurer of the United States. Assistant Treasurer. Executive Assistant to the Treasurer. Administrative Assistant. Chief Clerk. _ BUREAU OF NARCOTICS Harry J. Anslinger Will S. Wood Malachi L. Harney Commissioner of Narcotics. Deputy Commissioner of Narcotics. Assistant to the Commissioner. OFFICE OF T H E COMMISSIONER OF I N T E R N A L REVENUE Guy T. Helvering Milton E. Carter Charles T. Russell George J. Schoeneman... D. Spencer Bliss Stewart Berkshire Eldon P. King A. R. Marrs Elmer L. Irey Bertha Wetherton...-. Commissioner of Internal Revenue. Assistant to the Commissioner. Deputy Commissioner. Deputy Commissioner. Deputy Commissioner. Deputy Commissioner. Special Deputy Commissioner. Head, Technical Staff. Chief, Intelligence Unit. Special Assistant to the Commissioner. F E D E R A L ALCOHOL ADMINISTRATION Wilford S. Alexander Harris E. Willingham John L. Huntington H. C. Flanery Phillip E. Buck John E. O'Neill Federal Alcohol Administrator. Associate Administrator. Deputy Administrator. Deputy Administrator. General Counsel. Assistant General Counsel. _ BUREAU OF CUSTOMS James H. Moyle.. Frank Dow Thomas J. Gorman Harvey A. Benner Commissioner of Customs. Assistant Commissioner of Customs. Deputy Commissioner. Deputy Commissioner. Nellie Tayloe Ross Mary M. O'Reilly Director of the Mint. Assistant Director. M I N T BUREAU PUBLIC H E A L T H SERVICE Thomas Parran, Jr. W. F. Draper... Robert Olesen L. R. Thompson Walter L. Treadway C. E. Waller S. L. Christian C. L. Williams R. A. Vonderlehr D. S. Masterson Surgeon General. Assistant Surgeon General. Assistant Surgeon General. Assistant Surgeon General. Assistant Surgeon General. Assistant Surgeon General. Assistant Surgeon General. . . . Assistant Surgeon General. Assistant Surgeon General. Chief Clerk and Administrative Officer. _ U N I T E D STATES COAST GUARD Rear Admiral Russell R. Waesche Capt. Leon C. Covell Capt. William H. M u n t e r . . Capt. Philip W. Lauriat Capt. Thaddeus G. Crapster Capt. Lloyd T. Chalker Capt. (E) Harvey F. Johnson Commander William J. Keester Commander Frederick A. Zeusler Commander Joseph E. Stika Commander Frank J. Gorman Lt. Frank E. Pollio... Commandant. Assistant Commandant. Chairman of Permanent Board. Inspector-in-Chief. Chief Personnel Officer. Chief Aviation Officer. Engineer-in-Chief. Chief Supply Officer. Chief Commuhications Officer. Chief Ordnance Officer. Chief Finance Officer. Acting Chief Intelligence Officer. XVI P R O C U R E M E N T DIVISION Rear Admiral C. J. Peoples W. E. Reynolds Harry E. Collins . Leo C. Martin E. R. Witman N. Max Dunning Robert LeFevre W. N. Rehlaender Louis A. Simon Neal A. Melick Edward Bruce Director of Procurement. Assistant Director, Public Buildings Branch. Assistant Director, Supply Branch. Executive Officer. Special Assistant to the Director. Assistant to Assistant Director, Public Buildings Branch. Assistant to Assistant Director, Supply Branch. Administrative Assistant, Supply Branch, .Supervising Architect. Supervising Engineer. Chief, Section of Painting and Sculpture. ADVISORY COMMITTEE ON ARCHITECTURAL DESIGN Charles Z. Klauder, Chairman. Aymar Embury II. Louis A. Simon, Philip B. Maher, Henry R. Shepley. BOARD OF AWARDS E. R. Witman, Chairman. Breedlove Smith, Acting Chief Counsel, Legal Neal A. Melick, Supervising Engineer. Section. W. C. Noll, Superintendent, Architectural Section. John H. Schaefer, Office Manager. Nelson S. Thompson, Chief, Mechanical Engineer- John Weber, Secretary, ing Section. 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 C. R. Schoeneman, Chairman. F. A. Birgfeld, Vice Chairman. W. N. Thompson. D. S. Bliss. L. C. Martin. Edward F. Bartelt. R. L. Harlow. John H. Schaefer. Arthur E. Wilson. M. E. Slindee. George 0 . Barnes. Fred P. Trott. Mary E. Switzer. 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 Guy C. Hanna, Chairman. W.W.Cook. Edwards H. Childs. Charles C. G, Evans, Attorney for the Government, 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. Harper. (Vacant.) 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. ANNUAL REPORT ON THE FINANCES TREASURY DEPARTMENT, WashingtoUj D. C.j January 5, 1937. SIR: I have the honor to make the following report: BUDGET RESULTS Receipts Total general and special account receipts amounted to $4,116,000,000 in the fiscal year 1936 as compared with $3,800,500,000 in RECEIPTS (GENERAL AND SPECIAL ACCOUNTS). FISCAL YEARS 1927 TO 1936, BY PRINCIPAL SOURCES DOLLARS [ _^ Billions A// O t h e r Foreign Obligations Customs 1927 1928 1929 1930 1931 1932 1933 , 1934 1935 1936 CHART 1. 1935, an increase of $315,500,000. The invalidation of the processing taxes on farm products by the United States Supreme Court decision of January 6, 1936, and the subsequent repeal of the related cotton ginning, tobacco sales, and potato stamp sales taxes resulted in a decrease in revenue of $444,700,000 from these sources in the fiscal year 1936. This loss in revenue, however, was more than offset by increased receipts, aggregating $760,200,000, from all other sources. ^ The trend in receipts by major sources for the fiscal years 1927 to 1936, inclusive, is shown in the chart above. A more detailed comparison of receipts for 1935 and 1936 is presented in the table on page 2. 93790—37 2 2 REPORT OF THE SECRETARY OF THE TREASURY Receipts by major sources for the fiscal years 1935 and 1936 [In millions of dollars] Internal revenue: Income taxes: Current corporation . . Current individual Back taxes Excess-profits tax . _ 1936 2 465. 4 448.2 185.6 6.6 2 610. 0 589.4 213. 5 14.5 +144. 6 +141.2 +27.9 +7.9 1,105.8 -.1 1,427. 4 -.8 +321. 6 -.7 _. 3 1,105.7 1, 426. 6 +320. 9 91.5 140.4 7L7 2 195. 4 2 215. 6 2 458. 8 43.1 94.9 218.8 160.1 2 256.1 2 249.1 2 500. 8 69.0. +3.4 +78.4 +88.4 +60.7 +33.5 +42.0 +25.9 161.5 77.3 32.6 27.8 M2.8 177. 3 94.5 33.6 27.1 50.2 +15.8 +17.2 +1.0 —.7 +7.4 342.0 382.7 +40.7 19.7 9.5 15.4 27.3 a 39.4 2L1 9.8 17.1 2 11.7 8 13.3 2, 004. 5 +5.1 +1.4 _ _. . Total income taxes (collection basis) _ . . ...... Adjustment to daily Treasury statement basis (unrevised) Total income taxes Miscellaneous internal revenue taxes: Capital stock _ _ .. Estate Gift Distilled spirits and wines (including special taxes) . Fermented malt liquors (including special taxes) Tobacco - . Stamp _ ._ Manufacturers' excise taxes: Gasoline Automobiles, trucks, tires, tubes, and parts or accessories Electrical energy _ Lubricating oils -- Another Total manufacturers' excise taxes Telegraph, telephone, radio, and cable. Transportation of oil by pipe line- . . Admissions. Coconut, etc., oils processed . . . . . All other miscellaneous Total miscellaneous internal revenue taxes (collection basis) Adjustment to daily Treasury statement basis (unrevised) Total miscellaneous internal revenue taxes Agricultural adjustment and related taxes Other internal revenue Total internal revenue Custonos - _. -_ . Total internal revenue and customs Miscellaneous receipts: Proceeds of Government-owned securities: Foreign obligations Another Seigniorage ^ All other miscellaneous receipts _ - - - _ . Total miscellaneous receipts Total receipts, general and special accounts. _ _. -. Increase (+). decrease ( - ) 1935 1, 649. 8 +.8 3 1, 650. 6 2,009.6 +354. 7 +4,3 +359. 0 76.7 -444. 7 3, 277. 7 343.4 3, 512. 9 386.8 +235. 2 +43.4 3, 621.1 3,899. 7 +278. 6 .7 38.1 58.0 82.6 .5 90.4 39.3 86.1 —.2 +52.3 -18.7 +3,5 521.4 . . . --- +.3 +1.7 +4.4 -26.1 (0 179.4 216.3 +36.9 3,800. 5 4,116. 0 +315. 5 1 The detail of income taxes and miscellaneous internal revenue taxes is on the basis of internal revenue conections, with totals adjusted to basis of daily Treasury statement (unrevised). Agricultural adjustment and related taxes, customs, and miscellaneous receipts are shown on the basis of the daily Treasury statement (unrevised). General and special accounts are combined. For description of accounts and bases, see p. 311. 2 Collections for credit to trust funds are not included. 3 Excess-profits tax cohections amounting to $6,560,483 have been excluded from miscellaneous internal revenue collections and included instead with income taxes in order to place the 1935 figures on a comparaable basis with those for 1936. 4 Excludes $145,290 and $129,991 from excise taxes on candy and soft drinks, respectively, terminated May 11, 1934, which are included in "All other miscellaneous." 5 Includes collections of $25,645,139 from the tax on checks, terminated Jan. 1, 1935. 8 Includes collections of $729,218 from the bituminous coal tax. ^ Taxes upon carriers and their employees, $48,279, 8 Exclusive of $140,111,441 in 1935 and $175,789,415 in 1936, representing seigniorage resulting from the issuance of sHver certificates equal to the cost of silver acquired under the Silver Purchase Act of 1934 and the amount returned for silver received under the President's proclamation dated Aug. 9,1934. REPORT OF THE SECRETARY OF THE TREASURY 6 Income tax receipts constituted 35 percent of total receipts in 1936 as compared with 29 percent in 1935. Miscellaneous internal revenue receipts increased from 43 percent of total receipts in 1935 to 49 percent in 1936. The increases in these ratios for 1936 were largely the result of increased receipts from these sources, arid the decline in receipts from the agricultural adjustment and related taxes which constituted 14 percent of total receipts in 1935 andj only 2 percent in 1936. I Income taxes.—Eeceipts from income taxes aggregated $1,426,600,000 in the fiscal year 1936 as compared with $1,105,700,000 in 1935, an increase of $320,900,000. This increase chiefiy reflected higher levels of corporate and individual incomes and, for the first time, the full effect of the Revenue Act of 1934. 1 Collections of current corporation income taxes increased $144,600,000 in 1936 over the preceding year. Approximately 55 percent of this increase was collected in the first half of the fiscal year 1936, reflecting the higher corporate incomes of the calendar year 1934 as compared with 1933 and the effects of the Revenue Act of 1934. The balance of the increase, resulting from collections in the last half of the flscal year 1936, was due largely to the incre&.se in corporate incomes in the calendar year 1935. Another factor| contributing to increased current corporation income tax collections in the fiscal year 1936 was the change in the Treasury's administration of depreciation allowances which then became fully effective. The latter factor, together with the continued special efforts of the Bureau of Internal Revenue to collect back taxes, resulted inj an increase in collections from this source of $27,900,000 over the collections of 1935. Current individual income tax collections were $141,200,000 greater in the fiscal year 1936 than in 1935. A major portion of this increase represented the rise in individual incomes in the calendar year 1935 as compared with 1934. | Miscellaneous internal revenue taxes.—Receipts froin miscellaneous internal revenue taxes amounted to $2,009,600,000 in the fiscal year 1936 as compared with $1,650,600,000 in 1935, an increase of $359,000,000. Collections from the leading revenue producing taxes of this class are shown in the table on page 2. Approximately 93 percent of total miscellaneous internal revenue collections in 1936 came from the following sources which are arranged in the order of their revenue producing importance: Tobacco manufactures taxes, manufacturers' excise taxes, taxes on distilled spirits and I wines, taxes on fermented malt liquors, the estate tax, the gift tax, j and the capital stock tax. Collections from all of these taxes increased in the fiscal year 1936 as compared with 1935. j Estate tax collections were $78,400,000 greater in 1936 than in I935j reflecting the liigher value of taxable estates and the full effect 4 REPORT OF THE SECRETARY OF THE TREASURY of the Revenue Act of 1934 which increased the rates of the additional estate tax imposed by the Revenue Act of 1932. Collections from the gift tax were more than twice as large in the flscal year 1936 as in 1935, due to an increase in the amount of taxable gifts and also to the increased rates of tax under the Revenue Act of 1934. Collections from the taxes on tobacco manufactures increased $42,000,000 in the fiscal year 1936 to a new high level of $500,800,000. This increase resulted chiefly from the continued upward trend of consumption of small cigarettes. Total collections from taxes on alcoholic beverages of $505,200,000 in the fiscal year 1936 exceeded the collections from this source for any prior fiscal year. Taxes collected on distilled spirits and wines and on fermented malt liquors increased $60,700,000 and $33,500,000, respectively, over the comparable collections of the fiscal year 1935. The manufacturers' excise taxes yielded $40,700,000 more revenue in the fiscal year 1936 than in 1935. The greater portion of this increase was due to larger collections from the taxes on gasoline, automobiles, tires and tubes, and automobile accessories. Collections from stamp taxes showed an increase of $25,900,000 in 1936 over the preceding year, reflecting increases in refunding of security issues and greater activity in trading on the stock exchanges. Moderate increases from other miscellaneous internal revenue taxes were more than offset by the loss in revenue resulting from the repeal of the tax on checks effective January 1, 1935, collections of which amounted to $25,600,000 in the flscal year 1935. The bituminous coal tax and the taxes upon carriers and their employees were flrst effective in the flscal year 1936 and yielded $729,218 and $48,279, respectively. The Bituminous Coal Conservation Act was declared unconstitutional by the United States Supreme Court on May 18, 1936. On June 26, 1936, the District Court of the United States for the District of Columbia declared unconstitutional certain provisions of the Railroad Retirement Act of 1935 and the taxes imposed upon carriers and their employees under the act of August 29, 1935, and in a decree dated June 30, 1936, enjoined the Commissioner of Internal Revenue from enforcing the collection of these taxes, a 3-month payment of which was due prior to June 30, 1936. Agricultural adjustment and related taxes.—As the result of court injunctions impounding these taxes, collections began to decline in May 1935. On January 6, 1936, the United States Supreme Court declared the Agricultural Adjustment Act unconstitutional. The act of February 10, 1936, repealed the Kerr Tobacco Act, the Bankhead Cotton Act of 1934 except section 24 thereof, and the Potato Act of 1935. Consequently, receipts from the agricultural adjustment and related taxes show*ed a decline of $444,700,000 in the flscal year 1936. REPORT OF THE SECRETARY OF THE TREASURY 0 I Customs.—Customs receipts amounted to $386,800,000 in the flscal year 1936, an increase of $43,400,000 over 1935. This increase was chiefly due to larger collections on dutiable imports ofi wool, metals, and agricultural products which more than offset the de|cline in collections on imports of sugar and of distilled spirits. jAlthough the volume of imports of distilled spirits increased in the flscal year 1936, the duties collected were less, owing to the reduction iii rates of duty on rum, gin, and whisky under various reciprocal trade agreements. Miscellaneous receipts.—Receipts from miscellaneous: sources were $216,300,000 in 1936 as compared with $179,400,000 in 1935, an increase of $36,900,000. These receipts include such items as proceeds from Government-owned securities, Panama; Canal tolls, seigniorage, fees, flnes and penalties, rents and royalties, and sales of Government property. ! Expenditures I Total general and special account expenditures (including expenditures for recovery and relief) amounted to $8,879,800,000 for the flscal year 1936, as compared with $7,375,800,000 in 1935, an increase of $1,504,000,000. However, the figure for 1936 includes an expenditure of $1,673,500,000 for the veterans' adjusted jcompensation payment made in accordance with the act of Janulary 27, 1936 (Public No. 425), directing the immediate payment of| the veterans' adjusted service certificates, which under the original terms were not due until 1945 and thereafter. If this payinent be deducted from the expenditures for the fiscal year 1936, the total is $169,500,000 less than total expenditures for the fiscal year 1935. I The trend in total expenditures and in the principal classes of expenditures for the fiscal years 1927 to 1936 is shown in the chart on page 8. A comparison of expenditures on a functional j basis for the fiscal years 1935 and 1936 appears in the table beginning on page 6, and another classification for the fiscal years 1932 to 1936, showing recovery and relief expenditures classified as to provision for repayment is presented in the table beginning on page 364. ! Expenditures for 1932 and 1933 shown in the chart 'as ^'Recovery and relief" include only those made from funds of the Reconstruction Finance Corporation and subscription to stock of the I Federal land banks. Other expenditures in 1932 and 1933 of an emergency nature and all such expenditures in years prior to 1932 were made from regular appropriations and general Treasury accounts. Therefore, neither the totals of general expenditures nor the totals of recovery and relief expenditures for the fiscal years 1934, 1935, |and 1936 are comparable with the totals for prior fiscal years. General expenditures for years subsequent to 1933 follow the classification for those years as carried in the daily Treasury statement of Julyj 15, 1936, and include, in addition, recovery and relief expenditures for the Agricul 6 REPORT OF THE SECRETARY OF THE TREASURY tural Adjustment Administration and for emergency conservation work. This classification of expenditures is made to conform with the classification shown in the most recent compilations of the T^iireau of the Budget. Expenditures by major functions, fiscal years 1935 and 1936 ^ [Adjusted to foHow Budget classification. In minions of dollars] Class of expenditure 1936 Increase (+)or decrease (-) Regular departments and establishments: 2 Legislative and executive Civil departments and agencies and the judiciary 3 * Agricultural Adjustment Administration Refunds of processing taxes Emergency conservation work Social Security Act, administrative expenses and grants.. Public buildings ^-_ Public highways ^ River and harbor work * Postal deficiency National defense < . Veterans' Administration * • Refunds of receipts, internal revenue and customs Ah other < Total regular departments and establishments- 20.1 348.9 711.8 31.2 435.5 25.3 55.1 64.0 533.6 605.6 45.2 34.3 2 2,910. 6 ! 3, 276. 9 Veterans' adjusted compensation payment Public debt charges: Interest Retirements Total public debt charges. Recovery and relief: Agricultural aid: Commodity Credit Corporation Farm Credit Administration (including Federal Farm Mortgage Corporation)^ Federal land banks Total relief.. Public Works: Administrative expenses. Public Works Administration.. Boulder Canyon project Loans and grants to States, municipalities, etc Loans to raHroads . Pubhc highways River and harbor work Works Progress Administration National defense Other public works Total public works.. +1.8 -f 105. 0 -179.3 -21.1 +50.8 +28.6 -10.2 +28.8 +16.3 +22.0 +230.8 +70.4 -1.0 +23.5 +366. 3 1, 673. 5 +1, 673. 5 820.9 573.6 749.4 403.2 1,394.5 1,152. 6 -71.5 -170.4 «60.1 129.7 +189. 8 141.4 48.0 6 33.2 60.5 -174.6 +12.5 157.0 +27. 7 ^1,821.0 11.3 80.6 495.6 .6 2.9 -1,325.4 -10.7 • -77.7 1,912.9 499.1 -1,4.13.8 Total agricultural aid. Relief: Federal Emergency Relief Administration (including Federal Surplus Relief Corporation) Civn Works Administration...^.. _ _. Drought-stricken areas (Department of Agriculture) 21.9 453.9 532.5 10.1 486.3 28.5 15.1 28.8 71.4 86.0 764.4 676.0 44.2 57.8 14.6 23.8 137.7 66.2 317.4 147.9 176.3 136. 5 1,020.4 25.3 +10. 7 10.0 -13.8 172.1 +34.4 6 127. 9 -194.1 215.1 -102. 3 +4.4 152.3 1, 263. 7 + 1 , 263. 7 147.3 -29.0 234.2 +97.7 2,092.1 +1,07L7 1 On basis of dany Treasury statements (unrevised), partly reclassified on the basis of compilations of the Bureau of the Budget. See note 2. 2 Operation and maintenance expenditures only, exclusive of expenditures for public buOdings and public works. Includes the following expenditures classified as "Recoverj'' and relief" in the daily Treasury statements: Expenditures for the Agricultural Adjustment Administration and for emergency conservation work. 3 Expenditures of the judiciary not available separately. < Additional expenditures for these accounts included under "Recovery and relief." 6 Excess of credits, deduct. 6 Additional expenditures for Farm Credit Administration included under "CivH departments and agencies and the judiciary", above. 1 Revised; includes transfer of $110,000 from the Farm Credit Administration and $6,542,000 from the Reconstruction Finance Corporation. REPORT OF THE SECRETARY OF THE TREASURY Expenditures by major functions, fiscal years 1935 and 1936-—Continued [Adjusted to follow Budget classification. In millions of dollars] 1935 Class of expenditure 1936 Increase (+)or decrease (-) Recovery and relief—Continued. Aid to home owners: Home loan system Emergency housing.. Federal Housing Administration Resettlement Administration Subsistence homesteads 75.7 6.5 15.9 1.7 3.7 _ Total aid to home owners. Miscellaneous: Export-Import Banks of Washington Federal Deposit Insurance Corporation Administration for Industrial Recovery . . _. Total miscehaneous Total recovery and relief Total expenditures _ -38.3 +18.4 -1.4 +136. 2 -3.6 214.8 +111.3 5 238. 7 -96.8 36.1 27.8 -8.3 5 2.6 .5 12.5 19.6 +22. 2 —.5 -7.4 103.5 Reconstruction Finance Corporation, direct loans and expenditures.. 5 8 141. 9 Tennessee Valley Au thority 37.4 24.9 14.5 137.9 .1 5.1 10.4 24.7 +14.3 3,070. 7 2, 776. 8 -293.9 7, 375. 8 8.879.8 +1, 504. 0 « Excess of credits, deduct. 8 Revised; $6,542,000 transferred to the Federal Emergency Relief Administration. Expenditures for the operation and maintenance of regular departments and establishments of the Government (exclusive of public debt charges) amounted to $3,276,900,000 in the fiscal year 1936, an increase of $366,300,000 over the preceding year. This increase was principally accounted for by the following: $230,800,000 for national defense—to construct naval vessels, aircraft, and subsidiary works in order to meet provisions of the naval treaties of 1922 and 1930, for additional naval personnel, and to provide replacement and improvement of equipment for the Army—including an adjustment of repayments deposited by Army disbursing officers amounting to $65,600,000 (see note 4, p. 38); $105,000,000 for civil departments and agencies and the judiciary, to provide for increased personnel, money for the restoration of the final 5 percent of the salary reduction, expenditures from regular appropriations for the construction programs of the Boulder Canyon project and the Tennessee Valley Authority; $70,400,000 for the Veterans' Administration, reflecting chiefly an increase of $50,000,000 in the contribution to the veterans^ adjusted service certificate fund; $50,800,000 for emergency conservation work, to provide for the additional personnel engaged in the work in 1936; $28,800,000 representing expenditures for public highways from regular appropriations; $28,500,000 under the Social Security Act for administrative expenses and grants, which commenced late in the fiscal year; $22,000,000 on account of the postal deficit; and $23,500,000 for all other operation and maintenance expenditures, which includes an increase of approximately $20,000,000 in the contribution to the 8 REPORT OF THE SECRETARY OF THE TREASURY civil service retirement and disabiUty fund. These increases were, in large part, offset by a decrease of $200,400,000 in expenditures for the Agricultural Adjustment Administration and for refunds of processing taxes due to the interruption of that program by the Supreme Court decision and the consequent postponement of expenditures, and by a decrease of $10,200,000 in expenditures for pubhc buildings because of the practical completion of the regular public building program under the act of May 26, 1926. Additional expenditures for some EXPENDITURES (GENERAL AND SPECIAL ACCOUNTS, INCLUDING .RECOVERY AND RELIEF), FISCAL YEARS 1927 TO 1936, BY PRINCIPAL CLASSES DOLLARS. Billions .DOLLARS Billions 5 of these purposes were made from recovery and relief funds and are shown as such. Public debt charges totaled $1,152,600,000 in 1936, as compared with $1,394,500,000 in 1935, a decrease of $241,900,000, of which $170,400,000 represented a smaller amount of debt retirement and $71,500,000 a decrease in interest charges. A detailed discussion of public debt operations and expenditures is presented on pages 10 to 23. Total expenditures for recovery and relief amounted to $2,776,800,000 in 1936, or $293,900,000 less than in 1935. This total REl^ORT OF THE SECRETARY OF THE TREASURY 9 is a net figure after taking into consideration the earnings of certain agencies of the Government and the repayments of loans to these agencies. Expenditures for agricultural aid aggregated $157,000,000 in 1936, an increase of $27,700,000 over 1935. This was chiefly the result of an increase in expenditures of $189,800,000 by the Commodity Credit Corporation, representing in the most part the purchase of producers' cotton loans held by commercial banks. On the other hand, recovery and relief expenditures of the Farm Credit Administration (inciudiug the Federal Farm Mortgage Corporation) were $174,600,000 less than in 1935, due in large part to lower expenditures for loans and relief in stricken agricultural areas. Expenditures for the Federal land banks increased $12,500,000 over 1935, reflecting further payments to the Federal land banks for the reduction in interest rates on mortgages held by such banks. Total expenditures for relief in 1936 amounted to $499,100,000, a decrease of $1,413,800,000 as compared with 1935. This decrease was almost entirely the result of the substitution in 1936 of work relief under the Works Progress Administration for direct relief. Expenditures of the Federal Emergency Relief Administration (including the Federal Surplus Rehef Corporation) declined from $1,821,000,000 in 1935 to $495,600,000 in 1936; expenditures of the Civil Works Administration in 1936 were only $600,000, a decrease of $10,700,000 from 1935; and expenditures of the Department of Agriculture for relief in drought-stricken areas amounted to $2,900,000, a decrease of $77,700,000 from the amount expended in 1935, occasioned by severe drought conditions during the summer of 1934. Expenditures for the emergency public works program increased from $1,020,400,000 in 1935 to $2,092,100,000 in 1936. The Works Progress Administration, which commenced operations in 1936, expended $1,263,700,000 for work rehef. Public works expenditures for national defense decreased $29,000,000, while expenditures for other departments showed an increase of $97,700,000, chiefly accounted for by the Labor, Agriculture, and Treasury Departments. Small increases occurred in administrative expenditures of the Public Works Administration in loans and grants made to States, municipalities, etc., and in expenditures for river and harbor work. Substantial decreases appear in recovery and relief expenditures for public highways and for loans to railroads, and a small decrease occurred in expenditures for the Boulder Canyon project. However, these decreases in expenditures for public highways and for the Boulder Canyon project were partially offset by increases in the expenditure of regular funds for these purposes. Total aid to home owners increased $111,300,000 in 1936, largely the result of an increase of $136,200,000 in expenditures of the 10 REPORT OF THE SECRETARY OF THE TREASURY Resettlement Administration which commenced operations April 30, 1935. Expenditures for emergency housing increased $18,400,000, while those of the home loan system decreased $38,300,000 due chiefly to the consummation in 1935 of the purchase by the Reconstruction Finance Corporation of the capital stock of the Home Owners' Loan Corporation. Smaller decreases occurred in expenditures of the Federal Housing Administration and for subsistence homesteads. Earnings and repayment of loans received by the Reconstruction Finance Corporation in 1936 exceeded direct loans and expenditures of the Corporation as was also the case in the previous year; however, the excess was $96,800,000 greater in 1936 than in 1935, resulting in net receipts of $238,700,000 as compared with $141,900,000 in 1935. Expenditures of the Tennessee Valley Authority from recovery funds decreased from $36,100,000 in' 1935 to $27,800,000 in 1936. Additional expenditures during the fiscal year 1936 for the construction program of the Tennessee Valley Authority were included in the general public works program and financed from regular appropriations. Expenditures classified as ^'Miscellaneous" increased $14,300,000 in 1936 due chiefly to an increase in loans by the Export-Import Bank of Washington. Deficit The deficit for the fiscal year 1936 amounted to $4,764,000,000, which included $403,000,000. for statutory debt retirement. After deducting this amount there was a net deficit of $4,361,000,000 as compared with a net deficit in 1935 of $3,002,000,000. This increase of $1,359,000,000 over the previous year was due largely to the noncollection of processing taxes and to the payment of the adjusted service certificates. THE PUBLIC DEBT At the clc)se of the fiscal year 1936, the gross public debt outstanding amounted to $33,778,543,494, as compared with $28,700,892,625 outstanding on June 30, 1935, an increase of $5,077,650,869. This increase is partially due to the payment of adjusted service certificates with adjusted service bonds, of which $944,516,650 were outstanding on June 30, 1936, and to an increase of $840,164,664 in the balance in the General Fund between June 30, 1935 and 1936. The net changes brought about during the year in the various classes of securities which make up the outstanding debt are shown in the two following tables, the first presenting a comparison by classes of the amounts outstanding at the. beginning and at the end of the year, and the second showing, in summary form, the public, or open market, issues and maturities or redemptions. 11 REPORT OF THE SECRETARY OF THE TREASURY Changes in public debt outstanding June 30, 1935 and 1936, by classes [On basis of daily Treasury statements (unrevised), see p. 311] June 30, 1935 Interest-bearins: debt: Public issues: Pre-war and postal savings bonds... Liberty bonds Treasury bonds ._ United States savings bonds __. Treasury notes Treasury bills Total public issues... Restricted issue: A d j u s t e d bonds 3 service Special issues for investment of trust funds, etc.: Treasury notes • Certificates of indebtedness Total special issues Increase (+) or decrease (—) June 30, 1936 $199, 575, 520. 00 -$655,687,950.00 $855, 263,470. 00 -1,246,230,750.00 1 1, 246, 230, 750. 00 12, 683, 570, 300. 00 17,167,930,100.00 +4, 484, 359, 800. 00 2 62, 047, 818. 75 2 316,124, 814. 50 +254, 076,995. 75 14, 847,112, 338. 75 10,023, 251, 900. 00 2,052,898,000.00 17, 683, 630, 434. 50 4-2, 836, 518,095. 75 11, 380,985, 050. 00 +1, 357, 733,150. 00 2, 353, 516, 000. 00 +300,618,000.00 26,923, 262, 238.75 31,418,131,484. 50 +4, 494, 869, 245. 75 944, 516, 650. 00 +944, 516, 650. 00 477, 742, 000.00 155, 500, 000. 00 480, 433, 000. 00 145, 709, 000. 00 +2, 691, 000. 00 - 9 , 791, 000. 00 633, 242, 000. 00 626,142, 000. 00 -7,100,000.00 Total interest-bearing debt ... Matured debt on which interest has ceased... Debt bearing no interest 32,988,790,134.50 +5, 432, 285, 895. 75 27, 556, 504, 238.75 -150.035,610.00 169, 363, 395. 26 4 319, 399, 005. 26 620, 389,963. 97 -204,599,416.55 824,989, 380. 52 Total gross debt Net balance in General Fund 28, 700, 892, 624. 53 1, 841, 345, 539. 47 33, 778, 543, 493. 73 +5, 077, 650, 869. 20 2,681,510,203.96 +840,164, 664. 49 26, 859, 547,085. 06 31, 097, 033,289.77 Gross debt less net balance in General Fund . +4, 237,486, 204. 71 1 Excludes $88,736,850 estimated amount of called Fourth iU's on'which interest bad ceased. 2 Cash receipts transferred to the Treasurer of the United States, less redemptions. For full account of sales, see p. 19. 3 Issued only in payment of adjusted service certificates. The corresponding figure on the revised daily Treasury statement basis is $711,260,300. The difi'erence is due to the large amount of bonds in the process of redemption OD June 30, 1936. * Includes $88,736,850 referred to in note 1. Public issues, maturities, and redemptions during the fiscal year 1936 [On basis of daily Treasury statements (unrevised), see p. 311] Issued Interest-bearing debt: Public issues: Pre-war and postal savings bonds.. Liberty bonds Treasury bonds United States savings bonds Treasury notes.. Treasury bills... Total. $20, 744, 000 1 4,484, 361, 300 2 265, 239, 521 Maturities and redemptions $676, 431, 950. 00 1, 246, 230, 750. 00 1, 500. 00 11,162, 525. 25 4,770, 344,821 1,933, 826, 725. 25 3 3, 385, 783, 550 2, 028, 050, 400. 00 3, 556,159, 000 3, 255, 541, 000. 00 11, 712, 287, 371 7, 217, 418,125. 25 1 Includes $326,400 received in 1936 for 2li percent Treasury bonds of 1955-60 offered in prior year. 2 Gash receipts transferred to the Treasurer of the United States. 3 Includes $190,100 received in 1936 for Treasury notes offered in prior year. The composition of the interest-bearing public debt outstanding, by types of obligations, monthly, January 1927 to June 1936, in percent of the total, is shown in chart 3 on page 13. The various maturities, by calendar years, of the interest-bearing debt outstanding on June 30, 1933 to 1936, are shown in chart 4 on page 15. 12 REPORT OF THE SECRETARY OF THE TREASURY On the basis of the interest-bearing debt outstanding at the beginning and at the end of the year, the computed annual interest charge was increased from $750,677,802 ^ to $838,002,053, and the computed average rate of interest was reduced from 2.716 to 2.559 percent. Actual expenditures for interest during 1936 were $749,396,802. The course of the interest-bearing debt outstanding and of the computed rate of interest thereon from January 1919 through June 1936, is shown in chart 5 on page 16 and in table 34 on page 442. Treasury bonds, notes, and bills issued during the year Public issues during the year included eight issues of Treasury bonds, in the total amount of $4,484,034,900,^ of which $2,301,699,900 was for cash and $2,182,335,000 in exchange for maturing securities; and five issues of Treasury notes in the total amount of $3,385,593,450,^ of which $2,590,266,150 was for cash and $795,327,300 in exchange for maturing securities. An account of these issues follows. On June 24, 1935, the Treasury offered for cash on a bid basis, at not less than par and accrued interest, an additional issue of $100,000,000, or thereabouts, of 3 percent Treasury bonds of 1946-48, dated June 15, 1934, to be issued as of July 1, 1935. Tenders aggregating $461,341,000 face amount of the bonds were received, of which $112,669,000 were accepted at an average price of about 103^?^2 and accrued interest, with a total premium of $4,005,378.18 realized. On July 8, 1935, the Treasury offered for cash subscription, at par and accrued interest, $500,000,000, or thereabouts, of 1% percent Treasury notes of series B-1939, dated July 15, 1935, and maturing December 15, 1939. Subscriptions aggregating $2,970,169,700 were received, of which $526,233,000 were accepted. The Treasury offered for cash on a bid basis, at not less than par and accrued interest, on July 15, July 29, and August 12, 1935, additional issues, each of $100,000,000, or thereabouts, of 2% percent Treasury bonds of 1955-60, dated March 15, 1935. For the first offering, with the bonds issued as of July 22, 1935, tenders aggregating $510,958,000 face amount of bonds were received, of which $101,971,000 were accepted at an average price slightly above 10P%2 and accrued interest, with a premium of $1,631,979.42 realized. For the second offering, with the bonds issued as of August 5,1935, tenders aggregating $320,981,000 face amount of bonds were received, of which $106,541,000 were accepted at an average price of about 10P%2 and accrued interest, with a premium of $1,664,723.18 realized. For the third offering, with the bonds issued as of August 19, 1935, tenders aggregating $147,264,000 face amount of bonds were received, of 1 Revised to include United States savings bonds. 2 Excludes $326,400 exchange subscriptions relating to the prior fiscal year, but settled for during the fiscal year 1936. 3 Excludes $190,100 consisting of $155,100 exchange subscriptions and $35,000 cash subscriptions relating to the prior fiscal year, but settled for during the fiscal year 1936. REPORT OF THE SECRETARY OF THE TREASURY 13 14 REPORT OF THE SECRETARY OF THE TREASURY which $98,215,000 were accepted at an average price of about 100^^2 and accrued interest, with a premium of $777,150.24 realized. On September 3, 1935, as the final act in refunding the Fourth Liberty Loan, the Treasury offered an issue of 2% percent Treasury bonds of 1945-47, dated September 16, 1935, maturing September 15, 1947, but callable on and after September 15, 1945, and an issue of 1}^ percent Treasury notes of series C-1939, dated September 16, 1935, and maturing March 15, 1939, both in exchange for Fourth Liberty Loan 4}^ percent bonds of 1933-38 called for redemption on October 15, 1935, in an amount of about $1,246,000,000. At the same time cash subscriptions at par and accrued interest were invited for $500,000,000, or thereabouts, of the Treasury notes. A total of $997,897,200 of the called Fourth Liberty Loan bonds was exchanged, $568,717,800 for the bonds and $429,179,400 for the notes. Cash subscriptions for the notes aggregated $1,274,565,350, of which $512,434,350 were accepted. On December 2, 1935, there were offered for cash subscription, at par and accrued interest from September 16 to December 16, 1935, an additional issue of $450,000,000, or thereabouts, of 2% percent Treasury bonds of 1945-47, and also for cash subscription, at par and accrued interest, $450,000,000, or thereabouts, of IK percent Treasury notes of series C-1940, dated December 16, 1935, and maturing December 15, 1940. At the same time the holders of 2^ percent Treasury notes of series D-1935, maturing December 15, 1935, in the amount of $418,291,900, were offered the privilege of exchanging such notes for either the Treasury bonds or the new Treasury notes. Cash subscriptions aggregating $2,034,979,700 were received for the bonds, of which $484,423,400 were accepted. For the notes, cash subscriptions aggregating $2,487,264,900 were received, of which $487,808,700 were accepted. The total issues for cash were $972,232,100. Of the maturing notes, a total of. $410,665,600 was exchanged, $161,312,700 for the bonds and $249,352,900 for the notes. The issue of the Treasury bonds for cash and exchange was $645,736,100 and of the Treasury notes, $737,161,600. On March 2, 1936, there were offered for cash, at par and accrued interest, $650,000,000, or thereabouts, of 2% percent Treasury bonds of 1948-51, dated March 16,1936, maturing March 15,1951, and callable on and after March 15, 1948, and $600,000,000, or thereabouts, of IK percent Treasury notes of series A-1941, dated March 16, 1936, and maturing March 15, 1941. At the same time the holders of 2% percent Treasury notes of series C-1936, maturing April 15, 1936, in the amount of $558,819,200 were offered the privilege of exchanging such notes either for the Treasury bonds or the Treasury notes at par with an adjustment of accrued interest as of March 16. For the cash offering of Treasury bonds, subscriptions received aggregated 15 REPORT OP THE SECRETARY OF THE TREASURY MATURITY, BY CALENDAR YEARS. OF THE INTEREST-BEARING PUBLIC DEBT OUTSTANDING i AS OF JUNE 30, 1933 TO 1936 DOLLARS Billions DOLLARS Billions As of June 30 1933 I I I I I I I I 1933 '35 '37 '39 '41 '43 '45 '47 '49 '51 '53 '55 '57 '59 '61 As of June 30 1934 1933 '35 -37 '39 '41 '43 '45 '47 '49 '51 '5 3 '5 5 '57 '59 '61 1933 '35 '37 '39 '41 "43 '45 '47 '49 '51 '53 '55 '57 "59 '61 '51 '5 3 '55 '57 '59 '61 As. of June 30 1936 1933 '35 '37 '39 -41 '43 45 47 49 CHART 4. ^.Exclusive of consols, postal savings bonds, United States savings bonds, adjusted service bonds, and special obligations issued to governmental trust funds and agencies. Certificates of indebtedness are included with Treasury notes. 16 REPORT OF THE SECRETARY OF THE TREASURY $5,106,913,850, of which $727,033,950 were accepted; and for the notes, subscriptions received aggregated $3,354,464,300, of which $628,625,600 were accepted. Of the notes maturing April 15, $496,462,900 were exchanged for the Treasury bonds and $48,082,000 were exchanged for the Treasury notes, making the total exchanges $544,544,900. The issue of the Treasury bonds for cash and exchange was $1,223,496,850 and of the Treasury notes, $676,707,600. INTEREST-BEARING DEBT OUTSTANDING » AND COMPUTED RATE OF INTEREST THEREON, BY MONTHS, JANUARY 1919 TO JUNE 1936 DOLLARS B i l l i o n ss DOLLARS E Billions J f ^ • ^ ^ ^ {- -K^ / 7| 2rQSt - B e a i 'ing L'Xibt / -^ 20 y PER CENT PER CENT ^••••** ..y-' •%. ""--^.. r • 1 '•\... Computed Interest Rate / \ .A --i.^. s... 3.0 3 0 ) • : \. 1925 1927 \ 1929 CHART 5. On June 1, 1936, the Treasury offered for cash, at par and accrued interest, $600,000,000, or thereabouts, of 2^ percent Treasury bonds of 1951-54, dated June 15, 1936, maturing June 15, 1954, and callable on and after June 15, 1951, and $400,000,000, or thereabouts, of 1% percent Treasury notes of series B-1941, dated June 15, 1936, and maturing June 15, 1941. The holders of 1% percent Treasury notes of series E-1936, maturing June 15, 1936, in the amount of $686,616,400, and of 3^ percent Treasury notes of series A-1936, 1 On basis of daily Treasui-y statement (revised). REPORT OF THE SECRETARY OF THE TREASURY 17 maturing August 1, 1936, in the amount of $364,138,000, were offered the privilege of exchanging such notes either for the Treasury bonds or for the Treasury notes, exchanges to be made at par with an adjustment of accrued interest as of June 15 on the notes maturing August 1. For the Treasury bonds, cash subscriptions aggregating $4,281,967,000 were received, of which $670,846,550 were allotted. For the Treasury notes, cash subscriptions aggregating $2,772,780,900 were received, of which $435,164,500 were allotted. Of the two series of maturing notes, $678,410,100 of those maturing June 15 were exchanged, $619,910,100 for the Treasury bonds and $58,500,000 for the Treasury notes, and of those maturing August 1, $346,144,500 were exchanged, $335,931,500 for the bonds and $10,213,000 for the notes. The issue of the Treasury bonds for cash and exchange was $1,626,688,150 and of the Treasury notes, $503,877,500. Weekly offerings for cash of moderate amounts of Treasury bills on a bid basis continued throughout the year. Seventy-one series were offered, for which tenders aggregating $10,758,090,000 were received and $3,556,159,000 were accepted. The highest rate, computed on a bank discount basis, for any issue was 0.253 percent for 273-day bills issued October 2, 1935, and the lowest rate was 0.052 percent for 273-day bills issued July 17, 1935. During the year 61 series, aggregating $3,255,541,000, matured, and the amount outstanding at the beginning of the year, $2,052,898,000, increased by $300,618,000 to $2,353,516,000 at the close of the year. Further details concerning the public issues and the maturities during the year are set forth in the statement appearing as table 27, beginning on page 435. All official circulars and statements relating to these transactions are included in the exhibits beginning on page 215. Refunding of the Fourth Liberty Loan The refunding of the Fourth Liberty Loan was begun in October 1933 and brought to a successful conclusion in October 1935. In reports for the fiscal years 1934 and 1935, accounts were given of the operations during those years, and elsewhere in this report there is an account of the final action taken through the offering, on September 3, 1935, of 2% percent Treasury bonds of 1945-47 and 1^ percent Treasury notes of series C-1939 in exchange for Fourth Liberty Loan 4K percent bonds included in the fourth and final call for redemption on October 15,1935. A summary of the refunding operations follows: 93790—37- 18 REPORT OF THE SECRETARY OF THE TREASURY Summary of refunding of the Fourth Liberty Loan Original issue, Oct. 24,1918 Redeemed prior to first call ___. Outstanding at date of first call, Oct. 12, 1933 Exchanged for: Treasury bonds: 4H-3M's 1943-45, dated Oct. 15, 1933 .i $900,716,550 3H's 1944-46, dated Apr. 16, 1934: Apr. 16,1934 $827,496,200 Sept. 15, 1934 456,898,300 1,284, 394, 500 2Ji's 1955-60, dated Mar. 15, 1935 1,558, 022, 650 2M's 1945-47, dated Sept. 16, 1935 568,717,800 Total bonds issued on exchange... Treasury notes: 2J^'s series D-1938, dated Sept. 15, 1934 IJ^'s series C-1939, dated Sept. 16, 1935 .: $6,964,581,100 696,486,950 6,268,094,150 $4,311,851, 500 596,416,100 429,179,400 Total notes issued on exchange Total exchanged Redeemed for cash Total exchanges and redemptions for cash. , ' • Balance outstanding June 30,1936, on which interest has ceased 1,025,595,500 5,337,447,000 872,434,000 6,209,881,000 58,213,150 Of the Fourth Liberty Loan bonds outstanding on October 12,1933, 85 percent were exchanged for other issues, 14 percent were redeemed for cash to June 30, 1936, and 1 percent remained outstanding on the latter date. On the exchanged portion of the bonds the annual interest charge was reduced $74,044,382.18, and the saving of interest to the maturity date originally fixed for the bonds, October lo, 1938, will be $267,049,219.27. Redemption of the 2 percent bonds In the report for 1935, an account was given of the calls for redemption on July 1 and August 1, 1935, respectively, of the outstanding 2 percent consols of 1930 and the 2 percent Panama Canal bonds, and of the plans for the retirement of the bond-secured circulation of national banks. Of the $599,724,050 of the consols outstanding on their call date, $596,705,650 were redeemed during the year, and $3,018,400 remained outstanding June 30,1936; and of the $74,901,580 of the Panamas, $74,687,260 were redeemed and $214,320 remained outstanding June 30, 1936. For details as to the retirement of national bank circulation secured in part by the 2 percent bonds, see page 46. Postal savings bonds The act of June 25, 1910, establishing the Postal Savings System, authorized the issue, against the surrender of postal savings deposits, of 20-year 2}^ percent United States bonds, known as postal sa\^ings bonds, redeemable after one year from date of issue. The act of February 4, 1935, amending the Second Liberty Bond Act, authorized the issue of United States savings bonds, against the surrender of postal savings deposits, and directed that no further issues of postal savings bonds should be made after July 1, 1935. REPORT OF THE SECRETARY OF THE TREASURY 19 The first series of postal savings bonds was issued on July 1, 1911, and subsequent series were issued at 6-month intervals, the last and final series amounting to $20,744,000, being issued on July 1, 1935. Altogether 49 series, aggregating $129,128,940, were issued. Ten series matured prior to June 30, 1936, on which date 39 series, aggregating $120,881,020, were outstanding. A series matures each January 1 and July 1, the maturity of the final 49th series being July 1, 1955. United States savings bonds United States savings bonds of the initial issue, termed series A, were first offered on March 1, 1935, and continued on sale until December 31, 1935, when they were replaced with bonds of series B . No change was made in the general terms of the bonds of the new series. These bonds are issued on a discount basis at a price of $75 for each $100 maturity value, in denominations of $25, $50, $100, $500, and $1,000 (maturity value), and only in fully registered and nontransferable form. A single ownership of bonds issued in any one calendar year is limited to $10,000 (maturity value). These bonds are dated on the first day of the month in which sold and mature 10 years from such date. After 60 days from the issue date (i. e., the first day of the month in which sold, not the actual date of sale) and within 1 year, they are redeemable at the option of the owner at the original sales price. After 1 year from the issue date and at 6-month intervals thereafter the redemption value is increased according to a fixed schedule, reaching maturity value 10 years from the issue date. The Postal Service, through about 15,000 post offices, continues as the chief agency for the sale of these bonds. In addition, direct mail subscriptions have been received since the beginning of the sale of the bonds by the Treasury Department, and toward the close of the fiscal year the Federal Keserve banks also commenced to receive such subscriptions. During the fiscal year 1936, United States savings bonds in the aggregate maturity value of $369,969,800 were sold, for which cash aggregating $277,477,350 was received. Kedemptions during the fiscal year, on the basis of daily Treasury statements (revised). 20 REPORT OF THE SECRETARY OF THE TREASURY amounted to $11,252,714.75, or 4.06 percent of sales. months and denominations follow: Sales by Sales of United States savings bonds, by months and denominations, July 1935 to June 1936 $25 $50 $100 $500 $1,000 Total Month Maturity value 1935—July August September October... November. December. 1936—January... February.. March April May June - $412,200 314,000 292, 650 510,850 512,100 680,975 738,475 547,975 608, 025 576,975 515,900 737,175 6,447,300 $653, 700 $3, 231, 200 $6, 018, 500 $17, 594, 000 $27,909, 600 478, 350 2, 227, 500 ' 3,575,500 9,498,000 16,093,350 435,800 1,812,900 7,190,000 12, 555, 350 2,824,0C0 3, 602, 900 6, 214, 500 15,379,000 831, 600 26,538, 850 807,150 3,381,900 5, 791, 500 14,535, 000 25, 027, 650 1,099, 600 3, 609, 500 7,951, 000 21, 587, 000 34,928, 075 1,145,450 5, 202,900 9,939, 500 43, 111, OCO 60,137, 325 938, 600 3, 629,300 5,979,000 19,795,000 30, 889,875 1, 017, 200 4, 037, 300 6,847, 500 23, 254, 000 35, 764, 025 953,450 3, 881, 600 6, 557, 500 22,807, 000 34, 776, 525 862, 650 3,493,900 5, 705,000 19,108, 000 29, 685,450 1, 396, 750 4, 791,800 7,064,000 21, 674,000 35, 663, 725 10, 620,300 42,902,700 369,969,800 Cash receipts Total... 4,835,475 Total 74,467,500 235,532,000 7,965,225 32,177,025 55,850,625 176,649,000 277,477,350 The above table is compiled on the basis of the final Treasury audit of sales by the Postal Service and the Federal Reserve banks during the fiscal year 1936. These figures are not in agreement with those presented elsewhere in this rej)ort, as receipts from sales through the Postal Service, while deposited in the Treasury currently, are not transferred from the account of the Postmaster General to that of the Treasurer of the United States until after the receipt and audit of postmasters' accounts of sales, with the result that public debt receipts on account of such sales are not shown as such in the Treasurer's books until some time after the close of the month in which the sales were made. As set forth in the report for 1935, sales of savings bonds for the period March 1 to June 30, 1935, aggregated $128,487,450 (maturity value), for which cash receipts of $96,365,587.50 were received in the Treasury. Accordingly, the total issues of these bonds from their initial offering on March 1, 1935, to June 30, 1936, aggregated $498,457,250 (maturity value) against cash receipts of $373,842,937.50. Redemptions of these bonds, at the option of owners, during the same period, aggregated $11,783,602.25 (redemption value) for bonds with a maturity value of $15,679,050. Department Circular No. 554, as amended, datedlDecember 16, 1935, offering United States savings bonds, series B, for sale, and Department Circular No. 530, as amended, dated December 2, 1935, prescribing regulations governing the bonds, will be found as exhibits 20 and 23 on pages 242 and 247 of this report. REPORT OF THE SECRETARY OF THE TREASURY 21 Adjusted service bonds The Adjusted Compensation Payment Act, 1936, enacted January 27, 1936, provided for the immediate payment of the face amount of adjusted service certificates less outstanding loans and unpaid accrued interest thereon to September 30, 1931. All unpaid loan interest which accrued subsequent to September 30, 1931, was canceled insofar as the veteran was concerned. The act provided for application by the veteran for payment, certification by the Administrator of Veterans' Affairs of the amount due, and payment by the Secretary of the Treasury. Payment to the veteran was authorized to be made on or after June 15, 1936, by the issuance of nonnegotiable but immediately redeemable bonds in the denomination of $50 having a total face value up to the highest multiple of $50 contained in the ^mount due, the odd amount to be paid by the issuance of a check. "It was provided that the bonds be dated June 15, 1936, and mature on June 15, 1945, but be subject to redemption at the option of the veteran at any time and at such places, including post offices, as the Secretary of the Treasury might designate. Interest on the bonds accrues at the rate of 3 percent per annum from June 15, 1936, to June 15, 1945, unless the veteran chooses to redeem them at an earher date, in which event interest is payable to date of redemption, but no interest is payable on any bond redeemed prior to June 15,1937. ^ Section 5 of the act provided for the redemption of adjusted service certificates held by the United States Government life insurance fund on account of loans made thereon by issuing to that fund bonds of the United States bearing interest at the rate of 4^ percent per annum. These bonds may not mature or be called until the expiration of at least 10 years from the date of issue, except that any of these bonds may be redeemed at any time upon the certification by the Administrator of Veterans' Affairs that the amount represented by the bond is required to meet current habilities. In the Independent Offices Appropriation Act, 1937, approved March 19, 1936, there was appropriated to the adjusted service certificate fund $1,730,000,000, and in addition such amount as represents the face amount of the bonds required to be paid to the United States Government hfe insurance fund pursuant to section 5 of the Adjusted Compensation Payment Act. The Veterans' Administration designated a number of its field stations to accept and act upon applications for payment of adjusted service certificates under the Adjusted Compensation Payment Act. To facilitate operations and in order to maintain close contact with Veterans' Administration offices handling the applications, the Treasury Department set up a disbursing unit in each of the Federal Reserve banks with the exception of the Federal Reserve Bank of 22 REPORT OF THE SECRETARY OF THE TREASURY Richmond, which was served from Washington. The procedure established required the Veterans' Administration field offices to certify to the Treasury disbursing unit for the district in which the offices were located the amount due each veteran whose application had been approved. The disbursiag officer then prepared a check for the amount to be paid in cash and forwarded the Veterans' Administration certification and the check to the Federal Reserve bank for the issuance of the proper number of $50 bonds in accordance with the amount found due by the Veterans' Administration. In Washington, D. C , these matters were handled between the central office of the Veterans' Administration and the Treasury Department. In order to have deliveries made as promptly as possible after June 15, 1936, arrangements were made with the Post Office to turn over to postmasters, several days in advance of the dehvery date, aU bonds and checks that had been completed up to that time. The delivery procedure required that personal delivery be effected and a receipt obtained from the veteran. At the close of business June 30, 1936, the Treasury disbursing units had drawn, under the Adjusted Compensation Payment Act, checks aggregating $1,745,184,345.98, of which $1,669,548,500 was in payment of adjusted service bonds to be issued by the Public Debt Service and the Federal Reserve banks as Treasury agents. On the basis of the daily Treasury statement of June 30, 1936, there had been issued for delivery to veterans adjusted service bonds amounting to $1,668,752,150, of which amount $724,235,500 ^ had been redeemed. The redemption procedure established for adjusted service bonds was made as simple as possible, consistent with the proper protection of the public interest. Two hundred and forty-three post offices were designated as paying offices. Fifty-nine of these offices were central accounting post offices which redeemed bonds forwarded by postmasters in the area covered by the office. The remaining 184 post offices redeemed bonds presented directly to their offices. A veteran desiring to redeem his bonds through the post office had merely to present himself to his local post office, establish his identity as the person whose name appeared on the face of the bonds to be redeemed, and sign the request for payment on the back of the bonds. The local postmaster then took charge of the bonds and transmitted them by registered mail, without cost to the veteran, to a designated paying post office, where a check was drawn for the amount due and mailed to the veteran at the address requested by him in his application for payment. The veteran could, at his own risk and expense, 1 The corresponding figure on the revised daily Treasury statement basis is $957,491,850. The differ* ence Is due to the large amount of bonds in the process of redemption on June 30, 1936. REPORT OF THE SECRETARY OF THE TREASURY 23 send his bonds to the Treasury Department in Washington for payment. If he elected to follow the latter procedure, the request for payment could be certified by any one of a number of designated Government officials or by any executive officer of an incorporated bank or trust company. Settlement on account of the amount due the United States Government life insurance fund, pursuant to section 5 of the Adjusted Compensation Payment Act, had not been effected by the close of the fiscal year 1936. In order to eliminate unnecessary expense in the administration of estates of deceased and incompetent veterans, the act of June 26, 1936, authorized the Secretary of the Treasury to make payment of amounts payable under the Adjusted Compensation Payment Act to the person or persons determined by him to be lawfully entitled thereto without the necessity of the appointment, by judicial proceedings or otherwise, of a legal representative of the estate of any veteran or of any other persons or in compliance with State law with respect to the administration of estates. The Adjusted Compensation Payment Act, the act to eliminate unnecessary expense in the administration of estates of deceased and incompetent veterans, and Department Circular No. 560 and supplement prescribing regulations governing adjusted service bonds will be found as exhibits beginning on page 253 of this report. Cumulative sinking fund The available appropriation for the cumulative sinking fund for the fiscal year 1936, including an unexpended balance of $183,652 brought forward from the fiscal year 1935, was $553,224,373. Redemptions aggregating $403,340,750, all at par, were made for account of the fund as follows: First Liberty Loan bonds called for redemption, $100,913,900; Fourth Liberty Loan bonds called for redemption, $278,857,450; Treasury notes of series D-1935, C-1936, and E-1936, all matured, $23,569,400. An unexpended balance of $149,883,623 remained at the close of the year, and was carried forward to 1937. Tables covering transactions on account of the fund for 1936, and since its inception on July 1, 1920, will be found on pages 439 and 440 of this report. GENERAL FUND OF THE TREASURY All cash receipts of the Government are deposited in the General Fund of the Treasury and all expenditures are made from it. The balance in this fund represents the cash balance of the Government. 24 REPORT OF THE SECRETARY OF THE TREASURY The net change in this balance from the close of the previous fiscal year is accounted for as follows: Analysis of the change in the General Fund balance between June 30, 1935, and June 30, 1936 [On basis of daily Treasury statements (unrevised), see p. 311. For a description of accounts through which Treasury transactions are efi;ected, see p. 312] Balance, June 30, 1935 $1,841,345, 539.47 Ordinary receipts: General and special funds 4,115,956,615.13 Trust funds, increment on gold, etc 434, 351, 237. 03 Net increase in gross public debt 5,077,650,869.20 Total funds available Expenditures chargeable against ordinary receipts: General and special accounts Less public debt retirements Trust funds, increment on gold, etc Less national bank note retirements 11,469,304, 260.83 $8,879, 798,257.61 403,240,150.00 708,658,429.26 397,422,480.00 $8,476, 558,107.61 311,235,949.26 Total expenditures (excluding retirements of public debt and national bank notes). 8,787,794,056.87 Balance, June 30, 1936. 2,681,510,203.96 The composition of the General Fund of the Treasury, existing liabilities against the assets in the fund, and the balances in excess of such liabilities are shown for June 30, 1935 and 1936, in the table following. Similar information is presented in somewhat greater detail, on the basis of the daily Treasury statements (revised), in the table on page 448 of this report. Current cash assets and liabilities of the Treasury, J u n e 30, 1935 and 1936, and changes during the year [On basis of daily Treasury statements (unrevised), see p. 311] June 30,1935 June 30,1936 Increase (+), decrease (—) $9,115,380,809.40 $10,608,304,157. 23 +$1,492,923,347.83 GOLD Assets:-Gold : __ _ Liabilities: Gold certificates outstanding (outside of Treasury) Gold certificate fund, Board of Governors, Federal Reserve System Redemption, fund, Federal Reserve notes Gold reserve ^ Exchange stabilization fund Total Gold in General Fund 787,745,989.00 2,916,285,859.00 +2,128,539,870.00 5,509,710,115.48 5,291,078.912.60 -218,631,202.88 22,879,855. 28 156, 039, 430. 93 1,800,000, 000: 00 8, 276, 375, 390. 69 12,948,478. 00 156,039,430. 93 1,800, 000,000. 00 10,176, 352, 680. 53 —9,931, 377.28 +1,899,977,289.84 839, 005,418. 71 431,951,476. 70 —407,053, 942. 01 313,308,863.15 510, 024,945. 00 823, 333,808.15 708,210,842. 21 508,582, 714. 00 1, 216, 793, 556. 21 -f 394,901,979.06 -1,442,231.00 +393,459, 748. 06 810,040,419.00 1,133,777, 786.00 +323,737,367.00 1,181, 574. 00 811,221.993.00 1,176, 622. 00 1,134,954, 408.00 -4,952.00 +323, 732. 415. 00 SILVER Assets: Silver Silver dollars Total... _. Liabilities: Silver certificates outstanding (outside of Treasury) Treasury notes of 1890 outstanding (outside of Treasury) Total.Silver in General Fund 12,111,815.15 81,839,148. 21 . +69, 727, 333. 06 I Reserve against $346,681,016 of United States notes and against Treasury notes of 1890 outstanding in the amount of $1,181,574 in 1935 and $1,176,622 in 1936. Treasury notes of 1890 are also secured by silver dollars in the Treasury. REPORT OF THE SECRETARY OF THE TREASURY 25 Current cash assets and liabilities of the Treasury, June 30, 1935 and 1936, and changes during the year—Continued June 30,1935' June 30,1936 Iiicrease (+), decrease (—) $839.005,418. 71 12,111,815.15 192,906, 203.17 $431,951,476. 70 81,839.148. 21 351,429,84L12 —$407,053,942 01 +69, 727,333. 06 +158,623, 637. 95 958,480,491.77 13, 565,097. 25 2, 068, 087,034. 35 2,427,943. 58 +1,109,606, 542.58 — 11,137,153.67 2,016, 069, 026. 05 2,935, 735,443. 96 +919, 666,417. 91 174, 723,486. 58 254, 225,240. 00 +79,501, 753. 42 Balance in the General Fund 1,841,345, 539.47 2,681,510,203. 96 +840,164, 664. 49 Balance of increment resulting from reduction in weight of the gold dollar.. Seigniorage 2 Working balance 700,091,147.08 140,111,441.47 1,001,142,950.92 140,496,996. 73 315, 900,856. 96 2, 225,112,350. 27 -559,594,150.35 +175,789,415.49 +1,223,969,399. 35 1,841,345, 539.47 2, 681,510,203. 96 +840,164, 664.49 GENERAL F U N D Assets: In Treasury offices: Gold (as above) . - Silver (as above) Other coin, currency, and bullion.. In depositary banks, reserve banks, and treasury of Philippine Islands.... Unclassified, collections, etc . . Total Liabilities.- -. - B alance in the General Fund 3 This item represents seigniorage resulting from the issuance of silver certificates equal to the cost of the silver acquired under the Silver Purchase Act of 1934 and the amount returned for the silver received under the President's proclamation dated Aug. 9,1934. EMERGENCY LEGISLATION During the fiscal year 1936, further appropriations and allocations of funds were made for the purpose of continuing the Federal program to furnish relief and to aid recovery. The capital stock of the Commodity Credit Corporation was increased from $3,000,000 to $100,000,000 by an act approved April 10, 1936, and the Reconstruction Finance Corporation was authorized and directed to acquire the additional nonassessable stock of that agency. The act of May 20, 1936, authorized and directed the Reconstruction Finance Corporation to make loans, not exceeding $50,000,000 for the fiscal year 1937, to the Rural Electrification Administration upon request of the Administrator, approved by the President. On June 30, 1936, the amount of capital stock and obhgations that the Reconstruction Finance Corporation was authorized to have outstanding at any one time was $6,050,000,000, exclusive of indefinite authorizations for which there is no statutory limitation. During the year the Reconstruction Finance Corporation made further sales of its notes to the Secretary of the Treasury in the net amount of $375,000,000. As of June 30, 1936, the total sold to the Treasury amounted to $4,030,000,000, excluding the original $500,000,000 of the corporation's capital stock purchased by the Treasury. Notes originally issued by the corporation directly to banks and other institutions increased by $1,858,000 to $251,629,667 during the fiscal year. The Emergency Relief Appropriation Act of 1936, approved June 22, 1936, provided a direct appropriation of $1,425,000,000 for relief 26 REPORT OF THE SECRETARY OF THE TREASURY and for work relief on useful projects. In addition, such unexpended balances of funds appropriated and made available by the Emergency Relief Appropriation Act of .1935 as the President determined were reappropriated for these purposes. These funds are to remain available until June 30, 1937. The direct appropriation was made available for the following classes of projects in the amounts indicated: Highways, roads, and streets Public buildings Parks and other recreational facilities, including buildings therein.. Public utihties, including sewer systems, water supply, airports, etc Flood control and other conservation Assistance for educational, professional, and clerical persons Women's projects.Miscellaneous work projects National Youth Administration Rural rehabilitation, loans and relief to farmers and livestock growers Total . $413,250,000 156,750,000 156,750,000 171,000,000 128,250,000 85,500, OOC 85,500,000 71,250,000 71,250,000 85,500,000 1,425,000,000 The amount specified for any of the foregoing classes may be in-^ creased proportionately in accordance with the amount of unexpended balances that may be transferred from the Emergency Relief Appropriation Act of 1935, and may be increased 15 percent by transfer of amounts from other classes. In order to increase employment, the act also provided that the Federal Emergency Administrator of Public Works may use $300,000,000 from funds on hand or to be received from the sale of securities for the making of grants to aid in the financing of useful pubhc works projects, which can be substantially completed prior* to July 1, 1938. The grant in each case may not exceed 45 percent of the cost of the project. The following table summarizes ah funds appropriated and allocated for recovery and relief, expenditures therefrom, and unexpended balances on June 30, 1936. As shown in the table, $1,082,000,000 of the $6,104,000,000 appropriated under the Emergency Relief Appropriation Acts of 1935 and 1936 remained unallocated on June 30, 1936. A subsidiary table shows the details of revolving funds in which repayments and collections from previous loans are offset . against payments for current loans made by Federal lending agencies. 27 REPORT OF THE SECRETARY OF THE TREASURY Funds appropriated and allocated for recovery and relieff expenditures therefrom, and unexpended balances, as of June SO, 1936 [In millions of dollars] Expenditures 1 Sources of funds ^ Appropriations Statutory and executive allocations Organization cific Agricultural aid: Agricultural Adjustment Administration Commodity Credit Corporation 1 Farm Credit Administration«. Federal Farm Mortgage Corporation Federal land banks: Capital stock Paid-in surplus Reduction in interest rates on mortgages Relief: Federal Emergency Relief Administration Federal Surplus Commodities Corporation Civil Works Administration.. Emergency conservation workDepartment of Agriculture, relief Public Works (including work relief): Boulder Canyon project Loans and grants to States, municipalities, etc.* Loans to railroads * Public highways River and harbor work.. Rural Electrification Administration Works Progress Administration All other Aid to home owners: Home loan system: Home loan bank stock Home Owners' Loan Corporation Federal savings and loan associations Emergency housing Federal Housing Administration Resettlement Administration. Subsistence homesteads Miscellaneous: Export-Import Banks of Washington *_. Federal Deposit Insurance Corporation... Administration for Industrial Recovery. _ Reconstruction Finance Corporation—direct loans and expenditures* Tennessee Valley Authority... Total-. Unallocated funds Grand total. F o o t n o t e s on following page. ReconstrucFiscal UnexEmer- tion pended Fiscal year gency NaFi1935 Relief nance Total year and tional Emergency 1936 prior Indus- Appro- Appro- Cortrial pria- porayears 2 priaRetion tion tion covery Act, Acts, Act, 1935 1935 1933 and 3 308 (0 346 28 160 168 """85" 0 443 316 446 614 130 733 104 423 212 224 200 200 134 126 74 1 38 29 20 10 3,081 487 8 2,450 117 827 1,337 1 486 816 767 86 3 69 "605 8 338 93 400 318 481 932 320 '6O5' 911 85 72 3 10 255 (10) 436 192 438 255 133 (") 200 71 32 126 146 125 145 500 129 («) («) 912 192 1,193 477 43 172 • 128 215 152 16 1072 758 74 "50 125 126 82 200 200 444 "225' 50 138 20 25 45 252 7 16 138 (13) 19 2,293 1* 3, 227 161,358 17 6,104 6,158 19,140 3,291 3,227 1,358 (11) (11) 17 (10 24 5,023 1,082 2,293 16 113 1 160 * 3,795 50 16 668 345 106 150 3,795 7 239 28 75 6,158 18,058 3,291 1,082 (10) 524 183 393 105 (») (11) 20 36 (^0 "111 200 106 150 216 137 585 220 00 1,822 1,264 1, 211 405 1,822 307 10 83 2,270 47 (11) 1,763 4,939 1,082 6,021 28 REPORT OF THE SECRETARY OF THE TREASURY NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. For complete figures see daily Treasury statement for June 30, 1936. 1 The following appropriations included in the 1936 Budget estimate of $300,000,000 for general public works annual program and expenditures therefrom are not included: Boulder Canyon project, $14,000,000; public highways, $40,000,000; river and harbor work, $10,000,000; other public works, $118,409,000; Tennessee Valley Authority, $36,000,000; total, $218,409,000. 2 The emergency expenditures included in this statement for the period prior to the fiscal year 1934 include only expenditures on account of the Reconstruction Finance Corporation and subscriptions to capital stock of Federal land banks under authority of the act of Jan. 23,1932. Expenditures by the several departments and establishments for public works under the Emergency Relief and Construction Act of 1932 were made from general disbursing accounts, and, therefore, are not susceptible to segregation from the general expenditures of such departments and establishments on the basis of the daily Treasury statements. 3 The sum of $307,500,000 includes appropriations under the acts of May 12, 1933, May 25, 1934, June 19, 1934, and Aug. 24, 1935, totaling $360,000,000, less $52,500,000 carried to the surplus fund from the appropriation of $100,000,000 provided by the act of June 19, 1934. * There are no statutory limitations on the amounts of funds which may be made available by the Reconstruction Finance Corporation for carrying out the purposes of sec. 5 of the Agricultural Adjustment Act, and for the purchase by the Reconstruction Finance Corporation of preferred stock or capital notes of banks and trust companies under the act of Mar. 9, 1933. The Reconstruction Finance Corporation is required to make available to the Federal Housing Administrator such funds as he may deem necessary for the purposes of carrying out the provisions of the National Housing Act. The amounts included in this column for the purposes specified are based upon checks issued therefor from time to time by the Reconstruction Finance Corporation. The authority of the Reconstruction Finance Corporation to issue its bonds, notes, and debentures has been increased by such amounts as may be required to provide funds for such purposes. 6 Expenditures are stated on a net basis, i. e., gross expenditures less repayments and collections, the details of which are set forth in the supplementary statement following. 6 Net, after deducting repayments to the Reconstruction Finance Corporation. 7 ExcGss of credits rdpdtict^ 8 The appropriation of $950,000,000 provided in the act of Feb. 15, 1934, was allocated by the President as follows: Federal Emergency Relief Administration, $605,000,000 and Civil Works Administration, $345,000,000, of which amount $7,300,000 has been transferred to the Emergency Relief appropriation. fl Under the provisions of the Emergency Appropriation Act, fiscal year 1935, the Reconstruction Finance Corporation is authorized to purchase marketable securities acquired by the Federal Emergency Administration of Public Works, but the amount which the Reconstruction Finance Corporation may have invested at any one time in such securities may not exceed $250,000,000. Moneys paid for such securities are available for loans (but not grants) under title II of the National Industrial Recovery Act. The amount of obligations which the Reconstruction Finance Corporation is authorized to have outstanding at any one time is increased by the sums necessary for such purchases, not to exceed $250,000,000. The purchase of such securities by the Reconstruction Finance Corporation is reflected as expenditures of the Reconstruction Finance Corporation and as credits against expenditures of the Federal Emergency Administration of Public Works. The amount by which the available funds on account of such transactions has been increased is, therefore, included in the funds of the "Reconstruction Finance Corporation—direct loans and expenditures." 10 See note 1 above. 11 Less than $500,000. 12 Includes $700,000 allocated for savings and loan promotion as authorized by sec. 11 of the act of Apr. 27, 1934. 13 Under sec. 3 of the act of June 16, 1934, the Reconstruction Finance Corporation is authorized to purchase at par obligations of the Federal Deposit Insurance Corporation in a face amount of not to exceed $250,000,000, and the amount of obligations which the Reconstruction Finance Corporation is authorized to have outstanding at any one time is increased by $250,000,000. The amount to be included in this column will represent the proceeds deposited with the Treasurer of the United States on account of the sale of such obligations by the Federal Deposit Insurance Corporation to the Reconstruction Finance Corporation. i< The appropriation of $500,000,000 for subscription to capital stock is included in the figures shown in the column for Reconstruction Finance Corporation. 15 Exclusive of the $72,638,000 transfer referred to in note 17. 16 Exclusive of the $26,455,000 and $42,193,500 transfers referred to in note 17. 17 Includes $4,000,000,000 specific appropriation under the act of Apr. 8,1935, $1,425,000,000 specific appropriation under the act of June 22, 1936, and transfers of unexpended balances as follows: From the Reconstruction Finance Corporation, $500,000,000; from the appropriation of $3,300,000,000 for National Industrial Recovery, $72,638,000; from the appropriation of $525,000,000 for relief in stricken agricultural areas provided in the Emergency Appropriation Act of 1935, approved June 19, 1934, $26,455,000; from the appropriation of $899,675,000 for emergency relief and pubhc works provided in the Emergency Appropriation Act of 1935, approved June 19, 1934, $42,193,500; from the appropriation of $950,000,000 for emergency rehef and civil works provided in the act of Feb. 15,1934, $7,300,000; from unobligated moneys referred to in sec. 4 of act of Mar. 31,1933, $17,965,140.54; and moneys transferred pursuant to sec. 15 (0 of the Agricultural Adjustment Act, $12,921,502.64. Details of revolving funds, fiscal year 1936, included in the table on page 27 [In millions of dollars] Organization C o m m o d i t y Credit Corporation F a r m Credit A d m i n i s t r a t i o n L o a n s a n d grants to States, municipalities, etc . . L o a n s t o railroads E x p o r t - I m p o r t B a n k s of W a s h i n g t o n . Reconstruction F i n a n c e Corporation—direct loans a n d expenditures J Excess of repayments and collections'(deduct). Repayents P a y m e n t s am n d collections 220 70 360 26 25 925 90 103 188 154 6 1,164 N e t expenditures 130 1 33 172 » 128 20 1239 REPORT OF THE SECRETARY OF THE TREASURY 29 REVENUiS LEGISLATION Revenue legislation during the fiscal year 1936 included two major revisions of the Federal tax system: (1) the Revenue Act of 1935, approved August 30, 1935, and (2) the Revenue Act of 1936, approved June 22, 1936. The Revenue Act of 1935 increased all the individual income surtax rates applicable to surtax net incomes over $50,000, raising the maximum surtax rate from 59 percent applicable to surtax net incomes of over $1,000,000 to 75 percent applicable to surtax net incomes of over $5,000,000. All the estate and gift tax rates were increased by this act; the maximum estate tax rate was revised from 60 percent applicable to net estates of over $10,000,000 to 70 percent applicable to net estates of over $50,000,000, and the maximum gift tax rate was changed from 45 percent applicable to net gifts of $10,000,000 to 52K percent applicable to net gifts of over $50,000,000. The specific exemptions for both the estate and the gift taxes were reduced from $50,000 to $40,000. The Revenue Act of 1935 also introduced two new features into the corporation income tax: (1) I t substituted a graduated tax for the single rate of tax which had been imposed under all earlier acts; the rate scale was graduated from 12}^ percent upon the first $2,000 of net income to 15 percent upon net incomes of over $40,000, as against the flat rate of 13% percent imposed under the Revenue Act of 1934; (2) it subjected 10 percent of the dividends received by corporations to the corporation income tax whereas under earlier acts all dividends received by corporations were exempt from tax. Under the graduated corporation income tax the small corporate entities would receive more favorable treatment than the large ones to the extent that the size of net income constitutes a measure of corporate size. The major provisions of the 1935 act relating to income taxes were to apply only in the case of taxable years beginning after December 31, 1935. The Revenue Act of 1936 did not change the surtax rates of the individual income tax or the estate and gift tax rates which were imposed by the Revenue Act of 1935; it did, however, change the corporation income tax by superimposing upon a graduated normal corporation income tax rate scale (somewhat lower than that imposed by the 1935 act) a scale of surtaxes on undistributed profits graduated from 7 percent to 27 percent. Under the Revenue Acts of 1934 and 1935, railroad corporations were permitted to file consolidated returns and a tax rate of 15% percent was applicable. This privilege is continued under the Revenue Act of 1936 but this %ct |does not distinguish between the rates applicable to corporations permitted to file consolidated returns 30 REPORT OF THE SECRETARY OF THE TREASURY and other corporations. The 1936 act increased the tax upon intercorporate dividends by subjecting 15 percent of the dividends received by corporations to the corporation income taxes, instead of only 10 percent as in the 1935 act. The chief change in the individual income tax made by the Revenue Act of 1936 was to subject dividends received to the normal income tax for the first time in the history of Federal income tax legislation. The above-mentioned provisions of the 1936 act apply to taxable years beginning after December 31, 1935. Important changes were also effected in the taxation of nonresident aliens and foreign corporations. Under the Revenue Act of 1934, nonresident alien individuals were required to file returns on income from sources within the United States and were subject to both normal tax and surtax. On annual or periodical gains, except dividends, a tax of 4 percent was withheld at source to be credited against the total amount of tax as determined on the return. Similarly, a tax of 13% percent was withheld on the same items of income of foreign corporations. The 1936 act provides for a 10 percent withholding tax applicable to nonresident aliens not engaged in trade or business in this country on gross income from interest (except interest on deposits with persons carrying on the banking business), dividends, rents, royalties, and other annual or periodical sources of income within the United States. Such nonresident aliens are not subject to the tax on capital gains. Similar items of income are taxable to nonresident foreign corporations at a 15 percent rate, except dividends, which are subject to a tax of 10 percent. The 10 percent rate on dividends may be reduced to not less than 5 percent if the recipient is from a contiguous country, and provision for such reduction has been effected by treaty with such country. Resident foreign corporations are subject to a flat tax of 22 percent on income from sources within the United States. They are not subject to the surtax on undistributed profits. Nonresident alien individuals doing business in this country are subject to normal tax and surtax on income from sources within the United States. A number of other changes were effected by the Revenue Acts of 1935 and 1936. Certain of the provisions in the 1935 act, however, were superseded by the 1936 act before their first effective dates, notably, those relating to the corporation income taxes. The more important tax rate changes made by'^these acts and^^the rates which they superseded, together with legal citations and effective dates, are shown in exhibit 44, page 281. The following should be noted relative to the data in this exhibit: (1) Certain corporations are not subjected to the graduated normal tax and to the graduated surtax rates on undistributed profits: Banks, REPORT OF THE SECRETARY OF THE TREASURY 31 iDsurance companies, foreign corporations, and certain others are required to pay various flat rates in lieu of the normal tax and surtaxes imposed on other corporations. (2) The 1935 act made no change in the tax on corporations improperly accumulating surplus; the 1936 act decreased the rates applicable to corporations subjected to the surtax on undistributed profits, but made no change in the rates applicable to corporations not subjected to such tax. The 1935 act increased the surtaxes on the undistributed adjusted net income of personal holding companies; the 1936 act decreased these rates. (3) The capital stock tax rate was increased by the 1935 act and reduced by the 1936 act so that it stands at the same level as in the Revenue Act of 1934, namely, $1 per $1,000 of the adjusted declared value of the capital stock. Corporations were permitted under the 1935 act to redeclare the value of their capital stock. The excessprofits tax was increased and graduated by the 1935 act as against a flat rate in the 1934 act, and the excess in the 1935 act was to be measured from a lower level than in the 1934 act. No change in the excess-profits tax rates was made by the 1936 act. (4) The 1936 act imposed a tax on the unjust enrichment arising from: (a) Federal excise taxes shifted to vendees but not paid; (b) Federal excise taxes shifted by vendee for which he was reimbursed by the vendor; or (c) refunds or credits of such taxes shifted to others. (5) The 1935 act reduced the tax on producers of crude petroleum. The 1936 act eliminated the jewelry tax; reduced the rate of tax on furs, but eliminated the exemption from tax of articles made of fur which sold for less than $75; and imposed a tax on the import of certain additional types of oils and of certain seeds from which oils are derived. Important special taxes were imposed by legislation enacted during the fiscal year 1936. The Social Security Act, approved August 14, 1935, imposed three taxes: (1) An income tax on employees, with certain exceptions, based upon wages received not in excess of $3,000 per annum; (2) an excise tax on employers, with certain exceptions, based upon wages paid not in excess of $3,000 per annum; and (3) an excise tax on all employers of eight or more, based upon total wages paid. An act approved August 29, 1935, imposed similar taxes appHcable to carriers and their employees: (1) An income tax on employees, based upon wages received not in excess of $300 per month; (2) an excise tax on carriers, based upon wages paid not in excess of $300 per month; and (3) an income tax on representatives of employees of carriers. The rates of tax effective under the Social Security Act are as follows: Under title VIII, the income tax on employees first applies 32 REPORT OF THE SECRETARY OF THE TREASURY with respect to employment during the calendar year 1937 and the rate imposed is 1 percent of the wages. This rate of tax is increased by one-half of 1 percent every 3 years until it reaches 3 percent, which is applicable with respect to employment after December 31, 1948. The excise tax on employers, also imposed under title VIII, is at the same rates as the aforementioned income tax on employees. The rates of tax on employers of eight or more, imposed under title I X of the Social Security Act, start at 1 percent, applicable with respect to employment during the calendar year 1936, and are increased by 1 percent each year until the maximum rate of 3 percent is reached. The excise tax upon carriers and the income tax upon their employees are effective with respect to employment after March 1, 1936, and are levied at a rate of 3}^ percent. The rate of tax levied upon wages of employees' representatives is 7 percent. The taxes imposed by this act do not apply to any compensation received or paid after February 28, 1937. A copy of titles VIII and I X of the Social Security Act is shown as exhibit 42, page 272, and a copy of an act to levy an excise tax upon carriers and an income tax upon their employees, and for other purposes is shown as exhibit 43, page 279. The Bituminous Coal Conservation Act of 1935, approved August 30, 1935, imposed an excise tax of 15 percent of the sale price of bituminous coal produced in the United States after November 1, 1935, to be paid by producers of such coal. Producers who compUed with the Bituminous Coal Code were entitled to a credit of 90 percent of the amount of tax. This act was declared unconstitutional by the United States Supreme Court on May 18, 1936. The Federal Alcohol Administration Act, approved August 29, 1935, created the Federal Alcohol Administration and provided for certain improvements in the administration of the liquor taxes without changing any of the rates imposed by the Liquor Taxing Act of 1934. The Liquor Tax Administration Act of 1936, approved June 26, 1936, made certain additional improvements in the administration of the Federal liquor tax and reduced by 50 percent the rates of tax on wines and liquors. Agricultural adjustment taxes At the beginning of the fiscal year 1936, processing taxes, floor stock taxes, and import compensating taxes imposed under the Agricultural Adjustment Act, as amended, were in effect with respect to the following basic agricultural commodities: Wheat, cotton, tobacco, field corn, hogs, sugar beets, and sugarcane. Similar taxes had been imposed upon certain paper products, jute fabric, and jute yarn, which were found to be competing to the disadvantage of cotton REPORT OF THE SECRETARY OF THE TREASURY 33 processors. Only processing taxes and import compensating taxes were in effect with respect to peanuts and rice. In addition, taxes were imposed upon the ginning, in excess of an allotment, of cotton harvested during the crop year beginning June 1, 1935, and upon the first bona fide sale of certain tobacco harvested during the crop year beginning May 1, 1935, for which tax payment warrants to the extent of an allotment had not been issued. Processing and import compensating taxes on rye became effective on September 1, 1935, as a result of the proclamation by the Secretary of Agriculture of July 2, 1935, of rental and benefit payments with respect to rye. A tax was imposed by the Potato Act of 1935 (Public No. 320), effective December 1, 1935, upon either the first sale or first change in form of potatoes. Changes in rates of a number of agricultural adjustment taxes were made during the year in accordance with the procedure provided for in the acts imposing these taxes. A summary of the rates of processing taxes and of cotton ginning, tobacco sales, and potato sales tax rates in effect during the fiscal year 1936 appears as exhibit 45 on page 285. On January 6, 1936, the taxes imposed by the Agricultural Adjustment Act, as amended, were held to be unconstitutional by the United States Supreme Court {TJ. S, A. v. William M. Butler et al., receivers of the Hoosac Mills Corporation, No. 401 U. S.), Subsequently the taxes imposed upon the ginning of cotton, the sale of tobacco, and the first sale or first change in form of potatoes were repealed by the act of February 10, 1936 (Pubhc No. 433). ESTIMATES OF RECEIPTS AND EXPENDITURES Each November the Treasury Department is required to make an estimate of the revenues of the Federal Government for the balance of the current fiscal year and for the entire following fiscal year, assuming the continuation of the existing tax structure. The tax revenue from practically every major source is directly dependent, although in varying degree, upon business conditions during the period in respect of which the tax is levied. The Treasury Department in making estimates of future revenue is therefore required to forecast the general business situation for a period ending 20 months later. Appraisals of future industrial production and profits, security markets, commodity niarkets, and general business activity are necessary for deternuning revenue estimates. These forecasts require analyses of a large variety of financial and economic data, and they form the basis for estimates of the aggregate amounts of taxable corporate and individual incomes as well as the distribution of such incomes by major sources, such as corporate and individual 93790—37- 34 REPORT OF THE SECRETARY OF THE TREASURY business profits, wages and salaries, rents, royalties, interest, dividends, and proceeds from the sale of assets. In considering estimates of future revenue in connection with forecasts of business conditions, it is important to remember that changes in business profits and individual incomes do not occur in mechanical proportion to increases and decreases in the volume of business activity and in the general price level. In periods of rising business, for example, profits and incomes rise much more than proportionally to the increase in the volume of business. Also, consideration must be given to the fact that the amount of increased revenue which will result from a given gain in individual incomes is influenced by the distribution of this increase among the various income groups since a change in the aggregate amount of individual incomes is attended by marked shifts of income from one surtax bracket to another. There is a definite lag between the time of collections of income taxes and the time income is earned. Thus the improvement in earnings in the calendar year 1936 will appear in income tax collections for the first time when the income tax returns are filed on March 15, 1937. Because of the privilege of making quarterly installment payments of these tax liabilities the collections will be received throughout the calendar year 1937, thus falling into the receipts of two different fiscal years. Hence, the estimated income tax collections, both corporation and individual, for the fiscal year 1937, are made up partly from payments on 1935 incomes and partly from payments on 1936|incomes. Similarly, fiscal year 1938 estimates of income tax receipts involve payments on both 1936 and 1937 earnings. Because of the Federal practices in the collection of taxes, collections from estate and gift taxes and from the Social Security Act tax on employers of eight or more persons also lag behind changes in general business conditions. Most of the other sources of revenue reflect such business changes within 2 months. Actual receipts and expenditures for the fiscal year 1936, and estimates for the fiscal years 1937 and 1938 are shown in the table following. More detailed revenue estimates are presented in table 15, on page 383, and a detailed description of the recent revenue legislation which influences these estimates is presented in the article beginning on page 29. The estimated expenditures are furnished by the Bureau of the Budget and are based upon a careful survey of the needs of the various departments and bureaus of the Government. KEPORT OF THE SECRETARY OF THE TREAStTRY 35 Receipts and expenditures for the fiscal year 1936, on the basis of daily Treasury statements {unrevised), and estimated receipts and expenditures for the fiscal years 1937 and 1938 1936, a c t u a l 1937, e s t i m a t e s 1938, estimates G E N E R A L AND SPECIAL ACCOUNTS EECEIPTS Internal r e v e n u e : I n c o m e tax _ __ . Miscellaneous internal r e v e n u e _._ U n j u s t e n r i c h m e n t tax _. Taxes u n d e r Social Security A c t Taxes u p o n carriers a n d their employees Processing tax on farm p r o d u c t s Customs --Miscellaneous receipts: Proceeds of G o v e r n m e n t - o w n e d securities: Principal—foreign obligations Interest—foreign obligations. All other P a n a m a C a n a l tolls, e t c . Seigniorage . --.. 0 t h e r miscellaneous Total - $1, 426, 575, 433. 84 2, 009, 578, 512.16 $2,372,900,000 2, 274,968, 000 82, 000, 000 324, 600, 000 48,278.74 76, 649,383. 41 386,811, 593. 69 134, 652, 000 446, 800, 000 1 463,000 000 69,897.91 477, 414. 59 90, 360, 932. 61 25, 899,995. 07 39, 266, 510.41 60, 218, 662. 70 72, 094 518,493 59,869, 088 25, 501, 400 39, 000, 000 67, 369, 644 74, 298 319,781 67, 892,108 26,351, 400 27, 000, 000 60, 537, 610 4,116,956, 615.13 5, 828,150. 719 7, 293, 607,197 21,516,234.43 425,401. 68 16,816, 356. 30 132, 289,463. 34 1,486,458. 78 37,842,352. 06 177,949.28 23, 673,450 511,100 20, 980, 700 150, 545, 200 1,463, 000 39„286, 000 23, 300,100 435, 700 20, 769, 800 149, 918, 300 1,698,400 38, 418, 500 13,889,113.53 66,080,926. 91 76,748,809. 25 35,133, 687.10 15, 254, 035. 42 n , 109, 468.01 14, 500, 000 105, 925, 702 101, 878, 285 38, 311,150 16, 065, 220 2,009, 200 7, 800, 000 123 196 600 105, 506, 200 39.556 400 17,123 000 8,188, 000 26, 000, 000 $3,365,300 000 1 2,508,332,000 774,800,000 EXPENDITURES General: Departmental: 2 3 Legislative e s t a b l i s h m e n t Executive proper State Department . Treasury Department W a r D e p a r t m e n t (nonmilitary) ^ . . D e p a r t m e n t of J u s t i c e P o s t OflQce D e p a r t m e n t D e p a r t m e n t of t h e Interior: B o u l d e r C a n y o n project Other .._ D e p a r t m e n t of A g r i c u l t u r e D e p a r t m e n t of C o m m e r c e D e p a r t m e n t of L a b o r . . Shipping Board ' U n i t e d States M a r i t i m e C o m m i s sion _. R u r a l Electrification A d m i n i s t r a tion I n d e p e n d e n t offices a n d commissions Unclassified i t e m s A d j u s t m e n t for disbursing officers' checks outstanding • Total departmental 3 _ Public buildings 2 _ _ _ Public highways 2 River a n d harbor work 2 P a n a m a Canal 2 . P o s t a l deficiency R a i l r o a d R e t i r e m e n t Act: A d m i n i s t r a t i v e expenses Annuity payments Social S e c u r i t y Act: A d m i n i s t r a t i v e expenses: Social S e c u r i t y B o a r d D e p a r t m e n t of C o m m e r c e D e p a r t m e n t of L a b o r G r a n t s to S t a t e s : Social S e c u r i t y B o a r d D e p a r t m e n t of L a b o r Treasury Department Old-age reserve account . Unclassified Retirement funds (United States share): Alaska Railroad r e t i r e m e n t fund Civil-service r e t i r e m e n t fund Foreign service r e t i r e m e n t fund C a n a l Zone r e t i r e m e n t fund D i s t r i c t of C o l u m b i a ( U n i t e d States s h a r e ) . Per footnotes, see p. 38. 970, 000 21, 475, 000 40,194, 688.86 2,067, 786.47 44,997, 400 38,149,100 447,457,895.84 565, 286, 067 613, 347,100 442, 994,432. 77 15,045, 264.70 28,799,817.06 71,398,632.02 11,447,778.98 86,038,861.60 565, 286, 067 31,108,900 97,813, 000 124,981,100 11, 281, 000 50, 293,181 613, 347,100 45, 799,963 155, 775, 000 163,129.800 10, 387,900 30, 769, 478 270,435.28 1,162, 500 7, 000, 000 2, 223, 000 25, 000, 000 601,288.08 46, 350.00 76, 936.38 20,505,000' 87, 500 295, 000 23,305, 000 24, 000 420, 000 23, 637, 015. 26 1, 800, 213. 94 2,386, 670. 54 139, 000, 000 6, 250, 000 8, 500, 000 225,000, 000 256,000, 000 8, 025, 000 8, 200, 000 540, 000, 000 - 4 , 4 6 3 , 4 6 3 . 07 2,181.70 40,000,000.00 162,400.00 500,000.00 6,707,600.00 46, 050, 000 185, 300 500,000 5,000,000 176, 000 72,392, 000 188, 000 500, 000 36 REPORT OF THE SECRETARY OF THE TREASURY Receipts and expenditures for the fiscal year 1936, on the basis of daily Treasury statements (unrevised), and estimated receipts and expenditures for the fiscal years 1937 and 1938—Continued 1930, actual 1937, estimates 1938, estimates GENERAL AND SPECIAL ACCOUNTS—Con. EXPENDITURES—continued National defense: 2 Army * _. Navy Veterans' pensions and benefits: Veterans' Administration 2 Adjusted-service certificate fund Agricultural Adjustment Administration 2. Agricultural Adjustment Administration (Act Aug. 24, 1935) -.. Agricultural contract adjustments Soil Conservation and Domestic Allotment Act Emergency Conservation Work Farm Credit Administration 2.__ Tennessee Valley Authority 2. Debt charges: Retirements: Sinking fund Estate taxes, forfeitures, gifts, etc... Redemption of bonds, etc., from repayments to principal of loans to States, municipalities, etc., Public Works Administration Interest.. Refunds: Customs Internal revenue Processing tax on farm products Total, general Recovery and relief: Agricultural aid: Agricultrual Adjustment Administration Commodity Credit Corporation: Reconstruction Finance Corporation funds _._ Other Farm Credit Administration: Reconstruction Finance Corporation funds: Crop production loans Regional agricultural credit corporations Loans to joint stock land banks Farm mortgage relief Farm Credit Administration Unclassified Other Federal land banks: Capital stock Subscriptions to paid-in surplus. Reduction in interest rates on Relief: mortgages Federal Emergency Relief Administration:* Reconstruction Finance Corporation funds Other.. Federal Surplus Commodities Corporation:fl Reconstruction Finance Corporation funds Other Civil Works Administration Emergency Conservation Work4... Department of Agriculture, relief.. Public works: Boulder Canyon project Loans and grants to States, municipalities, etc Loans to railroads Public highways River and harbor work Rural Electrification Administration: Reconstruction Finance Corporation funds. _. Other For footnotes, see p. $373,014, 977. 68 391, 424,149. 26 $377,601,000 510, 280, 080 $393, 460,400 587, 302, 600 575,982,094.01 1, 773,492, 531. 72 344, 737, 068. 35 588, 771, 465 563, 500, 000 587, 524,000 24,161, 602. 21 135,453, 092. 60 56, 500, 000 97, 960, 000 3,000,000 5,000, 000 322,037. 35 300, 000,000 308, 000, 000 2,141, 800 48, 000, 000 470, 000,000 11, 551, 343. 05 21, 016, 755. 48 403, 238, 650.00 1, 500. 00 400, 000, 000 25,000 400,000, 000 15, 000 4, 500,000 835, 000,000 1,500,000 860,000, 000 J 749, 396,801. 68 5, 658, 200 49,000, 000 14. 085,195. 44 30,100, 430. 34 10, 081, 744. 03 5,588,870,388.11 18, 000, 000 30, 203,100 22, 500, 000 5,498, 997, 393 5, 371,068, 341 27, 850, 207. 41 5, 650, 000 20, 900, 000 129,862, 736. 53 147, 714. 00 1,271,841.13 122,000,000 3,000, 000 16,800, 000 36,146, 900 SO, 000,000 606,000 600,000 6,000,000 5,000,000 93, 600 182, 687 445, 640. 62 107. 50 14,607,266.28 6,000,000 7,600,000 1,046,186. 00 32, 467, 994. 63 1,000,000 38,000,000 '24,"000,"000 17,779,645.80 110,249.64 21.36 29,064, 981. 00 328,018.92 487,099, 601. 71 36.10 8,164, 330.24 676,195. 79 486,281,193. 58 2,882,448.90 10,023,710. 53 172,116, Oil. 89 127,881,697.83 215, 095, 581. 31 152,318,737.09 1,402, 654.17 4,000,000 540, 000 60,000, 000 507, 300 230, 000 8,835, 000 5, 354,900 236,000,000 5,000,000 268,130, 000 105,961, 500 183, 000,000 6,000, 000 9,262,400 134, 544,000 15,195,700 REPORT OF THE SECRETARY OF THE TREASURY 37 Receipts and expenditures for the fiscal year 1936, on the basis of daily Treasury statements (unrevised), and estimated receipts and expenditures for the fiscal years 1937 and 1938—Continued 1936, actual 1937, estimates 1938, estimates G E N E R A L A N D SPECIAL A C C O U N T S — C o n . EXPENDITURES—continued R e c o v e r y a n d relief—Continued. Public works—Continued. W o r k s Progress A d m i n i s t r a t i o n Other p u b l i c w o r k s : A d m i n i s t r a t i v e expenses. P u b lic W o r k s A d m i n i s t r a t i o n Legislative e s t a b l i s h m e n t State D e p a r t m e n t Treasury Department: Public buildings Other War Department (nonmilit a r y ) *.. N a t i o n a l defense: Army < Navy P a n a m a Canal D e p a r t m e n t of J u s t i c e D e p a r t m e n t of t h e I n t e r i o r D e p a r t m e n t of A g r i c u l t u r e D e p a r t m e n t of C o m m e r c e D e p a r t m e n t of L a b o r Veterans' Administration I n d e p e n d e n t oflQces a n d commissions D i s t r i c t of C o l u m b i a Unclassified i t e m s Aid to h o m e owners: H o m e loan s y s t e m : R e c o n s t r u c t i o n F i n a n c e Corp o r a t i o n funds: H o m e loan b a n k stock F e d e r a l savings a n d loan associations. E m e r g e n c y housing Federal Housing Administration: R e c o n s t r u c t i o n F i n a n c e Corp o r a t i o n funds Other Resettlement Administration Subsistence h o m e s t e a d s Miscellaneous: E x p o r t - I m p o r t B a n k s of W a s h i n g ton: R e c o n s t r u c t i o n F i n a n c e Corporation funds Other A d m i n i s t r a t i o n for I n d u s t r i a l Recovery R e c o n s t r u c t i o n F i n a n c e Corpora" tion—direct loans a n d expenditures Tennessee Valley A u t h o r i t y T o t a l , recovery a n d relief $1, 263, 661,490. 21 25, 255,459.16 1, 603, 049.42 886, 636. 83 26, 000, 000 1, 057, 500 70, 500 52,942, 371. 69 35, 846, 747.42 53, 350, 000 27, 750, 000 391,632. 79 19, 500 9, 639,105.49 137, 607, 516. 68 4, 950. 30 781,695.11 55,128,930. 27 54,899, 540. 72 9, 581, 748.16 11,683,302.98 1,908,497.75 16, 494, 800 60, 472, 000 . Excess of e x p e n d i t u r e s ( + ) or receipts (—).. 1, 065, 500 105, 710, 700 51, 387, 700 4, 674, 600 11, 822, 000 364, 500 8, 398,151.81 219,873. 53 642,825.90 11, 028,100 150, 000 17, 696, 300. 00 25, 399, 000 19,689,058. 26 24,906,423. 42 50, 000 49, 612, 600 14,727,039. 92 222,439.78 137,907, 723. 28 108, 264. 37 152, 940, 000 114, 500 19,495, 496. 91 85, 960. 85 3, 000,000 66, 000 5, 111, 371. 02 !0, 000 238, 722,416.78 27,814,668.09 G r a n d t o t a l e x p e n d i t u r e s , exclusive of s u p p l e m e n t a l i t e m s Supplemental items G r a n d total, expenditures, general a n d special accounts ,, 400,000, 000 15, 000, 000 425, 000,000 $10,000,000 10, 250, 000 295, 000 10, 835, 000 28, 519, 000 3, 790, 000 5, 300, 000 31, 000, 000 16, 000, 000 '30,"900,'000 150,000,000 3, 290, 927,869. 50 2, 231, 807,100 336, 930, 913 8,879, 798, 257. 61 7, 730,804, 493 750, 000, 000 5, 707, 999, 254 450, 000, 000 8, 879, 798, 257. 61 8,480,804,493 6,157,999, 254 -f 4, 763, 841, 642.48 + 2 , 652, 653, 774 + 4 , 763,841, 642.4.8 403, 240,150. 00 + 2 , 652,653, 774 404, 525, 000 + 4 , 360, 601,492. 48 + 2 , 248, 128, 774 -f 274, 307,192. 23 + 4 , 634,908, 684. 71 397, 422, 480. 00 -flOl, 729, 632 + 2 , 349,858, 406 100, 000, 000 -1,537,122,943 25, 000, 000 + 4 , 237,486, 204. 71 + 2 , 249, 858, 406 -1,562,122,943 +4,237,486,204.71 -f 2, 249,858, 406 -1,135,607,943 Summary Excess of expenditures (-1-) or receipts (—). Less p u b l i c d e b t r e t i r e m e n t s Excess of e x p e n d i t u r e s ( + ) or receipts (—) (excluding p u b h c d e b t retirements) T r u s t accounts, i n c r e m e n t on gold, etc., excess of receipts (—) or e x p e n d i t u r e s (-f) Less n a t i o n a l b a n k n o t e r e t i r e m e n t s T o t a l excess of e x p e n d i t u r e s ( + ) or receipts (—) (excluding p u b l i c d e b t retirements) A d d i t i o n a l a m o u n t for r e c o v e r y a n d relief ( c o n t i n g e n t u p o n a p p r o p r i a t i o n being m a d e therefor—see; P r e s i d e n t ' s B u d g e t Message) F o r footnotes, see p . 38. -1,135, 607, 943 401, 515, 000 -1,537,122,943 1, 537,122,943 -25, 000, 000 38 REPORT OF THE SECRETARY OF THE TREASURY Receipts and expenditures for the fiscal year 1936, on the basis of daily Treasury statements (unrevised), and estimated receipts and expenditures for the fiscal years 1937 and 1938—Continued 1936, actual 1937, estimates 1938, estimates GENERAL AND SPECIAL ACCOUNTS—Con. EXPENDITURES—continued Summary—continued. Increase (-f) or decrease ( - ) in General Fund balance 4-$840,164, 664.49 Increase (+) or decrease (—) in the public debt Public debt at beginning of year . +6, 077, 650,869.20 28,700, 892, 624. 53 +1,248,000,000 33, 778, 543, 494 -$25,000,000 35, 026, 543,494 33, 778, 543, 493. 73 35, 026, 543, 494 35, 001, 543,494 Public debt at end of year. ._ -$1,001,868,406 TRUST ACCOUNTS, INCREMENT ON GOLD, ETC RECEIPTS Trust accounts Increment resulting from reduction in the weiffht of the cold dollar Seigniorage ^ Unemployment trust fund _ Total-. 238,827,935. 50 223,218,443 223, 867, 643 784,464. 60 175, 789, 415.49 18,949,421. 44 1,750,000 40, 000, 000 278,300,000 25, 000,000 576, 500, 000 434, 351, 237. 03 543,268,443 825,367, 543 205,131,966.43 264,948,075 265, 047, 510 EXPENDITURES Trust accounts * Transactions in checking accounts of governmental aizencies (net) Chargeable against increment on gold: Melting losses, etc Payments to Federal Reserve banks (sec. 13b, Federal Reserve Act, as amended) For retirement of national bank notes.. Unemployment trust fund investments... J Total.Excess of expenditures over receipts 41,179,967 80,788,693.33 791,845.87 750,000 5,614,453.63 397, 422, 480. 00 18,909,000.00 1, 000, 000 100,000,000 278,300,000 1 25, 000, 000 576, 600, 000 708,658,429.26 644,998,075 | 825, 367, 543 274, 307,192. 23 101,729,632 1 Assuming extension of temporary taxes and duties in present form. See Table 15, p. 383 for estimates, assuming temporary taxes are not extended. 2 Additional expenditures on these accounts are included under "Recovery and relief." 3 The Executive order of June 10, 1933, as amended, provides for the transfer of the function of disbursement of all moneys of the United States (except those relating to the Military and Naval establishments, rivers and harbors, and Panama Canal) to the Division of Disbursement, Treasury Department. The transfer of such functions in Washington, D. C., of the several departments and establishments subject to the Executive order of June 10, 1933, was completed on July 1, 1934. Therefore, effective July 1, 1934, in the interest of economy and efficiency, the disbursements by the Division of Disbursement, Treasury Department, which appear in daily Treasury statements under the caption "Departmental expenditures" are on the basis of checks issued. The totals shown, after making adjustment of outstanding checks of the Division of Disbursement, relating to such "Departmental expenditures", are on the basis of checks paid as published heretofore. * The expenditures for the fiscal year 1936 include adjustments in the classification of repayments to appropriations deposited by Army disbursing officers in the fiscal years 1934 and 1935, as follows: Increase: General expenditures: National defense—Army. ^ $66,581,618.38 Decrease: General expenditures: War Department (nonmilitary) 606,962.63 Recovery and relief expenditures: Emergency conservation work. _ 60,789,926.21 Public works—other: War Department (nonmilitary) 639,572.20 National defense—Army 13,071,778.73 Trust accounts—other... 473,379.61 65,681,618.38 8 Expenditures on account of "Federal Surplus Commodities Corporation" and "Federal Emergency Relief Administration" are combined under the latter caption on p. 2 of the daily Treasury statement. \ 8 This item represents seigniorage resulting from the issuance of silver certificates equal to the cost of the silver acquired under the Silver Purchase Act of 1934 and the amount returned for the silver received under the President's proclamation, dated Aug. 9, 1934. 1^ NOTE.—Excess credits a;nd adjustments in italics to be deducted. REPORT OF THE SECRETARY OF THE TREASURY 39 Fiscal year 1937 Total receipts.—Total receipts (general and special accounts) for the fiscal year 1937 are estimated at $5,828,000,000 (on daily Treasury statement basis, unrevised), an increase of $1,712,000,000, or 41.6 percent, over the $4,116,000,000 receipts from these sources for the fiscal year 1936. Actual receipts from internal revenue taxes and customs duties collections amounted to $3,900,000,000 in the fiscal year 1936 as contrasted with estimates from these sources of $5,636,000,000 for the fiscal year 1937. The figures are not strictly comparable, due to the addition or elimination of taxes on certain items and to clianges in the method of taxing other items. Certain taxes which were collected in the fiscal year 1936, such as processing taxes under the Agricultural Adjustment Act and related taxes, the bituminous coal tax, and the tax on jewelry, have now been eliminated from the tax system. The revenue from other taxes, however, appears for the first time in the estimated receipts for the fiscal year 1937. The most important of these are the employment tax and the tax on employers of eight or more persons, both levied under the Social Security Act. The tax on unjust enrichment is nonrecurring and will be collected only in the fiscal year 1937. Collections of corporation taxes under the Revenue Act of 1936 will reflect in the returns for 1937 the surtax on the undistributed profits of corporations, unless within the tax year they have been distributed as dividends taxable in the hands of the recipient during that same tax year. This act also provides that taxable income in the form of dividends shall be subject to the normal tax in the tax year in which they are received. The full effect of the Revenue Act of 1936 will not be reahzed in the fiscal year 1937, since collections under the provisions of this act will only include those tax payments made in the months of March, April, May, and June 1937. Furthermore, many corporations whose fiscal years began prior to December 31, 1935, will not be subject to the provisions of the Revenue Act of 1936 in time to affect Federal revenues in the fiscal year 1937. The estimated increase of $1,736,000,000 in total internal revenue and customs receipts (on daily Treasury statement basis, unrevised) is in large measure a reflection of the Revenue Acts of 1935 and 1936, 40 REPORT OF THE SECRETARY OF THE TREASURY and of improved' business conditions. These effects are not only indicated by the increase in the estimated total of the income tax collections but will also be reflected in most of the major items of miscellaneous internal revenue. Income tax.—It is estimated that income tax collections for the fiscal year 1937 will amount to $2,373,000,000, or 66.3 percent more than the comparable figure for 1936. This increase is due to the improvement in business conditions and, in addition, to the fact that collections in the last 4 months of the fiscal year will reflect provisions of the Revenue Act of 1935 (continued in the Revenue Act of 1936) which increase surtax rates above the $50,000 surtax net income class, and of the Revenue Act of 1936 which make dividend receipts subject to the normal tax, and impose a surtax on the undistributed profits of corporations. A slight increase in back income tax collections is estimated because of the increase in income tax liabihty and the continued intensive drive for collections by the Bureau of Internal Revenue. The excess-profits tax estimate of $14,500,000, despite better business conditions, is about the same as the collections for the fiscal year 1936. The collections for the first half of the fiscal year 1937 are expected to be very much larger than those for the corresponding period of 1936, reflecting greatly increased corporate profits in the calendar year 1935. This increase, however, is expected to be practically offset by the estimated decline in collections in the last half of the fiscal year. This is due to the fact that corporations have already availed themselves of the opportunity afforded by the Revenue Act of 1935 for redeclaration of the value of their capital stock in order to reduce their combined tax liability from the excess-profits and capital stock taxes. Miscellaneous internal revenue taxes.—Estimated collections under the capital stock tax of $139,000,000,«show an increase of $4.4^000,000, or 46.4 percent, over the comparable coUections for the fiscal year 1936. These collections directly reflect the revaluation mentioned above which occurredln connection with the capital stock tax returns flled June 30,1936, payment of which was received in the early months of the fiscal year 1937. Total estate tax collections for the fiscal year 1937 are estimated at $305,000,000. The estimate of an increase of $86,000,000 in the collections for the estate tax in the fiscal year 1937 is only a partial refiection of the higher rates and lower exemptions contained in the Revenue Act of 1935. Although the new rates became effective at the time of the signing of the act by the President on August 30, 1935, the maximum time for filing final estate tax returns was extended from the previously existing 12-month requirement to one of 15 months after the decedent^s death. Hence, the fiscal year 1937 REPORT OF THE SECRETARY OF THE TREASURY 41 estate tax estimates contain the first 2 months' collections chiefly under the lower rates of 1934, followed b}'' relatively low collections for the next 3 months due to the time extension. Beginning with the December 1936 collections the new rates are effective with respect to all returns filed in connection with the estate tax. The estimated decrease of $50,000,000 in receipts from the gift tax for 1937 is in large measure due to the removal of special incentives for gifts which existed in the calendar year 1935. Miscellaneous internal revenue tax collections (exclusive of taxes upon carriers and their employees, Social Security Act taxes, and the tax on unjust enrichment) are estimated at $2,275,000,000 for the flscal year 1937, an increase of 13.2 percent over comparable collections for the fiscal year 1936. Each of the major classifications of miscellaneous internal revenue has contributed to this increase. The revenue from alcoholic beverage taxes is estimated at $595,000,000, an $89,000,000 increase attributable mainly to expected larger sales of fermented malt liquors, and to probable increased consumption of distilled spirits, as a result of improving quality, more rigid enforcement activity, and increased consumer incomes. Collections from tobacco taxes are estimated at $542,000,000, an increase of $41,000,000 from 1936. The gain is attributable principally to the estimated increase in the consumption of small cigarettes. The estimated increase of $9,000,000 in stamp tax collections reflects anticipated increases in the volume of trading on the stock exchanges and in corporate flnancing. Manufacturers' excise tax collections are estimated at $428,000,000, an increase of $46,000,000 over the previous year. The gain is attributable in large measure to collections from the taxes on gasoline, automobiles, and lubricating oils. MiscellaDcous taxes are expected to increase $6,000,000 reflecting principally the normal concomitant of returning prosperity in the increased use of telephone, telegraph, and radio, as well as an increased number of admissions to theaters and concerts. Social security and other internal revenue taxes.—The United States Supreme Court's decisions in 1936 invalidated the processing taxes imposed by the Agricultural Adjustment Act, in addition to invalidating the taxes levied under the Bituminous Coal Conservation Act of 1935 (collections from which were reported as miscellaneous taxes). The act of February 10, 1936 (Public No. 433), repealed the Potato Act of 1935, the Kerr Tobacco Act, and the Bankhead Cotton Act of 1934. Taxes imposed by these acts had yielded in the fiscal year 1936 revenue of over $77,000,000 from tax liabilities incurred up to the time of their discontinuance. Collection of taxes under the Social Security Act will begin in January 1937. Title VIII imposes an excise tax on ;employers and an 42 REPORT OF THE SECRETARY OF THE TREASURY income tax on their employees applicable with respect to employment after December 31, 1936. These taxes are expected to yield $253,000,000 in the latter half of the fiscal year 1937. Title I X of the act, providing for an excise tax on employers of eight or more persons, became effective January 1, 1936; payments are due beginning January 1937, and are estimated at a total of $71,000,000 for the payments to be made during the current fiscal year. For the initial year, each of these taxes is imposed at one-third of the rate which it will reach when the full rate is applied, beginning January 1, 1938, in the case of title IX, and January 1, 1949, in the case of title VIII. The act to levy an excise tax on carriers and an income tax upon their employees became effective March 1, 1936, and terminates February 28, 1937. The estimate for the collections of these taxes in the fiscal year 1937 of $135,000,000 includes an estimate of $33,000,000 back taxes from the liabilities incurred in the fiscal year 1936 but unpaid due to a court injunction issued by the District Court of the United States for the District of Columbia on June 30, 1936, restraining the collection of these taxes. Customs.—Customs receipts for the fiscal year 1937 are estimated at $447,000,000, an increase of about $60,000,000 over the fiscal year 1936. Revenue from duties on distilled spirits and wines is expected to decline by more than $2,000,000. In general, imports and duties therefrom are expected to increase because of improved trade conditions. Miscellaneous receipts.—Revenues from miscellaneous receipts for the fiscal year 1937 are estimated at $192,000,000, a decrease of $24,000,000 from the comparable receipts for the preceding fiscal year. This difference reflects a reduction of about $50,000,000 in the 1937 estimate of interest on obligations of the Reconstruction Finance Corporation. This decrease is due to the fact that certain interest payments which normally would have been made in the fiscal years 1935 and 1937 were made instead in the fiscal year 1936. Offsetting items include increases of $14,000,000 and $10,000,000 in the repayments of loans made by the Resettlement Administration and the Farm Credit Administration, respectively. Fiscal year 1938 Total receipts.—Total receipts (general and special accounts) for the fiscal year 1938 are estimated at $7,294,000,000 (on daily Treasury statement basis, unrevised), assuming that the temporary taxes expiring June 30 and July 31, 1937, are extended. This represents an increase of $1,465,000,000, or 25.1 percent, over the comparable estimates for the fiscal year 1937, and is $3,178,000,000, or 77.2 percent, more than the actual receipts for the fiscal year 1936. If REPORT OF THE SECRETARY OF THE TREASURY 43 the temporary taxes are not extended, the above estimates wiU be reduced by $494,000,000. Income tax.—Total income tax collections are estimated at $3,365,000,000, an increase of $992,000,000 over the estimated collections for the fiscal year 1937. This increase represents the first full year of collections under the Revenue Act of 1936, which made dividends subject to the normal tax and imposed a surtax on the undistributed profits of corporations, as well as put into effect the increased surtax rates on individual incomes, first imposed by the Revenue Act of 1935. I t is also in part a reflection of the improvement in business in 1936 and a partial reflection of the estimated business recovery for 1937. The excess-profits tax collections are expected to decline to $6,000,000 for the fiscal year 1938, as the corporations have availed themselves of the opportunity afforded by the Revenue Act of 1935 to make a new declaration for the capital stock tax and so reduce their excess-profits tax liabilities. Miscellaneous internal revenue taxes:—The capital stock tax receipts are estimated at $142,000,000, an increase of $3,000,000 over the estimate for the fiscal year 1937. The estate tax receipts are estimated at $464,000,000, an increase of $159,000,000 over the estimate for the fiscal year 1937. This is not only a reflection of the expected higher value of taxable estates but also of a full year of collections under the lower exemptions and higher rates imposed by the Revenue Act of 1935. The gift tax receipts are estimated at $75,000,000 for the fiscal year 1938. Miscellaneous internal revenue tax collections for the fiscal year 1938 are estimated at $2,032,000,000, assuming that the temporary taxes expiring on June 30, 1937, and July 31, 1937, are not extended. This is $243,000,000 less than the $2,275,000,000 estimated receipts from these sources for the fiscal year 1937. If the temporary taxes are extended, the 1938 fiscal year estimate is $2,508,000,000. This represents an increase of $233,000,000 over the comparable estimate for the fiscal year 1937. Each of the major classifications of miscellaneous internal revenue is expected to contribute to this increase. The receipts from alcoholic beverage taxes are estimated at $644,000,000, an increase of $49,000,000 over the estimate for the fiscal year 1937. This increase is attributable mainly to the estimated increased receipts from the taxes on fermented malt liquors and to the expectation of increased consumption of distilled spirits. Collections from tobacco taxes are estimated at $569,000,000, an increase of $28,000,000 over the comparable estimate for the fiscal year 1937. The gain is largely the result of the estimated increase in the consumption of small cigarettes. The estimated increase in stamp tax collections of $5,000,000 reflects estimates of a moderate increase in the volume of trading in securities on stock exchanges and in new corporate financing. If certain of the 44 REPORT OF THE SECRETARY OF THE TREASURY temporary documentar}^ stamp taxes are not extended, the estimate for revenue from this source would be only $42,000,000, or $36,000,000 less than the $78,000,000 estimate for the fiscal year 1937. Manufacturers' excise tax collections are estimated at $449,000,000, an increase of $20,000,000 over the estimate for the fiscal year 1937. The bulk of this estimated increase is due to the expected larger volume of gasoline consumption. Most of the taxes which expire on June 30 and July 31, 1937, are manufacturers' excise taxes. If these taxes should not be extended, total manufacturers' excise taxes are estimated at $43,000,000, representing largely a carry-over of collections from tax liabilities incurred in the previous fiscal year. This would amount to a decrease of $386,000,000 in the receipts from this source as compared with the fiscal year 1937. Miscellaneous taxes are estimated to increase $4,000,000 over the $79,000,000 estimate for the fiscal year 1937, assuming that the temporary taxes are extended. If they are not extended, miscellaneous taxes are expected to yield only $33,000,000, or $46,000,000 less than the estimate for the fiscal year 1937. Social security taxes.—The fiscal year 1938 will be the first full year of collections of the taxes imposed by the Social Security Act. I t is estimated that the employment tax, imposed by title VIII of that act as an excise tax on employers and an income tax on their employees, will yield $622,000,000 in the fiscal year 1938, an increase of $369,000,000 over receipts from this source for the fiscal year 1937. The collections of the tax under title I X of the act, which is an excise tax on employers of eight or more persons, are estimated to yield $153,000,000 in the fiscal year 1938, an increase of $82,000,000 over the estimate for the fiscal year 1937. This is the result of collecting in the latter half of the fiscal year 1938 two quarterly payments on the tax liabihties of the calendar year 1937 at double the rates which apphed in 1936. Customs.—Customs receipts for the fiscal year 1938 (on the assumption that temporary taxes on certain products, such as coal, petroleum, copper, lumber, and certain animal and vegetable oils, are extended) are estimated at $463,000,000, an increase of about $16,000,000 over the fiscal year 1937. A decrease of $2,000,000 from the estimate for the fiscal year 1937 is expected in revenue from wines and liquors, chiefly as a result of a probable decline in whisky imports from Canada. In the flscal year 1938, it is estimated that the revenue from other classes of imports will continue to increase. Assuming that the temporary import taxes are not extended, customs receipts of $445,000,000 are expected, a decrease of $18,000,000 from the estimate assuming the continuation of these duties. Miscellaneous receipts.—Miscellaneous receipts for the flscal year 1938 are estimated at $182,000,000, a decrease of $10,000,000 as compared with the estimate for the fiscal year 1937. REPORT OF THE SECRETARY OF THE TREASURY 45 MONETARY DEVELOPMENTS Gold Pubhc Resolution No. 63, approved August 27, 1935, entitles the lawful holders of coius or currencies of the United States to exchange them, dollar for dollar, for other coius or currencies which may be lawfully acquired and are legal tender for public and private debts; and, for a limited period, entitled the owners of the gold clause securities of the United States, including those not yet due, to receive immediate payment of the stated dollar amount thereof with interest to the date of payment or to prior maturity or to prior redemption date, whichever was earlier. Pursuant to the authority of this resolution, regulations, approved by the President on September 14, 1935, were issued governing the immediate payment of outstandiug gold clause securities and the exchange of coins and currencies of the United States. The provisional regulations issued under the Gold Reserve Act of 1934 were further amended during the year. An amendment on August 26, 1935, excepted United States gold coin from the gold that may be acquired by the Federal Reserve banks under article IV of such regulations and from the gold that may be purchased by the mints and assay offices under article VI of such regulations. An amendment, eft'ective January 1, 1936, removed some of the restrictions on dealings in gold for industrial, professional, and artistic purposes. On January 10, 1936, the President signed a proclamation extending for 1 year, until January 30, 1937, the powers conferred by section 10 (stabilization fund) of the Gold Reserve Act of 1934 and section 43 (b) (2) (fix the weight of gold and silver dollars, etc.) of title I I I of the act approved May 12, 1933, as amended. The public resolution, proclamation, and department circulars issued during the fiscal year with respect to gold appear as exhibits 36 to 39, pages 266 to 270. Silver Acquisitions of silver by the Treasury from all sources during the fiscal year were 609,613,258 ounces, at a cost of $395,313,736. Under the proclamation of December 21, 1933, as amended, 48,784,455 ounces were received; 650,452 ounces were received under the proclamation of August 9, 1934; 558,639,669 ounces were purchased under the authority of section 3 of the Silver Purchase Act of 1934; and 1,538,682 ounces were received in deposits of gold bullion and in exchange for Government-stamped bars. Silver certificates The issuance of a new series of $1 silver certificates, designated series of 1935, was begun on December 18, 1935. The new $1 bill presented for the first time on any money both the reverse of the 46 REPORT OF THE SECRETARY OF THE TREASURY great seal of the United States and the famihar obverse of the great seal. (See exhibit 40, p. 270.) Since there was a considerable reserve stock of $1 silver certificates of the series of 1934, their issuance was continued until the stock was exhausted on June 22, 1936. The issuance of $5 and $10 silver certificates of the series of 1934 is contiuued. On June 30, 1936, the amount of silver certificates outstandiug was SI,133,785,172, representing an increase of $323,771,495 during the fiscal year. i ^^ National bank notes National bank notes, which have been an important part of this country's circulating medium since the establishment of the national banking system in 1863, are now being gradually retired from circulation. Their eventual disappearance will constitute a step in the simplification of our currency system. The issuance of national bank notes by national banks has always been contingent upon the deposit with the Treasurer-of the United States of bonds of the United States bearing the circulation privilege. For many years past the only issues outstanding which carried permanently the circulation privilege were the 2 percent consols of 1930 and 2 percent Panama Canal bonds of 1916-36 and 1918-38. Under the Federal Home Loan Bank Act of July 22, 1932, all bonds of the United States bearing an interest rate not exceeding 3% percent per annum were given the circulation privilege for 3 years thereafter. Both the consols and the Panama Canal bonds were called for redemption at the beginning of this fiscal year,^ while the temporary provision of the Federal Home Loan Bank Act expired on July 22, 1935. Part of the increment resulting from the reduction in the weight of the gold dollar was made available for the retirement of the bonds bearing the permanent circulation privilege. As explained on page 23 of last year's report, however, gold certificates issued against gold representing this part of the increment are being deposited in the Federal Reserve banks only as rapidly as approximately corresponding amounts of national bank notes are retired, in order to avoid any temporary alteration in the aggregate supply of money due to this operation. By June 30, 1936, national banks had deposited lawful money with the Treasurer of the United States to the amount of all but $600,000 of their liability for these notes, thereby ending for the national banks, and transferring to the United States, the liability for the redemption of all but $600,000 of such notes. On June 30, 1936, the amount of national bank notes still outstanding was $371,721,815. A year previous the amount outstanding was $769,095,645, showing retirements of $397,373,830 in the intervening 12 months. 1 See p. 18 for an account of the redemption of these issues. REPORT OF THE SECRETARY OF THE TREASURY 47 BUREAU OF INTERNAL REVENUE During the fiscal year 1936 collections of internal revenue in the amount of $3,448,000,000,^ exclusive of agricultural adjustment taxes, exceeded collections in the preceding fiscal year by $675,000,000. Agricultural adjustment taxes amounted to $72,000,000,^ a decrease of $455,000,000. Back taxes on income The effort to obtain more prompt payment of back taxes on income was continued during the fiscal year 1936. The work of investigation in the field offices upon 1934 returns was practically completed by June 30, 1935. I t is intended that the investigation of returns for subsequent years shall be undertaken and completed so far as practicable within 15 months following the final filing date. Approximately 750 internal revenue agents were added to the field force of the Income Tax Unit, the majority by appointment effective July 1, 1935, ancj the increase in force made it possible to conduct more than 125,000 examinations, which otherwise could not have been undertaken. The total additional tax recommended for assessment amounted to $355,000,000, exceeding the amount recommended for 1935 by $79,000,000. The amount of back income taxes collected during the fiscal year 1936 was $213,557,591 as compared with $185,641,137 during 1935, an increase of $27,916,454, or 15.0 percent. The examination of depreciation deductions claimed by taxpayers resulted in recommendations for the assessment of $29,238,951, of which amount $21,851,292 was agreed to by taxpayers. Additional taxes assessed in Washington (exclusive of jeopardy assessments) and in the collectors' offices totaled $219,355,884. Of this amount, taxpayers executed agreements, consenting to the immediate assessment and collection of deficiencies aggregating $140,046,254. In addition, deficiencies totaling $21,763,393 were assessed by default in cases wherein taxpayers failed to avail themselves of their privilege of filing petitions with the United States Board of Tax Appeals. The total of assessments, therefore, which became collectible, and upon which litigation was avoided, was $161,809,647 or 73.8 percent of the $219,355,884 assessed. During the previous year the total assessments aggregated $178,152,259 with respect to which litigation was avoided upon $108,743,858, or 61.0 percent. Alcohol tax administration The program for the enforcement of raw materials control, authorized under the act of June 18, 1934, has been very effective during the second year of the administration of the act. Close control of 1 On the basis of reports of collections, see p. 312. 48 REPORT OF THE SECRETARY OF THE TREASURY blackstrap molasses and corn sugar has resulted in illicit distillers resorting to the use of granulated cane sugar, which adds to the expense of illicit distilling. Control over other commodities used in the fermentation of mash, such as urea, ammonium phosphate, and other yeast foods, has resulted in the seizure of illicit distilleries. Regulations were promulgated permitting control over denatured alcohol and manufactured products containing denatured alcohol, making it possible to trace these products in illicit channels. As a result, considerable success has been achieved in keeping to a minimum the amount of denatured alcohol and its products reaching illicit trade. Smuggling has practically been eliminated on the Atlantic Coast during the past year through a coordinated program of the Enforcement Division, the Customs Service, and the Coast Guard. The measurement of beer at breweries by the use of meters for tax payment purposes begun during the previous year, has proved successful. A meter service plan was instituted, providing for rebuilt meters to be supplied by the manufacturers in exchange for old meters at approximately 25 percent of the original cost. Arrangements were also made with the meter manufacturers to provide small parts necessary for frequent replacement. Under this arrangement, minor replacements can be made promptly by inspectors in the field, at a minimum cost to the brewers, without entailing delay in brewery operations. Research work in the laboratory of the Alcohol Tax Unit resulted in developing three new formulas for completely denatured alcohol. These new formulas will, it is believed, cut off one of the sources of illicit beverage spirits. Progress was made on the problem of developing a satisfactory method for determining whether race horses have been stimulated with narcotic or other drugs. Improved methods for determining the tax classification of many products were developed. The laboratories were also employed in bringing about better supervision over the operations of industrial alcohol plants, denaturing plants, distilleries, rectifying plants, breweries, and bonded wineries. A detailed description of the work of the Bureau of Internal Revenue will be found on pages 136 to 162 of this report. CONSTRUCTION ACTIVITIES OF THE TREASURY The Department's building operations during the fiscal year 1936, carried on under several different programs and appropriations, resulted in the completion or practical completion and occupancy during the year of 363 projects with a limit of cost of $47,126,351. In addition, 416 projects with a limit of cost of $66,890,244 were placed under contract, and 166 projects with a limit of cost of $26,863,600 were on the market for bids, or in the specification stage at the end REPORT OF THE SECRETARY OF THE TREASURY 49 of the year. Plans were being prepared for 118 projects with a limit of cost of $30,149,000, and land had been acquired for 7 additional projects to cost approximately $602,000. Sites for 8 projects to cost approximately $1,487,000 had been selected or were in process of selection. The original public building program The Pubhc Building Act, approved May 25, 1926, and subsequent acts enlarging the regular building program made general authorizations of $702,296,794 and specific authorizations for buildings and land of $496,366,798. Of the 735 construction projects previously under contract in this program, 706 with a limit of cost of $438,412,328 had been completed by June 30, 1936, leaving still under contract 29 projects with a hmit of cost of $57,954,470. Among these 29 projects are included buildings which have been completed and occupied, but on which certain minor work remains to be done. Building program in the District oj Columbia.—The 1926 building program for the District of Columbia has been practically completed, except for certain items for the Archives Building and the South Building, Department of Agriculture. The Archives Building and a major part of the South Building were occupied during the year. Under the present building program, which is chargeable to funds allotted from emergency appropriations, the addition to the Internal Revenue Building was completed and occupied during the year and an extension to the Archives Building, to cost approximately $3,600,000, was in course of construction. Contracts for the new Interior Department Building, to cost approximately $11,000,000, were awarded in August 1935, and it is expected that this structure will be ready for occupancy before the end of the calendar year 1936. A contract for construction of an additional building for the Bureau of Engraving and Printing and a building to be occupied by the Bureau of Economics, Department of Agriculture, to cost approximately $5,500,000, was awarded on June 5, 1936. Contracts, amounting to $800,000, were also awarded for the construction of three animal houses and a shop building for the National Zoological Park, and work on these buildings is nearing completion. Specifications for an addition to the Government Printing Office, to cost approximately $6,000,000, are in course of preparation. Program under the Public Works Administration During the fiscal year 1936 the number of allotments for pubUc buildings by the Public Works Administration under the National Industrial Recovery Act, approved June 16, 1933, was reduced from 93790—37 5 50 REPORT OF THE SECRETARY OF THE TREASURY 442 to 434. Additional authorizations increased the total amount of the allotments from $70,850,768 to $75,763,645. By June 30, 1936, 219 of these projects, with a limit of cost of $22,086,993, had been completed; 213 were under contract with a hmit of cost of $49,921,652; and 2 were in the drawing stage. Program under the Emergency Appropriation Acts The Emergency Appropriation Act, approved June 19, 1934, provided an appropriation of $65,000,000 for the emergency construction of public buildings throughout the country, the projects to be selected by the Secretary of the Treasury and the Postmaster General. This act authorized the expenditure of $2,500,000 from Pubhc Works Administration funds for increasing up to 10 percent the limits of cost of both Public Works Administration and emergency construction projects when the bid of the lowest responsible bidder exceeds the amount previously made available for any project. By June 30, 1936, 360 projects with a limit of cost of $65,946,944 were selected; 107 with a limit of cost of $8,695,978 were completed; 190 with a limit of cost of $44,200,966 were under contract; and 63 were in the prehminary stages. Under dates of August 12, 1935, and June 22, 1936, additional appropriations of $60,000,000 each were provided for public building construction under practically the same conditions as those contained in the act of June 19, 1934. Under these appropriations 716 projects were authorized, to cost approximately $115,099,468. By June 30, 1936, 132 projects, with a hmit of cost of $14,522,368, were under contract and 584 projects were in the preliminary stages. Program for other departments Funds to the amount of $32,258,946 were transferred to the Treasury Department by other departments for 41 projects involving the rehabilitation, extension, and remodeling of old buildings, construction of new buildings, repairs, etc. Projects totaling $21,668,946 were under contract at the end of the fiscal year, the value of work on the market or in the specification stage was $5,890,000, and drawings and specifications were being prepared for projects to cost approximately $4,700,000. Detailed information with reference to all building programs and appropriations will be found in the abstract of the report of the Procurement Division on pages 174 to 184 of this report. REPORT OF THE SECRETARY OF THE TREASURY 51 TREASURY ACTIVITIES UNDER TttE PROVISIONS OF THE SOCIAL SECURITY ACT The Social Security Act, approved August 14, 1935, provides for grants to the States for^, old-age assistance, for unemployment compensation administration, for aid'to dependent children, for maternal and child welfare, for public health work, and for aid to the dependent blind. Grants to States The Secretary of the Treasury is required to make payments to the States from sums appropriated for the various purposes. The amounts of such payments are certified by the Social Security Board or other governmental agency responsible for their determination under the provisions of the act. Old-age reserve account Title I I of the act establishes a system of Federal old-age benefits payable to employees who have attained the age of 65. Death benefits are also payable. Section 201 (a) of the act establishes an account in the Treasury to be known as the '^Old-Age Reserve Account." The Secretary of the„ Treasury is required to submit annually to the Bureau of the Budget estimates of the appropriations required to be made to this account. These estimates are determined on a 3 percent reserve basis in accordance with accepted actuarial principles. Although the first appropriation to the account has already been made, in the amount of $265,000,000, by the First Deficiency Appropriation Act, approved June 22, 1936, it is not anticipated that this amount will be invested until January 1, 1937, and thereafter. The first statement showing the actuarial status of the account will appear in the Annual Report of the Secretary of the Treasury for the fiscal year 1937. I t is the duty of the Secretary of the Treasury to invest such portions of the amounts credited to the account as are not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are extended under the Social Security Act to authorize the issuance to the account of special obligations bearing interest at the rate of 3 percent per annum. Obligations other than special obligations liiay be acquired for the account only on such terms as to provide an investment yield of not less than 3 percent per .annum. All amounts credited to the account are available for making payments required 52 REPORT OF THE SECRETARY OF THE TREASURY under title II of the act. The Secretary of the Treasury makes all benefit payments from the account in accordance with the certification by the Social Security Board. Unemployment trust jui!^ Section 904 (a) of the act establishes in the Treasury an unemployment trust fund. The receipts of State unemployment funds are paid over to the Secretary of the Treasury for credit to the unemployment trust fund. This fund is invested as a single fund, but a separate book account is maintained for each State agency and each account is credited quarterly with a proportionate share of earnings on the basis of average daily balances. The Secretary of the Treasury is authorized and directed to pay out of the fund to any State agency such amount as it may requisition, not exceeding the amount standing to the account of such State agency at the time of such payment. Collection oj taxes Titles VIII and IX of the act impose an income tax upon the wages of employees and excise taxes on employers. The taxes are collected by the Bureau of Internal Revenue under the direction of the Secretary of the Treasury. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, makes and publishes rules and regulations covering the collection of taxes. Public health work Title VI of the Social Security Act authorizes an appropriation for assisting the States, counties, and other political subdivisions in maintaining adequate health services. A further appropriation was made for expenditure by the Public Health Service for investigation of disease and problems of sanitation. A report of the activities of the Public Health Service under this title will be found on page 198 of this report. TREASURY ACTIVITIES UNDER THE EMERGENCY RELIEF AFPRGPRIATION ACT OF 1935 Allocations from funds made available by the Emergency Relief Appropriation Act of 1935 were received by several bureaus and divisions of the Treasury Department for administrative expenses incurred in connection with the act, for a revolving fund for the purchase of supplies, and for projects designed to provide work for the unemj^lbyed. REPORT OF THE SECRETARY OF THE TREASURY 53 Administrative expenses For handling the accounting, disbursing, and procurement activities imposed upon the Department by the Emergency Relief Appropriation Act of 1935, and for other administrative expenses, including the payment and clearance of checks by the Treasurer of the United States, $26,700,001 had been allocated to June 30, 1936. Obligations incurred against this allocation totaled $23,989,928.91, and of this amount $22,054,287.92 was expended. At the close of the fiscal year, approximately 16,800 persons were employed on the work financed by the allocation for administrative expenses, and in most cases these employees received salaries at the standard Government rate paid for similar work in the classified service. Work relief supply fund Executive Order 7151 of August 21, 1935, allocated to the Secretary of the Treasury $3,000,000 to be set aside in the Treasury as a work relief supply fund for use in the purchase and distribution of materials, supplies, and equipment through the Procurement Division for the work relief program. This fund is used to reimburse the general supply fund of the Procurement Division for purchases made through the latter fund, and is in turn reimbursed by the departments and agencies receiving materials. Upon liquidation of the work relief supply fund, the net assets, not in excess of the amount allocated, are to be returned to the appropriation contained in the Emergency Relief Appropriation Act of 1935; and the amount in excess of the allocation is to be covered into the surplus fund of the Treasury. Work relief projects Public Health Service.—The Public Health Service received an allocation of $2,721,750 to conduct a four-fold national health survey under the direction of the Division of Scientific Research. The chronic disease survey, covering 865,000 families, undertakes to throw light on the nature and incidence of chronic and disabling diseases in the country as a whole, and includes studies of diseases peculiar to certain localities. The communicable disease survey, covering 214,000 families, will provide needed information of similar nature on this type of illness. A detailed inventory of public health and medical facihties, including hospitals. State and local health departments, nursing and tuberculosis facilities, etc., and dispensary or clinic services, is being prepared by the health facilities survey. Finally, through the occupational morbidity and mortality study, invaluable data are being gathered on the expectancy of industrial diseases at given ages, according to sex and geographic areas. While none of the 54 REPORT OF THE SECRETARY OF THE TREASURY surveys cover the entire country, urban and rural localities in 19 States have been included, constituting a representative sample of the population of the Nation as a whole. As of June 30, 1936, cumulative obligations amounted to $2,492,358.89, of which $2,412,320.56 represented actual expenditures. Field work, employing a peak staff of 5,000 persons, more than 90 percent of whom were taken from relief rolls, was completed by the end of June. The task of coding and tabulating began in January, and will employ a staff of 1,000 relief workers for the remainder of the calendar year 1936. Coast Guard.—As of June 30, 1936, $4,850,950 had been allocated to the Coast Guard for repair, renewal, and improvement of telephone lines; reconditioning, modernizing, and construction of shore facilities at various Coast Guard stations; construction of wooden boats; and dredging at Government Island, Alameda, Calif. Obligations incurred to June 30, 1936, amounted to $3,178,677.86, of which $1,446,602.59 was disbursed. The number of workers provided with employment increased steadily from the time the program was begun, and reached the fiscal year peak of 963 on June 27, 1936. Approximately three-fourths of the workers were taken from relief rolls. Bureau of Internal Revenue.—Allocations were made to the Bureau of Internal Revenue for a series of projects. About 3,400 persons were regularly employed on these projects, more than 90 percent of whom were taken from relief rolls. A survey of miscellaneous taxes in 20 of the largest metropolitan centers was designed to collect delinquent taxes, principally on sales of sporting goods, cosmetics, radios, electric refrigerators, jewelry, and furs, and on. admissions and dues. As of June 30, 1936, $1,937,500 had been allocated to this project; obligations amounted to $1,803,121.18, and of this amount $1,723,731.29 was expended. This investigation resulted in the collection of $3,411,476.72 and the assessment of an additional amount of $10,500,330.54 as of June 30, 1936. A second project involved the examination of income tax returns which ordinarily would not receive an intensive examination. Allocations to this project amounted to $771,405 to June 30, 1936; obligations totaled $735,246.14, of which $689,815.91 was liquidated. As a result of.the inspection of these returns, net deficiencies of $1,578,296.71 were disclosed to June 30, 1936, and taxpayers had agreed to these deficiencies to the extent of $1,430,915.15. A third project comprised a canvass to effect collection of delinquent spirituous beverage taxes through an investigation in 91 metropolitan centers. As of June 30, 1936,'allocations to this project amounted to $917,683, of which $851,958.61 was obligated, and actual expenditures amounted to $807,143.07. Under this project taxes and penalties aggregating $993,924.93 were collected to June 30,1936. REPORT OF TPIE SECRETARY OF THE TREASURY 55 Division of Research and Statistics.—The Division of Research and Statistics received funds to carry out a statistical analysis of income tax returns. The purpose of this study is to obtain more ample and detailed information with respect to individual incomes, especially from returns on incomes of less than $5,000. A complete tabulation of all 1934 individual income tax returns will provide important information relative to tax administration and tax legislation. This tabulation includes classifications of incomes by geographic areas and by small income groups, as well as tabulations of separate returns filed by husbands and wives, returns having farm schedules, returns showing capital gains or losses, and returns showdng ownership of Government securities. In addition, separate ta,bulations are being made of all partnership and fiduciary returns for the year 1934. Work on this project commenced in September 1935, with headquarters at Washington, D. C , while field offices were established in 12 cities in the United States. The number employed increased steadily to a maximum of 1,500 at the end of April 1936, and declined to below 1,300 by June 30, 1936, over 90 percent of the workers being drawn from relief rolls. I t is estimated that the entire study will be ready for publication in June 1937. As of June 30, 1936, the amount allocated to this project was $806,447, of which $780,923.67 was obligated, and of this amount $694,689.94 was expended. Procurement Division.—The Treasury relief art project, under the supervision of the Procurement Division, received an allocation for the employment of unemployed artists on the decoration of public buildings. About 75 murals and 27 sculptures have been undertaken, as well as 76 projects involving the execution of more than 2,600 easel paintings and approximately 90 miscellaneous types of artistic productions, resulting in the employment by June 1936, of about 325 artists at widely scattered points in the United States. As of June 30, 1936, the total amount allocated to this project was $530,784, of which $235,407.98 was obligated, and of this amount $224,883.47 was expended. An allocation of $12,800 was made to the Procurement Division in August 1935, for the razing of certain buildings on the post office site at Des Moines, Iowa. At the request of the Procurement Division, this work was undertaken by the Works Progress Administration. BUREAU OF CUSTOMS Total customs receipts amounted to $386,812,000 in the fiscal year 1936 as compared with $343,353,000 in 1935, an increase of $43,459,000. This represented an increase of 12.7 percent over 1935 and 54.3 percent over 1933; in the latter year duties collected on imports were at the lowest level since the close of the World War. 56 REPORT OF THE SECRETARY OF THE TREASURY Almost half of the increase in receipts for the fiscal year 1936 was due to larger dutiable imports of wool and wool manufactures. The balance of the increase resulted from larger collections on dutiable imports of metals and metal manufactures, agricultural products, and various other commodities. Although the volume of imports of distilled spirits and wines was greater in the fiscal year 1936 than in 1935, duties collected on these imports showed a moderate decline owing to the reduction in rates of duty on rum, gin, and whisky under various reciprocal trade agreements. Collections of duties on imports of sugar also declined from the previous year as the result of the concentration in the fiscal year 1935 of the greater part of the sugar imports permitted under the quotas for both the calendar years 1934 and 1935. The value of all dutiable imports entered for consumption in the fiscal year 1936 was $921,498,000, an increase of 22.5 percent over the preceding year. The value of imports entered free of duty constituted 58 percent of the total value of ill imports entered for consumption in each of the years 1935 and 1936. Foreign trade results and customs receipts are summarized by fiscal years in the following table: Merchandise exports and imports and customs receipts, fiscal years 1931 to 1936 [In millions of dollars] Fiscal year 1931 1932 _ 1933 1934 1935 1936 Exports _ -- - - General imports 3,083 1,948 1,440 2,042 2,121 2,414 Excess of exports over imports 2,432 1,730 1,168 1,721 1,786 2,216 651 218 272 321 335 198 Customs receipts i 378 328 251 313 343 387 1 On basis of daily Treasury statements (unrevised). Includes tonnage tax in 1931. A more detailed statement of the activities of the Bureau of Customs is presented on pages 124 to 129 of this report. NONFISCAL ACTIVITIES Coast Guard The Coast Guard's principal activities during the year included the international service of ice observation and ice patrol to promote safety at sea, in the vicinity of the Grand Banks of Newfoundland, along the trans-Atlantic steamship lanes, and oceanographic cruises and surveys; patrol of the coast—including aircraft patrol—to aid vessels and persons in distress; patrol of the waters of the North Pacific Ocean, Bering Sea, and southeastern Alaska, in the enforcement of laws and regulations for the protection of the fur seal and REPORT OF THE SECRETARY OF THE TREASURY 57 sea otter, game, fisheries, and fur-bearing animals of Alaska, and of other laws in Alaska; patrol in the enforcement of the Northern Pacific Halibut Act and the convention for the preservation of the halibut fisheries of the northern Pacffic Ocean and the Bering Sea; supervision of the anchorage and movements of vessels at ports and other places where Federal regulations are in force; cooperation in the enforcement of regulations promulgated by the Interstate Commerce Commission governing the handling of explosives by vessels; enforcement of the customs, navigation, motor boat, and other laws of the United States; patrol and supervision of regattas and marine parades; prevention of smuggling of liquor and other contraband; removal of derelicts and other obstructions to navigation from the paths of marine commerce; and the preservation of life and property at sea and along the coasts. In a number of particulars the performances of the service during the year 1936 were marked by material increases over the preceding year. The persons saved or rescued from peril numbered 7,510, which exceeded by 1,685 last year's number, and by 1,018 the highest record ever before attained by the Coast Guard in a single year in this form of endeavor. The persons on board vessels assisted by the Coast Guard numbered 37,553, an increase of 4,672 over the previous year. Assistance was rendered in 14,746 instances, 944 more than during 1935. A more detailed account of these and other operations of the Coast Guard will be found on pages 111 to 120 of this report. Public Health Service Reports of the prevalence of diseases dangerous to the public health were received from all available sources in the United States and foreign countries, and the information was disseminated to State and local health officers and others. The general death rate for the calendar year 1935, based on preliminary reports, showed a slight decrease from the rate for 1934. Record low death rates were established for diphtheria and typhoid fever, and the downward trend of tuberculosis continued. However, more cases of poliomyelitis and smallpox were reported in 1935 than in 1934. The Public Health Service continued its cooperation with State health agencies in providing technical supervision for community sanitation, malaria control drainage, and mine sealing; gave assistance to other Federal bureaus and departments on problems of environmental sanitation; and cooperated with the State and Territorial health authorities of California, Oregon, Washington, Montana, and Hawaii on measures directed toward the control of bubonic plague. Advisory service was extended to various agencies expend 58 REPORT OF THE SECRETARY OF THE TREASURY ing Federal emergency relief funds for public health nursing, supervision of water supplies, elimination of faulty plumbing, and similar activities. The community sanitation projects, inaugurated by the Civil Works Administration and continued by the Emergency Relief Administration and by the Works Progress Administration, are sponsored by the State health departments with technical supervisory assistance from the Public Health Service. Since these projects were initiated in 1933, 896,879 sanitary latrines have been constructed in unsewered villages and in unsewered areas of cities, for the purpose of preventing the spread of typhoid fever, hookworm disease, dysentery, and enteritis; and 340,000 acres of malaria-mosquito breeding areas have been drained, involving the construction of 22,000 miles of ditches for the prevention of malaria. During the year a health inventory was conducted as a work relief project under an allocation from the funds provided in the Emergency Relief Appropriation Act of 1935. During a part of the year 5,000 persons, 90 percent from relief rolls, were engaged in collecting data for the project. The inventory included a survey of disabling illnesses, physical impairments, and medical care among 865,000 families in 90 cities and 23 rural counties throughout the United States, as well as a communicable disease survey, an occupational morbidity and mortality study, and a health facilities study. The cooperative public health administration program authorized under sections 601. and 602, title VI, of the Social Security Act, approved August 14, 1935, was inaugurated. By the close of the year, every State had submitted a plan for operation under the provisions of this title and had been allotted funds from the appropriation made available for 1936. Authorization was given in the Social Security Act for the appropriation of $2,000,000 per annum chiefly for investigation of disease and problems of sanitation. On February 11, under this authorization, $375,000 was appropriated for research and administrative expenses for the remainder of the fiscal year 1936. This supplemented funds available to the Public Health Service under its regular appropriation for investigation of disease and problems of sanitation. A full account of the public health work carried on under the provisions of the Social Security Act is to be found on page 198 of this report. The venereal disease control work of the Public Health Service has been given a more important place than it has held for a number of years. Through the Social Security Act, assistance was given to a larger number of State health departments in the development of their prograrns. I t also was possible to plan additional studies which are of fundamental importance in this field of public health. REPORT OF THE SECRETARY OF THE TREASURY 59 These include investigations dealing with both the clinical and laboratory aspects of syphilis and gonorrhea, and other original scientific studies. At the National Institute of Health extensive experimental work was continued in connection with the determination of the causation and prevention of meningitis, typhus. Rocky Mountain spotted fever, dysentery, and other diseases. The sum of $1,463,000 was made available for the construction, on donated land in Bethesda, Md., of buildings for the housing of the National Institute of Health. The United States Narcotic Farm at Lexington, Ky., in operation since May 1935, for the care and treatment of drug addicts, has admitted 1,240 patients. The Public Health Service continued to supervise and furnish the medical, psychiatric, and technical services for the Federal penal and correctional institutions under the control of the Department of Justice and, at the request of the Attorney General, inaugurated a special study for providing psychiatric services for Federal district courts. Special studies concerning the country's medical and scientific needs for narcotic drugs, the medicosocial problems of drug addiction, and the causes, prevalence, and means for the prevention and treatment of nervous and mental diseases were continued. Cooperation was continued with international, national, and local official and voluntary agencies interested in various phases of mental hygiene. The marine hospitals and other relief stations of the Public Health Service continued to furnish hospital and out-patient care to American merchant seamen and other legal beneficiaries. By the act of March 21, 1936, these benefits were extended to seamen employed on vessels of the United States Government not in the military or naval establishments, and on State school ships; also to cadets on State school ships. Seamen comprised the largest class of patients, but the customary medical services were furnished to other beneficiaries as well. The Public Health Service also cooperated with other Government departments in Washington in furnishing emergency medical relief to employees and in supervising 20 medical relief units. The International Sanitary Convention for Aerial Navigation, concluded at The Hague in 1933, became effective with regard to the United States on November 22, 1935. The provisions of the convention applicable to air commerce between foreign countries and the United States have been placed in effect and facilitate the observation of measures for protecting the United States against the introduction of quarantinable disease. The inauguration of aerial transport service across the Pacific necessitated the issuance of special instructions to the quarantine stations at San Francisco, Honolulu, and Manila in order to prevent 60 REPORT OF THE SECRETARY OF THE TREASURY the introduction of quarantinable disease into the United States and to prevent the introduction of mosquito carriers of malaria into the Territory of Hawaii, where this disease does not now exist. The Surgeon General has effected an informal agreement with the Chief of the Quarantine Service of Cuba, providing for the reciprocal recognition of international deratization exemption certificates issued by the quarantine officers of either country to vessels which are maintained in a rat-free condition. The fiftieth annual volume of the weekly Public Health Reports was completed with the issue of December 27, 1935. This pubhcation contains statistical and other reports and articles describing the latest advances in scientific knowledge relating to public health. The activities of the Public Health Service are more fully presented on pages 194 to 204 of this report. Bureau of Narcotics The Bureau of Narcotics has continued to direct its principal enforcement activities against the major narcotic law violators of the internal traffic and toward stopping the smuggling of drugs into the United States by active cooperation with customs authorities. The Bureau has solicited the cooperation of State and municipal law enforcement agencies in dealing with the addict and the peddler and in the prosecution of minor infractions of the narcotic laws. Diversion of drugs from legitimate to illicit channels through the robberies of narcotic stocks, the forgery and false execution of narcotic prescriptions, and the improper prescribing and dispensing of narcotics continued to increase in significance as enforcement problems. The cases against registered persons were 41 percent of the total cases reported during the year as compared with 33 percent the year before. The Uniform State Narcotic Law was enacted during the fiscal year by the States of Illinois and Wisconsin, making a total of 29 States in which this law has been enacted with httle or no amendment. This act complements the Federal narcotic laws and its adoption renders more effective the cooperation of State and municipal law enforcement agencies. A more complete account of the activities of the Bureau will be found on pages 169 to 171 of this report. REPORT OF THE SECRETARY OF* THE TREASURY 61 ORGANIZATION CHANGES AND PROCEDURE Under the provisions of the Federal Alcohol Administration Act of August 29, 1935, the Federal Alcohol Administration was created as a Division in the Treasury Department, headed by an Administrator to be appointed by the President, by and with the advice and consent of the Senate. This Division was assigned to the supervision of the Secretary of the Treasury by Treasury Department Circular No. 244 of November 25, 1935. Detailed reference to the duties and operations of the Federal Alcohol Administration will be found on page 133 of this report. On June 26, 1936, the President approved the Liquor Tax Administration Act, under the terms of which the Federal Alcohol Administration is made an independent establishment of the Government, the office of Administrator is abolished, and provision is made for the Federal Alcohol Administration to be composed of three members to be appointed by the President, by and with the advice and consent of the Senate. This change in the status of the Federal Alcohol Administration becomes effective when a majority of the members of the Administration first appointed qualify and take office. During the fiscal year 1936, three Treasury Department orders were issued. Orders Nos. 11 and 12 relate to matters of administration and supervision. Order No. 13 created a Division of Savings Bonds in the Office of the Fiscal Assistant Secretary. These orders are printed as exhibit 49, page 298 of this report. Attention is invited to the attached reports of bureaus and divisions of the Treasury Department and to the exhibits and tables accompanying the report on the finances. H E N R Y MORGENTHAU, Jr., Secretary oj the Treasury. To the SPEAKER OF THE H O U S E OF REPRESENTATIVES. ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS 63 REPORT OF THE SECRETARY OF THE TREASURY 65 OFFICE OF THE COMMISSIONER OF ACCOUNTS AND DEPOSITS The Office of the Commissioner of Accounts and Deposits has administrative supervision over the Division of Bookkeeping and Warrants and its relations to the office of the Treasurer of the United States, over the Division of Disbursement, the Division of Deposits, and the Section of Surety Bonds. I t prepares periodic estimates of the future cash position of the Treasury for use of the Department in connection with its financing; prepares calls for the withdrawal of funds from special depositaries to meet current expenditures; directs the transfer of Government funds between Federal Reserve banks when necessary; directs fiscal agency functions in general, including deposits of gold certificates in the gold certificate fund for credit with Federal Reserve banks; supervises collections of principal and interest on foreign obligations; keeps the accounts, and handles generally matters relating to the indebtedness of foreign governments to the United States, including matters arising under funding agreements; supervises collections of railroad obligations owned by the Government and keeps the accounts relating thereto; handles the collection of other obligations owned by the United States which are turned over to the Treasury by other departments for collection; makes payments, keeps accounts, and handles matters generally relating to awards under the Settlement of War Claims Act of 1928. The Commissioner likewise has control of the investment accounts of the Government and is responsible for the proper custody of investments and securities held by the Treasurer of the United States and the Federal Reserve banks for which the Secretary is responsible, other than those related to public debt operations. The Commissioner also has supervision over the procedure for the maintenance of the system of accounts and disbursements under the Emergency Relief Appropriation Acts of 1935 and 1936. Combined statement oj assets and liabilities oj governmental corporations and credit agencies A combined statement of assets and liabilities of governmental corporations and credit agencies as of June 30, 1936, will be found as table 40 on page 453 of this report. This statement is published monthly in the Daily Statement of the United States Treasury, as required by Executive Order No. 6869 of October 10, 1934. This Executive order also requires every executive department and independent establishment of the Government holding assets or incurring liabilities and every corporation in which the Government of the United States has a proprietary interest to furnish to the Secretary of the Treasury nob later than the 15th day of each month, a statement of its assets, liabilities, and capital and surplus as of the close of business on the last day of the preceding month. During the year the Treasury prepared, from reports submitted by governmental corporations and credit agencies, a summary statement of the proprietary interest of the United States in such corporations and credit agencies as of June 30, 1929 to 1936, inclusive. This statement appears as table 41 on page 460 of this report. Securities owned by the United States Government The aggregate amount of securities owned by the Government on June 30, 1936, based upon the latest reports received, was $17,985,93790—37 6 66 REPORT OF THE SECRETARY OF THE TREASURY 665,696.40 as against $17,676,212,144.72 on June 30, 1935, an increase of $309,453,551.68. A summary comparison of the holdings at the end of each fiscal year is shown below. A detailed statement of the securities held on June 30, 1936, will be found as table 39 on page 450. Summary of securities owned h'y the United States on June 30, 1935 and 1936 J u n e 30, 1935 Foreign obligations: Received u n d e r d e b t s e t t l e m e n t s . . All o t h e r . . . $11,155, 784, 298. 04 $11,155, 714, 400.13 859, 205,363. 64 859, 205, 363. 64 Total C a p i t a l stock of war emergency corporations C a p i t a l stock, etc. of other g o v e r n m e n t a l corporations a n d credit agencies: C a p i t a l stock of P a n a m a R . R. Co C a p i t a l stock of I n l a n d W a t e r w a y s Corporation Reconstruction Finance Corporation... (Capital stock a n d notes, less funds exp e n d e d for subscriptions to capital stock of other governmental corporations a n d funds disbursed to other g o v e r n m e n t a l agencies for m a k i n g loans included below.) C a p i t a l stock of H o m e O w n e r s ' L o a n Corporation Capital stock of regional agricultural credit corporations C a p i t a l stock of Federal h o m e loan b a n k s Capital stock of Federal F a r m Mortgage Corporation Capital stock of E x p o r t - I m p o r t B a n k of Washington C a p i t a l stock of Second E x p o r t - I m p o r t B a n k of W a s h i n g t o n __ Capital stock of R F C M o r t g a g e Co C a p i t a l stock of production credit corporations :. C a p i t a l stock of C o m m o d i t y C r e d i t Corporation C a p i t a l stock of Electric H o m e a n d F a r m Authority, Inc .-. C a p i t a l stock of Federal Deposit I n s u r a n c e Corporation C a p i t a l stock (preferred a n d full-paid income shares) of Federal savings a n d loan associations Capital stock of Federal Subsistence H o m e steads Corporation C a p i t a l stock a n d paid-in s u r p l u s of Federal land banks C a p i t a l stock a n d paid-in s u r p l u s of Federal i n t e r m e d i a t e credit b a n k s . . C a p i t a l stock of C e n t r a l B a n k for Cooperatives C a p i t a l stock of b a n k s for cooperatives O t h e r obligations a n d securities: Railroad obligations Obligations acquired b y Federal E m e r g e n c y A d m i n i s t r a t i o n of P u b l i c W o r k s N o t e s received b y F a r m Credit A d m i n i s t r a tion evidencing o u t s t a n d i n g advances m a d e from t h e revolving fund created b y t h e Agricultural M a r k e t i n g A c t . . Securities received b y Secretary of W a r Securities received b y Secretary of N a v y Securities received b y U . S. Shipping B o a r d Bureau Obligations of farmers for seed, feed, d r o u g h t relief, a n d crop-production loans Obligations of joint stock l a n d b a n k s Securities received b y R e s e t t l e m e n t A d m i n istration Securities received b y R u r a l Electrification Administration. _ Total J u n e 30, 1936 - - 12, 014,989, 661. 68 83, 683, 096. 22 7, 000, 000. 00 12, 000, 000. 00 3, 486, 215, 554. 93 > 200, 000, 000. 00 44, 500, 000. 00 81, 645, 700. 00 12, 014,919, 763. 77 83, 639, 510. 58 Increase ( + ) or decrease (—) -$69,897.91 -69,897.91 -43,585. 64 7, 000,000.00 12, 000, 000. 00 3, 762, 734,653.76 +276, 519, ( » 200,000,000. 00 25,I, COO, 000. 00 -19,500,000.00 », 342, 000. 00 +17,696,300.00 200, 000, 000. 00 200, 000, 000. 00 11,000, 000. 00 18, 000, 000. 00 2, 750, 000.00 10, 000, 000. 00 10, 000,000. 00 +7,000, 000.00 - 2 , 750, 000. 00 120, 000,000. 00 120, 000, 000. 00 3, 000, 000. 00 100, 000, 000.00 + 9 7 , 000, 000. 00 1, 000, 000.00 850, 000. 00 -150,000.00 150,000,000.00 150, 000, 000.00 32, 464, 000. 00 49, 223, 000. 00 10, 000.00 10, 000.00 199, 452,477. 75 230,874, 287. 38 100, 000, 000. 00 100, 000, 000. 00 65, 000, 000. 00 60, 000, 000. 00 66, 000, 000. 00 79, 000, 000. 00 +16,759,000.00 +31,421,809.63 + 1 , 000, 000. 00 + 1 9 , 000, 000. 00 31,192,156. 36 30, 590, 232. 55 - 6 0 1 , 9 2 3 . 81 312,360, 510.09 146,949, 557. 39 -165,410,952.70 125, 211,123. 35 433, 000. 00 5, 086, 301.17 112, 605, 799. 81 383, 000. 00 5, 026,142. 24 -12,605,323.54 - 5 0 , 000. 00 -60,158.93 119, 719,682.87 105,183,152.88 -14,536,529.99 197,124,401.86 374, 478. 44 176, 233, 417.11 272, 686. 79 -20,890,984.75 -101,791.65 79, 005, 229.83 + 7 9 , 005, 229. 83 823, 262. 31 +823, 262. 31 17,676,212,144.72 17, 985, 665,696. 40 +309, 453, 551.68 1 Includes $100,000,000 expended for subscription to capital stock of Federal Savings a n d L o a n I n s u r a n c e Corporation. REPORT OF THE SECRETARY OF THE TREASURY 67 Contingent liabilities oj the United States A summary statement of the contingent liabilities of the United States as of June 30, 1935 and 1936, and the change between the two dates is shown below. A detailed statement of such liabilities of the United States as of June 30, 1936, and a description of them appear as table 35 on page 444. Agency Obligation Total amount of contingent liability June 30, 1935 Federal Farm Mortgage Corporation. Home Owners' Loan Corporation. Reconstruction Finance Corporation. Secretary of Agriculture Postal Savings System Federal Reserve System Increase (+) or decrease ( - ) June 30,1936 Bonds, various issues. $1, 233, 090, 547. 93$1,431,137, 489. 50 +$198,046,941. 57 do Notes, various issues._ 2,666, 576, 480. 21 3, 065,885, 426. 82 +399, 308, 946. 61 250,988,401.82 252,602, 042. 03 +1,613,640. 21 45, 095, 000. 00 -45, 095, 000. 00 Funds borrowed upon cotton. Funds due depositors. 1,230.976,844.57 1, 260, 787. 703.92 +29,810,859. 35 Federal Reserve notes. 3, 234, 959,135. 00 4. 021, 532,607. 00 +786, 573, 472. 00 Federal savings and loan associations The Federal Home Loan Bank Board was authorized under the Home Owners' Loan Act of 1933, approved June 13, 1933, to provide for the organization, incorporation, examination, operation, and regulation of Federal savings and loan associations, and to issue charters therefor, in order to provide local mutual thrift institutions in which people might invest their funds and in order to provide for the financing of homes. Under section 5 (g) of the act the Secretary of the Treasury was authorized on behalf of the United States to subscribe for preferred shares in such associations, upon request of the Federal Home Loan Bank Board, but the subscription was not to exceed $100,000 in shares of any one association. The Home Owners' Loan Act Of 1933, as amended by an act approved April 27, 1934, provided under section 5 (j) that, in addition to the authority to subscribe for preferred shares in these associations, the Secretary of the Treasury was authorized, on behalf of the United States to subscribe for any amount of full-paid income shares in such associations, upon request of the Federal Home Loan Bank Board, but the amount paicl in by the Secretary of the Treasury for full-paid income and preferred shares together shall at no time exceed 75 percent of the total investment in the shares of such association by the Secretary of the Treasury and other shareholders. An appropriation of $50,000,000 to enable the Secretary of the Treasury to purchase preferred shares in Federal savings and loan associations was provided by the Fourth Deficiency Act, fiscal year 1933, approved June 16, 1933. This appropriation was extended by the act approved April 27, 1934, to cover the purchase of full-paid income shares. Pursuant to amendments in the acts of April 27, 1934, and May 28, 1935, $700,000 of the $50,000,000 appropriation was aUocated and made available to the Federal Home Loan Bank Board to enable the Board to encourage local thrift and local home financing and to 68 REPORT OF THE SECRETARY OF THE TREASURY promote, organize, and develop these associations. The amount available to the Secretary of the Treasury for subscription to shares in Federal savings and loan associations was $49,300,000. The Home Owners' Loan Corporation also was authorized to purchase full-paid income shares of Federal savings and loan associations after the funds made available to the Secretary of the Treasury for the purchase of such shares had been exhausted. The funds available to the Secretary of the Treasury were exhausted on October 25, 1935. The following statement shows a summary of the transactions in connection with the subscriptions by the Secretary of the Treasury to preferred and full-paid income shares in these associations: Preferred and full-paid income shares of Federal savings and loan associations subscribed by the Secretary of the Treasury to June 30, 1936, and dividends received [Par value of shares] Preferred shares Shares subscribed and paid: To June 30, 1935 July 1, 1935, to June 30, 1936 . . Full-paid income shares Total $637,800 $31,826,200 16,836,000 $32,464,000 16,836,000 To June 30, 1936 Less shares repaid during fiscal year 1936 637,800 12 500 48, 662, 200 64, 500 49, 300,000 77, 000 Shares held on June 30,1936 625 300 48, 597, 700 49,223,000 . . . Dividends received on preferred and full-paid income shares: To June 30, 1935 July 1, 1935, to June 30, 1936 To June 30, 1936 - - 76,808. 28 1,146, 226. 67 1, 223,034. 95 Federal home loan banks Twelve Federal home loan banks were established pursuant to the Federal Home Loan Bank Act, approved July 22, 1932. These banks are supervised by the Federal Home Loan Bank Board. The act provided that the Board, with the approval of the Secretary of the Treasury, shall determine the minimum capital of each bank, which shall be not less than $5,000,000. It further provided that the Secretary of the Treasury shall subscribe, on behalf of the United States, for such part of the minimum capital of each Federal home loan bank as is not subscribed for by members within 30 days after books had been opened for stock subscriptions. Payments for stock subscriptions by the Secretary of the Treasury are subject to call in whole or in part by the Board, with the approval of the Secretary of the Treasury, at such time or times as may be deemed advisable. To enable the Secretary of the Treasury to make payments upon stock of Federal home loan banks subscribed for by him, the sum of $125,000,000, or so much thereof as may be necessary for such purpose, was allocated and niade available to the Secretary of the Treasury out of the capital of the Reconstruction Finance Corporation and the proceeds of notes, debentures, bonds, and other obligations issued by the corporation. The act of July 22, 1932, provided that the capital subscribed for by the United States was entitled to receive dividends at a rate of 2 percent per annum cumulative from the date of investment, but in any case in which the rate of dividend is in excess of 2 percent the REPORT OF THE SECRETARY OF THE TREASURY 69 stock subscribed for by the United States shall be entitled to dividends at a rate not in excess of that paid on other stock. The act of May 28, 1935, amending the act of July 22, 1932, provided, however, that all stock of any Federal home loan bank shall share in dividend distributions without preference. The following statement shows a summary of the transactions in connection with the subscriptions by the Secretary of the Treasury to stock of Federal home loan banks: Subscriptions by the Secretary of the Treasury to stock of the Federal home loan banks to June 30, 1936, and dividends received thereon [Par value of shares] Federal home loan bank Boston..->. New York Pittsburgh Winston-Salem. Cincinnati Indianapolis Chicago Des Moines Little Rock Topeka Portland Los Angeles Total Federal home loan bank Boston New York Pittsburgh Winston-Salem.. Cincinnati Indianapolis Chicago Des Moines Little Rock Topeka... Portland Los Angeles Total- Total shares Shares held subscribed June 30,1935 Shares paid fiscal year Shares held June 30,1936 $12,467, 500 18,963, 200 11, 146, 300 9,208,200 12,775, 700 6,577,400 14, 173,900 7,394, 900 8,772,400 7,333, 600 5,960, 000 967, 900 $5,000,000 11,500,000 8,500,000 5, 700, 000 12, 776, 700 6,000,000 10,000,000 4, 500, 000 6,100,000 4, 700, 000 3, 310,000 3, 560,000 4,173,900 2,000,000 2, 672, 400 600,000 2,350,000 1, 700,000 $5,300,000 12,500,000 9, 600, 000 7, 500,000 12, 775, 700 6, 000,000 14,173,900 6, 500,000 8, 772,400 5,300,000 5,660,000 5,260,000 124, 741,000 81, 645, 700 17, 696, 300 99, 342,000 $300,000 1,000,000 1,100,000 1,800,000 Dividends Dividends Dividends received to received fis- received to June 30, 1935 cal year 1936 June 30,1936 $145, 715.11 286,915.07 243, 545. 21 184, 493.14 414, 743.85 196,164. 39 317, 994. 52 135, 682.19 196, 279.45 22, 575. 35 2,144,108. 28 $62, 672. 61 -233,369.87 174, 032.89 121, 649. 32 255, 514.00 89, 630. 75 212, 410.96 71,905. 48 92,932.88 108, 526.04 117, 623.13 71, 778. 08 $208,387. 72 520, 284.94 417, 578.10 306,142. 46 670,257.85 285, 795.14 630,405.48 207, 687. 67 289, 212. 33 108, 526. 04 117, 623.13 94,353.43 1, 612, 046. 01 3, 766,154. 29 Federal land banks Capital stock.—The 12 Federal land banks were established under the Federal Farm Loan Act approved July 17, 1916. The Farm Credit Administration exercises general supervisory authority over these banks. Under the act of January 23, 1932, amending the Federal Farm Loan Act, as amended, it is the duty of the Secretary of the Treasury on behalf of the United States, upon the request of the board of directors of any Federal land bank made with the approval of the Farm Credit Administration, to subscribe from time to time for capital stock of such bank, such subscriptions to be subject to call, in whole or in part, by the board of directors of said bank, upon 30 days' notice, with the approval of the Farm Credit Administration. The act further provided that such stock is to be nonvoting and may at any time, in the discretion of the directors and with the approval of 70 REPORT OF THE SECRETARY OF THE TREASURY the Farm Credit Administration, be paid off at par and retired in whole or in part and that the Farm Credit Administration may at any time recjuire such stock to be paid ofl' at par and retired in whole or in part if in its opinion the bank has resources available for such purpose. The proceeds of all repayments on account of stock subscribed for by the Secretary of the Treasury under the act of January 23, 1932, were authorized to be held in the Treasury and shall be available for the purpose of paying for other stock thereafter issued pursuant to said act.' To enable the Secretary of the Treasury to pay for said stock, there was appropriated under the act approved February 2, 1932, the sum of $125,000,000. The following statement shows a summary of the transactions in connection with the subscriptions by the Secretary of the Treasury to stock of Federal land banks: Subscriptions by the Secretary of the Treasury to stock of Federal land banks to June 30, 1936 [ P a r v a l u e of shares] Federal l a n d b a n k Springfield Baltimore Columbia Louisville New Orleans. St. L o u i s St. P a u l Wichita Houston Berkeley Omaha Spokane _ Total S h a r e s held J u n e 30, 1935 $6, 397, 900 7, 443, 220 15, 733, 065 7, 030, 276 18, 727, 570 8, 643, 870 16,877, 995 6, 257,195 8, 581, 050 6, 419, 580 7, 327, 815 15, 519, 280 Shares s u b scribed flscalyear 1936 $2, 000, 000 124,958,815 " 2,000,000 Shares repaid fiscal year 1936 $82, 235 68,140 44, 770 213, 796 20, 780 451, 876 623, 785 363, 250 157, 640 163, 445 763, 745 92, 725 3,046,185 Shares held J u n e 30, 1936 $6, 315, 665 7, 375, 080 15, 688, 295 6, 816, 480 18, 706, 790 8,191, 995 18, 254, 210 5, 893, 945 8, 423, 410 6, 256.136 6, 564, 070 . 15, 426, 555 123,912,630 Subscriptions to paid-in surplus and payments on account oj reduction in interest rates on mortgages.—Under the act approved January 23, 1932, amending the Federal Farm Loan Act, as amended. Federal land banks were authorized to extend, in whole or in part, any obligation that may be or become unpaid under the terms of any mortgage, and to accept payment of any such obligation during a period of 5 years or less from the date of its extension in such amounts as may be agreed upon at the date of making the extension. This provision was amended by the act of May 12, 1933, which provided that the terms of any extension shall be such as will not defer the collection of any obligation which, after investigation by the bank of the situation of the borrower, is shown to be within his capacity to pay. The amendment of May 12, 1933, to the Federal Farm Loan Act, as amended, provided that the rate of interest on loans on mortgages made through national farm loan associations or through Federal land banks, or purchased from joint stock land banks by any Federal land bank, outstanding on May 12, 1933, or made through national farm loan associations within 2 years after such date, shall not exceed 4}^ percent per annum for all interest payable on installment dates occurring within a period of 5 years commencing 60 days after May 12, 1933; and that no payment of the principal portion of REPORT OF THE SECRETARY OF THE TREASURY 71 any installment of any such loan shall be required during such 5-year period if the borrower shall not be in default with respect to any other condition or covenant of his mortgage. These provisions also apply to loans made by Federal land banks through branches, except that the rate of interest on such loans for the 5-year period shallbe 5 percent in lieu of 4^ percent. Under the Farm Creciit Act of 1935, approved June 3, 1935, as amended by the act of June 24, 1936, these provisions were amended, effective July 1, 1935, to provide that the rate of interest on such loans after that date shall not exceed Sji percent per annum for all interest payable on installment dates occurring within a period of 2 years commencing July 1, 1935, and that no payment of the principal portion of any installment of any such loan outstanding on the date of the enactment of the Farm Credit Act of 1935 shall be required prior to July 11, 1938, if the borrower shall not be in default with respect to any other condition or covenant of his mortgage. The provision with respect to the rate of interest on loans made by Federal land banks through branches was also amended, effective July 1, 1.935, to provide that the rates of interest on such loans for the respective periods above specified shall be one-half of 1 percent per annum in excess of the rates paid during the corresponding periods by borrowers on mortgage loans made through national farm loan associations. An amendment of May 12, 1933, directed the Secretary of the Treasury to pa}'^ each Federal land bank after October 1, 1933, the amount accrued since July 1, 1933, and after the end of each quarter thereafter to pay such amounts as the Lank Bank Commissioner certifies to the Secretary of the Treasury is equal to the amount by which interest payments on mortgages held by such bank have been reduced, during the preceding quarter, by reason of the limitation upon the interest rates provided in said amendment. But in any case in which the Land Bank Commissioner finds that the amount of interest payable by such bank during any quarter has been reduced by reason of the refinancing of bonds, the amount of the reduction so found shall be deducted from the amount payable to such bank. No payments shall be made to a bank with respect to any period after June 30, 1938. I t was also provided that in the case of any such extension made prior to the expiration of 5 years from May 12, 1933, or in case of any deferment of principal, as provided above, it shall be the duty of the Secretary of the Treasury, on behalf of the United States, upon the request of the Federal land bank making the extension, and with the approval of the Lank Bank Commissioner, to subscribe at such periods as the Commissioner shall determine, to the paid-in surplus of such bank an amount equal to the amount of all such extensions and deferments made by the bank during the preceding period. Such subscriptions shall be subject to call, in whole or in part, by the bank with the approval of the Land Bank Commissioner upon 30 days' notice and upon the payment to any Federal land bank of the amount of any such subscription, such bank shall execute and deliver a receipt therefor to the Secretary of the Treasury. The amount of any subscriptions to paid-in surplus of any such bank may be repaid in whole or in part at any time in the discretion of the bank and with the approval of the Land Bank Commissioner, and the Commissioner may at any time require such subscriptions to be repaid in whole or 72 REPORT OF THE SECRETARY OF THE TREASURY in part if in his opinion the bank has resources available for such purpose. A statement as of June 30, 1936, of the amounts appropriated for subscriptions to the paid-in surplus of Federal land banks on account of extensions and deferments referred to above, and payments to Federal land banks for this purpose, follows: Appropriations for subscriptions to the paid-in surplus of Federal land banks on account of extensions and deferments, and payments for this purpose to J u n e 30, 1936 1. Amounts appropriated: Fourth Deficiency Act, June 16, 1933 $50,000,000.00 Emergency Appropriation Act, fiscal year 1935, June 19, 1934 75,000,000.00 Second Deficiency Appropriation Act, fiscal year 1935, Aug. 12, 1935 20,000,000.00 Treasury Department Appropriation Act, 1937, June 23, 1936 .-. 24, 000,000.00 Total to June 30, 1936 169,000,000.00 2. Payments to Federal land banks: Federal land bank 6 Springfield _. Baltimore Columbia.. Louisville. N e w Orleans _. St. L o u i s St. P a u l Wichita Houston Berkeley Omaha . Spokane _. Total A m o u n t paid to J u n e 30, 1935 A m o u n t paid fiscal year 1936 $2, 400, 347.19 $3, 573, 548. 33 2, 389, 741. 62 447, 518. 06 3, 416, 537. 35 ' 1,036,203.03 1,727,470.31 4, 254,839. 81 1, 900, 527. 43 10, 778,117. 73 3, 038, 628. 66 5, 477, 095. 22 2, 411, 503. 54 10, 281, 465. 71 5, 588, 878. 39 3, 468,109. 07 5,179, 714. 00 1, 674, 800. 00 4, 729, 653. 92 6, 384, 246.88 6, 930,122. 41 7,867, 948. 51 9, 302, 529. 20 2, 703, 111. 01 74, 493, 662. 76 32,467,994.63 A m o u n t paid to J u n e 30, 1936 $5, 973,895. 52 2,837, 259. 68 4, 451, 740. 38 5, 982, 310.12 12, 678, 645.16 8, 515, 723. 88 12, 692, 969. 25 9, 056, 987.'46 6, 854, 614. 00 11,113, 900.80 14, 798, 070. 92 12, 006, 640. 21 106, 961, 657. 38 106, 961, 657. 38 3. Amount available for expenditure, June 30, 1936 62,038,342.62' A statement as of June 30, 1936, of the amounts appropriated on account of reduction in interest rate on mortgages and payments to Federal land banks for this purpose is as follows: Appropriations on account of reduction i n interest rates on mortgages, and payments to Federal land banks for this purpose to J u n e 30, 1936 1. Amounts appropriated. Fourth Deficiency Act, fiscal year 1933, June 16, 1933 $15,000,000.00 Emergency Appropriation Act, fiscal year 1935, June 19, 1934 _ _ 7,950,000.00 Second Deficiency Appropriation Act, fiscal year 1935, Aug. 12, 1935 36,000,000.00 Treasury Department Appropriation Act, 1937, June 23, 19'36. 24, 000,000.00 Total to June 30, 1936 82,950,000.00 2. Payments to Federal land banks: Federal land bank Amount paid Amount paid Amount paid to June 30,1935 fiscal year 1936 to June 30,1936 Springfield... Baltimore Columbia Louisville New Orleans. St. Louis St. Paul Wichita Houston Berkeley Omaha Spokane $766, 242. 34 1,114, 476. 36 903, 583. 95 1,993, 447.03 1, 770, 414. 31 1, 666,085. 83 2, 057, 560.86 1, 574,014. 92 2, 510,476. 39 993, 376.95 2, 667, 649. 76 1,699,613.06 $1, 018,104. 23 1, 277,506. 47 1, 298,740. 37 3.060, 939.34 1, 759,493. 97 2, 537,058.62 4.061, 223. 27 2, 323,604. 08 3, 295,729. 27 1, 714,735. 96 4,859, 887. 24 1,857, 958.18 $1, 784,346. 67 2, 391,982.83 2, 202,324.32 5,064, 386. 37 3, 529,908. 28 4,093. 144.46 6,118,774.13 3,897,619. 00 5, 806,205. 66 2, 708,112.91 7, 527,536. 99 3,467, 571. 23 Total.. 19, 506,931. 74 29,064, 981.00 48, 571,912. 74 48, 671,912. 74 i. Amount available for expenditure June 30, 1936 34, 378,087. 26 REPORT OF THE SECRETARY OF THE TREASURY 73 Advances to Federal Reserve banks jor industrial loans, etc. The act approved June 19, 1934, amending the Federal Reserve Act, as amended, by adding section 13(b) which provides that in exceptional circumstances, when it appears to the satisfaction of a Federal Reserve bank that an established industrial or commercial business located in its district is unable to obtain requisite financial assistance on a reasonable basis from the usual sources, the Federal Reserve bank, pursuant to authority granted by the Federal Reserve Board, may make loans to, or purchase obhgations of, such business, or make commitments with respect thereto, on a reasonable and sound basis, for the purpose of providing it with working capital, but no obligation shall be acquired or commitment made with a maturity exceeding 5 years. Each Federal Reserve bank under certain conditions shall also have power to discount for, or purchase from, any bank, trust company, mortgage company, credit corporation for industry, or other financing institution operating in its district, obligations having maturities not exceeding 5 years, entered into for the purpose of obtaining working capital for any such established industrial or commercial business; to make loans or advances direct to any such financing institution on the security of such obligations; and to make commitments with regard to such discount or purchase of obligations or with respect to such loans or advances on the security thereof, including commitments made in advance of the actual undertaking of such obligations. In order to enable the "Federal Reserve banks to make such loans, discounts, advances, purchases, and commitments, the Secretary of the Treasury was authorized, under such rules and regulations as he shall prescribe, to pay to each Federal Reserve bank not to exceed such portion of the sum of $139,299,557 as may be represented by the par value of the holdings of each Federal Reserve bank of Federal Deposit Insurance Corporation stock, upon the execution by each Federal Reserve bank of its agreement to hold such stock unencumbered and to pay to the United States all dividends, all payments on liquidation, and all other proceeds of such stock, for which dividends, payments, and proceeds the United States shall be secured by such stock itself up to the total amount paid to the Federal Reserve bank by the Secretary of the Treasury. Each Federal Reserve bank, in addition, must agree that, in the event such dividends, payments, and other proceeds in any calendar year do not aggregate 2 percent of the total payment made by the Secretary of the Treasury, it will pay to the United States in such year such further amount, if any, up to 2 percent of the said total payment, as shall be covered by the net earnings of the bank for that year derived from the use of the sum so paid by the Secretary of the Treasury, and that for the amount so due the United States shall have a first claim against such earnings and stock, and further that it will continue such payments until the final liquidation of said stock by the Federal Deposit Insurance Corporation. All amounts required to be expended by the Secretary of the Treasury in order to carry out the provisions of section 13 (b) of the Federal Reserve Act, as amended, were appropriated and authorized to be paid out of the miscellaneous receipts of the Treasury created by the increment resulting from the reduction of the weight of the gold dollar under the President's proclamation of January 31, 1934. 74 REPORT OF THE SECRETARY OF THE TREASURY The following statement is a summary of the transactions in connection with advances to Federal Reserve banks on account of industrial loans, etc., pursuant to section 13 (b) of the Federal Reserve Act, as amended: Advances to the Federal Reserve banks for industrial loans and payments received by the Treasury to June 30, 1936 P a y m e n t s m a d e to Federal Reserve b a n k s Federal Reserve b a n k " Maximum payments authorized Atlanta _ Boston.Chicago Cleveland Dallas Kansas City Minneapolis New York Philadelphia St. Louis Richmond San F r a n c i s c o . . $6, 272,031. 65 10, 230, 236. 88 19, 748, 516. 70 14,146,863. 66 4, 369, 338.10 4,131, 276. 30 3, 509, 467. 66 *42, 629, 210. 66 14, 620,883. 52 5,093,112.26 5, 808, 291. 43 9, 850, 328. 30 Total 139, 299, 656. 99 T o J u n e 30, 1935 $756, 934.44 2,166, 637.83 1, 417, 701. 33 1,016, 571. 33 938, 841.06 778, 790.49 1, 007, 746. 96 6, 586, 057. 06 2,099, 200. 30 547, 832. 83 2,918, 748. 70 697, 795. 01 20,931,857.34 Fiscal year 1936 T o J u n e 30, 1936 Payments received b y t h e Treasu r y to J u n e 30, 1936 $9, 066. 91 49, Oil. 78 17, 636. 94 8, 734. 30 23, 428. 05 601, 913. 35 459,000. 00 $756,934.44 2,876,115. 98 1,417, 701. 33 1,016, 671. 33 1, 251, 788. 08 1,146,717.73 1, 007, 746. 96 7, 762,044. 63 4,198,400. 60 547,832. 83 3,420, 662. 05 1,166, 795. 01 6, 614,453. 63 26, 546, 310. 97 297, 667.19 $708,478.15 312, 947.02 366, 927. 24 1,166, 987. 67 2, 099, 200. 30 16, 863.49 64, 238. 45 41,984.01 66, 714. 26 Accounting and disbursing oj emergency reliej junds appropriated under the Emergency Reliej Appropriation Acts oj 1935 and 1936 Section I I (A) of Executive Order No. 7034, dated May 6, 1935, directs: (A) The Secretary of the Treasury, (1) through the disbursing and accounting facilities under the Commissioner of Accounts and Deposits of the Treasury Department, to make provision for all disbursements from the funds appropriated by the Emergency Relief Appropriation Act of 1935, subject only to such exceptions as the Secretary may authorize, and to maintain a system of accounts necessary to enable the President (a) to exercise Executive control over such funds, (b) to provide current financial and accounting information for governmental agencies concerned, and (c) to make a complete report to the Congress concerning expenditures made and obligations incurred, by classes and amounts * * *. Pursuant to the provisions of this order, the Secretary of the Treasury on June 18, 1935, issued Regulation No. 1 prescribing administrative procedure for the maintenance of a system of accounts and disbursements under the Emergency Relief Appropriation Act of 1935. This regulation was approved by the President and issued as Treasury Department Circular No. 543, a copy of which appears in the annual report for the fiscal year 1935. Executive Order No. 7396, dated June 22, 1936, directs that the expenditure of funds appropriated by the Emergency Relief Appropriation Act of 1936, approved June 22, 1936, and the administration thereof, shall be in accordance with the orders, rules, and regulations theretofore issued by the President relating to the expenditure of funds appropriated by the Emergency Relief Appropriation Act of 1935 and to the administration of that act, insofar as applicable. With a view to providing effective accounting controls and in order to facilitate disbursing operations, there were established in each State, and in the District of Columbia, Alaska, Hawaii, Puerto Rico, and the Virgin Islands, a Treasury accounts office and a Treasury dis REPORT OF THE SECRETARY OF THE TREASURY 75 bursing office, the activities of which are coordinated and administratively controlled from central offices in the Treasury at Washington, D. C. To expedite the effective administration of the work relief program, these offices are located in the same cities as the Treasury procurement offices and the State headquarters of the Works Progress Administration. During the fiscal year 59 branch Treasury accounts and disbursing offices were established in 21 States and Territories. Four of these branch offices were discontinued prior to June 30, 1936. In the Treasury accounts offices accounts are maintained showing in detail the status of the funds allocated by the President for various projects and purposes in the several States, Territories, and possessions. These accounts provide a control to keep expenditures within the limitations set up by the Congress and the President. There is in effect a system of reporting whereby financial information relating to each project is provided currently to administrative officers for operating purposes. Over 135,000 accounts for official projects were on the records of the Treasury accounts offices on June 30, 1936. The procedure adopted by the Treasury offices for accounting and disbursing for emergency relief funds contains three features never previously observed in accounting for public funds. The first feature is the practice of rendering to the General Accounting Office for audit, as of the 10th, 20th, and last day of the month, a complete accounting for disbursements handled by the Treasury, whereas under the regular departmental procedure established pursuant to the act of July 31, 1894, as amended, the accounting is made monthly or quarterly. The second feature is that the administrative accounts relating to allotments and obligations as maintained by the Treasury accounts offices for appropriations and projects are correlated and currently balanced with the disbursing accounts. The third feature requires each of the Treasury accounts offices to submit, within 48 hours after the close of each accounting period, to the Commissioner of Accounts and Deposits in Washington, D. C , a complete statement showing the financial status of the administrative accounts for allotments, expenditure authorizations, obligations incurred, and disbursements on the basis of checks issued. The data in these reports are compiled in financial statements every 10 days and at monthly intervals for the information of the President, the Secretary of the Treasury, administrative agencies, and others concerned. A summary of these figures as of the close of each month is released to the public in the Daily Statement of the United States Treasury on the 15th of the succeeding month. Section 15 of the Emergency Relief Appropriation Act of 1935 provides that a report of operations under the act shall be submitted to the Congress before the 10th day of January in each of the three next regular sessions of Congress following the date of approval of the act. A detailed financial report of the Secretary of the Treasury covering financial transactions.through December 31, 1935, was available on January 5, 1936. This financial report containing tables in summary and detailed form, together with a statement prepared by the Director of the National Emergency Council, was submitted by the President to Congress on January 9, 1936. A complete financial report also was made available for transactions through June 30, 1936. 76 REPORT OF THE SECRETARY OF THE TREASURY A summary statement of the status of the funds under the Emergency Relief Appropriation Acts of 1935 and 1936, as of June 30, 1936, is contained in table 16, page 390. Agricultural Adjustment Act Under the Agricultural Adjustment Act, as amended, and related legislation, there was established an agricultural program involving the collection of processing taxes and expenditures for rental and benefit payments and other purposes. The decision of the Supreme Court on January 6, 1936, declared the processing taxes unconstitutional. Thereafter, the collection of such taxes and expenditures based upon them were discontinued. The following statement shows receipts of processing taxes and expenditures to June 30, 1936, under the Agricultural Adjustment Act, as amended, and related legislation: Receipts: Processing taxes covered into the Treasury $960,792,288.62 Expenditures payable from processing taxes: , Under "Advances to Agricultural Adjustment Administration under sec. 12 (b) of the Agricultural Adjustment Act": Department of Agriculture $1,117,383,659.19 Treasury Department 52,081,031.47 War Department 62,678,886.45 Department of Justice -•.-. 3,664.84 Cotton Act of 1934, approved Apr. 21, 1934. 15,162,736.29 Under "Purchase of surplus sugar from processing taxes (act of May 9, 1934)" _ _ 476,487.61 Under "Advances to Department of Agriculture under sec. 10 (a) of Tobacco Act of June 28, 1934": Department of Agriculture -.. 705,637.52 Treasury Department 318,693.89 1, 248, 810, 697.16 Excess of expenditures over processing taxes _ Other expenditures on account of the program under the Agricultural Adjustment Act, as amended, and related legislation, to June 30, 1936: Under allocations from National Industrial Recovery appropriation Under appropriation of $100,000,000 provided by sec. 12 (a) of the Agricultural Adjustment Act. Under appropriation of $150,000,000 provided by the act of May 26, 1934 Under appropriation of $100,000,000 provided by the act of June 19,1934, less $52,600,000 reimbursements made to the Treasury _ _.. Under appropriation of $10,000,000 provided by sec. 37 of the act of Aug. 24, 1935 Total expenditures under Agricultural Adjustment Act, to June 30,1936, in excess of processing taxes 298,018,408. 54 37,490,397.76 14,174,752.73 113,679,706. 68 17,000,000.00 965,044.32 481,228,310.02 Appropriations authorized under Social Security Act The Social Security Act, approved August 14, 1935, provided, among other things, for the establishment of a system of Federal old-age benefits, and for grants-in-aid to the several States to enable them to make more adequate provision for aged persons, blind persons, dependent and crippled children, maternal and child welfare, public health, and the administration of their unemployment compensation laws. The amounts appropriated to June 30, 1936, for the fiscal years 1936 and 1937 under the various authorizations contained in the Social Security Act, except amounts appropriated for administrative expenses of the Federal Government, are shown in the following statement: 77 REPORT OF THE SECRETARY OF THE TREASURY I. Appropriations for grants to States: Under Social Security Board: For old-age assistance. For unemployment compensation administration For aid to dependent children For aid to the blind- Total amount appropriated ^° *{"!if ^^' ^^^^ $109,660,000 31,250,000 40,000,000 10,000,000 - 190,910,000 Under Department of Labor: For maternal and child health service For services for crippled children For child welfare services.. '... 4,400,000 3,337,000 1,825,000 - 9,562,000 Under Treasury Department: For public health work Under Interior Department: For vocational rehabilitation of persons disabled in industry ..Total grants to States '. 11,333,000 » 2,261,000 214,066,000 II. Appropriations for other purposes: Under Treasury Department: For disease and sanitation investigations by Public Health Service For old-age reserve account -- i l , 695,000 2 265,000,000 Total for other purposes 266,695,000 1 Funds authorized to be appropriated under the Social Security Act augment existing appropriations for fiscal years 1936 and 1937. Figures used in this statement represent total amounts appropriated for such years. 2 See p. 51. Obligations oj joreign governments The United States received during the fiscal year 1936 payments aggregating $547,312.50 on account of the indebtedness of foreign governments, of which $65,000 was for account of principal, $444,251.50 was for account of interest, and $38,061 was for account of annuities under the moratorium agreements. The following statement shows the payments due during the period July 1 to December 31,1935, and the amounts actually paid on account by certain governments: AMOUNTS DUE AND PAYABLE, JULY 1 TO D E C E M B E R 31, 1935 Funding agreements Country Principal Belgium..^ Czechoslovakia... Estonia Finland France Great Britain.. Greece Hungary Italy . Latvia Lithuania _ - - . Poland Rumania _ _ Total ... . $1,600,000 122,000 65,000 32,000,000 406, 000 13, 310 60, 200 1,485,000 Interest $4,168,000.00 286, 265.00 146,422. 50 19, 261,432. 50 75,960,000.00 217,920.00 33,186.08 1, 246,437. 60 119, 609.00 107, 783. 67 3, 582,810.00 .- 35, 641, 510 105,108,865. 25 Moratorium agreements $484,453.88 182,812. 78 36,585.29 19, 030. 60 3,046,879. 72 9, 720, 765. 05 67,137.38 4,225. 58 896,156.88 15, 274. 26 13,683. 26 456, 229. 71 48, 750. 08 $4,642,453.88 1, 682,812. 78 444,850.29 230,463.00 22,308,312.22 117, 670 765 05 691,057. 38 60, 720.66 2,141, 593 38 186, 083. 26 121,466 93 6, 524,039. 71 48 750.08 14, 991,983.37 155, 742, 358. 62 $19,030.50 $230,453. 00 AMOUNTS ACTUALLY PAID Finland. $65,000 $146,422.50 The following statement shows payments due during the period January 1 to June 30,1936, and the amounts actually paid on account: 78 REPORT OF T H E SECRETARY OF T H E TREASURY AMOUNTS D U E AND PAYABLE, JANUARY 1 TO J U N E 30, 1936 F u n d i n g agreements Moratorium agreements Country Principal Austria Belgium . Czechoslovakia. . _ _ . _ . Estonia Finland France . . Great B r i t a i n Greece Hungary _ Italy Latvia . . Lithuania _. Poland Rumania Yugoslavia ^ Total.... . . .. $460,093.00 4,500,000.00 . 1,500,000.00 52,479,413. 67 411, 000. 00 _ . ._ . 13, 500, 000. 00 44,976. 00 _. . $4,158,000.00 286, 265. 00 145,286.00 19, 261,432.50 76,950,000.00 217, 920. 00 33,185. 08 1, 246,437. 50 119, 609. 00 107, 783. 67 3, 582,810. 00 1, 600, 000. 00 350, 000. 00 . -. 74,845,481. 67 Total Interest 106,107,727.75 $34, 767. 23 484,453.88 182,812.78 36, 585. 29 19, 030. 50 3, 046,879. 72 9, 720, 765.05 67,137. 38 4, 225. 58 896,155.88 15, 274. 26 13,683. 26 456, 229. 71 48, 750. 08 16,026, 750. 60 $494,860.23 9,142,453.88 1, 682,812. 78 322,850. 29 164, 316. 50 74 787,725.89 85,670, 765.05 696,057. 38 37,410. 66 15, 641, 693.38 134,883 26 166,441.93 4,039,039. 71 1,648, 760.08 350, 000.00 194,979,960.02 AMOUNTS ACTUALLY PAID Finland Greece , -._. Total $145, 285.00 1 152,644.00 $19,030.50 $164, 315. 60 152, 544. 00 297,829.00 19, 030. 50 316,859.50 1 Represents payment of 35 percent of interest due on May 10,1935, and Nov. 10,1936, which was received on Mar. 26, 1936. Press releases of the Treasury Department and State Department and correspondence exchanged between the Government of the United States and various foreign governments regarding the amounts due during the fiscal year will be found as exhibit 48 on page 288 of this report. 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, 1936, appears as table 50 on page 470. The total amounts previously due from foreign governments on account of their indebtedness to the United States under the funding and moratorium agreements and not paid as of November 15, 1936, according to contract terms, are shown in the following statement: T O T A L A M O U N T S D U E A N D N O T P A I D , A S O F N O V E M B E R 15 , 1936 F u n d i n g agreements Country Principal Austria Belgium Czechoslovakia Estonia. France Great Britain Greece Hungary i Italy.Latvia Lithuania Poland Rumania Yugoslavia Total-. _. . _ _ " . - - $460,093. 00 17, 300,000. 00 10,170, 086. 83 466, 000. 00 152, 707, 280. 43 96, 000, 000. 00 3, 523, 000. 00 51,180. 00 51, 400,000. 00 183, 500. 00 . 169, 360. 00 . . . 5,687,000. 00 6, 200, 000. 00 1, 500,000. 00 344,817,499. 26 Interest $22, 566, 000.00 2, 249, 225.00 164,091,460. 00 514,149, 481. 68 1,318,819.60 261, 258. 45 6, 718, 041. 74 • 821, 732.84 691, 302. 34 28,150, 650.00 731,007, 971. 45 Moratorium agreements $34, 767. 23 2,906, 723. 28 1,096,876. 68 219,511. 74 18, 281, 278. 32 58,324, 590. 30 469, 961. 66 25, 353.48 5, 376,935. 28 91, 645. 66 82,099. 66 2,737,378.26 292,500. 48 Total $494,860. 23 42, 772, 723. 28 11, 266,962. 61 2,934, 736. 74 325, 080,018. 76 668,474, 071.88 5,311,781.16 327, 791. 93 63,494, 977.02 1,096,878. 40 942,761. 90 36, 676,028. 26 5,492,500. 48 1, 500,000. 00 89, 939, 621.83 1,165,765,092. 54 1 The Hungarian Government has deposited with the foreign creditors' account at the Hungarian National Bank the aggregate amount of 1,314,395.19 pengo. The debt-funding and moratorium agreements with Hungary provide for payment in dollars in the United States. REPORT OF THE SECRETARY OF THE TREASURY 79 Receipts jrom Germany During the fiscal year 1936 the United States received no payments from the Government of Germany under the debt-funding agreement of June 23, 1930, covering the costs of the American army of occupation and the awards of the Mixed Claims Commission, United States and Germany. Army costs.—Payments of 9,300,000 reichsmarks were due on September 30, 1935, and March 31, 1936, respectively, from the Government of Germany on account of army costs under the provisions of the debt agreement of June 23, 1930. Interest amounting to 2,434,187.50 reichsmarks was also due on those dates. There has been no change in the army cost account from that shown in the statement appearing on page 39 of the annual report for 1932. Mixed claims. United States and Germany.—Payments of 20,400,000 reichsmarks were due on September 30, 1935, and March 31, 1936, respectively, from the Government of Germany on account of mixed claims awards under the provisions of the debt agreement of June 23, 1930. Interest amounting to 8,670,000 reichsmarks was also due on those dates. Annuities under moratorium agreement.—The semiannual installments, aggregating 3,058,098.90 reichsmarks, of the annuities under the moratorium agreement with the Government of Germany dated May 26, 1932, which were due during the fiscal year 1936, were not paid by Germany. The status of the indebtedness of Germany to the United States as of June 30, 1936, under the funding and moratorium agreements is summarized in the following tables: AMOUNT OF I N D E B T E D N E S S [In reichsmarks] Total indebtedness as of J u n e 30, 1936 Indebtedness as funded A r r a y costs M i x e d claims Total 1,004,371,861.11 2, 057,340, 000. 00 997, 600,000 2,040, 000,000 6,871,861.11 17,340, 000. 00 3.169, 700, 000 2 3,061,711,861.11 3. 037, 500, 000 24,211,861.11 P a y m e n t s of principal P a y m e n t s of interest RECEIVED Total paym e n t s received as of J u n e 30, 1936 A r m y costs (reichsmarks) M i x e d claims (reichsmarks) T o t a l (reichsmarks) . . . _ _ I n t e r e s t accrued a n d unpaid i 1,048,100,000 2,121, 600, 000 PAYMENTS A m o u n t s received (in dollars) Principal .-.. _ . 51,466, 406. 25 87,210,000.00 50,600.000.00 81,600,000.00 866,406. 25 5, 610,000.00 138, 666.406. 26 132, 200, 000. 00 6, 466, 406. 25 33, 587, 809. 69 31, 539, 595.84 2, 048, 213. 85 1 Includes interest accrued under unpaid moratorium agreement annuities. 2 Includes 4,027,611.95 reichsmarks deposited by German Government in the Konversionskasse fur Deutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and moratorium agreements. 80 REPORT OF THE SECRETARY OF THE TREASURY AMOUNTS NOT PAID ACCORDING TO CONTRACT T E R M S , JUNE 30, 1936 [In reichsmarks] Funding agreement Moratorium agreement Date due Principal Sept. 30,1933. Mar. 31,1934. Sept. 30,1934. Mar. 31,1935. Sept. 30,1935. Mar. 31,1936. 122, 400, 000 20, 400. 000 82, 900, 000 29, 700, 000 29, 700, 000 Total..- 285,100, 000 Total Interest 1, 529,049.45 1, 529, 049. 45 1,529, 049. 45 1, 529, 049.45 1, 629, 049.45 1, 529, 049. 45 2 4,027,611.95 123,929,049.45 25, 784,736.95 88,963, 299.45 36, 441,861. 95 37,120,424. 45 21, 992, 687. 50 9,174, 296. 70 316, 266, 984. 20 2, 498, 562.50 3, 865, 687. 50 4, 534, 250. 00 5, 212, 812. 50 5, 891, 375 00 2 Includes 4,027,611.95 reichsmarks deposited by German Government in the Konversionskasse fur Deutsche Auslandsschulden and not paid to the United States in dollars as required by the debt and moratorium agreements. Treasury administration oj 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 claims of German, Austrian, and Hungarian nationals against the Government of the United States; and (3) awards of the Tripartite Claims Commission for claims of American nationals against the Governments of Austria and Hungary. The time within which claimants could file applications for payment of awards from the Mixed Claims Commission, United States and Germany, and the Tripartite Claims Commission, United States, Austria, and Hungary, has been extended from time to time, and was further extended until March 10, 1938, under the joint resolution of Congress approved June 26, 1936, a copy of which will be found as exhibit 55 on page 307 of this report. Executive Order No. 6981, dated March 2, 1935 (a copy of which will be found as exhibit 53 on p. 288 of the annual report for 1935), under which the restrictions imposed by Public Kesolution No. 53 of June 27, 1934, as to payments, transfers, and deliveries of property under the Trading with the Enemy Act, as amended, and the Settlement of War Claims Act of 1928, as amended, were removed in certain cases, was amended during the year by Executive Order No. 7111, dated July 22, 1935. A copy of this order will be found as exhibit 54, page 306 of this report. Mixed Claims Commission: Claims against Germany.—During the year the Treasury made payments amounting to $356,855.59 on account of awards of the Mixed Claims Commission. The Treasury made payments up to September 30, 1936, in the aggregate amount of $135,736,070.52 on account of these awards, from which there has been deducted $678,680.94, representing one-half of 1 percent authorized by the Settlement of War Claims Act, maldng net payments to claimants of $135,057,389.58. Of the deductions so made, $651,809.90 has been covereci into the Treasury as miscellaneous receipts or reserved for such purpose in accordance with the Settlement of War Claims Act of 1928, as reimbursement to the United States for expenses incurred, and $26,871.04 has been paid to the German Government REPORT OF THE SECRETARY OF THE TREASURY 81 or reserved for payment to that Government in accordance with the agreement of December 31, 1928, and the act of Congress approved June 21, 1930, for defraying such expenses as were incurred by that Government in connection with the adjudication of the late claims. The following summary shows the awards certified to the Treasury by the Secretary of State, by classes, number, and amount of the awards, the amount paid on account, and the balance due thereon as of September 30, 1936: 93790—37 7 Number and amount of awards of the Mixed Claims Commission, United States and Germany, certified to the Secretary of the Treasury by the Secretary of State; and the amount paid and balance due, by classes, as of September 30, 1936 Class II Class I Total number of awards Awards certified Total amount 0 Class III Awards on ac- Num- Other awards NumNum- count of death ber of of $100,000 and ber of ber of personal awards less awards awards andinjury 00 to United States Government Other awards Number of over $100,000 awards .Amount o o 1. Amount due on account: Principal of awards: Agreement of Aug. 10, 1922 Agreement of Dec. 31, 1928.- _ o . ._ Less amounts paid by Alien Property Custodian and others Interest to Jan. 1, 1928, at rates specified in awards: Agreement of Aug. 10, 1922 Agreement of Dec. 31, 1928 Total payable to Jan. 1, 1928 . Interest thereon to date of payment or, if unpaid Sept. 30, 1936, at 5 percent per annum as specified in the Settlement of War Claims Act of 1928. Total due claimants 4, 551 $156.685,145. 09 3, 695, 863. 20 2,290 160, 381, 008. 29 420 116 $3,489, 437. 75 556, 625.00 4,046,062. 75 187, 226. 85 3,829 2,169 $15,102,155.76 2, 447,803. 92 298 6 $96,058,757.17 691,434. 28 17, 549, 959.68 96,750,191.46 48,012. 50 139,214.35 4 $42,034, 794.41 H W 42,034, 794.41 160,193, 781. 44 4,046, 062. 75 17, 501,947.18 96,010, 977.10 42,034, 794.41 O SI 69, 755, 018. 74 1, 409, 240. 88 732,801. 61 115,976.22 6,851, 202.19 971,159.15 42,961, 689. 72 322,105. 51 19, 209, 325. 22 > 231, 358,041. 06 4,894,840. 58 25,324, 308. 52 139,894, 772.33 61, 244,119. 63 O 52, 361,458. 66 188,801. 74 1, 371,404.38 283, 719, 499. 72 6,083, 642. 32 26, 695, 712.90 24, 019, 500. 22 163,914,272.55 26, 781, 752. 32 88,026,871. 95 SI w H > 2. P a y m e n t s m a d e o n a c c o u n t u p t o S e p t . 30, 1936: P r i n c i p a l of a w a r d s : A g r e e m e n t of A u g . 10, 1922 A g r e e m e n t of D e c . 31, 1928 I n t e r e s t t o J a n . 1,1928, a t r a t e s specified in a w a r d s : A g r e e m e n t of A u g . 10, 1922 A g r e e m e n t of D e c . 31, 1928 I n t e r e s t a t 6 percent per a n n u m from J a n . 1,1928, to d a t e of p a y m e n t as directed b y t h e Settlem e n t of W a r C l a i m s A c t of 1928 T o t a l p a y m e n t t o S e p t . 30, 1936 Less H of 1 percent d e d u c t i o n from each p a y ment: A g r e e m e n t of A u g . 10, 1922 A g r e e m e n t of D e c . 31, 1928. _-. N e t payments made to claimants u p to Sept. 30, 1936 3. B a l a n c e d u e on a c c o u n t : P r i n c i p a l of a w a r d s : A g r e e m e n t of A u g . 10, 1922 A g r e e m e n t of D e c . 31, 1928 I n t e r e s t t o J a n . 1, 1928, a t r a t e s specified in awards: A g r e e m e n t of A u g . 10, 1922 A g r e e m e n t of D e c . 31, 1 9 2 8 - . . Accrued interest a t 5 p e r c e n t p e r a n n u m from J a n . 1, 1928, on total a m o u n t p a y a b l e as of J a n . 1, 1928, t o S e p t . 30, 1936 B a l a n c e d u e claim.ants as of S e p t . 30, 1936 4,236 2,263 1121,740,195.22 3, 791, 791.80 420 115 3,489,437. 75 566,625.00 3, 816 2,148 1103,221,804.53 789, 280.11 15,028, 952. 94 2, 445,886. 69 7, 574, 058.17 1,086, 361. 01 732,801. 61 116, 976. 22 6, 841, 256. 56 970, 384. 79 1, 543, 664. 32 135,738, 070. 62 188,801. 74 6, 083,642. 32 1,354, 862. 58 26, 641, 343. 56 104, Oil, (2) 084. 64 O 3 651,809. 90 i 26, 871. 04 21, 660. 20 3, 767. 97 114, 050. 28 19,156. 68 516,109. 42 3.946. 39 6 135,057, 389. 58 5, 058, 224.15 26, 508,136. 60 (2) SJ 315 27 96,928, 737.96 226,176. 91 13 21 25,190. 32 1, 917. 23 9, 945. 64 774. 36 9, 945. 64 774. 35 50, 817, 794. 34 147,983,429.20 16, 541. 80 64, 369. 34 hj 103,491,028.83 298 6 35, 659, 428. 01 224,259. 68 24, 019, 500. 22 .59, 903,187. 91 w 4 61, 244,119. 63 26, 781,752. 32 88,025,871.95 1 Includes payments on account of interest to Jan. 1, 1928, on class I I I 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 classes equals 80 percent 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. * See above note. 3 Of this amount, $650,025.54 has been covered into the Treasury as miscellaneous receipts. A further sum of $1,784.36 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 $2,720.95 is payable in connection with the adjudication of late claims under the agreement of Dec. 31, 1928. ZP o o ZP 00 CO 84 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 limitations, to hear the claims of German, Austrian, and Hungarian nationals and to determine the fair compensation to be paid by the United States for ships seized, patents sold or used by the United States, and a radio station sold to the United States. War Claims Arbiter: Claims oj German nationals.—The Treasury completed up to June 30, 1935, payment of 50 percent of the amount of all awards made by the War Claims Arbiter in favor of German nationals as required by paragraph 7 of section 4 (c) of the Settlement of War Claims Act of 1928. No payments were made on these awards during the fiscal year 1936. The following summary shows the number and amount of awards in favor of German nationals certified to the Treasury for payment, the payments made on account, and the balance due thereon as of September 30, 1936: Awards of the War Claims Arbiter on account of claims of German nationals for ships, patents, and radio station, amount paid, and balance due on each as of September 30, 1936 1. A m o u n t d u e on a c c o u n t : Principal of a w a r d s , i n c l u d i n g i n t e r e s t to J a n . 1, 1929 . I n t e r e s t a t 5 percent per a n n u m from J a n . 1, 1929, on total a m o u n t p a y a b l e as of J a n . 1,1929, or on t h e principal a m o u n t r e m a i n i n g u n p a i d to Sept. 30,1936 Total due claimants . _._ . _ 2. P a y m e n t s m a d e on a c c o u n t to Sept. 30,1936: P r i n c i p a l of a w a r d s I n t e r e s t a t 5 percent per a n n u m from J a n . 1, 1929, on total a m o u n t p a y a b l e as of J a n . 1, 1929, or on t h e principal a m o u n t r e m a i n i n g u n p a i d to Sept. 30,1936 _ T o t a l p a y m e n t s t o Sept. 30,1936 3. Balance d u e on a c c o u n t : P r i n c i p a l of a w a r d s _. ._ . I n t e r e s t accrued a t 5 percent per a n n u m from J a n . 1,1929, on total a m o u n t p a y a b l e as of J a n . 1,1929, or on t h e principal a m o u n t r e m a i n i n g u n p a i d to Sept. 30, 1936 _ Balance due claimants _ Patents and radio station, a m o u n t (288 awards) Total amount (316 a w a r d s ) Ships, a m o u n t (27 a w a r d s ) $86,738,320.83 1 $74,252,933 00 $12,485,387.83 21,489,409.65 18,246,316.19 3, 243,093. 46 108, 227,730.48 92,499,249 19 15,728,481.29 43,368,899. 24 37,126, 205 21 6,242,694.03 43,368,899. 24 37,126,205 21 6, 242,694.03 43,369,421. 69 1 37,126,727 79 6,242,693.80 21,489,409. 65 18,246,316 19 3, 243,093.46 64,858,831. 24 55,373,043 98 9,485,787.26 1 Includes awards amounting to $522.58 to members of former ruhng family of Germany (sec. 3 (j), Settlement of War Claims Act of 1928, as amended). War Claims Arbiter: Claims of Hungarian nationals.—The awards made by the Arbiter to Hungarian nationals in the sum of $39,125, with interest at the rate of 5 percent per annum from July 2, 1921, to December 31, 1928, amounting to $14,675, have been paid with the exception of one award amounting to $137.51, together with interest thereon at the rate of 5 percent per annum from December 31, 1928. One award of $1,375.07 with interest amounting to $507.57, a total of $1,882.64, was paid during the year. REPORT OF THE SECRETARY OF THE TREASURY 85 German special deposit account.—The following statement shows the total amounts deposited in the German special deposit account, the amounts paid therefrom up to September 30,1936, and the balance held in the account: Funds deposited in the German special deposit account and payments made therefrom up to September 30, 1936 RECEIPTS From investments by Alien. Property Custodian under Trading with the Enemy Act, as amended: Unallocated interest fund $25,000,000.00 Less refunds 4,000,000.00 20 percent German property retained 21,000,000.00 17,552,096.91 From Germany: 2H percent of Dawes' annuities available for reparations (Paris agreement of Jan. 14, 1925) 32,183,060.87 Under German-American debt agreement, June 23,1930 19,469,964.00 Interest on payments postponed under terms of debt agreement dated June 23,1930 1,743,738.70 Appropriation for ships, patents, and radio station 86,738,320.83 Expenses of administration. War Claims Arbiter, on account German nationals. 113,624.20 $38,652,096.91 53,396,763.57 86,851,945.03 Earnings and profits on investments made by Secretary of the Treasury 4,636,075.25 Total receipts $183,436,880. 76 PAYMENTS ON ACCOUNT Awards of the Mixed Claims Commission: Under agreement of Aug. 10, 1922 Under agreement of Dec. 31, 1928 $129,710,006.62 6,347,383.96 $135^ 057,389. 58 Awards of War Claims Arbiter: For ships 37,126,206. 21 For patents and radio station 6,242,694.03 43,368,899. 24 >^ of 1 percent deducted from mixed claims payments covered into Treasury ($1,784.36 withheld but not paid) 650,025.64 H of 1 percent deducted from mixed claims payments on account of awards entered under agreement of Dec. 31,1928 (act of June 21,1930), and paid to Germany ($2,720.95 withheld but not paid) 24,150.09 Advances to special fund, expenses of administration of the Settlement of War Claims Act of 1928 (oflace of the Secretary of the Treasury) 41,175.00 Expenses of administration, War Claims Arbiter account of German nationals 113,624.20 Total payments on account Balance (including investments) Made up as follows: $3,847,000 face amount 3 percent Treasury bonds of 1951-55 $110,000 face amount 3H percent Treasury notes, series A, due Sept. 15,1937.-. Cash balance..-. _ 179,255,263.65 4,181,617.11 Principal cost $3,828,053.51 110,103.13 243,460.47 4,181,617.11 Tripartite Claims Commission: Claims against^Austria.—The total amount of awards, including interest, certified by the Tripartite Claims Commission to the Treasury for payment was $370,032.14. All of these awards against Austria have been paid, except one in the amount of $135.06. Sufiicient funds have been retained in the Austrian special deposit account to pay this award. No payments were made on these awards during the fiscal year 1936. Tripartite Claims Commission: Claims against Hungary.—The awards entered by the Tripartite Claims Commission against Hungary, in favor of American nationals, amounted to $199,975.57. During the fiscal year 1936 the Treasury made payments to American nationals on account of such awards amounting to $1,722.35. As of 86 REPORT OF THE SECRETARY OF THE TREASURY June 30, 1936, awards aggregating $7,472.53 had not been paid because claimants had not filed applications as required by law. Railroad obligations Total receipts during the fiscal year on account of railroad securities owned by the United States, which were acquired under the Federal Control Act, as amended, and the Transportation Act, 1920, as amended, amounted to $986,195.17, classified as follows: Interest Principal Collections by Treasury Department: Sec. 210 Sec. 207 Total Collections by Director General _ _ __ _ Grand total $601,923.81 Total $369, 862.07 $971,785.88 12, 750. 00 12, 750. 00 _ _ 601,923.81 1, 000. 00 382, 612. 07 659. 29 984, 535.88 1, 659. 29 . 602,923.81 383,271.36 986,196.17 .- . . The following statement shows the total amount of railroad obligations, by classes, originally held by the United States Government (exclusive of certain miscellaneous obligations held by the Director General of Railroads), the amount held on June 30, 1936, and payments received on account: Principal Principal amount amount held originally held on June 30,1936 Federal Control Act: Equipment trust notes Sec. 7 Sec. 12 Transportation Act: Sec. 207 Sec. 210 Total 1,080, 575, 462. 64 Principal Interest $346, 556, 750.00 98,401, 755. 00 62,103,453.28 $45,338, 918. 25 23,100, 562. 27 4,248,171.96 277, 493,337.36 266,429,934. 45 54, 360,339. 70 90,656, 614.77 30, 590,232. 56 1,049,985,230.09 217,704,606.95 $346, 566,760. 00 98, 401,755. 00 62,103,453. 28 282, 712,837. 36 290,800, 667. 00 Total payments received $5, 219, 500. 00 26,370, 732. 55 Section 204-—There have been no transactions under section 204 since June 30, 1931. Total payments under this section amounted to $10,967,801.80. Section k07.—The following statement shows the amount of obligations of carriers acquired under section 207 of the Transportation. Act, 1920, as amended, and held on June 30, 1936. 87 KEPORT OF THE SECRETARY OF THE TREASURY Obligations acquired under the provisions of sec. 207 of the Transportation Act, 1920, and held as of June 30, 1936 • Name of carrier Principal amount of promisCollatsoiry note eral, face or of diamount rectly held security Chicago, Milwaukee, St. $3,207,000 Paul & Pacific R. R. Co. Kansas, Oklahoma & Gulf • 212, 500 Ry, Co. Minneapolis & St. Louis R. R. Co. Washington, Brandywine & Point Lookout R. R. Co. Waterloo, Cedar Falls & Northern Ry. Co. Total Class of collateral or of directly held security o Principal in default Interest in default 5 percent noncumulative preferred stock of carrier. 6 percent cumulative pre0) ferred stock, series A, of carrier. 1, 250, 000 $1, 500,000 Refunding and extension $1, 250, 000 $975,000.00 mortgage, 5 percent bonds of carrier. 13, 500.00 50,000 50, 000 75, 000 First mortgage, 6 percent bonds of carrier. 500,000 416,301.37 625,000 Temporary general mort500, 000 gage, 7 percent bonds of carrier. (0 1,800,000 1,404,801.37 5, 219, 500 1 Securities directly held. Sections 209 and ;^^^.-^Payments during the fiscal year under section 209 were made to the following carriers: Buffalo Susquehanna R. R. Corporation Texas State R. R Total _ $21,749.31 192.94 21,942.25 _ There have been no transactions under section 212 since June 30, 1934. Total payments to carriers under sections 209 and 212 amounted to $532,028,045.55 up to June 30, 1936. Section 210.—This section established a revolving fund of $300,000,000 to be used for loans to railroads 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 as the time for making application has expired. The net expenditures by the Director General during the fiscal year under this section, after deducting repayments, amounted to $4,053.29, making net expenditures by him on this account of $33,640,740.24 to June 30, 1936. ^ Total loans (including renewal loans and repayments thereof aggregating $59,800,000) to June 30, 1936, amounted to $350,600,667, repayments amounted to $325,229,934.45, and loans outstanding as of that date amounted to $25,370,732.55. Repayments during the fiscal year 1936 were made by the following carriers: Seaboard Air Line Ry. C o . . . Fernwood, Columbia & Gulf R. R. Co. Toledo, St. Louis & Western R. R. Co National Railway Service Corporation account: Minneapolis & St. Louis R. R. Co Wheeling & Lake Erie Ry. C o . . . Total $3,309.96 10,000.00 _ 48,000.00 $56,730.79 483,883.06 540,613.85 601,923.81 The following statement shows the amount of obligations held on June 30, 1936, on account of loans to carriers under section 210 of the Transportation Act, 1920, as amended, and the amount of principal and interest in default as of that date: 88 REPORT OF THE SECRETARY OF THE TREASURY Obligations held on June 30, 1936, on account of loans to carriers under sec. 210 of the Transportation Act, 1920, as amended, and the amount of principal and interest in default as of that date N a m e of carrier A l a b a m a , Tennessee & N o r t h e r n R . R . Corporation Aransas Harbor Terminal R y Charles C i t y W e s t e r n R y . Co D e s M o i n e s & C e n t r a l I o w a R . R . Co. (formerly t h e Interu r b a n R y . Co.) F o r t Dodge, D e s M o i n e s & S o u t h e r n R . R , Co Gainesville & N o r t h w e s t e r n R . R . Co Georgia & Florida R y . (receiver) M i n n e a p o l i s & St. Louis R . R . Co Missouri & N o r t h A r k a n s a s R y . Co Salt L a k e & U t a h R . R . Co Seaboard Air L i n e R y . Co S e a b o a r d - B a y L i n e Co :: Shearwood R y . Co _. Virginia B l u e R i d g e R y . C o . . ._.. Virginia S o u t h e r n R . R . C o . Waterloo, C e d a r Falls & N o r t h e r n R y . Co W i c h i t a , N o r t h w e s t e r n R y . Co Wilmington, Brunswick & Southern R. R. C o . . Total L o a n s outstanding Principal i n default Interest in default $151, 500.00 44,304.67 140,000. 00 $139,100. 00 44,304. 67 140, 000. 00 $22, 725. 00 9,382.73 633, 500. 00 200, 000.00 75, 000. 00 792, 000. 00 1,382, 000. 00 3, 500, 000. 00 872, 600. 00 14, 440, 677.88 1,256, 000.00 7, 500. 00 106, 000.00 38, 000. 00 1,260. 000. 00 381. 760.00 90, 000. 00 633, 500.00 200,000. 00 75, 000. 00 792,000. 00 1,382,000. 00 172, 600. 00 6,873. 577.88 1.256,000.00 7, 500. 00 106,000. 00 38, 000. 00 1, 260,000. 00 381. 760. 00 90, 000. 00 323, 758.49 77, 164.91 68, 352. 53 308, 880. 00 1,040, 609.73 2,453, 237.04 602. 038.80 4, 575, 701. 62 339, 120.00 450.00 63^ 471. 76 23, 187. 84 1,073, 689.71 286, 312. 60 32, 400. 00 26,370, 732. 55 13, 591,332. 55 11,290,482. 55 Trust and special funds invested by the Treasury Adjusted service certijicatefund.—Investments for the account of the adjusted service certificate fund, created by the act of May 19, 1924, were made, during the fiscal year 1936, in special issues of Treasury certificates of indebtedness bearing interest at the rate of 4 percent per annum, in accordance with the procedure outlined in the annual report of the Secretary of the Treasury for the fiscal year 1925. The Adjusted Compensation Payment Act, 1936, enacted January 27, 1936, declared adjusted service certificates immediately payable, and authorized the payment of such certificates on or after June 15, 1936, by the Secretary of the Treasury by the issuance of bonds of the United States, registered in the name of the veteran only, in denominations of $50 having a total face value up to the highest multiple of $50 in the amount certified as due the veteran, the difference between the amount certified as due the veteran and the face amount of the bonds so issued to be paid out of the adjusted service certificate fund. In order to provide additional funds in the adjusted service certificate fund for the payments authorized under the Adjusted Compensation Payment Act, 1936, $1,730,000,000 was appropriated to the fund under the Independent Offices Appropriation Act, 1937, approved March 19, 1936. Investments made during the year amounted to $354,600,000, of which $100,000,000 represented funds appropriated under the act approved February 2, 1935; $246,800,000 represented the reinvestment of the principal proceeds of maturing certificates, and $7,800,000 was derived from interest on investments. During the year $383,300,000 face amount of certificates were redeemed (including $246,800,000 of maturing certificates and $136,500,000 of certificates redeemed to meet current payments from the fund) on account of the adjusted service certificate fund, the proceeds of which, together with interest thereon, were credited to the fund. REPORT OF THE SECRETARY OF THE TREASURY 89 A statement of the fund as of June 30,1936 (exclusive of fund assets held by the Veterans' Administration on account of bank loans on adjusted service certificates redeemed) is as follows: Adjusted service certificate fund, June 30, 1936 FUND ACCOUNT Appropriations: To June 30, 1935 Available July 1, 1935 Independent Oflices Appropriation Act, 1937. Interest on investments: To June 30, 1935 July 1, 1935, to June 30, 1936 $1,296,000,000.00 100,000,000.00 1,730,000,000.00 113,703,333.04 10,406,109.03 $3,126,000,000. 00 124,109,442.07 Total --3,250,109,442.07 Payments under Adjusted Compensation Payment Act, 1936, enacted Jan. 27, 1936: Adjusted service bonds ^ 1,669, 548, 500. 00 Checks for amounts less than $50. 75,635,845. 98 Total Checks paid by Treasurer of the United States other than in final settlement of certificates under the Adjusted Compensation Payment Act, 1936, less credits on account of repayments of loans and interest thereon Balance in fund June 30, 1936 1,746,184,346.98 1,312,371,219.64 - 3,057,555.565.62 192,653,876.55 FUND ASSETS i ^ Investments, 4 percent Treasury certificates of indebtedness _ ...*. ° Unexpended balances: To credit of chief disbursing officer. Division of Disbursement, and 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, 1936 1 Exclusive of assets held by Veterans' Administration. 126,800,000.00 65,354,681.07 399,195.48 192,553,876.56 Civil service retirement and disability fund.—The civil service retirement and disability fund was created by the act of May 22, 1920. During the fiscal year 1936 the Treasury continued to make investments for account of the fund in special issues of Treasury notes bearing interest at the rate of 4 percent per annum, in accordance with the procedure outhned in the annual report of the Secretary of the Treasury for the fiscal year 1926. Total investments amounting to $91,200,000 were made, of which^ $43,700,000 represented the proceeds of maturing notes. Redemptions, in addition to the maturing notes, were made in the amount of $20,500,000 to meet current payments from the fund. Total credits to the fund during the year amounted to $84,268,048.20, of which $32,405,263.05 was on account of deductions from basic compensation of employees and service-credit payments; $11,712,785.15 represented interest on investments; $40,000,000 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 liability on account of the fund. The total earnings and profits on investments to June 30, 1936, amounted to $82,284,665.18. The following statement shows the status of the fund as of June 30, 1936: 90 REPORT OF THE SECRETARY OF THE TREASURY Civil service retirement and disability fund, June 30, 1936 Credits: On account of deductions from basic compensation of employees and service-credit payments: From Aug. 1, 1920, to June 30, 1935 ...i$349, 653,095.98 July 1, 1935, to June 30, 1936 32,405,263.05 Appropriations: To June 30, 1935. Available July 1, 1935 Interest and profits on investments: From Aug. 1, 1920, to June 30, 1935 July 1, 1935, to June 30, 1936 145,450,000. 00 2 40,150,000.00 70, 571,880. 03 11, 712,785.15 Total Less checks paid by Treasurer of the United States on account of annuities and refunds, Aug. 1, 1920, to June 30, 1936 297,395,050 Unexpended balances June 30, 1936: To credit of disbursing officers. On books of Division of Bookkeeping and Warrants 185,600,000.00 82, 284,665.18 649,843,024.21 350,119,628.34 Total Assets: Face amount $6,884,000 3H percent Treasury bonds, 1943-45. 4,621,650 3H percent Treasury bonds, 1944-46 6,810,700 2}i percent Treasury bonds, 1955-60.._ 4,378,700 2H percent Treasury bonds, 1945-47 44,000,000 4 percent special Treasury notes payable June 30, 1937 72,100,000 4 percent special Treasury notes payable June 30, 1938 45,200,000 4 percent special Treasury notes payable June 30, 1939 59,200,000 4 percent special Treasury notes payable June 30, 1940 64,200,000 4 percent special Treasury notes payable June 30, 1941 $381, 958,369. 03 299,723.396.87 ' Principal cost $6, 794,338. 03 4,661,454. 45 6, 721,992. 74 4,321, 668.79 44, 000, 000. 00 72,100, 000. 00 45, 200,000. 00 59, 200. 000. 00 64, 200,000. 00 1,636, 732. 33 987,209.63 297,099,454.01 2, 623, 941. 86 Total fund assets June 30, 1936 299,723,395.87 1 Exclusive of $1,430,808.84 transferred to the Canal Zone retirement and disability fund pursuant to act of May 2, 1931. 2 Includes $40,000,000 appropriated from the General Fund to cover the liability 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 disability fund w^as established 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 disability fund were made during the fiscal year 1936 in special issues of Treasury notes in the face amount of $631,000, bearing interest at the rate of 4 percent 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 $440,000 face amount, including $186,000 maturing notes and $254,000 of notes redeemed to meet current payments from the fund. The net investments amounted to $191,000. Credits to the fund during the year aggregated $453,727.69, of which $174,364.95 was on account of deductions from basic compensation of employees and service-credit payments, $116,962.74 represented earnings on investments, and $162,400 was appropriated by Congress to meet the current liability of the Government in connection with the fund. REPORT OF THE SECRETARY OF THE TREASURY 91 The following statement shows the status of the fund as of June 30, 1936: Foreign service retirement and disability fund, June 30, 1936 Credits: On account of deductions from basic compensation and service-credit payments: From May 24, 1924, to June 30, 1935 $1,797,673.62 July 1, 1935, to June 30, 1936 174,364.96 Appropriations: To June 30, 1935 Available July 1, 1936 - Interest and profits on investments: From May 24, 1924, to June 30, 1935 July 1, 1935, to June 30,1936 1,727,800.00 162,400.00 608,172.46 116,962.74 $1,972,038. 57 1,890,200.00 625,136.20 Total 4,487,373.77 Less checks paid by Treasurer of the United States on account of annuities and refunds. May 24, 1924, to June 30, 1936 1,555,656.63 Balance in fund June 30, 1936 Assets: Face amount $654,000 4 percent special Treasury 514,000 4 percent special Treasury 657,000 4 percent special Treasury 763.000 4 percent special Treasury 296,000 4 percent special Treasury 2,931,717.14 notes due June notes due June notes due June notes due June notes due June 30, 1937 30, 1938 30, 1939 30, 1940 30, 1941 2,884,000 Unexpended balances June 30,1936: Treasurer of the United States, disbursing account On books of Division of Bookkeeping and Warrants.. Total fund assets June 30,1936 Principal cost $654,000.00 614,000.00 ._ 657,000.00 763,000.00 296,000.00 43,793.09 3,924.05 2,884.000.00 47,717.14 2,931,717.14 Canal Zone retirement and disability jund.—The Canal Zone retirement and disability fund was created by section 9 of the act of March 2, 1931 (46 Stat. 1477), and 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 required for the payment of the annuities, refunds, and allowances authorized by the act, the income from such investments to be credited to the fuijd. During the fiscal year 1936 the Treasury continued to make investments for account of the fund in special issues of Treasury notes bearing interest at the rate of 4 percent per annum in accordance with the procedure outlined in the annual report of the Secretary of the Treasury for the fiscal year 1931. Total investments amounting to $2,378,000 were made, of which $1,709,000 represented the proceeds of maturing notes. Redemptions, in addition to the maturing notes, were made in the amount of $169,000 to meet current payments from the fund. Credits to the fund during the year aggregated $1,085,919.18, of which $474,692.72 was on account of deductions from basic compensation of employees and service-credit payments and $111,226.46 represented earnings on investments. During the year there was available $500,000 appropriated by Congress to fulfill the current liability of the United States in connection with the fund. The following statement shows the status of the fund as of June 30, 1936: 92 REPORT OF THE SECRETARY OF THE TREASURY Canal Zone retirement and disability fund, June 30, 1936 Credits: Account of deductions from basic compensation of employees subject to retirement act: From July 1, 1931, to June 30, 1935 $3,649,148.40 July 1, 1936, to June 30, 1936 474,692. 72 Appropriations: To June 30, 1936 Interest and profits on investments: From July 1, 1931, to June 30,1935 July 1, 1935, to June 30, 1936 $4,123,841.12 600,000.00 $331,297.01 Ill, 226.46 442,623.47 Total — . 5,066,364.69 Less checks.paid by Treasurer of the United States, on account of annuities and refunds, July 1, 1931, to June 30, 1936 2,167,837. 67 Balance in fund June 30,1936..' Assets: Face amount $179,000 4 percent 93,000 4 percent 109,000 4 percent 651,000 4 percent 1,817,000 4 percent special special special special special Treasury Treasury Treasury Treasury Treasury notes maturing notes maturing notes maturing notes maturing notes maturing 2,898,526.92 June June June June June Principal cost $179,000.00 93,000.00 109,000.00 651, COO. CO 1,817,000.00 • 2,849,000.00 30, 1937. 30, 1938 30, 1939 30, 1940 30, 1941..... 2,849,000 Unexpended balances June 30,1936: Treasurer of the United States, disbursing account On books of Division of Bookkeeping and Warrants.. Total fund assets June 30, 1936 .- 29, 246. 27 20,281.66 - 49, 526. 92 2,898,626.92 District oj Columbia teachers' retirement jund.—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 the funds are to 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 United States separate from the investments on account of contributions of teachers. During the fiscal year 1936, the Treasurer acquired by purchase or exchange for account of the deductions fund (derived from deductions from teachers^ compensation) $876,500 face amount of United States, Federal land bank, and federal Farm Mortgage Corporation bonds at a principal cost of $878,721.90, as follows: Class of security 2J^ percent Treasury bonds of 1955-60 3 percent consolidated Federal land bank bonds of 1945-56 3 percent consolidated Federal land bank bonds of 1946-56 3M percent Federal Farm Mortgage Corporation bonds of 1944-64 Total Face amount Principal cost $557,000 177,000 70,500 72,000 $561,681.90 173,460. 00 69,796. 00 73, 785. 00 876, 600 878, 721. 90 There was also purchased for account of the Government reserve fund $214,000 face amount of United States and Federal Farm Mortgage Corporation bonds at a principal cost of $215,130.95, as follows: Class of security 2J4 percent Treasury bonds of 1955-60 3M percent Federal Farm Mortgage Corporation bonds of 1944-64. Total Face amount Principal cost . $191,000 23,000 $191, 564. 70 23, 566. 25 214,000 216,130.95 REPORT OF THE SECRETARY OP THE TREASURY 93 The following statement shows the status of the combined funds as of June 30, 1936: District of Columbia teachers^ retirement fund, June SO, 1936 Credits: On account of deductions from basic compensation of teachers: From Jan. 15, 1920, to June 30, 1936.__ July 1, 1936, to June 30,-1936 _ Appropriations: To June 30, 1935-__ Available July 1, 1936 $3,991,581.43 272,283.91 $4, 263,865.34 3,469,940.91 400,031.93 Interest on investments: From Jan. 16, 1920, to June 30, 1936__ July 1, 1936, to June 30, 1936. ". 1,517, 678.13 249,364.60 Total Balance in fund June 30, 1936. 55,320 1,358,880 385,400 177,000 70,500 215,640 819,600 52,100 3,087,028.28 6,813,852.53 DEDUCTIONS FUND Principal cost 43^ percent Treasury bonds of 1947-52 $956,962.07 4 percent Treasury bonds of 1944-54 123,387.50 Z% percent Treasury bonds of 1946-56 87,437.81 3H percent Treasury bonds of 1943-47 49,500.00 3H percent Treasury bonds of 1941-43 _. 137,657.60 33^ percent Treasury bonds of 1943-45 232,000.00 2J4 percent Treasury bonds of 1955-60 765,248.14 4H percent Philippine Islands bonds : 197,669.56 4H percent Puerto Rican bonds 15,962.57 3K percent Federal Farm Mortgage Corporation bonds of 194464 73,785.00 4 percent Federal land bank bonds _ 54,660.95 i H percent Federal land bank bonds 1,313,830.89 4 percent consolidated Federal land bank bonds of 1944^6 403,077.40 3 percent consolidated Federal land bank bonds of 1945-65 173,460.00 3 percent consolidated Federal land bank bonds of 1946-56 69,796.00 4,644,434.39 4,656,150 282,000 12,000 31,000 199,000 178,000 230,000 55,000 23,000 1,767,042.63 9,900,880.81 Less disbursements on account of annuities, refunds, etc., Jan. 15,1920, to June 30,1936 Assets: Face amount $860,200 122,000 87,000 48,000 142,000 232,000 747,850 182,000 16,000 72,000 3,869,972.84 GOVERNMENT RESERVE FUND 4 ^ percent Treasury bonds of 1947-62 4 percent Treasury bonds of 1944-54 3M percent Treasury bonds of 1946-56 3H percent Treasury bonds of 1943-47 3 ^ percent Treasury bonds of 1941-43 2J^ percent Treasury bonds of 1965-60 43^ percent Puerto Rican bonds 3H percent Federal Farm Mortgage Corporation bonds of 194464 . .... 4 percent Federal land bank bonds 41^ percent consolidated Federal land bank bonds 4 percent consolidated Federal land bank bonds of 1944-46 313,717. 61 12,285.00 31,145.31 204,701.25 177,606.66 231,210.64 65,109.56 23,566.25 208,050.78 776,281.48 64,623.76 • 2,088,298.09 2,097,340 Total 6,732,732.48 Accrued interest paid in 1936 (on investment purchases), repayable in 1937 678.73 Unexpended balance June 30,1936, on books of Division of Bookkeeping and Warrants.. _ 80,441.32 Total fund assets June 30,1936 6,813,852.53 Longshoremen's and harbor workers' compensation jund.—This fund was established under the act of March 4, 1927^ (44 Stat. 1444, sec. 44), to provide for the payment of compensation for disability 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 compensation 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 percent of each such payment shall be available for the payments on account of injuries increasing previous disabilities, and 50 percent shall be available for the payments on account of maintenance for employees undergoing vocational rehabihtation. 94 REPORT OF THE SECRETARY OF THE TREASURY 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. During the fiscal year 1936, the Treasurer acquired by purchase or exchange for account of the fimd $31,700 face amount of consolidated Federal land bank and Federal Farm Mortgage Corporation, bonds at a principal cost of $31,513.46 (excluding $9,700 face amount of consolidated Federal land bank bonds acquired prior to July 1, 1935, but paid for after that date). The following statement shows the status of the fund as of June 30, 1936: Longshoremen's and harbor luorkers' compensation fund, June SO, 1936 Credits: On account of assessments: To June 30, 1935 . July 1, 1936, to June 30, 1936 _ Interest on investments: To June 30, 1935 July 1, 1935, to June 30, 1936 Total $142,000.00 ' 20,000.00 $162,000.00 18,382.86 4,775. 20 '. Less disbursements on account of current claims and expenses 34,929.58 Balance in fund June 30, 1936 Assets: Face amount $15,600 34,600 11,550 10,000 9,700 11,000 9,700 22,000 ZU percent Treasury bonds of 1944-46 43^ percent Treasury bonds of 1947-52 3M percent Treasury bonds of 1943-45. 3 percent Treasury bonds of 1951-55 3}4 percent Federal Farm Mortgage Corporation bonds of 1944-64 4M percent Federal land bank bonds 3M percent consolidated Federal land bank bonds of 1945-66_ 3 percent consolidated Federal land bank bonds of 1945-55 124,050 Unexpended balances: Disbursing Officer (check book balances).. Division of Bookkeeping and Warrants Total fund assets June 30, 1936 23,158.06 185.168.06 150,228.48 Principal cost $15,600.00 38,646.56 11,660.00 9,959.38 9,953.46 9,680.48 9,901. 74 21,560.00 1,608.71 21,768.16 126,851.62 23,376.86 150,228.48 District oj Columbia workers' compensation jund.—This fund was established under the act of May 17, 1928 (45 Stat. 600), which extended the provisions of the act entitled ^'Longshoremen's and Harbor Workers' Compensation Act'', approved March 4, 1927, including all amendments thereto, to apply in respect to the injury or death of an employee of an employer carrying on certain employments in the District of Columbia, irrespective of the place where the injury or deat,h occurs. The fund is derived from collections of awards against employers made by the United States Employees' Compensation Commission, as compensation for death of employees resulting from injuries, in each case where no person is found to be entitled to such compensation, under the Longshoremen's and Harbor Workers' Compensation Act as extended to certain employments in the District of Columbia. Fines and penalties collected in connection therewith are also credited to the fund. One-half of each such collection is available as compensation for injuries increasing previous disabilities, the other half being available for maintenance of employees undergoing vocational rehabilitation. Any portion of the fund which, in the opinion of the Commission, is not needed for current require REPORT OF THE SECRETARY OF THE TREASURY 95 ments is invested by the Treasurer of the United States. No investments were made for this account during the year. The following statement shows the status of the fund as of June 30, 1936: District of Columbia workers' compensation fund, June 30, 1936 Credits: On account of assessments: To June 30, 1935.... July 1, 1935, to June 30, 1936 . $35,460.00 10,000.00 Interest on investments: To June 30, 1936 _ July 1, 1936, to June 30, 1936 2,466.10 734. 24 Total Less disbursements on account of current claims and expenses Balance in fund June 30, 1936 Total fund assets June 30, 1936 Principal cost $10,166.63 9, 360.43 .•... 3,190.34 48,650.34 13,454.94 36,195.40 Assets: Face amount $10, 000 2li percent Treasury bonds of 1956-60 11,000 4H percent Federal land bank bonds of 1936-56 21,000 .Unexpended balances: Disbursing officer (check-book balances) Division of Bookkeeping and Warrants $45,460.00 _._ 2,027.27 13,652.07 19,616.06 15,679.34 35,195.40 Unemployment trust jund.—The unemployment trust fund was established pursuant to the Social Security Act, approved August 14, 1935. The Secretary of the Treasury was authorized and directed to receive and hold in the fund all moneys deposited therein by a State agency from a State unemployment fund. I t is the duty of the Secretary of the Treasury to invest such portion of the fund as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. The act provided three methods for making these investments: (1) purchase of original issues at par; (2) purchase of outstanding obligations at the market price; and (3) the issuance at par of special public debt obligations exclusively to the fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations of the United States then forming part of the public debt; except that where such average rate is not a multiple of one-eighth of 1 percent the rate of interest of such special obligations shall be the multiple of one-eighth of 1 percent next lower than such average rate. Obligations other than such special obligations may be acquired for the fund only on such terms as to provide an investment yield not less than the yield which would be required in the case of special obligations if issued to the fund upon the date of such acquisition. The act provided that the fund shall be invested as a single fund, but the Secretary of the Treasury shall maintain a separate book account for each State agency and shall credit quarterly on March 31, June 30, September 30, and December 31 of each year to each account, on the basis of the average daily balance of such account, a 96 REPORT OF THE SECRETARY QF THE TREASURY proportionate part of the earnings of the fund for the quarter ending on such date. The total credits to the fund during the fiscal year amounted to $18,949,421.44, of which $18,857,720.50 was received from State agencies and $91,700.94 represented interest on investments. No payments were made during the year to State agencies for the purpose of paying benefits. Investments were made during the year in special Treasury certificates of indebtedness. Total investments amounted to $37,070,000, of which $18,161,000' represented the proceeds of certificates maturing June 30, 1936, making the net investments for the year $18,909,000. The certificates of indebtedness which matured June 30, 1936, bore interest at 2){ percent per annum, as required by law, and were reinvested in 2% percent special Treasury certificates of indebtedness maturing June 30, 1937. The total earnings on investments to June 30, 1936, amounted to $91,700.94. The following statement shows the status of the fund as of June 30, 1936: Unemployment trust fund, June SO, 1936 Credits: On account of deposits by State agencies Earnings on investments $18,857,720.60 91, 700. 94 Total 18,949,421.44 Assets: $18,909,000 face amount oi2\i percent Treasury certificates of indebtedness, unemployment trust fijnd series, maturing June 30, 1937, principal cost 18, 909, 000.00 Cash balance with Treasurer of the United States 40,421.44 Total fund assets _. _. 18,949,421.44 The following statement shows the amount to the credit of State agencies as of June 30, 1936: state agency District unemployment fund (District of Columbia) Indiana unemployment trust fund.. Division of Placement and Unemployment Insurance, New York Industrial Commission of Wisconsin Total Balance to credit of State agency Deposits Earnings collected $602, 489.08 855, 231. 42 $1,383. 34 329. 03 $603,872. 42 865, 660. 45 6, 000,000.00 11, 400,000.00 7,838. 09 82,150:48 6,007,838. 09 11, 482,150. 48 18,857, 720. 50 91, 700. 94 18,949, 421. 44 United States Government lije insurance jund.—Under the provisions of section 18 of the act approved December 24, 1919, as amended March 4, 1923, the Secretary of the Treasury is required to invest in interest-bearing obligations of the United States or in bonds of the Federal land banks, all moneys received in payment of premiums on converted insurance in excess of authorized payments. 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 available for investment during the fiscal year 1936 were used to make loans to veterans or invested in obhgations of the United States. REPORT OF THE SECRETARY OF THE TREASURY 97 The Adjusted Compensation Payment Act, 1936, enacted January 27, 1936, authorizing the payment of adjusted service certificates on June 15, 1936, also authorized and directed the Secretarjr of the Treasury to redeem from the United States Government life msurance fund all adjusted service cei'tificates held by the fund on account of loans made thereon, and to pay to the fund the amount of the hens against such certificates, including all interest due or accrued, together with such amounts as may be due under subdivision (m) of section 502 of the World War Adjusted Compensation Act, as amended. The act further authorized and directed the Secretary of the Treasury to make such payment by issuing to the fund bonds of the United States which shall bear interest at the rate of 4% percent per annum and shall not mature or be callable until the expiration of a period of at least 10 years from the date of issue, except that any such bond shall be redeemed by the Secretary of the Treasury at any time upon certification by the Administrator of Veterans' Affairs that the amount represented by such bond is required to meet current liabilities. The Independent Offices Appropriation Act, 1937, directed that such amount as represents the face value of the bonds required to be paid to the United States Government life insurance fund be charged to any moneys in the Treasury not otherwise appropriated for transfer and deposit as a pubhc debt receipt. The amount payable to the fund had not been determined and payment of such amount had not been made prior to June 30, 1936. On July 1, 1935, $49,480,000 face amount of 4K percent Federal land bank bonds of various maturities were called, for redemption, of which $30,200,000 face amount were redeemed for cash and $19,280,000 face amount were exchanged for a like face amount of 3 percent consolidated Federal land bank bonds of 1945-55. On January 1, 1936, $19,720,000 face amount of 4K percent Federal land bank bonds of 1926-36 were called for redemption, of which $10,000,000 face amount were redeemed for cash and $9,720,000 face amount were exchanged for a like face amount of 3 percent consolidated Federal land bank bonds of 1946-56, and these bonds were subsequently sold and the proceeds reinvested in Treasury bonds. The Administrator of Veterans' Affairs reported outstanding loans from this fund cn June 30, 1936, aggregating $128,723,390.98 to veterans on policies. The principal of outstanding loans on June 30, 1936, upon adjusted service certificates amounted to $493,011,234.54. 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, 1936, were as follows: 93790—37 8 98 REPORT OF THE SECRETARY OF THE TREASURY Government life insurance fundy June 30, 1936 Par value m percent Treasury bonds of 1947-62 4 percent Treasury bonds of 1944-54 3% percent Treasury bonds of 1946-66 3>^ percent Treasury bonds of 1949-52 2% percent Treasury bonds of 1965-60 2% percent Treasury bonds of 1948-51. 3 percent consohdated Federal land bank bonds of 1945-55 4M percent Federal land bank bonds ...' _. o Total investments made by the Secretary of the Treasury Policy loans Adjusted service certificate loans. _ Total investment made by Administrator of Veterans' Administration ...... Total investments in fund $41,272,000.00 14,106, 000.00 2, 200,000.00 300,000. 00 81,176, 250. 00 1, 300, 000. 00 19, 2S0, 000.00 32, 550, 000. 00 Principal cost $42, 762.867.12 15,078, 333.48 2, 384. 625.00 311,906. 25 82,118, 438. 35 1, 300,000. 00 18, 894, 400. 00 32, 477, 590.04 192,184, 250. 00 196, 318,160. 24 128. 723, 390. 98 493, Oil, 234. 64 128, 723, 390.98 493,011,234.54 621, 734, 625. 52 621, 734, 626. 52 813,918,876. 62 817, 062, 785. 76 Library oj Congress trust jund.—Under the act of March 3, 1925, as amended, the 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. Section 2 of the act of March 3, 1925, as amended by the act approved June 23, 1936, authorizes the Board in its discretion, in the absence of any specification to the contrary, to deposit the principal of any gift or bequest with this Treasurer of the United States as a permanent loan to the United States Treasury, provided that the total of such principal sums at any ti^le so held by the Treasurer shall not exceed the sum of $5,000,000. The Treasurer shall thereafter credit such deposit with interest at the rate of 4 percent per annum, payable semiannually, such interest, as income, being subject to disbursement by the Librarian of Congress for the purposes specified. During the fiscal year the Board accepted a donation in the sum of $100,000 from Gertrude Clarke Whittall, as an addition to its endowment funds for the benefit of the Library, on condition that the donation be deposited with the Treasurer of the United States as provided in section 2 of the act of March 3, 1925, as amended, referred to above. The income from this donation is to be applied through the Music Division of the Library to the maintenance of the collection of Stradivari instruments and Tourte bows given by Mrs. Whittall to the Library, and to the program of music within the Library in which those instruments will be used. Under the joint resolution of Congress approved April 13, 1936, the Librarian of Congress, with the advice and consent of the Library of Congress Trust Fund Board and the Joint Committee of Congress on the Library, is authorized to accept, on behalf of the United States, the property devised and bequeathed to the United States by the last will and testament of Joseph Pennell, deceased, upon the terms and conditions set forth in the said will, if, in their judgment, such acceptance would be to the best interests of the Library. I t is also provided that the Librarian of Congress shall transfer the assets of REPORT OF THE SECRETARY OF THE TREASURY 99 the ^Tennell fund" (as designated in the said will) to the Library of Congress Trust Fund Board for administration by the Board. Joseph PenneU died on April 23, 1926, and under his will his bequest was subject to a life tenancy in Mrs. Pennell. On the death of Mrs. Pennell on February 7, 1936, the United States became entitled to the assets remaining in the estate. As most of the material described in the will had already been released to the Library by Mrs. Pennell during her lifetime, the principal assets remaining are securities and a few parcels of real estate. The securities were reported to have, as of February 7, 1936, a book value of $327,562.49, and the realty an assessed value of $40,700. As of June 30, 1936, such funds had not been transferred to the Library of Congress trust fund. 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. Investments and reinvestments of the trust funds during the fiscal year were made in Government securities. The following statem^ent shows the earnings collected on account of each donation as of June 30, 1936: Library of Congress trust fund earningiS io June 30, 1936 Income account Donation Babine Beethoven .-. Benjamin Bowker. . . . Carnegie -._ Coolidge Guggenheim Huntington Longworth Wilbur- . Total , _ .. . . . _ ' . . -._ - T o t a l collected to J u n e 30, 1935 Collected d u r i n g fiscal year 1936 $1,068.96 2, 742. 07 22, 704. 50 835. 39 27, 361. 76 68,006. 02 20,460. 60 43, 366.11 226. 94 72, 267. 75 $276. 91 504.00 1, 487. 20 81.25 3,483. 00 7, 361. 97 3, 778. 00 4,240. 00 236. 04 13, 898. 69 $1,345. 87 3, 246. 07 24,191. 70 916.64 30, 844. 76 75, 367. 99 24, 238. 60 47, 606.11 462. 98 86,166.44 269, 040.10 35, 347. 06 294,387.16 T o t a l collected to J u n e 30, 1936 The following statement shows the principal cash account of each donation: Library of Congress trust fund—principal cash receipts, cost of investments, and unexpended balances, fiscal year 1936 Principal cash account Donation Babine Beethoven... Benjamin Bowker Carnegie Coolidge Guggenheim Huntington. J^ongworth.. Wilbur Total.. Unexpended balance June 30, 1935 $38.16 4.00 26.62 45.68 80.00 148. 38 79.60 33.75 37.77 638. 38 1,032. 34 • Receipts during year Available during year Cost of investments charged to principal account during year Unexpended balance June 30, 1936 69.72 16, 669.80 $38.16 4.00 . 26.62 1, 045. 68 80.00 2, 766. 26 79.60 33.75 107. 49 17, 208.18 16, 600. 00 $38.16 4.00 26.62 96.27 80.00 16.26 79.60 33.76 107. 49 708.18 20, 357.40 21, 389. 74 20,199. 41 1,190. 33 $1,000. 00 2, 617. 88 $949.41 2, 750.00 100 REPORT OF THE SECRETARY OF THE TREASURY A cash donation of $50 was received on account of the Longworth Foundation. Receipts aggregating $20,307.40 were received from maturing investments of various donations. Investments made during the year were as follows: Face amount Donation Bowker . Coolidge Wilbur .. Total- Principal cost charged to principal account Securities $950 2 ^ percent Treasury bonds of 1965^0 2,750 do. 16, 500 do-- ..- 20,200 $949.41 2,760.00 16, 600.00 20,199.41 The following statement shows the securities held by the Board for account of each donation as of June 30, 1936. The. securities are held in safekeeping 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. Securities held by the Library of Congress Trust Fund Board, June 30, 1936 Face amount or par value Name of security Alexis V. Babine donation American Chain Co., Inc Federal land bank bonds L U. S. Government . _. . . . . Do Do . . Tung-Sol Lamp Works, Inc., 6 shares Tung-Sol Lamp Works, Inc., 5^4 shares . . $600 3,800 500 1,000 500 (0 (0 Rate of interest Class of secm-ity Percent Preferred stock. 7 4M Farm loan bonds. Treasury bonds of 1945-47. Treasury bonds of 1943-45. 2ys Treasury bonds of 1956-60. Preferred stock. Common stock. Beethoven Association donation Canadian National Rys Consolidated Federal land bank bonds 10,000 100 5 4 Guaranteed gold bonds. Consolidated farm loan bonds. William E. Benjamin donation Standard Oil Co. of California '. 33,800 U. S. Government German Government Japanese Government American Telephone & Telegraph Co 950 2,000 2,000 4,800 Common stock. R. R. Bowker donation 2 2K Treasury bonds of 1955-60. 7 German external loan. Sinking fund gold bonds. 6H Common stock. Carnegie donation Commonwealth Edison Co Missouri Pacific R. R. Co New England Telephone & Telegraph C o — 52,000 6,000 25,400 4^2 First mortgage bonds. First and refunding mortgage bonds 6 First mortgage bonds. 4H 1 No par. 2 Life interest in ^ of income retained under terms of donation. REPORT OF THE SECRETARY OF THE TREASURY 101 Securities held by the Library of Congress Trust Fund Board, June SO, 1936—Con. Face amount or par value Name of security Rate of interest Class of security Elizabeth Sprague Coolidge donation Canadian National Rys .'... Do Chicago Rys. Co Federal land bank bonds -.. U. S. Government Consolidated Federal land bank bonds Great Northern Ry. Co Missouri Pacific R. R. Co. New England Telephone & Telegraph Co.. Public Service Co. of Northern Illinois Rio Grande Southern R. R. Co U. S. Government Utah Power & Light Co American Ship Building Co American Telephone & Telegraph Co American Window Glass Co Board of Trade Building Trust of Boston.. Commonwealth Edison Co Elgin National Watch Co Mexican Northern Ry. Co Public Service Co. of Northern Illinois $7,000 10, 000 3,750 11, 640 2,750 900 10,000 2,000 16, 400 13, 000 1,000 300 10,000 6,000 17,100 2,500 700 12, 400 6,625 800 6,000 Percent 5 5 4M 2K 4 7 5 4M 5 4 3H 6 Guaranteed gold bonds. Do. First mortgage bonds. Farm loan bonds. Treasury bonds of 1965-60. Consolidated farm loan bonds. General mortgage bonds. First and refunding mortgage bonds. First mortgage bonds. First and refunding mortgage bonds. First mortgage bonds. Treasury bonds of 1940-43. First mortgage bonds. Common stock. Do. Do. Do. Do. Do. Do. Preferred stock. Harry F. Guggenheim donation Consolidated Federal land bank bonds.. Harbor Commissioners of Montreal Consolidated farm loan bonds. Guaranteed gold bonds. 700 76,000 Archer M . Huntington donation Central Pacific Rys. Co Consolidated Federal land bank bonds.. Missouri Pacific R. R. Co First and refunding mortgage bonds. Consolidated farm loan bonds. First and refunding mortgage bonds. 105, 000 1,000 49, 600 Nicholas Longworth donation U. S. Government Do Consolidated Federal land bank bonds.. Treasury bonds of 1944-54. Treasury bonds of 1955-60. Consolidated farm loan bonds. 4,100 600 2,200 James B. Wilbur donation Canadian National Rys U. S. Government Consolidated Federal land bank bonds.. Public Service Co. of Northern Illinois.. U. S. Government Do Total. 44,000 16, 500 200 100, 000 3,000 100, 800 5 2^ 4 7 Guaranteed gold bonds. Treasury bonds of 1955-60. Consolidated farm loan bonds. Preferred stock. Treasury bonds of 1940-43. Treasury bonds of 1944-64. 783,815 The status of the permanent loan account as of June 30, 1936, is as follows: Library of Congress Trust Fund Board, permanent loan account, June SO, 1936 Donation Gertrude Clarke Whittall. Amount $100,000 National Institute oj Health gijtjund.—By the act of May 26, 1930 (46 Stat. 379), the Secretary of the Treasury is authorized to accept unconditional gifts for study, investigation, and research in the fundamental problems of the diseases of man, and for other purposes. It is also provided that he may accept conditional gifts, upon the 102 REPORT OF THE SECRETARY OF THE TREASURY recommendation of the Surgeon General and the National Institute of Health. Any such gifts are to be held in trusts and invested by the Secretary of the Treasury in securities of the United States. During the fiscal year the Secretary of the Treasury accepted an unconditional gift of $296.78 from the National Merchant Marine Association, bringing the total unconditional gifts to $1,258.78. There was received from the Rockefeller Foundation an additional conditional gift of $2,000 to be used for the publication of a history of county health work. In order to meet expenditures of the institute for the account of the Chemical Foundation donation, $1,000 face amount of 4}^ percent Treasury bonds of 1947-52 were sold. The receipts and expenditures of the conditional gift fund during the year were as follows: National Institute of Health conditional gift fund, receipts and expenditures, fiscal year 1936 Unexpended balance June 30, 1935 ._ Receipts: Cash donation, Rockefeller Foundation, county health work Net earnings collected on investment account of Chemical Foundation Principal cost of security sold during year. Chemical Foundation account Total Expenditures, advances to institute: Chemical Foundation donation Rockefeller Foundation donation, dental survey (net) $9,80L46 2,000.00 3,721. 55 1,115. 68 16,638.69 ._ $4,944.37 709.89 Unexpended balance June 30, 1936.... 6,654.26 10,984.43 The following statement shows the status of the fund as of June 30, 1936: National Institute of Health conditional gift fund, June 30, 1936 Credits: Donations: Chemical Foundation Rockefeller Foundation-- - $100.000.00 22,000.00 Net earnings on investments. Chemical Foundation Total Less advances to meet expenditures on account of the institute: Chemical Foundation Rockefeller Foundation, dental survey Balance in fund June 30, 1936 142,360.26 24,169.63 11,258.05 - Assets: $86,000 face amount 4 ^ percent Treasury bonds of 1947-52, principal cost -..—._ Unexpended balance to credit of the fund on the books of Division of Bookkeeping and Warrants Total fund assets June 30, 1936 -. $122,000.00 20,360.26 36,427.58 106,932. 68 95,948.26 10,984.43 106,932 68 National 'park trust jund.—Under the act of July 10, 1935 (49 Stat, 477), the National Park Trust Fund Board, consisting of the Secretary of the Treasury, the Secretary of the Interior, the Director of the National Park Service, and two persons appointed by the President, was created and established and is authorized to accept, receive, hold, and administer such gifts or bequests of personal property for the benefit of, or in connection with, the National Park Service, its activities, or its service, as may be approved by the Board, but no such gift or bequest which entails any expenditure not to be met out of the gift, bequest, or the income thereof shall be accepted without the consent of Congress. The moneys or securities given or bequeathed|to the Board are required to be receipted for by the REPORT OF THE SECRETARY OF THE TREASURY 103 Secretary of the Treasury, who is authorized to invest, reinvest, or retain investments as the Board may determine. Income from investments shall be covered into the national park trust fund. The Board accepted during the fiscal year a donation of $5,000 from the Metro-Goldwyn-Mayer Distributing Corporation in appreciation of the facilities accorded that corporation in filming a motion picture in a national park. There was purchased for account of the fund $4,850 face amount of 2% percent Treasury bonds of 1955-60, for which charges against the fund were made subsequent to June 30, 1936. There was also received, subject to acceptance by the Board and deposit in the fund, a donation of $3,000 from the Universal Pictures Corporation in appreciation of the privileges accorded that corporation in filming a motion picture in a national park. The following statement shows the status of the fund as of June 30, 1936: National park trust fund, June 30, 1936 Credits: Donation: Metro-Goldwyn-Mayer Distributing Corporation _ _. $5,000.00 ,\ssets: $4,850 face amount of 2 ^ percent Treasury bonds of 1965-60, principal cost Accrued interest paid at time of purchase Balance to credit of fund on bocks of Division of Bookkeeping and Warrants Less amount obligated to pay for securities purchased Total - - $5,000.00 4,983.06 -. 4,945. 48 37.57 16.96 5,000.00 Alien property trust jund.—Under the act of October 6, 1917, as amended, and the Settlement of War Claims Act of 1928, approved March 10, 1928 (44 Stat. 254), as amended, the Secretary of the Treasury held on June 30, 1936, Government securities in the face amount of $29,310,200 for account of the Attorney General, Alien Property Bureau, of which $1,600,000 constituted additional purchases during the fiscal year 1936. A statem.ent of the alien proper.ty trust fund as of September 15, 1936, follows: Alien property trust fund, Sept. 15, 1936 CreditsTrusts Earnings on investments, etc Total •.. _. - $37,289,397.46 31,778,753.90 - Assets: Face amount $9,800,000 4 percent Treasury bends of 1944-54 5,100.000 3M percent Treasury bonds of 1943-45 200,000 3U percent Treasury notes maturing Sept. 15, 1937 10, 200 23^ percent Treasury notes maturing June 15, 1939 , 1,100,000 3 percent Treasury bonds of 1951-56. 500,000 3H percent Treasury bonds of 1949-52... 3, 220,000 2\i percent Treasury notes maturing Sept. 16, 1938 5,730,000 2li percent Treasury bonds of 1956-60 3.300,ou0 2^4 percent Treasury bonds of 1945-47 350,000 2?4 percent Treasury bonds of 1961-64. 69,068,161.36 Principal at amortized cost $10,324,883.90 5,100,000.00 203,000.00 10,413. 56 1,138,382.19 519,759.31 3,220,000.00 5,742,369.74 3,300,000.00 350,000.00 29, 310,200 Accrued interest receivable Participating certificates issued under sec. 25 (e) of the Trading With the Enemy Act: Noninterest-bearing 21,000,000.00 6 percent interest-bearing 17,552,096.91 Cash with Treasurer of the United States Total fund assets, Sept. 16,1936 29,908.808.70 174,225.93 38,562,096.9b 433,019.82 69,068,161.36 104 REPORT OF THE SECRETARY OF THE TREASURY Checks issued by the Treasury Department during the fiscal year on account of the alien property trust fund were as follows: To the Attorney General, Alien Property Bureau, for— Distribution of income..-' Distribution of Government earnings _ Administrative expenses ., Total - - -- - - . . $10,000 135,000 226,000 . , 370,000 General railroad contingent jund.—^The general railroad 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 any carrier which received for any year a net railway operating income in excess of 6 percent of the value of the railway's property held for and used by it in the service of transportation was required to place one-half of such excess in a reserve fund established and maintained by and for use of the carrier, the other half to be paid to the Government for deposit in the general railroad contingent fund. Under the provisions of section 15 (a) of the Interstate Commerce Act, as amended by section 206 (a) of the Emergency Railroad Transportation Act, approved June 16, 1933, the Secretary of the Treasury is directed to liquidate the general railroad contingent fund and to distribute the fund among the carriers which have made payments under that section. During the fiscal year 1936 the Treasury made no payments out of the fuhd and there has been no change in the fund from that shown in the statement appearing in the annual report for 1935. The balance of $2,388.61 m the fund as of June 30, 1936, is due the Central Railway Co. of Arkansas. Payment of this refund has been delayed pending a determination of the party entitled to receive payment, inasmuch as the existence of the corporation has terminated. The Chancery Court of Sebastian County, Ark., Fort Smith district, under date of April 3, 1936, issued a decree holding that the title to the amount due the Central Railway Co. of Arkansas under section 206 (a) of the Emergency Railroad Transportation Act is vested in the Fort Smith Lumber Co., Fort Smith, Ark. Pursuant to this decree an apph cation was received during the year from the Fort Smith Lumber Co. Payment of the amount due was made subsequent to June 30, 1936. Pershing Hall Memorial jund.—The act of June 28, 1935 (49 Stat. 426), authorized the appropriation of $482,032.92 of the recreation fund—Army, created by the War Department Appropriation Act, approved March 4, 1933, for efl'ecting a settlement of any indebtedness connected with Pershing Hall, a memorial already erected in Paris, France, under the auspices of the American Legion, Inc., to the commander-in-chief, oflBicers, men, and auxiliary services of the American Expeditionary Forces. I t provided that this amount would not be used for the purposes set forth in the act until legal title to Pershing Hall had been vested in the United States Government for the use and benefit of all American officers and enlisted men of the World War. I t further provided that the balance remaining after ^settlement of the indebtedness would be retained in a special fund to be known as the Pershing HaU Memorial fund. Under the terms of the act, the Secretary of the Treasury is authorized (a) to invest and reinvest the corpus of this fund in interest-bearing United States REPORT OF THE SECRETARY OF THE TREASURY 105 Government bonds, and (b) upon request of the American Legion, Inc., to pay to the national treasurer of the Legion any part of the earnings upon the fund for use in the maintenance and/or perpetuation of Pershing Hall. An appropriation for these purposes was provided by the act of August 12, 1935 (49 Stat. 594), and pursuant thereto $482,032.92 was transferred from recreation fund—Army to the Pershing Hall Memorial fund on January 8, 1936. No expenditures were made from the fund prior to June 30, 1936. At the close of the fiscal year arrangements were being made for the acquisition by the United States of legal title to Pershing Hall. Special junds Colorado River Dam jund.—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. All revenues received in carrying out the provisions of the act are payable into the fund and 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 $165,000,000. The Secretary of the Treasury is required to charge the. fund, as of June 30 each year, with such amount as may be necessary for the payment of interest at the rate of 4 percent per annum accrued during the year upon all amounts advanced from the General Fund of the Treasury and remaining unpaid, except money advanced for construction costs of the Ail-American Canal, and 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 percent per annum until paid. Of the $165,000,000, an allocation of $25,000,000 was made to flood control, to be repaid with interest to the United States out of 62}^ percent of revenues, if any, in excess of the amount necessary to meet periodical payments during the period of amortization, as provided in section 4 of the act. If the $25,000,000 is not repaid in full during the period of amortization, then 62}^ percent of all net revenues shall be applied to payment of the remainder. No portion of this allocation had been advanced to June 30, 1936. Under an opinion of the Attorney General of the United States, dated December 26, 1929, funds advanced from the General Fund of the Treasury for the construction costs of the All-American Canal are not subject to the interest charge. To date, funds aggregating $6,764,740.72 have been expended (warrants-issued basis) from funds amounting to $9,000,000 allocated from the appropriations made in the National Industrial Recovery Act, approved June 16, 1933, and the Emergency Appropriation Act of 1935, approved June 19, 1934, for the construction of the Ail-American Canal. In addition, $3,500,276.64 was expended (warrants-issued basis) from funds amounting to $11,500,000 allocated out of the appropriation provided by the Emergency Relief Appropriation Act, approved April 8,_:1935. The 106 REPORT OF THE SECRETARY OF THE TREASURY act of June 22, 1936 (49 Stat. 1785), appropriated the sum of $6,500,000 from the General Fund for the same purpose, none of which has been expended. The Boulder Canyon Project Act provides for the repayment of these advances, and the Secretary of the Interior has made provision for such repayment to begin upon the completion of the canal. On June 30, 1936, the hability of the Colorado River Dam fund to the General Fund of the Treasury amounted to $109,436,983.66, representing advances in the sum of $99,124,093.21 and interest in the amount of $10,312,890.45. Upon recommendation of the Secretary of the Interior and in .accordance with the authority contained in section 2 (d) of the act of December 21, 1928, and in section 2 of the act of March 3, 1933, the Secretary of the Treasury deferred for 1 year the payment of the $10,312,890.45 of interest due on June 30, 1936. The status of the advances made to the fund as of June 30, 1936, was as follows: Advances to Colorado River Dam fund, June 30, 1936 Advances from Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year Fiscal year General Fund: 1931 1932 1933 1934 1935 1936 Interest* Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal 3931 1932 1933 1934 1936.. 1936 year year year year year year - -- - - -... - - - — Total..! Less amount covered into Treasury as miscellaneous receipts Total liability to General Fund - $1,746,866.46 17,018,608.34 19,709,297.48 19,684,789.68 22,299,521.44 18,766,009.81 $99,124,093.21 26,631.58 •365,029.92 1,161,488.18 1,933,449.68 2,958,905.67 3,904,017.10 10,338,522.03 25,631.68 1 10, 312,890.45 109,436,983.66 1 Payment of interest due June 30, 1936, $10,312,890.45, deferred for 1 year under sec. 2 (d) of the act of Dec. 21, 1928," and sec. 2 of the act of Mar. 3, 1933. Advances to reclamation fund.—Under the act of Congress approved June 17, 1902 (32 Stat. 388), there was established in the Treasury a special fund known as the reclamation fund, representing receipts from the sale of pubhc 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 June 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 of the annual payments for a period of 2 years and the act. of April 1, 1932, as amended by the act of March 3, 1933, provided a further extension until the fiscal year beginning July 1, 1936. The Deficiency Act approved March 4, 1931, appropriated an additional advance of $5,000,000 to the reclamation fund from the 107 REPORT OF THE SECRETARY OF THE TREASURY General Fund, 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, 1936: Charges: Advances from the General Fund: Under act of June 25, 1910 Under act of March 4,1931 $20,000;000 5,000,000 Total. 25,000.000 Less repayment of advances to June 30,1930 i 10,000,000 Unreimbursed balance 15,000,000 1 Installments for 1931-36 suspended. Division oj Deposits The Division of Deposits is charged with the administration of matters pertaining to the designation and supervision of Government depositaries and the deposit of Government funds in such depositaries. The regulations of the Treasury governing the deposit of public funds in depositaries are incorporated in Department Circulars Nos. 92 and 176, as amended. 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, 1936: Number of depositaries and amount of Government deposits held on June SO, 1936, by class of depositaries Depositaries Amount Federal Reserve banks (including branches) Federal Reserve member bank depositaries: To credit of Treasurer of the United States To credit of other Government oflQcers 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 oflQcers.-Special depositaries Total $690,103,434.19 7, 768,155. 73 41, 781,322.11 4, 868, 695. 23 1, 536,429.33 969. 259. 92 1, 900,919. 69 150, 331, 350. 43 - 899, 259,466. 63 1 In addition, 280 branch banks are carried on the depositary list of the Treasury under the designation of the parent banks. 2 Includes 1,887 national banks and 1,234 State banks and trust companies, of which 1,933 held deposits on June 30,1936. Approximately 1,800 changes and adjustments were effected within the depositary system during the fiscal year 1936. These adjustments are summarized in the followiuG: table: Designated Discontinued Amounts for which qualified increased. Amounts for which qualified decreased Member bank depositaries Special depositaries 77 82 846 178 183 288 130 12 108 REPORT OF THE SECRETARY OF THE TREASURY During the year the Treasury initiated a general survey covering all Government departments and agencies to determine the possibility of improving the procedure of collecting the revenues of the Government, principally with respect to speeding up check collections which comprise a very large percentage of such revenues. Many changes were inaugurated tentatively, and while the full effect could not be determined during the current fiscal year, prehminary reports clearly demonstrate the possibility of very substantial benefits and economies to the Treasury and other Government estabhshments. This new procedure has resulted in the Treasury receiving earlier credit in the Treasurer's general account at Federal Reserve bank points, through the wider use of member bank depositaries in the collection of checks, and has eliminated the indirect routing of checks and the duplication of handling by collecting officers who deposit direct where depositary facilities are available. This procedure also reduces the number of mail shipments and eliminates a large amount of unnecessary paper work involved in the previous procedure. Section oj Surety Bonds On June 30, 1936, there were 65 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 approved March 23, 1910, qualifying them as sole sureties on recognizances, stipulations, bonds, and undertakings permitted or required by the laws of the United States, to be given with one or more sureties. There were also 5 branches of foreign companies holding certificates of authority authorizing them to act only as reinsurers on bonds in favor of the United States. During the year one domestic company which previously held a certificate of authority to act as a reinsurer on Federal bonds was authorized to qualify as a sole surety on such bonds. Division oj Bookkeeping and Warrants The Division of Bookkeeping and Warrants, in the name of the Secretary of the Treasury, issues all warrants on the Treasurer of the United States, and under section 10 of the act of July 31,1894 (U. S. C , title 5, sec. 255), keeps the official accounts relating to the receipt, appropriation, and expenditure of the public moneys, 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 liability claims, budget matters, special deposit accounts, etc. The Division also maintains budgetary accounts relating to the apportionment and obligation of public funds covering all executive departments and independent establishments. Statements of the receipts and expenditures of the Government for the fiscal year 1936, compiled by this Division, are shown as tables 1 and 2, pages 314 to 336 of this report. Division oj Disbursement The Division of Disbursement, organized December 16, 1933, under the provisions of section 4 of Executive Order No. 6166, has absorbed the disbursing functions formerly exercised by the denartments and REPORT OF THE SECRETARY OF THE TREASURY 109 establishments of the Government located in Washington, D . C , including the emergency as well as the regular Government activities, with the exception of the Post Office Department, the Panama Canal, and that portion of the War and Navy Departments relating to national defense. On June 30, 1935, the disbursing functions of 298 field offices had been transferred to the 19 regional offices of the Division which had been established to that date, and on June 30, 1936, the disbursing functions of 534 field offices had been transferred to the regional offices. During the year 4 additional regional offices were established in Puerto Rico, Hawaii, the Virgin Islands, and Alaska. To handle disbursements under the emergency relief program, the Division of Disbursement established, during the year, 55 additional offices known as United States Treasury-State disbursing offices. Branches of these State disbursing offices were opened at 56 points. Offices were also established in 10 States as adjuncts to the regional disbursing offices, to handle disbursements under the cotton price adjustment program. In addition to the handling of routine disbursements, the Washington office of the Division and 11 regional offices made 3,195,590 payments under the Adjusted Compensation Payment Act of 1936. There were 652 additional temporary employees appointed for this work, 371 of whom were actively engaged on such work at the close of the fiscal year. On June 30, 1936, the total personnel of the Division, including regular, temporary, and emergency employees, was 4,466. In addition there were 298 employees of the Agricultural Adjustment Administration detailed to offices of the Division to assist in the handling of disbursements for that agency. During the fiscal year the offices of the Division issued 102,145,441 checks and made cash payments in 1,758,964 instances. These check and cash payments were supported in the disbursing accounts by 8,587,813 vouchers. The Division also received, deposited, and accounted for 2,642,516 collection items. DIVISION OF APPOINTMENTS Number oj employees There were 21,077 employees in the departmental service of the Treasury on June 30, 1936, a net increase of 4,119 for the fiscal year. The principal increases occurred in connection with the emergency relief program and in the Division of Loans and Currency and the Bureau of Engraving and Printing as a result of the issuance of adjusted service bonds. In the field service there were 60,378 employees on June 30, 1936, an increase of 11,470 as compared with the number on June 30, 1935. The largest increases were in connection with the emergency relief program and in the Division of Disbursement and the Procurement Division. The number of employees in the departmental service of the Treasury, classified according to bureaus and offices, at the end of each month, from June 30, 1935, through June 30, 1936, is shown in table 53, page 478 of this report. A comparison of the number of employees in the departmental and field services of the Treasury on June 30, 1935, and June 30,1936, is contained in table 54, page 479. 110 REPORT OF THE SECRETARY OF THE TREASURY Retirement oj employees ' During the fiscal year 1936, there were 499 persons retired from the departmental and field services of the Treasury Department. Under the provisions of the Civil Service Retirement Act, as amended, and of section 204 of the Economy Act of June 30, 1932, 222 persons were retired from the departmental service of the Treasury Department, 13 of whom were retired at their own option before the compulsory retirement age; and 277 were retired from the field service, 14 at their own option. As of June 30, 1936, nine employees in the departmental service and six in the field service, who had reached the retirement age, were retained under the authority of the President provided in section 204 of the Economy Act. Table 55, page 479, shows the number of persons retired and the number who have passed the compulsory retirement age retained in the departmental and field services of the Treasury from August 20, 1920, to June 30, 1936. BUDGET AND IMPROVEMENT COMMITTEE The Budget and Improvement Committee is responsible, under the direction of the Budget officer, for the preparation and examination of estimates of Treasury 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. Subsequent to the submission of the regular estimates of appropriations for the fiscal year 1937, supplemental and deficiency estimates aggregating $286,159,277 were received. After examination by the Budget officer, with the assistance of the committee, these estimates were reduced to $286,038,833 and submitted to the Acting Director of the Bureau of the Budget. Reserves amounting to $225,350 had been set aside from ordinary appropriations for the fiscal year 1936 by the Acting Director of the Bureau of the Budget. During the year, reserves amounting to $10,900 were released by the Acting Director, after approval of the committee, and additional reserves of $15,518 were set up, leaving $229,968 in reserve at the end of the year. Of the appropriations made to the Treasury Department for the fiscal year 1937, the Acting Director set aside $1,684,480 in reserve. For the fiscal, year 1938, heads of Treasury bureaus and offices submitted estimates for annual, permanent, and indefinite appropriations aggregating $2,335,867,770. After examination by the Budget and Improvement Committee, items aggregating $11,548,253 were disapproved in estimates for annual appropriations. There was approved and submitted to the Acting Director of the Bureau of the Budget for annual appropriations, $849,550,047, including $540,000,000 for the old-age reserve account; for permanent and indefinite appropriations and special funds, $4,087,470; trust funds, $17,167,000; interest on the public debt, $871,000,000; and public debt retirements chargeable against ordinary receipts, $582,515,000, making a grand total of $2,324,319,517. REPORT OF THE SECRETARY OF THE TREASURY 111 COAST GUARD The following is a summary of the principal operations of the Coast Guard for the fiscal year 1936, including comparisons with the preceding year: 1935 Lives saved or persons rescued from peril . _ __ 6,825 Persons on board vessels assisted. __ 32,881 Persons in distress cared for . ._ 927 Vessels boarded a n d p a p e r s examined 27, 671 Vessels seized, reported, or w a r n e d for violations of law 1,299 F i n e s a n d penalties incurred b y vessels reported _. $149,720 R e g a t t a s a n d m a r i n e parades p a t r o l l e d . . : 276 Instances of lives saved a n d vessels assisted 6,777 7,025 I n s t a n c e s of miscellaneous assistance -. Derelicts a n d other o b s t r u c t i o n s to n a v i g a t i o n r e m o v e d or de191 stroyed -. $19, 296 Value of derelicts a n d other obstructions recovered Value of vessels assisted (including cargoes) $68, 703,579 Persons e x a m i n e d for certificates as lifeboat m e n 9,811 1936 Increase ( + ) or decrease ( - ) 7.510 37, 553 1,439 35, 600 1,824 $209, 356 290 8,138 6,^608 +1,685 + 4 , 672 +612 +7,829 +525 +$59, 636 +14 + 1 , 361 -417 263 $67, 410 $65,425, 470 2,341 +72 +$48,115 + $ 6 , 721,891 - 7 , 470 In the winter of 1935-36, 29 vessels of the Coast Guard engaged for periods of from 1 to 35 days in breaking ice in various localities to free shipping and open the channels of marine traffic. These vessels were so engaged for 405 days. In cooperation with the American Red Cross, the Coast Guard dispatched 200 men, 45 boats, 6 airplanes, and 4 communication trucks into the flooded areas of New England, Pennsylvania, and the Ohio Valley, to afford relief to the stricken population. Following the disastrous hurricanes which swept Florida in September and November 1935, 20 Coast Guard vessels and 6 airplanes carried relief supplies to survivors, conducted surveys of stricken areas, and assisted the Red Cross and local and Federal agencies in their relief work. Coast Guard planes also distributed hurricane warnings to small craft and isolated communities. An allocation of $4,850,950 from funds provided in the Emergency Relief Appropriation Act of 1935 was made to the Coast Guard for work relief projects. These comprised the repairing, renewal, and improvement of telephone lines; the reconditioning, modernizing, and construction of shore facilities at various Coast Guard stations; the construction of wooden boats; and dredging at Government Island, Alameda, Calif. The number of workers provided with employment increased steadily from the time the program was begun, and reached the fiscal year peak of 963 on June 27, 1936. Approximately threefourths of these workers were taken from relief rolls. The various projects were well under way on June 30, 1936, and will be completed during the fiscal year 1937. Protection to navigation International service oj ice observation and ice patrol.—The international service of ice observation and ice patrol in the North Atlantic Ocean, provided for under the provisions of the International Convention on Safety of Life at Sea, 1929, was conducted during the season of 1936 by two cutters and one 125-foot patrol boat used as an oceanographic observation vessel. One of the cutters sailed from 112 REPORT OF THE SECRETARY OF THE TREASURY Boston, Mass., on March 23 for the Grand Banks region to determine the location of the southernmost ice and its progress toward the North Atlantic steamship lanes. The patrol boat sailed from Boston on March 31, proceeding to St. John's, Newfoundland, from which place she sailed April 8 on an oceanographic cruise to determine the rate of drift and direction of the currents prevailing in the Grand Banks region. The other cutter sailed from New York, N. Y., on April 2 and, relieving the first cutter on April 5, entered upon the ice observation duty. ^ • The season of 1936 was unique in that no icebiBrgs were sighted south of the forty-fourth parallel. No icebergs menaced the EuropeanUnited States steamship tracks throughout the, season. While it was not necessary to establish the customary ice patrol, the two cutters basing at Halifax, Nova Scotia, made six cruises in the ice patrol area, maintaining a continuous observation of conditions and keeping shipping advised as to the location of icebergs sighted or reported. During the period of ice observation service, 21 icebergs were reported south of the forty-eighth parallel, 9 of which were reported during the cruise from May 5 to 18. ; ^ In furtherance of the studies carried on by the international service of ice observation and ice patrol, the patrol boat sailed from St. John's on June 18, and made a survey of oceanographic and ice conditions in the waters between Newfoundland and southwestern Greenland. The vessel called at Ivigtut, Greenland, and observations were made of the glaciers in that region. She arrived at St. John's on June 30, after a cruise of approximately 3,000 miles. Winter cruising.—The President, on November 1, 1935, on the recommendation of the Secretary of the Treasury, designated 14 Coast Guard vessels to perform special winter cruises along the coast for the season of 1935-36 to aid distressed vessels. The vessels engaged on this duty cruised 113,229 miles, and afforded assistance to 337 vessels, whose values, including cargoes, amounted to $22,618,450. There were 690 persons on board the vessels assisted. In the interest of United States laws, 208 vessels were boarded. Anchorage and movements oj vessels.—The Coast Guard continued to maintain supervision over the enforcement of the rules and regulations promulgated by the Secretary of War and the Secretary of Commerce governing the anchorage and movemejuts of vessels in ports and in localities where Federal regulations are in force. At ports having Federal regulations. Coast Guard officers, designated as *'captains of the port", perform this duty, and also cooperate in the enforcement of the regulations of the Interstate Commerce Commission governing the handling of explosives by vessels. In localities where the continual presence of an enforcement officer is not necessary, periodic inspections are made and a surveillance is maintained to msure compliance with the published regulations. Enjorcement oj customs and other laws ^ The Coast Guard continued during the year its duties in connection with the enforcement of the customs laws land the navigation and motorboat laws of the United States, and the customary assignment of Coast Guard vessels at the principal ports of the country to assist the customs authorities in boarding incoming vessels and in performing REPORT OF THE SECRETARY OF THE TREASURY 113 other customs duties. Assistance was also afforded other branches of the Government in the enforcement of Federal laws. Smuggling.—The vigorous antismuggling campaign by the coordinated law-enforcement agencies of the Treasury Department, which was in progress during the year, resulted in the complete dispersal of the foreign hovering fleet which, since April 1934, had operated off the coasts of the United States. The Coast Guard, through its offshore and inshore patrol and its Intelligence Organization, contributed substantially to this dispersal. A summary of seizures during the year is presented in the following table: Summary of Coast Guard seizures and joint seizures by Coast Guard and other law enforcement agencies during the fiscal year 1936 Coast Guard Joint seizures (Coast Guard and other agencies) Total 4 41 Foreign vessels seized... Domestic vessels seized.. Total 45 Arrests ._. Aliens seized Vehicles seized stills and equipment seized. 103 1 29 140 161 36 161 Tax-free value of alcoholic beverages seized. Internal Revenue tax on above Stale tax on above $15,902.58 138, 635. 00 22, 352. 20 $5, 713. 28 22, 256. 00 2,613.20 $21, 615.86 160,891.00 24,966.40 Total domestic tax-paid value of alcoholic beverages seized. Appraised value of seized vessels Appraised value of seized vehicles Appraised value of seized stills and equipment 176, 889. 78 103. 566. 00 1, 726. 00 30, 582. 48 10. 805. 00 6, 707. 00 11, 031. 00 207,472. 26 114, 371. 00 7,432. 00 11, 031. 00 282,180.78 58,125. 48 340, 306. 26 Total- Patrol in northern waters.—The regular annual patrol of the waters of the North Pacific Ocean, Bering Sea, and southeastern Alaska for the season of 1935, in progress at the beginning of the fiscal year 1936, was conducted by six Coast Guard vessels. These vessels in the performance of their duties cruised 41,978 miles, assisted 7 vessels, boarded 30 vessels, afforded medical and dental aid to 351 persons, and transported 54 persons. The patrol for the season of 1936 was in progress at the close of the fiscal year. Northern Pacijic halibut jishery.—In pursuance of an Executive order of the President of October 24, 1935, the Commandant of the Coast Guard assigned five Coast Guard cutters and five Coast Guard patrol boats to patrol the territorial waters of the United States for the enforcement of the Northern Pacific Halibut Act and the Convention for the Preservation of the Halibut Fisheries of the Northern Pacific Ocean and Bering Sea. In this duty these vessels cruised 5,208 miles between December 16, 1935, and March 31, 1936. This activity is carried on annually for the Bureau of Fisheries, Department of Commerce, 93790—37 114 REPORT OF THE SECRETARY OF THE TREASURY Communications Telephone and telegraph lines and cables.—The Coast Guard owns and operates a coastal telephone system consisting of 1,602 miles of pole line, 3,000 miles of open aerial circuits, 50 miles of aerial and underground cables, and 642 miles of submarine cables. A number of these lines are connected with central offices of commerical telephone systems, thus affording telephone and telegraph service to all units of the Coast Guard, to navy radio compass stations, weather bureau offices, and lighthouses in various locations along the coastal waters of the United States. Investigation and research during recent years have resulted in a decided improvement in the manufacture of telephone wire and submarine cable. A scientific study to determine the type of wood most suitable for telephone poles, and a preservative that would protect them against termites and the elements has resulted in adding materially to the life of Coast Guard pole lines and in increased efficiency in service and operation. In addition to the reconstruction, routine overhauling, and repair work on lines in all divisions during the year, construction of six new lines was begun in the Chicago division, which will be completed in the near future; approximately 30 miles of new line have been constructed between Lompoc and Point Arguello, Calif.; 20 miles of line between Forks and Lapush, Wash.; and a new line was built between Golden Meadow and Grand Isle, La. Cable replacements were made as needed during the year at several places on the coast, and much was accomplished in research activities toward improving the physical and electrical characteristics of Coast Guard submarine cable. Radio.—A new standard communications plan has been completed which classifies all radio-equipped units and outlines the type of radio equipment to be provided for each class. This plan includes not only ships and shore stations but aircraft of various types, radioequipped emergency trucks, and portable emergency stations. The installation of radio transmitting and receiving equipment at Coast Guard (life-saving) stations and receiving equipment in motor lifeboats is progressing as equipment becomes available. The initial installations at a few stations have demonstrated the need at many other stations for such installation as specified in the standard communication plan. Equipment has been provided at the Coast Guard Radio Laboratory, at Fort Hunt, Va., to test, in accordance with Coast Guard specifications for such equipment, samples of radio equipment submitted for test. The facilities of the Coast Guard Radio Monitoring Station, at Fort Hunt, have been extended by providing additional receiving and transmitting equipment to handle traffic with aircraft and with the cadet practice ship in European waters. The Coast Guard laboratory has carried on extensive tests with ultra high frequency radio equipment. These tests have been confined mostly to two-way communications between moving automobiles. Several new vessels built or under construction have been equipped \vith radio. Included in this list are seven new 327-foot cutters on which automatic high frequency radio transmitters have been installed. REPORT OF THE SI2CRE1TARY OB' THE TREASURY 115 The Coast Guard communications service has cooperated with other branches of the Treasury Department, particularly the Bureau of Customs and the Alcohol Tax Unit, in connection with their radio problems. A light weight and efficient public address sytem has been developed for use on planes to warn fishermen, yachtsmen, inhabitants of sparsely settled communities, and others, of the approach of hurricanes. An improved visual type direction finder for use on aircraft has been developed and flight-tested with satisfactory results. An officer of the Coast Guard continued to represent the Treasury Department on the Interdepartmental Radio Advisory Committee. Equipment Floating equipment.—On June 30, 1936, there were in commission in the Coast Guard, 32 cruising cutters, seventeen 165-foot patrol boats, twenty-five 125-foot patrol boats, four 100-foot patrol boats, six 78-foot patrol boats, fifty-three 75-foot patrol boats, 41 harbor craft, 6 special craft, 79 picket boats, and 32 miscellaneous patrol boats exceeding 40 feet in length. This floating equipment does not include the primarily life-saving boat equipment attached to Coast Guard vessels and stations. A number of cutters and boats, and various small patrol boats and harbor boats were disposed of during the year by sale, or transfer to other. Government departments. One of the seven 327-foot cruising cutters under construction last year was placed in commission during the year. The remainuig 6 are in various stages of completion. A program for the construction of wooden patrol boats, harbor craft, and miscellaneous boats was initiated during the year, and the work is progressing satisfactorily. In addition to the work performed during the year by the repair depot on vessels of the service, routine and major repairs to vessels were made under contract with private shipyards and various navy yards. Small boats.-—The second 52-foot motor lifeboat was completed at the Coast Guard depot during the year and assigned to the Point Adams Coast Guard station, Oreg. Preliminary design work has been started on a new light weight motor surfboat which is intended for use in special localities. The construction details will include light weight woods and metals and reduced power plant weights. A final design has been evolved for the construction of 26-foot 6-inch motor launches for use on the new cutters and regular cruising cutters. The field installation of spray hoods for motor surfboats now in service has been completed, and in view of the adoption of shielded power plants, it has been decided to discontinue the fitting of these hoods on future boats as the protective features of the hood for engine operation are no longer required. Experimental investigations and tests of special metals, woods, marine equipment, fittings, outfit, etc., were continued during the year in the interests of new construction and maintenance of boats. Aviation.—During the year air stations were in commission at Salem, Mass.; Cape May, N. J.; Miami, Fla.; St. Petersburg, Fla.; Biloxi, Miss.; and Port Angeles, Wash. Air patrol detachments were in commission at Charleston, S. C ; San Antonio, Tex., and San 116 REPORT OF THE SECRETARY OF THE TREASURY Diego, Calif. Detachments of airplanes were also located at strategic operation points from time to time. Construction of air stations at Charleston,^S. C.,^and'San'Diego, Calif., has been in progress and funds were allocated for the construction of an air station at New York, N . Y. The six Grumman amphibian airplanes, contracted for in the preceding fiscal year, were received and placed in service. The duties falling to Coast Guard aircraft during the year were many and varied. In addition to rendering aid to persons and vessels in distress at sea and to enforcing customs regulations. Coast Guard aircraft assisted in the enforcement of the internal revenue regulations and conducted surveys of migratory waterfowl along all the coasts in conjunction with the Biological Survey. The use of aircraft in locating illicit distilleries, which were subsequently seized and destroyed, has indicated the value of this type of equipment for this work. Coast Guard aircraft was also used in locating livestock being smuggled into the United States. The value of aircraft in warning commercial and pleasure vessels, lacking radio facilities, of approaching hurricanes was manifested during the year, especially in the instances of the hurricanes along the Florida coast. This work contributed to the safety of many persons and vessels. The following summary is indicative of the operations of service aircraft during the yeaf: Miles cruised Area searched (square miles) Time in flights (hours) Vessels identified Plane? identified Requests for aircraft to engage in search Persons assisted Vessels assisted Emergency medical cases transported Instances of assistance rendered other Government departments Miscellaneous cases of assistance Foreign smuggling vessels located American smuggling vessels located Suspicious planes sighted Smuggling landing fields located Stills located and reported (subsequently seized and destroyed) _. .837,696 .-- 8,371,212 8,959 61,694 6,836 118 1,013 430 85 233 40 70 34 7 8 402 Ordnance.—During the year small arms target practice and gunnery exercises were conducted as usual. In addition, selected personnel entered national small arms competitions and made a creditable record. The instruction of approximately 6,000 civilian employees of the Treasury Department in the use of small arms was continued. The replacement of Z"jbO cahber antiaircraft guns with b " j b l caliber guns was authorized for nine vessels and it is contemplated that installation will be completed by the end of 1937. Five hundred sets of the recently developed shoulder line-throwing equipment, consisting of a .30 caliber gun, projectile, shot line canister, shot line, rewinding machine, and case, were distributed to active units. Reports from the field indicate conclusively that this new shoulder line-throwing equipment is far more effective than that heretofore used. A .32 caliber blank cartridge firing mechanism has been developed for use with the Lyle line-throwing gun. I t will materially reduce costs, eliminate misfires, and improve accuracy of fire. Other developments carried on during the year were a shot line canister and rewinding machine to replace the faking box now used with the Lyle and 6-pounder line-throwing equipment, also a nontumbhng line carrying projectile for the Lyle gun and a similar one REPORT OF THE SECRETARY OF THE TREASURY 117 for the 1-pounder. Tests which have been conducted indicate the possibihty of further improvement. Lyle gun equipment throughout the service has been checked and more than 140 of the 500 guns were found to be materially over the original 2}^-inch caliber. Therefore, arrangements have been made for relining these guns at a considerable saving as compared with the cost of purchasing new guns. About 50 percent of the Lyle projectiles were found to be undersized and replacement is planned. The use of the demohtion equipment developed by the Coast Guard has proved most effective. An interesting example of its use was the blasting of a channel through Cape Cod ice during the rescue of 7 men who were being carried out to sea. Air stations have been supphed with standard pyrotechnic equipment for aircraft, and a contract has been awarded for the overhaul of the Coast Guard flare-kit-parachute flares which are in general use throughout the service. A class of 12 men completed the 3 months' course for armorers at the small arms repair and supply base of the Coast Guard Depot, where the overhaul of small "arms and the assembly of equipment for issue to the service constituted a part of their training. Acknowledgment is made of the continued cooperation and assistance afforded the Coast Guard by the Army, Navy, and Marine Corps. The academyy stations^ baseSj repair depots engine school^ repair base, etc. Coast Guard Academy.—During the flscal year 74 cadets were appointed to the academy, 48 resigned, 1 died, and 30 were graduated from the academy. All of the graduates received permanent commissions as ensigns. There were 79 cadets under instruction at the end of the fiscal year 1936. The 1936 practice cruise left New London, Conn., on June 11, 1936. The itinerary included United States and foreign ports. Stations and bases.—On June 30, 1936, 241 Coast Guard (lifesaving) stations were in an active status, and 3 shore bases were in commission. Rebuilding, repairs, alterations, additions, and improvements were completed or undertaken during the year at a large number of shore units, and at a number of other shore units contracts were awarded or work was begun on major projects. Repair depot.—During the year 11 Coast Guard vessels were overhauled, reconditioued, repaired, or improved at the repair depot, Curtis Bay, Md. The boat building shop at the depot constructed, or had in course of construction, a large number of small boats of various types, repaired and reconditioned other boats, and manufactured launching carriages for lifeboats and surfboats. Engine school and repair base.—Facilities are available for 32 students at the engine school and repair base, Norfolk, Va. During the year the general course was extended to 6 months, and 94 students were graduated from the school. Forty-one marine gasoline engines were reconditioned, 14 of which were installed in Coast Guard patrol craft by the school; 102 starter motors and generators, 60 magnetos, and many minor pieces of electrical machinery were completely rebuilt, practically all of the work being done by the students. 118 REPORT OF THE SECRETARY OF THE TREASURY . Engineering competition The engineering competition acts as a stimulus to the personnel, promotes a spirit of friendly rivalry, and tends to maintain the personnel and material in a high state of efficiency and readiness. Thirty cruising cutters and 46 patrol boats took part in this competition during the year. Personnel On June 30, 1936, there were on the active list of the Coast Guard 477 regular and 5 temporary commissioned officers, 79 cadets, 159 chief warrant officers, 425 regular warrant officers, 146 temporary warrant officers (of whom 144 were on duty with the War Department under orders contained in Executive Order 6169), 8,331 enlisted men, and 361 civilian employees in the field,^of whom 264 were per diem civilian employees at the Coast Guard Depot, Curtis Bay, Md. An officer of the Coast Guard has acted during the year as a member of the Senate Technical Advisory Committee on Safety of Life at Sea. Recruiting.—Eight main recruiting stations were in operation during the fiscal year. Because of the limited appropriation, recruiting was suspended in November 1935 and not resumed until the latter part of June 1936. Of the 9,216 applicants for enlistment during the year, 134 were enlisted, 816 rejected for physical disability, and 8,266 rejected for other causes. Loss in personnel, other than through expiration of enlistments, was low, and 85 percent of the naen eligible to reenhst did so upon the expiration of enlistments. Training.—The Coast Guard Institute at New London, Conn., has continued to provide study courses for enlisted men of the Coast Guard in order to fit them for advancement, and 1,131 certificates were issued by the institute during the year. Educational courses of the International Correspondence Schools were used by the institute, and 116 diplomas were issued in connection with these courses. Navy rating courses and specially prepared courses for Coast Guard needs were given, and 17 certificates of the Capitol Radio Engineering Institute were awarded. Two men were graduated from the Navy Radio Materiel School, Bellevue, D. C , Training in radio is carried on at the Fort Trumbull Training Station, New London, and a school for yeomen has also been established at this unit. The course offered at the Engine School and Repair Base, Norfolk, Va., has been enlarged to include training in Liberty and aviation engines. Awards of lije-saving medals The Secretary of the Treasury, under the provisions of law, awarded duriQg the year 4 gold and 51 silver life-saving medals of honor in recognition of bravery exhibited in the rescue or attempted rescue of persons from drowning in waters over which the United States has jurisdiction, or upon an American vessel. Legislation Among the legislative enactments of the Seventy-fourth Congress affecting the duties of the Coast Guard are the following: The act of August 5, 1935 (Public No. 238), is designed to protect the revenue of the United States and provide measures for the more REPORT OF THE SECRETARY OF THE TREASURY 119 effective enforcement of the laws respecting the revenue, to prevent smuggling, to authorize customs-enforcement areas, and for other purposes. The act of May 1, 1936 (Public No. 535), gives effect to the convention between the United States and certain other countries for the regulation of whaling. The provisions of the act are enforced primarily by the Coast Guard and the Bureau of Customs. The act of May 27,1936 (Public No. 622), creates a marine casualty investigation board consisting of three members, one of whom shall be an officer of the Coast Guard designated by the Secretary of the Treasury. The act of June 22, 1936 (Public No. 755), to define the jurisdiction of the Coast Guard, empowers commissioned, warrant, and petty officers of the Coast Guard to make inquiries, examinations, inspections, searches, seizures, and arrests upon the high seas, etc., for the prevention, detection, and suppression of violations of laws of the United States, under certain limitations. This law clarifies the authority of the Coast Guard to enforce certain laws of the United States. The act of June 25, 1936 (Public No. 799), to promote safety at sea in the neighborhood of ice and derelicts, and for other purposes, authorizes the Commandant of the Coast Guard, under the direction of the Secretary of the Treasury, to administer the services provided for in the act. The act of June 25, 1936 (Public No. 808), to amend section 13 of. the act of March 4, 1915, entitled ^^An act to promote the welfare of American seamen in the merchant marine of the United States; * * *j?^ requires, among other things, all certificates as lifeboatman, issued prior to the passage of the act, to be surrendered for cancelation and new certificates, stamped with the seal of the board of local inspectors, etc., to be issued in lieu thereof. The act of June 29, 1936 (Pubhc No. 835), to further the development and maintenance of an adequate and well-balanced American merchant marine, etc., authorizes licensed or unlicensed members of the crew of any subsidized vessel to make complaints or recommendations to the Coast Guard. Funds available jor the Coast Guard The following table shows the amounts appropriated for the Coast Guard for the fiscal year 1936, including certain items in the First Deficiency Act, 1936, which are available for expenditure in 1937, and additional funds made available from funds appropriated under the National Industrial Recovery Act and the Emergency Relief Appropriation Act of 1935. The amounts of obligations and unobligated balances are also shown. 120 REPORT OF THE SECRETARY OF THE TREASURY Available funds, obligations, and unobligated balances for the fiscal year 1936 Amount available Appropriation: Salaries, OflQce of Coast Guard, 1936 Pay and allowances, Coast Guard, 1936 Fuel and water, Coast Guard, 1936 Outfits, Coast Guard, 1936 -.. _ Rebuilding and repairing stations, etc.. Coast Guard, 1936 Communication lines, Coast Guard, 1936 Civilian employees, Coast Guard, 1936 -- . Contingent expenses, Coast Guard, 1936 Repairs to Coast Guard vessels, 1936 Additional vessels, Coast Guard, 1936 _. .-. Outfits, Coast Guard, 1936 and 1937 Repairs to Coast Guard vessels, 1936 and 1937 Rebuilding and repairing stations, etc.. Coast Guard, 1936 and 1937 „ Total 292, 500 170,120 245, 080 175,000 1, 713,890 117, 526 70,000 175,000 $1,935 63,813 14,950 13,473 286,979 165, 267 205. 229 179,701 1, 700,354 -34,890 +10,000 23, 677, 541 22, 779, 074 -6,890 5,521 4,863 4,961 5,299 13, 536 117, 526 70. 000 175, 000 310,700 310, 700 Other available funds: National Industrial Recovery, Treasury, Coast Guard, 1933-37 .-. Public Works Administration, Treasury, Coast Guard, 1935-37 Emergency Relief, Treasury, Coast Guard, 1935-37 791, 577 942,882 932,361 10, 621 3,496,000 4,860,950 3,496.000 3,178,678 i, 672, 272 9, 289,832 7,607, 039 32,867,373 30,386,113 Total . . * Transfers: From: y Fuel and water .., p Civilian employees. To: Pay and allowances --. Contingent expenses From: Pay and allowances Civilian employees _ To Division of Disbursement Unobligated balance - Trarisferred i $369. 620 $367,685 17 000,000 17,004,187 If +$60,000 -2,000 } 1, 532, 650 1, 477, 700 -40,000 1,416,455 1,401, 982 - Grand total. _ Amount obligated 1, 682, 793 -6,890 2,474,370 $40,000 30,000 _._ . _ $60,000 10,000 _ 2,000 4,890 .-. 6,890 COMPTROLLER OF THE CURRENCY Changes in the condition oj active national banks The total assets of the 5,374 active national banks on June 30, 1936, amounted to $29,702,839,000, in comparison with assets of $26,061,065,000 reported by 5,431 active banks on June 29 of the previous year. The deposits of the active banks in 1936 totaled $26,200,453,000, the largest amount ever reported in the history of the national hanking system, exceeding by $3,682,207,000 the amount reported for active banks a year previous. The loans and investments totaled $20,245,967,000, or $2,160,864,000 more than on June 29, 1935. The assets and liabilities of active national banks on the date of each report from June 29, 1935, to June 30, 1936, are shown in the following statement: REPORT OF THE SECRETARY OF THE TREASURY 121 Abstract of reports of condition of active national banks on the date of each report from June 29, 1935, to June SO, 1936 [In thousands of dollars] June 29, 1936 (5,431 banks) Nov. 1, 1936 (,5,4.09 banks) Dec. 31, 1935 (5,392 banks) Mar. 4, 1936 (6,381 banks) June 30, 1935 (5,374 banks) ASSETS Loans and discounts (including redis7, 606,321 7,430, 864 counts) 7,366,226 7,301,371 4,235 3,463 Overdrafts ^ 3,491 5,190 U. S. Government securities, direct obliga6,564,770 6,480,438 6,233,061 tions 6,077,724 Securities guaranteed by U. S. Govern1, 305, 641 1,260, 635 1,257,342 ment as to interest and principal 1,096,283 3,803,037 3, 666,424 Other bonds, stocks, securities, etc 1 3, 543,379 3, 684,778 Customers' liabilit'y account of accept85, 774 89,101 86,753 80, 906 ances , 647,194 660, 478 647, 677 661,463 Banking house, furniture and fixtures 180, 629 184, 211 183, 242 171, 465 Other real estate owned— _ 3,453, 672 3, 637,060 3, 436,909 3,092,178 Reserve with Federal Reserve banks. 404, 379 469,042 493, 839 406, 513 Cash in vault Balances with other banks and cash items 2 3, 370,530 ! 4,007,999 4,209, 574 4,092, 344 in process of collection 7,689 12,068 Cash items not in process of collection Redemption fund and due from United States Treasurer 12,060 Acceptances of other banks and bills of exchange or drafts sold with endorse4,647 4,692 7,136 8,666 ment 647 647 795 537 Securities borrowed 140,396 158,630 158, 298 180, 623 Other assets Total.. 26,061,066 27,430, 730 28,224, 701 28,293,019 7,759,149 4,193 7,072,979 1,374,385 4,036,261 81, 395 641, 550 184,123 3, 620,901 531,694 4,328, 831 7,501 154, 406 29,702,839 LUBILITIES Demand deposits of individuals, partnerships, and corporations 9,674,923 10,549,984 Time deposits of individuals, partnerships, 6, 646, 982 6,761,989 and corporations 1,924,867 1,846,315 State, county, and municipal deposits U. S. Government and postal savings de632,467 679,655 posits Deposits of other banks, certified and cashiers' checks, and cash letters of credit, and travelers' checks outstand4,163,929 ing — : — 3,671,371 Total deposits 22,618,H6 24, OSS, 2S6 Secured by pledge of loans and/or investments ^ 2,121,816 2,115,605 Not secured by pledge of loans andfor investments 21,911,420 20,402,6il Circulating notes outstanding 222,095 Agreements to repurchase U. S. Govern4,194 2,251 ment and other securities sold 3,833 3,989 Bills payable 1,174 664 Rediscounts Obligations on industrial advances trans37 ferred to the Federal Reserve bank Acceptances of other banks and bills of exchange or drafts sold with endorse4,692 8,666 ment.. 86, 599 75,193 Acceptances executed for customers Acceptances executed by other banks for 8,171 11,963 account of reporting banks 795 637 Securities borrowed Interest, taxes, and other expenses accrued 42,336 68,938 and unpaid Dividends declared but not yet payable and amounts set aside for dividends not 6,910 21,004 declared 98,152 62, 936 Other liabilities Capital stock (see memorandum below).-. 1,809, 503 1,776, 691 865, 965 831, 846 Surplus • 337, 452 297, 967 Undivided profits, net 147,282 143,951 Reserves for contingencies 2,664 3,161 Preferred stock retirement fund... 26,061,065 27,430, 730 Total. 10,911,717 6,816,676 1,979,040 772,683 4,367,617 10,863,696 6,878,346 1, 953, 679 686,905 4, 576, 829 24,847,7S3 24,859,455 2, S66,543 11,665,872 7,074,644 2,108,486 829,903 4, 621,648 26,200,458 2,122,628 2,6O4,698 22,481,190 22,7S6,827 23,596, 855 2,301 2,233 769 1,585 4,330 843 2,425 447 38 7,136 84, 627 4,647 84,289 6,083 81,866 13,066 10, 282 647 13, 794 647 42, 744 50, 343 47,316 26,686 92, 657 1, 758,450 887,934 302, 396 161, 381 6,001 28,224,701 137,460 ., 750, 246 896, 242 327,782 161,066 6,889 28,293,019 28,043 156,449 1, 691,375 973, 393 346,039 147, 219 7,702 29, 702,839 »Includes Home Owners' Loan Corporation 4 percent bonds, which are guaranteed by the United States as to interest only. 2 Includes cash items not in process of collection, the amount of which was not called for separately prior to Dec. 31,1935. 122 REPORT OF THE SECRETARY OF THE TREASURY Abstract of reports of condition of active national banks on the date of each repor from June 29, 1935, to June SO, 1936—Conimwed [In thousands of dollars] June 29, 1935 (5,431 banks) Nov. 1, 1936 (5,409 banks) Dec. 31, 1935 (5,392 banks) Mar. 4, 1936 (5,381 banks) 503,914 21,208 1,288,848 603, 629 21,198 1, 257, 686 487,683 21, 021 1,267, 034 481, 708 21, 021 1, 254,.381 423, 228 20, 261 1, 254, 762 1,813,970 1,782, 313 1, 766, 738 1,757,110 1, 698, 251 2,004,611 720, 798 1,847, 622 680,056 2, 058, 526 686,274 1,871, 796 638, 774 2,362, 684 611,070 June 30, 1936 (5,374 banks) LIABILITIES—continued Memorandum: Par value of capital stock: Class A preferred stock Glass B preferred stock Common stock... Total.... Loans and investments pledged to secure liabilities: U. S. Government obligations, direct and/or fully guaranteed Other bonds, stocks, and securities... Loans and discounts (excluding rediscounts) Total Pledged: Against circulating notes outstanding Against U. S. Government and postal savings deposits Against State, county, and municipal deposits Against deposits of trust department Against other deposits Against borrowings With State authorities to qualify for the exercise of fiduciary powers For other purposes TotaL... 52, 627 31,162 31,894 26, 061 29, 960 2, 778, 036 2, 568, 730 2, 773, 694 2, 536, 631 2,993, 604 225,444 805, 797 752, 252 858,188 705,160 888,956 1,067,782 1,069, 257 1,188,516 1,166,324 1,247,125 411,138 157, 686 6,358 470, 989 155,212 6,673 447, 324 171,022 4,490 393, 639 169,676 6,680 596,785 162, 612 3,347 86,722 17,110 86, 944 17,403 87,393 16, 762 87, 871 17, 281 87,838 16,941 2, 778,036 2, 568, 730 2,773,694 2, 536, 631 Summary oj changes in membership in the national banking system The authorized capital stock of the 5,388 national banks in existence on June 30, 1936, consisted of common capital stock in the amount of $1,255,924,926, a decrease during the year of $36,929,955, and preferred capital stock in the amount of $493,251,922, a decrease during the year of $32,783,365. During the year charters were issued to 19 national banldng associations, with common capital stock aggregating $1,895,000 and preferred capital stock aggregating $355,000. During the year only 69 existing national banks took advantage of the provisions of the act of March 9, 1933, and increased their capital by the issuance of preferred capital stock of an aggregate par value of $21,256,000, while 461 banks reduced their capital by retiring or decreasing their preferred capital stock by $53,956,865. There was a net decrease of 75 in the number of banks, that is, from 5,463 to 5,388, by reason of voluntary liquidations, receiverships, and consolidations. Changes in the number and capital stock of national banks during the fiscal year 1936 are shown in the foUowing summary: 123 REPORT OP THE SECRETARY OP THE TREASURY Organization, capital stock changes, and liquidations of national banks during the fiscal year 1936 Capital stock Number of banks Common $1,520,000 375,000 Charters granted Issues of preferred capital stock, 69 banksi__ Increases of common capital stock: 28 banks, by regular increases 217 banks, by common capital stock dividends 2 banks, by consolidation under act of Nov. 7, 1918.. 2 banks, by conversion of preferred capital stock Preferred $366,000 21,256,000 2,177,140 6,492, 225 200,000 116.660 Total increases.. 10,881,025 7,166,000 Voluntary liquidations. Receiverships... Decreases of capital stock: 92 banks, by reduction of common capital stock... 452 banks, by retirements of preferred capital stock 8 banks, by decreases of par value of preferred capital stock.. 1 bank, by reduction of preferred capital stock Closed under consolidation (act of Nov. 7,1918) and capital stock decreases incident thereto _ 10,375,000 355,000 40,226,980 75,000 Total decreases.. 68,185,980 21,611, GOO 397,500 "'25,'005 49,106,115 4,824,760 26,000 15,000 64. 394, 365 Net decrease in preferred capital stock Net decrease in number of banks and common capital stock Charters in force June 30, 1936, and authorized capital stock 3 76 6,463 32, 783,366 36,929,955 1, 292,854, 881 626, 036, 287 Charters in force June 30, 1936, and authorized capital stock... 6,388 1, 256,924,926 493, 251,922 1 Includes 1 increase of $200,000, effected in connection with a consolidation under the act of Nov. 7,1918. 2 Previously reported in voluntary liquidation. See note 3. 8 Net decrease in tbe number of banks in existence after adjustment of the number of receiverships for 8 banks previously reported in voluntary liquidation. NOTE.—The number of banks and the total amount of capital stock as shown in this summary differ from the figures in the table on p. 121, because the figures above include all banks not in formal liquidation, and give effect to only those adjustments in capital reported prior to June 30, 1936. Some adjustments prior to June 30 had not been reported. The table on p. 121 includes all national banks from which reports were required on June 30. Banks that have discontinued business, although not in formal liquidation, do not submit reports of condition. Reorganized national banks The program with respect to the reorganization of national banks, and banks other than national in the District of Columbia, which were unlicensed at the close of the banking holiday, March 16, 1933, was completed on February 6,1935. Of the 1,417 unhcensed banks, with $1,922,699,000 of imsecured deposits, 1,096, with deposits of $1,772,977,000, were reorganized under old or new charters or absorbed by other national banks; 31, with deposits of $11,513,000, were placed in voluntary liquidation and left the national system; and 290, with deposits of $138,209,000, were placed in receivership for liquidation under the supervision of the Comptroller of the Currency. During the fiscal year 1936 liquidating dividends amounting to $80,093,000 were paici by trustees for waiving creditors and receivers of banks unlicensed on March 16, 1933. Up to June 30,1936, unsecured liabilities aggregating $1,508,894,000 were released, which represents 78.48 percent of the total unsecured Uabihties on March 16,1933. Of the 1,417 banks, 554 released 100 percent of unsecured habilities at or subsequent to reorganization. 124 REPORT OF THE SECRETARY OF THE TREASURY BUREAU OF CUSTOMS Collections For the third consecutive year, customs collections increased over those fbr the preceding year. Total coUections of $388,784,948 in 1936 represented an increase of 12.2 percent over 1935 and 23.6 percent over 1934. The increase in 1936 over 1935 was largely the result of increased collections on dutiable imports of wool, metals, and agricultural products, which more than offset the moderate decline in collections on imports of sugar, distilled spirits, and certain other commodities. The volume of imports of distilled spirits increased in 1936 but collections of duties declined owing to the reduction in rates of duty on rum, gin, and whisky under various reciprocal trade agreements. Customs collections and refunds for the fiscal years 19S5 and 1936 [On basis of accounts of Bureau of Customs] 19361 1936 Collections: $344,941,758 Duties Miscellaneous: $1,036.979 Fines and forfeitures Liquidated damages 239,124 Sale of seizures 170,264 Sale of unclaimed and abandoned merchandise. 85,974 All other customs receipts 48,012 Total miscellaneous Total collections Refunds: Excessive duties Drawback payments Total refunds. - 1, 580,363 1,843,613 346, 522, 111 388,784,948 7,062, 345 13, 727,160 . „ . » Revised. ..., „ $386,941,335 $1,436,135 286,368 43, 262 32, 971 45,877 6, 718,328 10,022, 656 16,740,884 20, 789, 506 Volume oj business Entries oj merchandise.—The number of entries of merchandise increased 13.4 percent, from 2,393,049 in 1935 to 2,712,954 in 1936. All types of entries contributed to this increase as shown in the foUowing table: Entries of merchandise, fiscal years 1935 and 1936 Consumption entries Warehouse and rewarehouse entries. Warehouse withdrawals Mail entries Baggage entries Informal entries. Another Total 19351 1936 Increase 449,065 65, 765 323, 473 475, 445 418,403 188,135 482, 763 507,431 68,929 379,124 527, 261 480,048 206, 436 643, 726 Percent 13.0 23 6 17.2 10 9 14.7 9.7 12.6 2,393,049 2, 712,954 13.4 1 Revised. Vessely airplane, and highway traffic.—The number of vehicles and passengers entering the United States from abroad increased in practicaUy aU cases during the fiscal year 1936 as compared with the preceding year, as shown in the foUowing statement: REPORT OF THE SECRETARY OF THE TREASURY 125 Number of vehicles and persons entering the United States from abroad, fiscal years 1935 and 1936 1935 Vehicles: Automobiles and busses Documented vessels Ferries and other vessels Passenger trains Airplanes Other vehicles ._ Passengers by: Automobiles and busses Documented vessels Ferries and other vessels Passenger trains Airplanes Other vehicles Pedestrians Total passengers and pedestrians 1936 Increase (+), (-) 9,293, 535 1 28,524 1 189,918 35,836 4,816 323,952 9,992,312 29, 601 191, 648 34,086 4,588 328, 762 Percent +7.5 +3.8 +0.9 -4.9 -4.7 +1.5 25,604,405 ' 811,547 1 2, 627. 032 936, 538 27, 001 1, 548, 857 10,174,956 209, 538 898. 267 686, 796 991,351 27,111 874, 050 601,967 +6.3 +10.7 +2.2 +5.9 +0.4 +21.0 +4.2 » 41, 730,336 44, 288,079 +6.1 1 Revised. Drawback transactions.—The number of drawback entries increased from 18,455 in 1935 to 19,443 in 1936, or 5.4 percent. Drawback payments, on the other hand, as a result of the reduction in rates of duty on sugar, declined from $13,727,160 in^ 1935 to $10,022,556 in 1936. Of the notices of intent to export with the benefit of drawback, 177,812 original notices were filed in 1935 and 202,728 m 1936, of which 68,588 in 1935 and 80,386 in 1936 were forwarded to other districts for final disposition. Under authority of section 318 of the Tariff Act of 1930, the President, by proclamation, authorized the Secretary of the Treasury to extend, for a further period of not more than one year, the time during which (1) merchandise imported durmg 1930, 1931, 1932, and 1933 may remain in warehouse, (2) proof of use may be furnished that wool or camel's hair imported or withdrawn from warehouse, under bond, during 1930, 1931, 1932, and 1933, has been used in prescribed manufacture, and (3) articles manufactured in the United States may be exported with benefit of drawback where the merchandise concerned was imported during certain periods of 1930, 1931, 1932, and 1933. Such extensions were granted by the Secretary of the Treasury during 1936 under Treasury Decisions 48118, 48148, and 48159, respectively. Law enjorcement activities Seizures.—The number of seizures made for violations of customs Faws continued to dechne, totaling only 14,641 during 1936, a decrease of 6,258 from the previous year. This decrease, as in the case of that of the previous year, was due to a further decline in the number of lottery and liquor seizures. The lottery seizures decreased from 9,313 in 1935 to 3,953 in 1936, since most lottery cases are now handled by the Post Office authorities. Liquor seizures declined from 5,226 in 1935 to 3,252 m 1936, due to the further extension of 'Vet'/ States along the border. The value of seizures declined from $2,403,718 in 1935 to $1,590,968 in 1936, a difference of $812,750, Seizures of alcohol in 1936 aggregated 101,604 gallons valued at $426,326 as compared with 138,040 126 REPORT OF THE SECRETARY OF THE TREASURY gallons valued at $1,417,973 during the previous year. A small decrease in the quantity and value of wine and malt liquor seizures was more than offset by an increase in the quantity and value of distiUed liquor seizures. The value of merchandise seizures in the fiscal year 1936 aggregated $451,442, an increase of $145,229 over the previous year. The seizures in 1936 include watch movements to the value of $74,696; chinaware, $64,066; jewelry, $54,930; electric light bulbs, $36,567; and wearing apparel, $27,979. In addition to the goods which were seized, claims were initiated against importers in connection with various irregularities and frauds discovered after the goods had gone into consumption. These claims amounted to $5,035,269 and showed a slight decrease under the amount involved in similar cases initiated during the previous year. The efforts of customs officers to suppress the smuggling of narcotics resulted in 202 seizures'of narcotic drugs valued at $110,129 in 1936 as compared with 158 seizures valued at $65,663 during the previous year. The quantity of narcotic drugs seized during the past year aggregated 15,279 ounces. A single seizure at Los Angeles consisted of 3,393 ounces of smoking opium; another at San Francisco, 3,200 ounces of the same drug; and a third at Seattle, 288 ounces of morphine. In connection with the violation of customs laws 623 automobiles, 74 boats, and 3 airplanes, with an aggregate value of $376,134, were seized, a decrease of 92 automobiles, 25 boats, and 3 airplanes from 1935. Customs officers also effected 7,296 seizures for other agencies of the Government and detained 728 persons for the violation of immigration, narcotic, and other laws. Fines J penalties, etc.—The total collections of fines, penalties, etc., because of violations of laws pertaining to the Customs Service aggregated $1,764,765 in 1936 as compared with $1,446,367 m 1935. Almost half of the total collected in 1936, or $857,542, represented liquor fines, of which $843,413 consisted of penalties assessed in cases which originated prior to the repeal of the eighteenth amendment. In addition, six major cases involving the smuggling of liquors during the prohibition period were settled during the past year. The aggregate recoveries by the Government in these cases will amount to $3,500,000. Penalties collected for undervaluations and false invoicing aggregated $207,085 in 1936 as compared with $334,221 in 1935. Penalties for failure to declare foreign merchandise, which during 1933 and prior years constituted a substantial portion of the total collection of fines and forfeitures, declined to $49,445 in 1936. The net proceeds from the sale of seized articles by collectors of customs declined from $170,264 m 1935 to $43,262 in 1936, and the proceeds from sales by court order decreased from $274,961 to $127,067 in 1936. These decreases in 1936 were chiefly due to the large decline in sales of forfeited liquor in 1936 as compared with 1935. . Coordination with other agencies.—The coordination plan adopted during August 1934, which brought about close cooperation between the Coast Guard, Alcohol Tax Unit, Bureau of Narcotics, Secret Service, and Customs Service, remained in operation during the past year. The increased effectiveness of the law enforcement branches of these agencies as a result of this coordination has been most gratifymg. REPORT OP THE SECRETARY OF THE TREASURY 127 Smuggling Three attempts of major importance to smuggle watch movements into the United States were frustrated during the year by the vigUance of customs field officers. In two of these cases '^carriers" were employed in an attempt to evade the payment of duty; the arrest of both carriers and their subsequent confessions resulted not only in seizures of considerable magnitude but also in the arrest and indictment of the principals. In another case the watch movements were sent by first-class mail, concealed in toy roulette wheels, to the employee of a watch company in care of hotels in various cities in the United States. Subsequent investigations, both in this country and abroad, proved a conspiracy to exist among the officers and owners of the company, whereby the Government had been defrauded of approximately $19,000 in duties during the period of about 1 year. Two of the principals pleaded guUty and each was sentenced to the penitentiary and fined $10,000. As a result of the prosecution of certain elevator companies in North Dakota, which during the fiscal year 1935 knowingly received smuggled grain, the United States District Court rendered a decision during the past year on behalf of the Government for the recovery of the forfeiture value of the smuggled grain under the provisions of section 592 of the Tariff Act of 1930. This decision constitutes, it is believed, a precedent for a recovery under this statute, and wUl undoubtedly operate as a deterrent to individuals and concerns in business dealings with smugglers of products from Canada. In April 1936, customs officers discovered a small tanker from which alcohol was being pumped through a pipe line to storage tanks located approximately 1,000 feet from the water front. As a result about 50,000 gallons of Belgian alcohol were seized and the tanker forfeited to the United States. This seizure prevented the discharge of the balance of the cargo of alcohol, 135,000 gallons, on board a foreign vessel off shore, which returned immediately to Europe. Two groups of fur smugglers were broken up during the past year, one through the apprehension of a customs border patrolman who was aiding the operators, and the other through the seizure in Vermont of $12,000 worth of sUver fox skins and the arrest and subsequent conviction in the Federal courts of seven members of the ring. These cases are illustrative of the many that might be cited as evidence of the activity and vigilance of customs field officers in the detection and suppression of smuggling. Miscellaneous The Bureau of Customs, through its legal divisions, has participated actively in the consideration of the many legal questions arising in the administration's reciprocal tariff bargaining program. I t has likewise participated in the examination of several applications for licenses for foreign trade zones, as authorized by the act of June 18, 1934 (U. S. C , title 19, sec. 81a-u), and in the granting of a license for such a zone in the Port of New York. The Bureau has devoted considerable attention to the questions involved in the application of countervaUing duties under section 303, Tariff Act of 1930 (U. S. C , title 19, sec. 1303), upon the importation of articles in connection 128 REPORT OF THE SECRETARY OF THE TREASURY with the production or exportation of which a bounty or grant was paid or bestowed in a foreign country by means of currency manipulation and other procedures. During 1936, new compensatory taxes were assessed on the importation of various products and certain changes in duties were made under the fiexible tariff provisions, which necessitated additional administrative and interpretative work. Changing conditions and processes of manufacture created new problems under the general tariff* laws, which called for the formulation of many decisions. During the year a ^'Digest of Customs and Kelated Laws and of Decisions Thereunder" was completed, which presents a compUation of the laws under which the Customs Service operates and a digest of the decisions which interpret and define the statutory provisions. This should be of invaluable service both to importers and to customs officers in the proper classifications of merchandise for the imposition of duties and in reaching decisions regarding the scope and application of the general provisions of customs laws in specific cases. Correspondence School oj Instruction.—As an aid to a more thorough knowledge of all branches of the service, a Correspondence School of Instruction was established during the early part of the fiscal year. The course of instruction, which embraces about 40 major customs subjects, has been made avaUable to all officers and employees of the Customs Service and to the personnel of those departments and branches which cooperate with the Customs Service in the discharge of duties in which there is a mutual interest. WhUe it is compulsory only that a customs officer or employee shall enroll for those subjects covering the work he is actuaUy performing, more than one-third of the employees are enrolled for the entire course. Such instruction is designed to raise the morale and spirit of the personnel, thereby mcreasing the efficiency of administration. Division oj Laboratories.—A Division of Laboratories was estabhshed on AprU 1, 1936, by Treasury Decision 48228, with headquarters in Washington, to provide a uniform and more efficient laboratory service. All of the field laboratories, which were formerly under the supervision of the collectors of customs, were placed under the technical and administrative supervision of the chief of this division. Investigative Unit Port examinations.—During the fiscal year the Port Examination Commission of the Customs Agency Service examined the accounts and procedure in 16 customs collection districts. The purpose of these examinations is to secure uniformity and greater efficiency in the conduct of the customs business throughout the country. In addition, customs agents conducted 249 examinations of the financial accounts of collectors of customs. . Civil and criminal cases.-—All important criminal cases incident to seizure or cases involving civU liabilities for the violation of customs laws are investigated, reported, and followed through the courts by customs agents, who collaborate with the United States attorneys in the actual presentation of testimony during trials. These agents made, or assisted in making, 759 arrests during the past fiscal year and aided in securing 416 convictions as compared with 31 acquittals and 155 faUures to indict. REPORT OP THE SECRETARY OF THE TREASURY 129 Customs joreign service.—Customs officers in the foreign service continued their investigations of foreign or export values of merchandise exported to the United States so as to provide for the appraisal of imported merchandise at its proper value and to prevent dumping. In addition, they reridered valuable service in the detection of smuggling of narcotics, jewelry, watch movements, and other merchandise. Customs injormation exchange.—This branch of the service disseminates information with respect to foreign market values, classification of imported merchandise, and simUar data. It is a clearing house for requests by appraising officers for foreign investigations and an archive for reports submitted by Treasury attaches in response to these requests. The following statement summarizes the activities of the exchange during the past fiscal year: Number Appraisers' reports of values received 13,463 Appraisement appeal reports received.. 3,247 Changes in value circulated 2,416 Requests for investigations abroad 1,946 Reports received in response to requests for investigations abroad. ..1 ,.... 2,678 Reports received of original investigations by Treasury attaches, and price lists received from American consuls.. 5,667 Differences in classification reported between field ports and classification at port of New York... 586 Summary.—The following statement, compiled from the records of the Investigative Unit, shows the results achieved through the activities of the Customs Agency Service during the fiscal year, insofar as direct results can be measured by a summation of individual cases: Examination of financial accounts of collectors of customs Drawback investigations Foreign investigations conducted by members of the domestic service Arrests Convictions _. Acquittals Failures to indict Indictment cases pending Seizures made Seizures appraised Seizures released or pending _ Appraised value of seized merchandise Merchandise entered free but found dutiable Fines, penalties, and forfeitures incurred, exclusive of court Bail forfeitures . Fines imposed by United States courts Increased and additional duties collected Deposits as offers in compromise Proceeds of sale of seized merchandise Drawback payments refunded _ fines _ Number 249 1,634 787 759 416 31 165 198 1,916 1,882 272 Amount $1,186,370 42,003 496,473 8,260 131,389 202,992 1,256,069 36,183 36,396 BUREAU OF ENGRAVING AND PRINTING The deliveries of currency, securities, stamps, and misceUaneous work by the Bureau during the year amounted to 401,216,667 sheets, as compared with 366,380,624 for the previous year, an increase of 34,836,043 sheets. A comparative statement of deliveries of finished work follows: 93790—37 10 130 REPORT OF THE SECRETARY OF THE TREASURY Deliveries of finished work in the fiscal years 1935 and 1936 Sheets Face value. 1936 1935 Currency: U n i t e d States notes Silver certificates Gold certificates. National bank currency. _ Federal Reserve notes _ . . . Total B o n d s , notes, certificates, a n d bills: Pre-war b o n d s Liberty b o n d s . . _ Treasury bonds U n i t e d States savings b o n d s Adjusted service b o n d s Treasury notes. T r e a s u r y bills Certificates of i n d e b t e d n e s s Insular bonds: Philippine Islands _ Puerto Rican F a r m loan b o n d s Consolidated farm loan b o n d s Collateral t r u s t d e b e n t u r e s Consolidated collateral t r u s t d e b e n t u r e s Federal F a r m Mortgage Corporation b o n d s . H o m e O w n e r s ' L o a n Corporation b o n d s . . . Reconstruction Finance Corporation n o t e s . C u b a n silver certificates, including in t h e fiscal year 1936 certificates for t h e Secret a r y of t h e T r e a s u r y of t h e R e p u b l i c of Cuba P h i l i p p i n e t r e a s u r y certificates N o t e s for t h e B a n k of t h e P h i l i p p i n e Islands I n t e r i m certificates for Federal H o u s i n g A d m i n i s t r a t i o n m u t u a l mortgage insurance fund d e b e n t u r e s • I n t e r i m certificates for P u e r t o R i c a n b o n d s I n t e r i m transfer certificates for postal savings b o n d s Specimens: Treasury bonds U n i t e d States savings b o n d s Adjusted service b o n d s . T r e a s u r y notes Certificates of i n d e b t e d n e s s Insular bonds: P h i l i p p i n e Islands Puerto Rican - F a r m loan b o n d s Consolidated farm loan b o n d s Consolidated collateral t r u s t d e b e n t u r e s F e d e r a l F a r m M o r t g a g e Corporation bonds . H o m e O w n e r s ' L o a n Corporation b o n d s . Reconstruction F i n a n c e C o r p o r a t i o n notes I n t e r i m certificates for Federal H o u s i n g m u t u a l mortgage insurance fund debentures Total Stamps: Customs Internal revenue: U n i t e d States P h i l i p p i n e Islands Puerto Rican Virgin I s l a n d s . . D i s t r i c t of C o l u m b i a Federal m i g r a t o r y bird h u n t i n g s t a m p s . Tax-exempt potato stamps F o r experimental purposes Specimens, U n i t e d States Postage: U n i t e d States C a n a l Zone Philippine Islands..^ Specimens, U n i t e d S t a t e s ' 1936 960.000 44,467,000 3,600 1,909,959 7,644,160 4,250,000 67,009,000 $203,520,000 1,161,748,000 16,272,400 2,624,460,000 54,974, 609 77,531,400 3, 979, 728,000 67,860 i4i; s m i 1, 988,162 2,920,000 505,450^2 14,110 760 10,810 1,2621^ 28.246 801,809 10,402 3,847,037 7,030,900 3,850 473, 756 1,417, 500 129,900 31,875 9,376, 778,400 693, 750,000 1,857,100,000 10.698,040, 000 4, 731,810,000 510 12,05m 20,483Ho 319,430 935 12,950 92, 600 1,066,000 3,800 510,000 27,335,000 11,701,460 603,950,000 10,000,000 361, 500,000 769,460, 000 1, 278,175,000 364,260,000 374,166^ 2,184,000 75 500 3,973 3,000 2,000 21^ 1 41.^ 2 6 4 16 26,663,000 1,340,48m 2,487, 600 9,286.600 353,7371.^ 19,142 600 10, 000,000 10, 269,000 m 5 21^ 1 35 4 22 22 14 14 6 4 2 9 1 19,386,783H 160, 600 127,956,4823^04 11,000 856,279 260 97,146H 30,887 12 2,09416^04 140,642,8261^7 52,470 892,620 1736J^a 17,601,253^0 258,000 130,711,'73212^04 13,825 860,600 60 111, 295 18, 350 7,637H 20 137,265, 788 96,022 439,116^ 1416Ji6 30,830,271,860 Subjects, 1936 7,890,000 11,112,490, 395 1, 915, 300 59,481,000 6,000 22, 259,000 2,055, 200 2, 749,440 1,856 13,963,999,957 8, 569,600 36,924,600 17,640 REPORT OF THE SECRETARY OF THE TREASURY 131 Deliveries of finished work in the fiscal years 1935 and 1936—Continued Sheets 1935 stamps—Continued. Postal savings.. 6,582 Total 270,709,323127^700 Miscellaneous: Checks Drafts Warrants Commissions Certificates Transportation requests.. Circular letters Other miscellaneous Blank paper Specimens For experimental purposes For exhibition purposes: Postal savings certificates of deposit Special stamps on United States postage stamp paper Total. Grand total-. 15, 713, 669 49,000 27, 0801^ 4,460,766 323, 600 474, 960 258, 612 2,381 60 1936 23,814 269,806,2927^^55 31,368,322H 500 48,410 142,179^ 4,120,894^^ 417, 320 160,121 1,701 100 2,100 IH 21, 309,9083^ 366,380,62442^700 Subjects, 1936 2, 381,400 25, 220, 740,187 166,866,050 2,000 227, 706 89, 280 18,061,672 2,086, 600 4, 660,479 500 26,200 9 16,07023/g, 4, 338,160 36,277,72097^1530 186, 356, 656 401,216,66664J^65 The following dies for new postage stamps were engraved during the year: Issue Boulder Dam Michigan Centennial Trans-Pacific Air Mail Texas Centennial Denomination, cents 3 3 26 3 Issue Rhode Island Tercentenary Arkansas Centennial. Oregon Territory Centennial.. Special delivery air mail (bi-color) Denomination, cents 3 3 3 16 One of the major tasks during the year was the printing of the new $1 silver certificates. These certificates, series 1935, have an entirely new design on the back which presents the obverse and reverse of the great seal of the United States. The face of the certificate shows only minor changes, but its production embodies a new process whereby the signatures of certifying officers are overprinted from steel dies when the bUls are numbered and sealed. This mechanical improvement makes it possible to have new signatures on currency within a short period after a change in certifying officers. Another major task was the printing of the adjusted service bonds which had to be available for delivery to veterans on June 15, 1936. Inasmuch as this work had to be accomplished within a period of 3 months, the temporary employment of about 700 persons was required. About 37,000,000 bonds were delivered to the Division of Loans and Currency by June 15. The Bureau continued the exhibit of printing at the CaliforniaPacific International Exposition in San Diego, and sponsored a similar exhibit at the Texas Centennial Exposition in Dallas. On August 12, 1935, Congress authorized the construction of a new annex to the Bureau of Engraving and Printing to be located on a site opposite the present building, on the east side of 14th Street, between C and D Streets SW. Plans for this building have been completed by the Procurement Division and a contract for its erection^ at a cost of approximately $6,300,000, has been awarded. The 132 REPORT OF THE SECRETARY OF THE TREASURY annex will be connected with the main building by a tunnel under 14th Street and with the freight yards for the handling of carload shipments by a tunnel under^ D Street. The work of clearing the site preliminary to the erection of the buUding has already been started. There was expended during the year for salaries and expenses $9,658,546, as compared with $8,760,831 for the previous year, or an increase of $897,715. The following statement shows the appropriations, reimbursements, and expenditures for the fiscal years 1935 and 1936: Appropriations, reimbursements, and expenditures for the fiscal years 1935 and 1936 1936 Appropriated by Congress, salaries and expenses 1 $4,668,060.00 Appropriation warrant no. 175, June 21,1935, for restoration of 5 percent salary reduction and amount to cover 40-hour week . 406.000.00 Transfer appropriation warrant no. 180, June 26, 1935, 400,000.00 "Collecting the internal revenue" Appropriation warrant no. 12, Aug. 12, 1935, "Second Deficiency Appropriation Act, fiscal year 1935" 491,780.00 Reimbursements from other bureaus for work completed 2 _ 3,649, 252. 77 Total-Expended, salaries and expenses 3 _ __ __ Unexpended balance (including compensation deductions for 9 months in the fiscal year 1935) 1936 Increase (-f), decrease (—) $6,988,247.00 -f $1,420,187.00 —405,000.00 -400,000.00 -491.780. 00 4,351,800.99 -f702, 648. 22 9, 514,092. 77 10, 340,047. 99 4-826, 965. 22 • 8,760,830.88 9, 658, 645. 45 +897,714. 67 763,261.89 681, 502. 54 -71,759.35 1 Includes $10,994 for salaries of employees transferred to the Procurement Division and the Division of Disbursement, Treasury Department. 2 An additional amount of $8,803.60, received from sale of by-products and useless property, was deposited to the credit of the Treasurer of the United States as miscellaneous receipts. 8 Includes $8,000 transferred to Bureau of Standards for research work in each of the fiscal years 1935 and 1936, and $263,829.22 and $301,156.25 transferred to retirement fund in the fiscal years 1935 and 1936, respectively. * Exclusive of $288,024.80, the amount for 6 percent compensation deductions for 9 months in the fiscal • year 1936. COMMITTEE ON ENROLLMENT AND DISBARMENT ^ The Committee on EnroUment and Disbarment is an administrative and judicial body. I t has charge of the enrollment of attorneys and agents for practice before the Treasury Department and conducts hearings in disbarment proceedings. An attorney, not a member of the committee, represents the Government before the committee. All complaints are filed with the attorney for the Government, who institutes proceedings in disbarment or suspension if the charges warrant such action. Department Circular No. 559, issued May 16, 1936, makes it the duty of the committee to issue licenses to customhouse brokers and to make findings of fact and recommendations to the Secretary in proceedings for the revocation or suspension of such licenses. REPORT OF THE SECRETARY OF THE TREASURY 133 The following statement summarizes the work of the committee for the year 1936, including the licensing of customhouse brokers from May 16, 1936: Attorneys and agents: Applications for enrollment approved Applications for enrollment disapproved. Complaints against enrolled persons: Pending July 1, 1936-_. Filed during the year Number 4,619 34 72 33 •. Disposed of: Dismissed Dismissed upon disciplinary action on another complaint-Disbarments Stricken from the rolls in the course of disbarment proceedings Suspensions Reprimands and admonitions Dismissed subject to reinstatement 20 3 11 16 6 5 3 Pending June 30, 1936...^ 63 42 Charges made, names stricken from the rolls. Disbarments vacated and names stricken from the rolls . _ Cases of minor infractions of the regulations disposed of, where enrollees are given an opportunity to show cause why proceedings should not be instituted... Customhouse brokers: Applications for licenses approved Applications for licenses denied Licenses revoked Licenses canceled.J Complaints dismissed 106 - 19 2 32 12 3 6 5 6 Since the organization in 1921 of the Committee on Enrollment and Disbarment, 43,682 applications for enroUment have been approved and 574 disapproved. One hundred and eighty-five practitioners have been disbarred from further practice before the Treasury Department, 128 have been suspended from practice for various periods, and 167 have been reprimanded. In 16 cases the order of disbarment has been vacated and in 14 of these cases the practitioners have been restored to practice before the Department. FEDERAL ALCOHOL ADMINISTRATION The act approved August 29, 1935, abolished the Federal Alcohol Control Administration, established by Executive order under the provisions of title I of the National Industrial Recovery Act, and created the Federal Alcohol Administration as a division in the Treasury Department. Under the Liquor Tax Administration Act of June 26, 1936, the Federal Alcohol Administration was made an independent establishment of the Government, the office of Administrator of the Federal AlcohoL Administration was abolished, and the Federal Alcohol Administration is to be composed of three members appointed by the President, with the consent of the Senate. The provisions relative to the establishment of an independent agency wiU become effective when a majority of the members of the Federal Alcohol Administration take office. This requirement had not been complied with on June 30, 1936. The provisions of the act of August 29, 1935, became effective on September 24, 1935, the date the Federal Alcohol Administrator took office. Under the terms of this act the Federal Alcohol Administration is charged with regulating the fair trade practices of alcoholic beverage producers, importers, and distributors, with a view to the elimination of tied-house relationships, commercial bribery, consign 134 REPORT O^ THE SECRETARY OF THE TREASURY ment sales, bulk distribution of distilled spirits, and false or deceptive labeling and advertising practices. During the year, following extensive public hearings, the Departnient issued regulations governing the labeling and advertising of distilled spirits and wine, the issuance and revocation of permits, the nonindustrial use of distilled spirits and wine, the bulk sale and bottling of distUled spirits, and the furnishing of equipment and other things of value to retail outlets. All regulations required to be issued were promulgated during the year except those regulations relating to the establishment of periods of credit and to the labeling and advertising of malt beverages. Permit Division The permit requirements of the Federal Alcoholic Administration Act with respect to distillers, rectifiers, wine producers and blenders, and importers became effective 60 days after the date on which the Administrator first appointed under the act took office, or on November 23, 1935. The effective date of the wholesalers' permit requirements, originally fixed as March 1, 1936, was extended to July 1, 1936, by the public resolution approved February 29, 1936. The ^ following statement embodies the permit activities of the Administration up to June 30, 1936: Permit activities, November 23, 19S5, to June SO, 19S6 Applications for p e r m i t s : Received..... Withdrawn _ Incomplete P e n d i n g , complete Notices of c o n t e m p l a t e d d e n i a l , (a) F i n a l denial after hearing • (6) F i n a l denial in default of r e q u e s t for hearing, (c) P e r m i t s issued after hearing Permits: Issued Canceled I n effect J u n e 30,1936 Distillers Rectifiers Importers Wine producers a n d blenders Warehousing a n d bottling 1 Wholesalers 2 619 9 2 17 6 502 7 0 15 1 1,111 34 17 40 10 1,436 25 7 33 67 1 0 3 0 9,796 87 146 129 128 13,421 163 172 237 147 0 0 0 0 1 2 0 30 33 0 11 12 3 1 Total 1 0 2 '0 1 0 487 23 474 39 1,023 36 1,368 36 53 8 9,321 63 12, 726 195 3 464 435 987 1,332 45 9,268 12, 531 0 0 1 Warehousing and bottling permits issued to proprietors of bonded warehouses only. Such permits are held also by all distillers and rectifiers. 2 Wholesalers' permit requirements became effective July 1, 1936. 3 Of the 464 distillers' basic permits, 88 merely authorize the operation under lease of existing distilleries, and the remaining 376 permits cover actual authorized distilling plants. Label Examination Section Under the terms of the Federal Alcohol Administration Act and regulations promulgated thereunder, no bottler or importer may bottle or remove from customs custody for consumption distilled spirits, wine, and malt beverages, unless the bottler or importer, upon application to the Administration, has obtained and has in his possession a certificate of label approval or a certificate of exemption if these beverages are not to be sold, offered for sale, or shipped or delivered for shipment, or otherwise introduced, in interstate or foreign commerce. 135 REPORT OF THE SECRETARY OF THE TREASURY The act was amended on February 29, 1936, by extending the limit of time within which the Administrator can fix the effective date of the provisions respecting labels from March 1, 1936, to August 15, 1936, for distUled spirits, and to December 15, 1936, for wine and malt beverages. During the year there were filed with the Administration 4,981 applications for approval of labels for distUled spirits imported in bottles, 39,470 applications for approval of labels for domestically bottled distiUed spirits, and 1,898 applications for exemption from label approvals for distUled spirits. At the end of the fiscal year, the Administration had acted upon 3,871 applications for approval of distUled spirits imported in bottles. Of this number, 1,465 were issued unlimited general approvals, 1,268 limited approvals, and 1,138 disapprovals. Action on 25,234 applications for approval of labels for domestically bottled distilled spirits resulted in the approval of 11,065, and the disapproval of 14,169. No action was taken on 16,543 applications for certificates of label approvals received for wine, preference being given to the applications covering distilled spirits because of the earlier eftective date of the latter. Enjorcement Division The Enforcement Division conducted 953 field investigations. The large majority of these investigations were made at the request of the Permit Division and related to permit applicants, although several were based on alleged violations of the restrictive provisions of the act of August 29, 1935. In 93 of the permit investigations, evidence was secured establishing illegal, sales into dry or monopoly States, in violation of the twenty-first amendment. Following is a tabulation of the two groups of investigations, classified by industries: Investiga- Investigations of tions of permit alleged appli- violations cants Brewers Wine producers and blenders. Distillers Rectifiers-_ 167 241 27 14 41 3 7 45 9 Investiga- Investigations of tions of permit alleged appli- violations cants Wholesalers - _ General .» Total 326 53 21 774 179 Since May 1, 1936, the effective date of most of the regulations relating to the advertising of distilled spirits and wine, liquor advertisements in prominent newspapers and magazines have been examined, and up to June 30, 1936, 178 cases involving one or more violations of these regulations were handled. The violations involved in these cases were practically all of a somewhat minor, technical nature, and the irregularities were corrected in all instances. Two offers in compromise were secured by the Enforcement Division, in connection with alleged violations of section 5 (b) (3) of the act. Seven cases were forwarded to the Legal Division recommending the institution of permit proceedings on the basis of various violations established through field investigations. A large number of cases which had been investigated, and were pending as of June 30, 1936, wiU doubtless result in the securing of compromise offers or the recommendation of permit proceedings or prosecution. 136 REPORT OF THE SECRETARY OF THE TREASURY BUREAU OF INTERNAL REVENUE General Internal revenue collections.—Collections from internal revenue and agricultural adjustment taxes during the fiscal years 1935 and 1936 are shown in the following summary, classified according to the administrative organization responsible for the audit of returns. A detaUed statement of collections appears in table 7, page 366, of this report. Summary of internal revenue collections for the fiscal years 1935 and 1936 [On basis of reports of collections, see p . 312], Source Income Tax Unit: Corporation income tax Individual income tax Totalincoru'e tax Excess-profits tax . . . . Dividend t a x . - ._ _ . __. Total. Alcohol Tax Unit: Distilled spiiits, imported, excise tax Distilled spirits, domestic, excise tax Distilled spirits rectification tax Bottle, container and case stamps. _ Wines, imported, excise tax Wines, domestic, excise tax Brandy for fortifying wines Floor taxes, spirits and wines Fermented malt liquors, excise tax Special, or occupational, taxes Total Miscellaneous Tax Unit: Capital stock tax Estate and gift taxes Tobacco manufactures tax Sales taxes (stamp, manufacturers' excise, admissions, communications, oleomargarine, etc.) .- -- _. . Silver bullion transfer tax Bituminous coal tax Railroad carriers and employees taxes Agricultural adjustment taxes Total Other miscellaneous collections __ . Total collections. _ Increase or decrease ( - ) 1936 1936 $672,117,876. 28 627,112,606.42 $738,622, 229. 75 674, 416,074.14 $166,404,353. 47 147, 303,667.72 1,099, 230,382. 70 1,412,938,303.89 6, 660,482. 64 14,609, 290.47 398, 790. 27 961,479.73 313,707,921.19 7,948,807.83 —562, 689.46 1,106, 752, 345.07 1,427,846,384. 63 321,094,039. 66 16,107,926.36 160, 525,646.92 6,381,567. 64 6,179, 614.12 666,896. 68 6,113,920.11 662,398.16 3, 021, 646. 76 211, 215,057. 05 11, 248,310. 76 19,658,166.96 202,872, 340. 44 7,881,202.76 8,662,129.03 654,727. 50 8,313, 605.17 1,410, 745.04 66,941. 68 244, 581, 330.96 11,462,948. 66 4,460,239.60 62, 346,693. 62 1,499,646.22 2,482,614.91 —11,168.08 2,199, 585,06 848,346.89 - 2 , 954, 604. 08 33, 366, 273. 91 214, 637.80 411, 021, 772. 36 605, 464,037.10 94,442, 264. 75 91, 508,121. 29 212, 111, 959. 23 459,178, 625.46 94,942,751. 74 378,839,515.00 601,165, 728. 39 3,434, 630. 45 166, 727,566. 77 41,987,102. 93 491,477,138.80 1,149,390. 48 538,835.340.64 686,188. 23 729, 217. 68 48, 278. 74 71,637,206.70 47,368,201. 74 —464, 202. 26 729, 217. 68 48,278. 74 -464, 585,161.54 526, 222,368. 24 1, 781,647, 593. 60 1,686,883,227.02 13, 861. 26 3,299,435,672.18 14, 732. 34 3,520,208,381.09 —194,764,366.48 871.08 220,772,808.91 Rejunds.—No deductions were made on account of refunds in the foregoing statement. Refunds were paid from the several appropriations during the fiscal year 1936, as follows: Refunding taxes illegally collected, 1935 and prior years.$22,974,319.23 Refunding internal revenue collections, 1936 and prior years 6,663,645.19 Advances to Agricultural Adjustment Administration (transfer to Internal Revenue for refunding processing taxes). 9,056,119.27 Administration of Cotton Act of 1934 (transfer to Internal Revenue for refunding cotton ^ taxes, 1934-36) 1. 1,808.97 Advances to Department of Agriculture under Tobacco Act of 1934 (transfer to Internal Revenue for refunding tobacco taxes, 1934-36) 6,928.33 Total, interest included .' 38,701,820.99 REPORT OF THE SECRETARY OF THE TREASURY 137 The refunds, showing the number of claims, the amount of refunds and repayments, and the total refunds, repayments, and interest on each class of tax during the fiscal year 1936, and a comparison of the total for the fiscal year 1935, are shown in the foUowing summary: Number of claims, amount of refunds and repayments, and total refunds, repayments, and interest, by class of tax, during the fiscal year 1936, and totals for the fiscal year 1935 Bituminous coal Capital stock Distilled spirits Distilled spirits stamps redeemed Distilled spirits drawbacks Estate Gift Income Miscellaneous... Miscellaneous stamps redeemed Narcotics Narcotic stamps redeemed Sales Silver Silver stamps redeemed Tobacco . Tobacco stamps redeemed Tobacco drawbacks Total Agricultural adjustment taxes... Cotton ginning taxes Tobacco sales tax ... Grand total, fiscal year 1936 Fiscal year 1935: Income and miscellaneous internal revenue. Agricultural adjustment taxes Grand total, fiscal year 1936 Refunds and repayments Total refunds, repayments, and interest 102 6,858 6,467 3,308 106 1,103 230 179. 720 135 2,212 141 126 1,775 6 26 14 1,500 38 $75, 244.46 640, 331.89 436, 392. 04 161, 031. 01 127, 601. 01 2, 275,174. 06 67, 821.12 15, 633,270. 40 101, 399.96 131, 386. 07 363.83 389. 20 1, 273,104. 66 1, 248.87 10, 334. 76 699.70 1,625, 429.17 24, 648. 74 $76, 756.48 680, 447.93 443, 977.84 151, 243. 69 127. 601. 01 2,868, 692.89 73, 094.89 21,397, 877.81 127, 401.93 135, 094. 25 366. 38 390.97 1,902, 634.17 1,248.87 10, 334. 76 722. 64 1,625, 429.17 24, 648. 74 201,865 45, 216 69 21 22, 375,870.84 29, 637,964.42 9,049, 726.85 9,066,119. 27 1,748. 20 1,808.97 6,928. 33 6,928.33 247,161 31,434, 274. 22 38, 701,820.99 77,771 78,080 19,611,842.41 26,483, 697.64 32,044,019. 72 32, 064,606. 33 Number of claims Class of tax 165,851 51, 555,862.13 67,548,202.97 If the tax refunds made during the fiscal year 1936 on account of erroneous or Ulegal collections of internal revenue and agricultural adjustment taxes and payments for drawbacks and redemption of stamps, amounting to a total of $38,701,820.99 were deducted from the gross coUections of $3,520,208,381.09, the net coUection for the fiscal year 1936 would be $3,481,506,560.10. The gross collections, however, are used for comparative purposes in these reports. Additional assessments.—The additional assessments resulting from office audits and field investigations during the fiscal years 1935 and 1936 were as follows: 138 REPORT OF THE SECRETARY OF THE TREASURY Additional assessments during the fiscal years 1935 and 1936, by class of tax Class of t a x I n c o m e taxes i Miscellaneous i n t e r n a l r e v e n u e : Estate Gift Tobacco Sales C a p i t a l stock Liquors. Miscellaneous B i t u m i n o u s coal . . . . . . _ 1936 1935 $240, 634,483. 26 $351,703,039. 66 21, 219,891. 42 390, 362. 44 41, 678.04 6,152,649.93 1,071,196. 25 18, 787,032.85 25,112,483. 98 30,049,823.33 3,812,127. 06 26, 281. 37 9,871,695.82 1, 299,424.99 13.000,116.17 32, 562,938. 90 1,183,928.03 72, 776, 294. 91 18, 696,132. 27 91, 806,336. 67 10, 706, 696.19 . . . . T o t a l miscellaneous i n t e r n a l r e v e n u e ^ Agricultural a d j u s t m e n t taxes ^ ._ G r a n d total 332.105,910.44 454, 216,071.41 1 Includes $232,511,940.26 for 1935 and $343,165,249.65 for 1936 from the Income Tax Unit; and $8,122,543 for 1935 and $8,547,790 for 1936 from the Accounts and Collections Unit. The assessments of the Income Tax Unit include $53,472,371.77 for 1935 and $121,056,934.91 for 1936 made under the jeopardy provisions of sec. 279 of the Revenue Act of 1926 and sec. 273 of the Revenue Acts of 1928,1932, and 1934. 2 Includes $29,847,939.06 for 1935 and $49,088,780.60 for 1936 from the Miscellaneous Tax Unit; $24,140,323 for 1935 and $29,717,439 for 1936 from the Accounts and Collections Unit; and $18,787,032.85 for 1936 and $13,000,116.17 for 1936 from the Alcohol Tax Unit. 3 Includes $4,898,617.27 for 1935 and $4,246,890.19 for 1936 from the Processing Tax Division; and $13,797,615 for 1936 and $6,459,806 for 1936 from the Accounts and Collections Unit. Cost oj administration.—The amount expended and obligated in administering the internal revenue laws for the fiscal year 1936 was $48,065,039. This does not include $3,718,346 expended in administering the Agricultural Adjustment Act and the Cotton, Potato, and Tobacco Acts. Also, it does not include expenses which are not administrative, such as the amounts expended for refunding taxes illegally or erroneously collected and for redemption of stamps. A comparison for the fiscal years 1935 and 1936 of the amounts expended and obligated for administrative expenses, the taxes collected, and the cost of collecting each $100 of revenue under the various appropriations is as follows: Amounts expended and obligated for administrative expenses, taxes collected, and the cost of collecting each $100 of revenue, fiscal years 1935 and 1936 E x p e n d e d a n d obligated Cost of collecting each $100 of revenue Collected Appropriation 1935 1936 1936 1936 1935 1936 Collecting t h e i n t e r n a l revenue $42, 719, ZZi $48, 065, 039. 27 $2, 773, 213, 213.9f $3,448, 671,174. 3^ $1.5^ $1.39 Advances t o A g r i c u l t u r a l A d j u s t m e n t Administration a n d salaries a n d expenses. Agricultural A d j u s t m e n t A d m i n i s t r a t i o n (transferred to I n t e r n a l R e v e n u e ) 3,746, 602 3, 258, 716. 21 621,880,108. 61 69,927,202.39 .72 4.66 A d m i n i s t r a t i o n of C o t t o n A c t of 1934, a d v a n c e s t o D e p a r t m e n t of A g r i c u l t u r e u n d e r Tobacco A c t of 1934, a n d p a y m e n t s for agricultural adjustment u n d e r C o t t o n , Tobacco, a n d P o t a t o Acts (transferred to I n t e r n a l R e v enue for a d m i n i s t r a t i v e ex1,105,172 459, 630. 28 4, 342, 249. 63 1, 710, 004. 31 25.46 26.84 penses) - . . . . Total 47, 571. 012 61,783,385.76 3,299,436, 672.18 3,620,208,381.09 1.44 1.47 139 REPORT OF THE SECRETARY OF THE TREASURY Income Tax Unit The Income Tax Unit is charged with the duty of auditing and closing all income tax returns except those filed on form 1040A. Returns filed on form 1040A (returns of individuals reporting income, chiefly from salaries and wages, of less than $5,000) are audited in the collectors' offices under the supervision of the Accounts and Collections Unit. Summary of work of the Income Tax Unit for the fiscal years 1935 and 1936 Number Returns 1935 1936 363,670 402, 394 126,833 1,864, 671 94,942 2, 668,073 Total 1,991,604 2, 763,015 T o t a l t o b e disposed of 2,356,174 3,165,409 120,809 162,389 3,048 7,405 3,862 9,062 131, 262 1,769 27,868 1, 784, 428 175,313 1,778 35, 393 2, 594, 689 1,945,327 2,807,173 402,394 2,913 350,097 2,842 On h a n d in W a s h i n g t o n a n d i n t h e field a t beginning of year i ._ . .. Received d u r i n g year: Reopened a n d amended Original Closed d u r i n g year:^ A d d i t i o n a l assessments except j e o p a r d y : Before final notice of deficiency After final notice of deficiency:3 Agreement Default . . . . . . . . . . . Total . J e o p a r d y assessments (subject t o appeal) Certificates of overassessment N o change T o t a l closed N o t closed d u r i n g year: On h a n d for a u d i t i n W a s h i n g t o n a n d i n t h e field a t e n d of year < .'. A w a i t i n g action of t a x p a y e r after mailing final notice of deficiency I n v o l v e d i n appeals t o B o a r d on final 90-day notice of deficiency m a i l e d d u r ing y e a r T o t a l n o t closed 4,540 6,297 409, 847 368,236 1 Excludes returns with respect to which final notices of deficiency (90-day letters) were mailed prior to the beginning of the year. 8 Excludes returns closed through decisions of Board of Tax Appeals. 3 Includes some returns with respect to which final notices of deficiency (90-day letters) were mailed prior to the beginning of the year. < Excludes returns in transit. Additional revenue.—The additional revenue made avaUable for collection (exclusive,of jeopardy assessments) was $222,099,314.64 as compared with $179,039,568.49 the previous fiscal year. The field forces of the Income Tax Unit secured agreements to the assessment and collection of $77,367,187.18 of which $49,179,528.06 was imrfie•diately assessed under the provisions of mimeograph 3552, while $172,919,786.58 was assessed after consideration in Washington. The additional revenues are classified in the following table to show the amounts involved as additional tax, interest, and penalty, and the procedure involved in reaching a settlement with the taxpayers. 140 REPORT OF THE SECRETARY OF THE TREASURY Additional revenue made available for coUection during the fiscal years 1935 and 1936, classified according to tax, interest, and penalty, and the procedure involved 1936 Amount Tax Interest Penalty - Total Rejected claims for abatement and credit Total additional revenue. _ ._ Procedure involved in settlement: Mim. 3652» Regular procedure: Agreements executed by taxpayer without 90-day letters Agreements executed by taxpayer subsequent to 90-day letters Appeals not filed within 90-day period Assessments listed in appealed cases after trial on the merits and decision by Board of Tax Appeals, or upon stipulation before the Board of cases settled by technical staff and/or General Counsel Total $141,870,869.40 33,232,014.07 3,049,375.29 1936 Percent Percent Amount 79.2 $177,171,101.90 18.6 38,722,883.70 1.7 3,461,898.29 79.8 17.4 1.6 178,162,268.76 887,309.73 99.5 .5 219,355,883.89 2,743,430.75 98.8 1.2 179,039,568.49 100.0 222.099,314.64 100.0 23,797,641.60 13.4 49,179,528.06 22.4 66,846,866.68 37.6 85,454,761.90 39.0 4,312,969.06 13,786,480.88 2.4 7.7 5,411,974.49 21,763,393.05 2.6 9.9 69,408,400.76 39.0 57,546,236.39 26.2 100.0 219,356,883.89 100.0 178,162,258.76 1 The efltect of mimeograph 3652 is to shorten the interest period when the additional tax is agreed to by the taxpayer and field force. The above figures cover assessments made during periods June 1,1934, to May 31, 1936, and June 1, 1936, to May 31, 1936. Additional taxes were also assessed under the jeopardy provisions of the several revenue acts, as follows: Additional taxes assessed under the jeopardy provisions of revenue acts during the fiscal years 1935 and 1936 ^ 1936 Under bankruptcy and dissolution procedure Other jeopardy assessipents Total assessed Interest Penalties. Grand total _ . 1936 $30,948,136. 24 . 7,233, 666.13 $24, 204,941.34 61, 779, 600.11 38,181,701.37 11, 326,177. 44 3,966, 492. 96 86,984,441.45 22,068,820,42 13,002,673, 04 53, 472,371. 77 121,0.55,934.91 1 The amounts shown may or may not represent taxes upon which collectors can proceed to immediate collection since the majority of jeopardy assessments are appealed to the Board of Tax Appeals. Final notices oj deficiency (90-day letters).—During the year 17,212 final notices of deficiency (90-day letters) were mailed by the Income Tax Unit, as compared with 14,529 for the previous fiscal year. Petitions were filed with the Board of Tax Appeals involving. 31 percent of the returns with respect to which 90-day letters had been issued, the same percentage as during the fiscal year 1935. The following table shows the tax years involved in petitions filed with the Board of Tax Appeals during the fiscal years 1933 to 1936, inclusive. 141 REPORT OP THE SECRETARY OF THE TREASURY Tax years involved in petitions filed with the Board of Tax Appeals during the fiscal years 1933 to 1936, by tax years Tax year. 1933 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 9 36 32 64 37 35 37 52 66 113 1934 24 21 18 37 68 33 60 76 96 128 1936 1936 8 11 12 16 20 39 62 47 92 98 8 7 7 13 16 33 37 65 56 69 Tax year 1927 1928 1929 1930 1931 1932 1933 1934 1935 Total 1936 1933 1934 1935 176 298 1,827 3,576 236 6 1 172 223 689 1,632 2,023 156 2 143 169 282 442 1,002 2,001 104 3 96 180 209 272 630 1,369 2,213 126 2 6,598 6,347 4,540 5,297 Claims and overassessments.—The following table shows the number of refund claims adjusted and the certificates of overassessment issued, together with the amounts of overassessments involved, during the fiscal years 1935 and 1936. Refund claims adjusted and overassessments determined during the fiscal years 1935 and 1936 1935 Claims: Pending at beginning of year Filed during year Received from other sources Total to be adjusted Allowed in full or in p a r t . . Rejected Total adjusted . Pending at end of year Certificates of overassessment issued when no claims had been filed. Overassessments settled by: Abatement Credit Refund Total Interest— -.._ Grand total. _. 1936 Number 20, 732 33,844 5,214 Number 22,838 42,406 472 59, 790 65,716 25,052 11,900 28, 497 10, 614 36, 952 39,111 22, 838 26, 605 18, 779 24,973 Amount $59,938, 289. 64 27, 226, 775. 32 16,621, 703. 04 Amount $70,145, 657. 29 10, 777,096.33 15, 633, 270.40 102, 786,768.00 5, 511,960.19 96,466,924.02 6,864, 607.41 108, 298, 728.19 102,320,631.43 NOTE.—The amount involved in claims filed during the year was $107,916,884.62 as compared with $99,952,466.13 the precediag year. Of the claims adjusted during the year the amount rejected totaled $102,497,803.47 as compared with $104,526,409.83 the preceding year. There were also allowed during the year 12,943 collectors' claims, of which 10,831 recommended abatements or credits and 2,112 recommended refunds. A collector's claim usually lists a number of items in favor of different taxpayers, and those settled during the year covered 37,052 items for abatement or credit and 154,737 for refund. Returns on hand.—A comparative table of the number of returns for all tax years on hand at the close of each of the past 4 years follows: 142 REPbRT O^ THE SECRETARY OE THE TREASURY Returns on hand in the Income Tax Unit on June SO, 19SS to 1936, by tax years T a x year 1917 1918.__ 1919._. 1920 1921. 1922 •. 1923.__ 1924 1926 1926 1927 1933 . 1934 293 248 267 240 239, 245 315 536 1,028 1,265 2,939 1935 167 119 126 163 146 209 232 281 362 435 607 116 85 118 116 98 146 157 212 277 388 634 80 69 84 116 105 130 149 167 204 226 336 1933 1934 1936 1936 2,632 6,236 9,929 208, 111 1 92, 211 1,033 3,246 4,298 9,622 297,803 1 46,421 823 2,214 2,993 4,562 13, 643 339, 235 1 36,188 617 1,162 1,539 2,096 4,229 14,996 123, 752 1 200,151 326,734 363, 670 402,394 1 350,097 T a x year 1936 1928 1929._.. 1930 1931 1932 19331934 1935 Total 1 Figures are incomplete, since the preliminary work against the returns for the year just previous to the end of thefiscalyear cannot be completed within thatfiscalyear. Audit in Washington.—The following table presents an analysis of the returns, original and reopened, pending in the several divisions and sections of the Wasliington office: Number of original and reopened returns under consideration in Washington, June SO, 1936, by tax years Audit Review Division Individual returns Corporation returns 'ca PI o 1917 1918 1919 1920 1921 Total 1922 1923 1924 1926 1926 1927 1928 1929 1930 1931 1932 1933 Total. i d P. 1.1 PI p. 8 o 8 1 bJO o 7 7 6 8 6 27 8 9 11 12 3 3 3 6 2 63 34 67 17 3,008 3,896 1,203 903 1,011 767 1,751 844 3,841 42 172 250 3,992 14 94 64 149 2 10,331 , 886 4,013 264 4,086 .54 151 18 2,851 888 1,902 402 4,039 ...... 7 6 4 10 12 14 18 54 80 107 217 375 G r a n d t o t a l . 13, 339 4,846 6,216 1,201 ...... 5,097 Tot al 1 .2 o o 7 16 18 13 9 8 8 12 17 26 39 64 120 9 206 20 315 105 889 2,193 1,067 Special Adjustment Section o 2 5 6 9 15 32 48 89 206 600 10,061 280 Total ^-« o '2 T3 Conference Section 15 1 23 25 26 3 34 10 42 9 63 8 67 40 94 57 106 150 126 466 147 1,006 7 26 61 388 2,526 1934 1935 1 a Consolidated returns Engiutjtjring a n d Valuation Division 2 2 7 7 16 16 29 44 49 70 67 69 2 2 8' 12 14 23 32 59 90 149 284 613 367 1,188 14 2,846 6 4 1 3 3 5 . 6 8 22 19 22 63 60 25 166 6 8 12 7 13 14 16 56 83 111 36 70 63 67 64 71 46 103 159 356 399 433 692 791 3 2 11 20 30 41 66 140 230 469 1,448 5,712 100 113 114 138 147 227 349 697 910 1,141 1,927 3,635 431 3,134 69 56 63 97 87 372 8,161 9,498 22 391 20, 879 34 653 1,575 94 22 425 21, 432 1,669 478 3,725 29, 593 11, 639 Audit in the field.—On June 30, 1936, there were 387,762 returns for all years pending for verification in the offices of the 38 field divisions of the Income Tax Unit, compared with 356,906 returns on hand June 30, 1935. REPORT OF THE SECRETARY OF THE TREASURY 143 Changes in tax liability were recommended by the field forces in 238,912 returns, or in 27 percent of the 885,944 returns disposed of by the field forces during the year. In 203,830 returns, or 85 percent of those changed, taxpayers agreed with the conclusions of revenue agents. The total additional tax recommended by revenue agents during the year was $355,076,147.98, as compared with $276,008,250.07 the preceding year. The Technical Stajf The Technical Staff considers {a) proposals for the settlement without further litigation of income, profits, estate, and gift taxes asserted in deficiency notices mailed under the various revenue acts, and (6) questions involving determinations of Bureau policy, specific cases, and other matters assigned or submitted to it by the Commissioner of Internal Revenue. In addition to its regular settlement work, the jurisdiction of the Staff has been enlarged to include certain classes of compromise of income tax cases (excluding cases involving fraud or cases under the supervision of a court), applications for extension of time within which to pay income taxes under sections 56 (c) and 272 (j) of the Revenue Act of 1934 and the corresponding provisions of prior revenue acts, and the review in behalf of the Commissioner of Internal Revenue of final closing agreements executed pursuant to section 606 of the Revenue Act of 1928. On July 1, 1935, the Technical Staff had on hand 3,161 docketed income and estate tax cases pending before the Board of Tax Appeals. During the year the Staff received 4,904 Board dockets, considered to a conclusion 2,598 Board cases, and settled 1,726 cases. The deficiencies proposed on cases recommended for settlement by the Staff totaled $32,429,337.71; the recomputed deficiencies were $15,077,514.81, making a settlement effectiveness of 47 percent. These figures are on pending Board cases considered to a conclusion by the Staff on its own responsibUity, and do not reflect the results of the circuit settlement groups' cases which are acted on jointly with attorneys from the Assistant General CounsePs Office. During the fiscal year the Staff considered 1,795 so-called 90-day status cases, of which 1,204 were disposed of without petitions being filed with the United States Board of Tax Appeals. These cases involved proposed deficiencies of $8,194,072.28 and recomputed deficiencies of $4,125,550.67. On July 1, 1935, the Staff had on hand 687 compromise cases; 1,349 cases were received during the year and 1,354 cases were disposed of, leaving a balance of 682 cases on June 30, 1936. There were 184 extension of time cases on hand July 1, 1935; 385 cases were received during the year and 562 cases disposed of, leaving 7 cases on hand June 30, 1936. In addition, 125 final closing agreements submitted pursuant to section 606 of the Revenue Act of 1928 were reviewed by the Staff for the Commissioner of Internal Revenue. Miscellaneous Tax Unit The Miscellaneous Tax Unit administers all taxes other than the income and excess-profits taxes, the taxes applicable to alcoholic beverages, and those imposed under title I X of the Social Security Act. The Unit consists of seven divisions, the titles of which are indicative of the general type of taxes administered. The Social 144 REPORT OF THE SECRETARY OF THE TREASURY Security Division was organized during the year to administer the taxes imposed under title VIII of the Social Security Act and under the Carriers Taxing Act. The total collections of miscellaneous taxes for the fiscal year 1936 amounted to $1,586,883,227 as compared with $1,781,647,593 for 1935, a decrease of $194,764,366. There was a considerable increase in the collections of substantially all miscellaneous taxes except the taxes imposed under the Agricultural Adjustment Act and related measures.. The taxing provisions of the Agricultural Adjustment Act were declared to be invalid in a decision of the United States Supreme Court on January 6, 1936, and the related measures were repealed February 10, 1936. Estate Tax Division.—Estate tax collections for the year amounted to $218,780,753.53, the largest amount collected from that source since the enactment of the estate tax law in 1916. The collections show an increase of $78,340,071.19 over the previous year and $64,737,493.14 over the previous high coUections in 1921. Gift tax collections amounted to $160,058,761.47, the highest on record, and show an increase of $88,387,484.58 over the collections for 1935. In addition to estate and gift taxes actually collected, deficiencies amounting to approximately $20,000,000 were asserted in 36T cases upon which collection was withheld pending a review of appeals filed with the United States Board of Tax Appeals. Deficiencies in estate tax amounting to $27,311,415.50 were assessed in 57.1 percent of the cases closed. Deficiencies in gift tax amounting to $3,535,513.38 were assessed in 11.2 percent of the cases closed. The administrative work in connection with estate tax and gift tax returns is summarized in the following table: Number of estate tax and gift tax returns investigated and audited during the fiscal years 1935 and 1936 Estate tax Returns in field: On hand at beginning of year Received for investigation . .. Total to be disposed of Major reports submitted by field force On hand at end of year . . . .. . . . _ . . . .. Gift tax 1935 1936 1935 3,449 11,137 3,635 11,967 673 2,162 902 1,373 14,586 10,951 15,592 11,138 2,826 1,923 2,275 2,003 3,635 4,464 902 272 1936 Returns in Bureau: On hand at beginning of year Received Reopened.. 6,488 13,133 177 9,693 3,291 13, 252 11,410 18 227 2,930 22,590 452 Total to be disposed of Disposed of 19,798 10,106 23,172 13,882 14,719 11,789 25,972 13, 240 9,693 9,290 2,930 12,732 236 1,374 1,610 1,124 486 2,316 16 107 82 436 2,801 2,380 123 41 618 369 486 1147 421 U77 82 149 »7 On hand at end of year _ Protest letters of taxpayers as a result of tax determined by audit: On hand at beginning of year Received. > Total to be disposed of .._ Disposed of .__ On hand at end of year Cases adjudicated by the Board of Tax Appeals 1 Included in returns disposed of. 145 REPORT OF THE SECRETARY OF THE TREASURY Refunds of estate and gift taxes aUowed with accrued interest, totaled $2,931,787.78. Tax amounting to $807,763.07, mcluding interest of $393,925.57, was refunded as a result of judgment estate tax claims filed in 30 cases. Estate tax and gift tax claims for refund and abatement on hand at the beginning of the year and the claims disposed of during the year are shown in the following table: Estate tax and gift tax claims on hand, received, and disposed of during the fiscal year 1936 Gift t a x claims E s t a t e t a x claims Refund Number Claims filed: On h a n d J u l y 1, 1936 Received . Reopened T o t a l t o b e disposed of Allowed Rejected.T o t a l disposed of. On h a n d J u n e 30, 1936 N o claims filed, overassessments a l l o w e d . . I n t e r e s t allowed Total allowed, including interest Amount Abatement Number Amount Refund Number Amount Abatement Number Amount 189 $2,009,761. 60 511 2,892,897.89 41 483, 485. 42 $9,420. 61 . 7 217 8,974, 876. 62 19 $3,566,019.21 618,837.86 123 2, 760. 00 1 19 $5, 795.38 143 4,187,617. 07 741 5, 386,144.91 224 8,984, 297. 23 19 5,795.38 492 1,833, 593. 60 98 1,878, Oil. 71 214 8,944,310.37 1 472. 50 49 30 27, 568. 54 437, 088. 01 19 5, 795. 38 690 3, 711, 605. 31 215 8, 944, 782. 87 79 464, 666. 65 19 5,795. 38 151 1, 674, 639. 60 611 1,103 441, 680. 46 683, 518. 83 2,858,692.89 9 39, 614. 36 64 3,722,960. 52 214 2, 612, 254. 89 181 40, 252. 68 6,273. 77 9 40,938.40 428 11,456, 665. 26 230 73,094. 89 28 46,733.78 NOTE.—In addition to the above, $3,054,629.99 was abated as uncollectible in 13 estate tax cases, and $3,076,269.60 was abated as uncollectible in 1 gift tax case. One additional estate tax refund, not reflected in the above table, was allowed in the sum of $18,704,89 by Private Act No. 368, 74th Cong. Tobacco Division.—Collections of tobacco taxes amounted to $501,165,728.39 for the year, which represents the largest annual collection from this source since these taxes were first imposed. A detailed comparison of the tobacco taxes collected during the last 2 fiscal years follows: 9,3790—37- -11 146 REPORT OF THE SECRETARY OF THE TREASURY Tobacco taxes collected during the fiscal years 1935 and 1936 Increase (+) or decrease ( - ) 1935 Source 1936 Amount Cigars (large): Class A Class B _ . Class C Class D Class E . . Total Cigars (small) _ Cigarettes (large) Cigarettes (small) . Percent +$555, 686. 40 -19,662.74 -10, 471.10 +4, 843. 67 +4,496. 22 +6.66 -9.83 -.41 +L19 +8.16 +534, 892.46 12,227,761.69 11,692,859.14 -10, 494. 82 143, 738. 75 133, 243. 93 + 1 , 466.89 17,317.56 18, 784. 46 385, 459, 570. 66 425,486,470. 87 +40,026, 900. 21 +4.67 -7.30 +8.47 +10. 38 $8,485, 474.10 200,030.28 2, 546, 266. 63 406, 023. 39 66,074. 74 $9,041,160.60 180,367. 64 2, 635, 785. 63 410, 867. 06 69, 670. 96 Tobacco, manufactured-Snuff 54, 372,414. 27 6,511,662.53 66, 412, 759. 68 +1,040,346. 41 +91,376.79 6,603,039. 32 +1.91 +L40 TotaL Leaf tobacco sold... Cigarette papers Cigarette tubes... Grand total 60, 884,076.80 4, 994. 39 963, 758.16 12, 310.00 62, 015, 799. 00 +1,131, 722. 20 1,654. 71 -•3, 339. 68 1, 268,960. 98 +305,192. 82 13,072. 86 +762. 86 +1.86 -66. 87 +31. 67 +6.20 601,166, 728. 39 +41,987,102. 93 +9.14 459,178, 625.46 Sales Tax Division.—The yield from the taxes administered by the Sales Tax Division was $538,835,340.54, an increase of $47,358,201.74 over the previous year. The major increases in collections were from stamp taxes, the manufacturers^ excise taxes, admissions taxes, and the taxes on the processing of coconut and other oils. A comparison of the taxes collected during the fiscal years 1935 and 1936 is shown in the following table: Collections of taxes administered by the Sales Tax Division during the fiscal years 1935 and 1936 Source Btamps: Bonds of indebtedness, capital stock issues, etc Capital stock sales or transfers.-. J Sales of produce (future delivery) Playing cards Total-. Oleomargarine: Colored Uncolored-Special taxes Total.A.dulterated butter Renovated butter Mixed flour Filled cheese Total... Increase (+) or decrease (—) 1935 := $17,934, 776.98 $28,162,668.42 +$10, 227,881.44 16, 747, 362. 59 33,054,798.14 +17, 307,435.55 2,943, 542. 37 -1,007,00L63 3, 950, 544. 00 4,143, 698. 44 4,361,299. 40 -207, 600.96 41,983, 982. 97 68,304,697.37 +26,320,714.40 84,800.77 898,121.82 1,066,063.91 66,307.20 915,690.68 1, 231,806.13 -28,493.57 +17, 568.86 +165, 762. 22 2,048,976.60 2,203,804.01 +154,827. 61 3,992. 66 4,928. 34 4, 626.93 1,003. 68 4,664.11 5,973.51 5, 682. 69 148.40 +671. 66 +1,046.17 +1,056. 66 -865.18 14,450.40 16, 368. 61 +1,918.21 Manufacturers' excise taxes (title IV, Revenue Act of 309,256,051. 69 349,080,335..31 +39,825,283. 72 1932, as amended) 9, 793,996. 42 9.479,721.47 +314, 273.95 Transportation of oil by pipeline 32,577, 256. 30 33, 575,179. 25 +997,922.96 Electrical energy.. Telegraph, telephone, cable, and radio messages, etc.-. 18,411,925. 22 19,805, 609. 38 +1, 393,684.16 1,292,738.27 1,329,608.88 Leased wires, etc. (telegraph and telephone) -36, 770. 61 1,997,409. 57 2,317,619.30 Safe deposit boxes -320, 209. 73 Total 373,371,082.76 415, 645,267. 20 +42,174,184.44 REPORT OP THE SECRETARY OP THE TREASURY 147 Collections of taxes administered by the Sales Tax Division during the fiscal years 1935 and 1936—Continued Source 1935 Admissions. _ Dues and initiation fees $15, 379, 397.16 $17,112,175.46 +$1,732, 778.30 6, 784,494. 99 6,090,923. 21 +306, 428. 22 _ Total 21,163,892.15 Checks, drafts, or orders for payment of money (repealed Dec. 31, 1934) Pistols and revolvers Narcotics _ Delinquent under repealed laws^... ^ ... 25,646,138.70 60, 237.83 680,613.00 »383.868. 24 Total 26, 669,857. 77 Coconut, etc., oils processed-^ Crude petroleum processed, refined, etc National Firearms Act _. ... 24, 457,091. 26 1,759, 789. 67 8, 015. 33 Total-Grand total.. Increase (+) or decrease ( - ) 1936 _ 23,203,098.67 +2,039, 206.52 60, 627. 64 564,028. 39 2 87, 271.67 —25,646,138. 70 +389.81 —26, 584. 61 —296, 596. 67 701,927.60 —26,967,930.17 27, 691, 080. 79 1,163, 754. 67 5, 341. 72 +3, 233,989. 54 -696,036.10 —2, 673. 61 26, 224,896. 26 28,860,177. 08 +2,635, 280.83 491,477,138.80 538,835,340.64 +47,358,201.74 1 Includes tto of $129,991.22 on soft drinks, $1,736.82 on use of yachts and boats, and $252,140.20 on candy. 2 Includes tax of $60,028.56 on soft drinks, $25,655.73 on checks, and $1,687.28 on use of yachts and boats. The claims for refund and abatement of taxes and redemption of stamps received and adjusted in the Sales Tax Division during 1935 and 1936 are shown in the following table: Claims for refund and abatement received and disposed of during the fiscal years 1935 and 1936 Claims 1935 1936 Number 7,117 13,713 Number 6,296 13,969 Total Transferred to Capital Stock Tax Division, Jan. 1,1935 20,830 1,600 19,265 Total to be disposed of. Adjusted. _ 19,330 14,034 19,265 12,236 On hand at beginning of year Received or reopened On hand at end of year . Allowed . . . . ,_ - _ .. >_ _ - _. - - ... 6,296 Amount $3,479,098.19 7,019 Amount $7, 396, 766. 72 A total of $1,019,418,455.76, representing 1,140,499 items, was approved by the Commissioner on misceUaneous assessment lists. There was mcluded m the lists $49,088,780.50 representing 49,409 additional assessments resulting from office audit and field investigation. The interest paid and assessed amounted to $6,809,719.20. The miscellaneous lists do not include the processing and related taxes or the tax on the transfer of interest in silver bullion. During the year there were received and examined 533,938 returns filed by taxpayers in connection with taxes administered by the Sales Tax Division. The number of offers in compromise submitted in settlement of liabUities incurred in connection with sales, tobacco, estate, gift, narcotics, capital stock, and miscellaneous stamp and special taxes, and the aggregate amounts thereof, received and disposed of, are shown in the following table: 148 REPORT OF THE SECRETARY OF THE TREASURY Offers in compromise received and disposed of during the fiscal years 1935 and 1936 1936 1936 Offers in compromise Number Number Amount Amount On hand at beginning of year Received during year 4,866 9,489 $465,170.90 474,817. 67 6,837 12,755 $640, 782. 65 440,976.00 Total to be disposed of 14,354 939,988. 57 18, 592 1,081, 758.65 6,990 1,618 9 115,890. 43 182,870.49 445.00 11, 541 3,029 49 204, 690.16 373,107. 94 27, 277.95 Total disposed of 8,617 299, 206. 92 14,619 606,076.04 On hand at end of year 5,837 640,782. 66 3,973 476,682.61 Accepted Rejected . . . Withdrawn Processing Tax Division.—A total of $71,637,206.70 was collected during the year from taxes administered by this Division, of which amount $69,927,202.39 represented processing, floor stocks, and compensating taxes imposed under the Agricultural Adjustment Act, as amended; $451,223.03 represented taxes imposed under the provisions of the Cotton Act, approved April 21, 1934; $1,214,880.64 represented taxes imposed under the provisions of the Tobacco Act, approved June 28, 1934; and $43,900.64 represented taxes imposed under the Potato Act of 1935, approved August 24, 1935. On January 6, 1936, the Supreme Court of the United States held the taxing provisions of the Agricultural Adjustment Act to be invalid. The collection of taxes under the act was immediately suspended. Acts of Congress, approved February 10, 1936, and March 2, 1936, repealed the Cotton, Tobacco, and Potato Acts and extinguished any outstanding tax liability under these acts. The Revenue Act of 1936 authorized consideration of claims for refund of the taxes collected under the Agricultural Adjustment Act and claims for payments with respect to certain floor stocks held on January 6, 1936. CoUections of taxes administered by the Processing Tax Division are summarized as follows: Collections of processing and related taxes during the fiscal years 1935 and 1936, by commodities Commodity and tax Wheat: Processing.-. Compensating Floor (other than retail) Floor (retail) Total. Cotton: Processing Compensating Floor (other than retail) Floor (retail) .... Total 1935 1936 $123,564,486. 59 27, 744. 27 249,622. 94 19,078. 43 ,9, 294,384.08 71,479.00 69,179. 23 6,474.13 123, 860,932. 23 9, 441, 516.44 93, 253,443.98 1, 799,354.68 771,125.07 102,377.98 3,966,005.31 1,246, 364. 29 176, 238.65 9,931.05 96,926, 301. 71 5,387, 639. 30 REPORT OF THE SECRETARY OP THE TREASURY 149 Collections of processing and related taxes during the fiscal years 1935 and 19S6, by commodities—Continued Commodity and tax Tobacco: Processing.-.. Compensating Floor (other than retail). Floor (retail) Total. Field corn: Processing Compensating Floor (other than retail). Floor (retail) Total. Hogs: Processing... Compensating Floor (other than retail). Floor (retail) Total. Paper and jute: Processing. Compensating Floor (other than retail). Floor (retail) TotalSugarcane and sugar beets: Processing.. Compensating Floor (other than retail). Floor (retail) Total. 1935 1936 $32,161,943.21 236,479.62 311,083.18 15,995.53 $13,156, 764.69 65,652.36 12,990.88 819.48 32,726,601.44 13, 226,127.31 6,760,471.66 48,663. 08 38,843. 65 1, 651.49 889,175.49 32,389.99 3,200. 99 66.84 6,849,629.87 924,823.31 184,380,029.76 186,591.68 32,766.28 1, 621. 74 1,640,942. 39 330,012. 95 2,035. 60 92.32 184, 601,009.46 8, 973,083.16 2,855, 600. 01 131,697.10 222,996. 64 11, 613.62 603,465. 70 12, 458. 69 21,181.89 169. 67 3,221,707.27 637, 265.86 65, 599, 671.49 3, 809, 686. 71 11,314,081.05 370,731.40 27, 903, 213. 50 2,120, 621. 63 331,962.85 1,811.18 71,093,970.66 30, 357, 699. 06 Peanuts: Processing.:.... Compensating. 3,569,523.39 2,412. 62 135,606.46 2, 644.68 Total. 3,571,936.01 138,051.04 Rice: Processing Compensating. Total 1,682.66 27,537.42 610,792. 23 154,928.81 29,119.97 6, 721.04 Rye: Processing Compensating. Total Cotton ginning. Tobacco sales... Potato sales Grand total.. 139,130. 71 36,345.17 175,475.! 1,110,874.86 3,231,374.77 461, 223.03 1, 214, 880. 64 43,900.64 626, 222, 358. 24 71, 637, 206. 70 Returns flled during the year under the provisions of the Agricultural Adjustment Act, as amended, the Cotton Act, and the Tobacco Act are shown in the following table: 150 REPORT OP THE SECRETARY OP THE TREASURY Number of returns filed during the fiscal year 1936, by commodities Floor tax Import compensat- (other t h a n ing tax retail) Processing tax Agricultural Adjustment Act: Wheat -Cotton Field corn . . Hogs. Tobacco.. . Paper and j u t e Sugarcane a n d s u g a r beets Peanuts Rice Rye Total Cotton Ginning Act Tobacco A c t . . . Floor tax (retail) Total 28,328 6,791 55,477 79,633 35,589 1,479 6,968 664 2,398 846 744 2,223 227 232 234 140 1,583 117 564 78 469 371 146 57 8,348 136 3,184 257 820 147 44 327 18 1,281 29,798 10,205 55,997 79,966 44,498 1,773 13,016 671 2,962 923 218,062 6,142 12,711 2,894 239,809 79,090 4,873 A. summary of the number and amount of all claims for refund, credit, and abatement received and adjusted in the Division during the flscal year foUows: Claims for refund, credit, and abatement received and disposed of during the fiscal year 1936 Number Agricultural A d j u s t m e n t A c t , as a m e n d e d : E x p o r t refunds: On h a n d J u l y 1, 1935.. Received . Reopened Allowed.. . . . . . Rejected On h a n d J u n e 30, 1936 . . . C h a r i t a b l e a n d o t h e r refunds: On h a n d J u l y 1, 1935 . Received _.__ Reopened Allowed ,._. Rejected . . . . On h a n d J u n e 30, 1936 Credit: On h a n d J u l y 1, 1935 Received.. . . Reopened Allowed Rejected_ On h a n d J u n e 30, 1936 Abatement: On h a n d J u l y 1, 1935... ^ Received. . . . ._ _ . Reopened. Allowed. Rejected On h a n d J u n e 30, 1936 Uncollectible: On h a n d J u l y 1, 1935— Received . . . . . Reopened . Allowed . Rejected On h a n d J u n e 30, 1936 Tobacco Act: On h a n d J u l y 1, 1935 Received .. .. . . . Reopened Allowed . . • . Rejected • On h a n d J u n e 30, 1936 C o t t o n G i n n i n g Act: O n h a n d J u l y 1, 1935 . . . Received Reopened . Allowed . . Rejected . . . O n h a n d J u n e 30, 1936 T o t a l claims: On h a n d J u l y 1, 1936 Received Reopened . _ . Allowed . . .' . Rejected On h a n d J u n e 30, 19"3"6" ..^ . . . . . . . ... - _ . . '.- . . . . . . .: . . . . . . .. . . . . . . . . . . . . Amount 7,697 26,979 6,027 25,131 2,397 12;175 $1,591,320. 24 5, 554, 812. 50 1,407,383.45 4, 988,676. 31 1,197, 716. 47 2,367,126.41 10,819 67,051 7,390 26,118 10,411 38, 731 75, 416, 289.44 744,013,650.14 72, 214, 940. 21 6,177, 602. 66 647,170, 254.08 339,297,023.06 6,613 11, 641 118 14, 647 2,726 0 4,684.067.65 7,157, 264.12 111, 852. 69 9,404, 285. 33 2, 648,889.03 0 1,178 3,434 17 2,415 2,185 29 4,113,102. 58 276, 616, 791. 80 18,405.96 267,893,099. 39 22, 660,890. 99 104,309.96 189 2,309 1 2,399 100 0 103, 667. 96 114,410.87 6.81 159, 904. 57 58,080.07 0 7.828 20,823 26 54 27,491 1,132 427,430. 90 1,131, 287. 99 731.44 6,176. 22 - 1,499,624.18 64,650.93 101 168 0 137 78 44 64.246.85 40, 744. 54 0 6, 209.48 61, 063. 99 48,117. 92 33,425 122, 395 12, 579 70,901 46,387 52, 111 86, 400,025. 52 1,034, 628,951. 96 73,763,319.56 277, 633,951. 96 575,177,117.81 341,871,227. 27 REPORT OF THE SECRETARY OF THE TREASURY 151 There were considered during the year 615 offers in compromise amounting to $110,284.45. A total of $306,291,343.49, representing 277,146 items, was approved by the Commissioner on the processing tax lists. This amount includes $4,246,890.19, representing 6,829 additional assessments resulting from office audit and fleld investigation. Capital Stock Tax Division.—Collections of capital stock tax during the year amounted to $94,942,751.74, an increase of $3,434,630.45, or approximately 4 percent over the collections for the preceding year. As a result of the audit of the returns in the Bureau 5,908 assessments involving $1,101,721.01 were made. The claims for refund and abatement of capital stock taxes, penalties, and interest received and adjusted in the Capital Stock Tax Division are shown in the following table: Claims for refund and abatement received and disposed of during the fiscal years 1935 and 1936 Claims On hand at beginning of year Received or reopened.. . . Total . Adjusted--. .__ _ __ On hand at end of y e a r . . . . Allowed 1936 1936 .- _ _ -_. Number 1,600 3,800 Number 890 9,461 5,300 4,410 10,351 9,391 890 960 Amount . $390,348.43 Amount $782,850.84 Bituminous Coal and Silver Tax Division.—The Bituminous Coal and SUver Tax Division is concerned with the administration of the taxes imposed under the Bituminous Coal Conservation Act of 1935 and the SUver Purchase Act of 1934. The coal act, approved August 30, 1935, imposed upon the sale or other disposal of all bituminous coal produced within the United States, effecjtive November 1, 1935, an excise tax of 15 percent on the sale price at the mine, payable monthly by the producer. Membership in the coal code, however, as provided for in the act, entitled such producers to a right of a drawback equal to 90 percent of the tax payable. The flrst payment of the coal tax was due and payable January 2, 1936. Many large producers, however, flled suits contesting the constitutionality of the act anci obtained orders restraining collection of the tax. On May 18, 1936, the Supreme Court of the United States declared the act to be invalid. During the life of the tax the Division certifled 435 coal assessment lists carrying 13,425 items for a total of $11,079,432. Collections amounted to $729,217.68. Since the act was invalidated, 409 claims for tax refunds amounting to $412,066.82, were received, of which 354, amounting to $370,171.29, have been allowed to June 30, 1936. In addition to these refund claims, 213 collectors' blanket office claims for abatement of outstanding assessments, amounting to approximately $8,000,000, have been allowed. The SUver Purchase Act of 1934, approved June 19, 1934, provided for the imposition of a tax equal to 50 percent of the net profit realized 152 REPORT OF THE SECRETARY OF THE TREASURY on the transfer of an interest in silver bullion, with certain exemptions and rights of abatement applicable to certain transfers to the United States Government and to transfers by persons regularly engaged in the business of furnishing sUver for industrial, professional, or artistic use. The silver tax collections for the flscal year 1936 amounted to $685,188.23, as compared with $1,149,390.48 for 1935.^ Social Security Division.—The Social Security Division was created on October 1, 1935, for the purpose of administering the taxes imposed under the Carriers Taxing Act, approved August 29, 1935, and the taxes imposed under title VIII of the Social Security Act, approved August 14, 1935. Under the Carriers Taxing Act an excise tax is imposed upon '^carriers'^ as that term is defined in section 1 (a) of the act, and an income tax is imposed upon their employees and employees' representatives. These taxes became effective March 1, 1936, and are required to be reported and collected quarterly. There are imposed under title VIII of the Social Security Act an excise tax upon employers and an income tax upon their employees, effective January 1, 1937. It is estimated that there will be approximately two an(i one-half million employers who will be required to withhold the employees' tax from approximately 25,000,000 employees. Alcohol Tax Unit On June 30, 1936, the following producers or distributors of alcohol and alcoholic beverages, or users of tax-free alcohol, were under the supervision of the Alcohol Tax Unit: Distilleries: Alcohol Brandy 1 1 Another. Bonded warehouses: Alcohol Internal revenue Wineries Bonded wine storerooms...... Breweries... Rectifying plants Wholesale liquor dealers _ Wholesale malt liquor dealers Denaturing plants _. _ Bonded dealers in specially denatured alcohol Bonded manufacturers using specially denatured alcohol . Hospitals, laboratories, and educational institutions using tax-free alcohol Number 39 " 160 126 -. i 70 263 1,145 107 711 363 5, 242 12,413 41 66 4,202 (>, 038 Enjorcement Division.-^The Enforcement Division is responsible for the investigation, detection, and prevention of willful and fraudulent violations of the internal revenue laws relating to distilled spirits, wines, and fermented malt liquors. The Division plans and coordinates the enforcement functions of the 15 administrative districts, supervises the activities of the investigators, and provides for their general instruction. During the year 15,629 stills were seized, having an aggregate mash capacity of 2,576,064 gallons, and in connection therewith 14,671,146 gallons of mash were seized and destroyed. The investigators also seized 730,646 gallons of spirits and 5,111 automobiles and trucks. The total appraised value of the property seized amounted to $4,201,485. A total of 31,504 persons were arrested for Federal liquor law violations. REPORT OF' THE SECRETARY OF. THE TREASURY 153 During the year 353 applications for pardon and 3,978 applications for parole were examined and reports submitted, and 347 applications for pardon and 4,158 applications for parole were received. Audit Division.—During the year 15,195 reports of violations of the internal revenue laws pertaining to alcoholic liquors by Ulicit operators, and 752 reports of violations by established plants and qualified dealers, were received from the field offices and audited, and the tax liabUities disclosed thereby were assessed, including ad valorem penalties. There were also certified to the Commissioner 807 assessment lists, which carried 23,377 items, totaling $13,000,116.17, listed in the Bureau, and 271,425 items, aggregating $36,701,484.17, listed by collectors. There were on hand at the beginning of the year 5,308 claims for refund, redemption, abatement, and uncollectible claims, aggregating $3,492,256.19. Durmg the year 36,584 claims, aggregating $19,229,031.50, were received; 34,242 claims, aggregating $14,147,944.57, were allowed; and 1,737 claims, aggregating $1,660,718.69, were rejected. There was a total of 5,913 claims on hand at the end of the year. At the beginning of the year, 9,449 offers in compromise, aggregating $320,073.40, were on hand. During the year 104,845 offers, amounting to $1,438,098.65, were received, of which 503 were forwarded to the Department of Justice and 1,163 were returned to the field offices. During the year 106,141 offers, aggregating $1,335,293.19, were accepted, and 3,763, totaling $123,700.81, were rejected, leaving 2,724 offers on hand at the end of the year. Laboratory Division.—The Laboratory Division comprises a chemical laboratory in Washington, D. C , and 14 branch laboratories located throughout the country. These laboratories perform aU the chemical work for the Bureau of Internal Revenue and Bureau of Narcotics. During the past year chemical work was also performed for the Federal Alcohol Administration and Bureau of Customs. Field Inspection Division.—An extensive program of retaU liquor dealer inspections was inaugurated. This program necessitated setting up a field organization and training retail inspectors to provide for inspection of the premises of all retaU liquor dealers and retaU malt liquor dealers in 91 project cities throughout the United States. Accounts and Collections Unit The Accounts and Collections Unit, which is the central administrative organization for the 64 collection districts, is divided into 3 divisions: The Collection Accounting Division; the Collectors' Personnel, Equipment, and Space Division; and the Disbursement Accounting • Division. Collection Accounting Division.—There were filed in collectors' offices during the year 8,429,852 tax returns, as compared with 8,313,342 for the previous year, an increase of 116,510. Of the total tax returns filed in 1936, there were 5,813,499 income tax returns, compared with 5,295,352 filed during the previous year, an increase of 518,147. Approximately 2,849,000 individual income tax returns, filed on form 1040-A, were audited and closed in coUectors' offices, and 5,828,893 information returns were verified. In connection with this audit work, 74,953 income tax returns were investigated by field deputy coUectors. 154 REPORT OF THE SECRETARY OF THE TREASURY A total of .11,144,798,920 revenue stamps, valued at $1,050,861,227.34, was issued to collectors of internal revenue and the Postmaster General, as compared with 10,432,005,552 stamps, valued at $941,713,682.42, issued during 1935. Stamps returned by coUectors and by the Postmaster General amounted in face value to $41,991,554.73, as compared with $45,068,828.09 for 1935. After the appropriate administrative procisdure, collectors of internal revenue transmitted to the Bureau, or otherwise disposed of, 393,836 claims, as compared with 238,251 during 1935, an increase of 155,585. The number of claims on hand at the close of the fiscal year 1936 was 18,400, as compared with 7,481 at the close of the previous fiscal year. The increase in the number of claims on hand at the end of the year was principally due to the increase in the number of claims filed during the year and to the necessity of retaining certain claims relating to agricultural adjustment taxes in collectors' offices pending enactment of new legislation before the claims could be forwarded to the Bureau. During the year an average of 1,970 field deputy coUectors made 462,743 revenue-producing investigations in connection with the verification of tax returns, the securing of delinquent returns, and the serving of warrants for distraint. The amount of tax involved in these investigations was $79,066,410, including $47,878,361 coUected and $31,188,049 recommended for assessment. The average number of investigations made per deputy was 235, and the average amount of tax collected and recommended for assessment was $40,135. The average salary of the deputy collectors during the year was $1,983, and the average travel expense, $470. It will be seen that for every $2,453 invested in the services of a deputy collector $40,135 was returned to the Government in collections and amounts recommended for assessnient. The amounts involved for the various types of work were: Delinquent taxpayers. Verification of tax returns.. Warrants for distraint Total... • . . . Collected" Taxes recommended for assessment $10,434,771 3,102, 215 34,341,375 $18, 375, 369 12,812, 680 47,878,301 31,188, 049 There were 117,841 warrants for distraint served by deputy collectors during the year, and on June 30, 1936, there were 57,380 warrants in the hands of the field forces for coUection as compared with 62,132 on June 30, 1935. Special attention has been given to the discovery of the various classes of dehnquent taxes and to the collection of back taxes. That these efforts have been successful is evidenced by the fact that the total coUections. of back income taxes amounted to $213,557,591, which is $23,557,591 in excess of the estimates for the year. The supervisors of accounts and collections submitted 102 reports covering their examinations of the accounts of the various'collectors' offices as compared with 105 reports submitted during the fiscal year 1935. Every collector's office was examined at least once and most of them twice during the year. The supervisors installed in office eight new coUectors of internal revenue and three acting collectors. REPORT OF THE SECRETARY OF THE TREASURY 155 Collectors^ Personnel, Equipment, and Space Division.—Since the repeal of the eighteenth amendment the number of special taxpayers, consisting of retaU liquor dealers, dealers in fermented malt liquor, etc., has increased greatly. The provision of law imposing the capital stock tax on corporations also added very considerably to the work of collectors' offices. During the year additional stamp offices were established in a number of the districts to serve more adequately distilleries and breweries located some distance from the collectors' offices. There was also a material increase in the number of income tax returns filed during the year as a result of improved business conditions, wider employment, and increased earnings. The provision of law which requires the filing of duplicate returns by income tax payers also added to the duties of the collectors' offices, inasmuch as the regulations require that such duphcate returns shall be retained in the collectors' offices and so arranged as to be readily available for inspection by representatives of the governors of the various States. The sum of $1,914,437 was expended for salaries of office and field employees engaged ui the collection of processing, import compensating, and floor taxes imposed upon various agricultural commodities under the Agricultural Adjustment Act. On January 6, 1936, the date the taxing provisions of the act were declared unconstitutional by the United States Supreme Court, there were 1,516 office and fleld employees assigned to the several districts. On February 1, 1936, collectors were authorized to retain the services of 410 of these employees to render needed assistance incident to the liquidation of processing tax affairs, and 1,106 of the employees were placed on indeflnite leave without pay, pending developments with respect to any new legislation that might be enacted which would make their reemployment necessary. During the year $224,341 was expended for salaries of office and fleld employees assigned to the cotton producing districts to admuiister the tax collection provisions of the Bankhead Cotton Control Act. On February 10, 1936, the date the Cotton Control Act was repealed, there were employed in the various cotton districts 252 office and fleld employees on the cotton tax roU. On AprU 1, 1936, coUectors were authorized to retain the services of 47 pf these employees to assist in liquidating the cotton tax work, and 205 of the employees were placed on indeflnite leave without pay. In administering the tax provisions of the Kerr-Smith Tobacco Control Act, $35,698 was expended for salaries of office and fleld employees assigned to the tobacco producing districts. On February 10, 1936, the date the Tobacco Control Act was repealed, there were employed in the tobacco producing districts 48 office and fleld employees. On AprU 1, 1936, collectors were authorized to retain the services of 7 of these employees to assist in the liquidation of the tobacco tax work and 41 of the employees were placed on indeflnite leave without pay. In administering the personnel of the several coUection districts the provisions of the Classification Act of 1932 and amendatory acts, and decisions of the Comptroller General relating thereto, have been closely adhered to. The policy has been continued of making such appointinents as have been authorized in the field collection service at the minimum salary rate of the appropriate grade and aU applica 156 REPORT OF THE SECRETARY OF THE TREASURY tions for positions have been carefully scrutinized and investigated with a view to maintaining the high standard of requirement for employment. Disbursement Accounting Division.—The Disbursement Accounting Division is charged with keeping the internal revenue appropriation accounts and expenditures, and is responsible for the audit of miscellaneous vouchers originathig in the Bureau at Washington which are paid by the Chief Disbursing Officer; and for the administrative examination required by law of the accounts of 64 collectors of internal revenue, 38 internal revenue agents in charge of divisions, and 15 supervisors in charge of alcohol tax districts, paid by the 21 regional disbursing officers located outside of Washington, including Puerto Rico and Hawau. The Disbursement Accountuig Division admuiistratively examuied and recorded 1,425 monthly accounts of collectors of internal revenue, uiternal revenue agents in charge, district supervisors, includuig the PhUippuie branch of the district of Maryland, and the uiternal revenue salary payments made by the collector of customs and the regional disbursing clerk, San Juan, Puerto Rico, comprising a total of 120,393 vouchers. . In addition, 4,107 expense vouchers of employees and 12,717 vouchers covering passenger and freight transportation, and miscellaneous expenses were audited and passed to the Chief Disbursing Officer, Treasury Department, or General Accountuig Office for payment. The monthly pay rolls of the Bureau were examined and recorded currently. Office oj the Assistant General Counsel The activities of the office of the Assistant General Counsel for the Bureau of Internal Revenue embrace the whole field of Federal taxation in connection with the preparation and presentation to the United States Board of Tax Appeals of defense in all appeals; the review of refunds, credits, and abatements, in excess of $20,000; decisions and advice in various administrative and internal revenue tax matters referred by the Secretary of the Treasury, the Under Secretary, or an Assistant Secretary, by the General Counsel of the Treasury, by the Commissioner or the Assistant to the Commissioner, by the heads of the administrative units of the Bureau, by collectors of internal revenue, by other branches of the Government, and by individual correspondence; the preparation at the request of the Department of Justice or of United States attorneys, of data for use in the prosecution or defense of tax cases (civU and criminal) in suit, and otherwise complying with their requests for assistance in such cases; and the preparation, revision, and publication of regulations. Treasury decisions, mimeographs, and rulings, for the guidance of the officers and employees of the Bureau of Internal Revenue and others interested. The office is divided into six divisions, viz: Appeals, Civil, Interpretative, Penal, Review, and Legislation and Regulations. Assistant General Counsels Committee.—The Assistant General Counsel's Committee, consisting at the present time of four members, serves in an advisory capacity to the Assistant General Counsel, the general assistants, and the special assistants, who refer to the committee cases from all divisions of the office. The committee considers the?e cases and makes written recommendations as to their proper 157 REPORT OF THE SECRETARY OF THE TREASURY disposition. At the beginning of the fiscal year 1936, the committee had on hand 19 cases; during the year it received 202 and closed 204, leaving 17 cases pending at the close of the fiscal year. Reorganization Section.—The Bankruptcy, Receivership, and Reorganization Section received 1,844 reorganization cases during the year and closed 556 cases involving claims of $10,273,992.60, which were settled for $3,895,793.82. A total of 1,020 bankruptcy and receivership cases were closed involving claims of $6,144,856.51, of which $1,319,051.36 was collected.-^ Appeals Division.—Cases involviag income, estate, and gift taxes filed with the Board of Tax Appeals are in the immediate charge of this Division. During the fiscal year 5,052 cases were closed whUe 4,731 new cases were filed. At the end of the year there were pending 64 gift tax cases involving $2,032,114, 560 estate tax cases involving $73,188,205, and 9,478 mcome tax cases involving $445,090,306, or a total of 10,102 cases involviag $520,310,625. ^ Of this number, 9,478 were pending before the Board and 624 were in appellate courts on appeal fromjBoard decisions. Cases filed with and closed before the Board of Tax Appeals and appellate courts during the fiscal years 1935 and 1936 1936 1935 Cases Number Pending at beginning of year Filed during the year Total Closed during the year: By default By decision on merits By agreed settlement '. . . Total Number Amount 12,474 3,816 $448, 493,080 184,819,113 10,423 4,731 $493,648,417 166,625,983 16,290 633, 312,193 16,164 659,174,400 500 1,615 3,762 4,908,068 32, 289,161 102, 466, 647 313 1,519 3,220 6,018,381 32,677,797 101,167,597 6,867. Pending at close of year Amount 10,423 139,663, 776 493,648,417 ' 6,062 138,863,775 10,102 520,310,625 Disposition of cases by Board of Tax Appeals during the fiscal year 1936 Amount approved Class Default Decision on merits Agreed settlement i Total Deficiency Overpayment Percentage of net result to amount Net result in dispute $6,018,381 32, 677,797 101,167,697 $4, 735, 636 12,921, 603 36,366,764 $300,152 1,279,592 1,264,856 $4,435,484 11,642,011 34,091,908 88.38 35.62 33.70 138,863, 776 63,014,003 2,844,600 50,169,403 36.13 Number of cases Amount in dispute 313 1,519 3,220 6,052 1 Includes not only the cases recommended for settlement by the Technical Staff, but all cases settled by the Appeals Division, whether by compromise or after conference. As a result of circuit and special trips, 1,184 cases iavolving $27,749,720.63 in dispute were settled by agreement in the amount of $14,813,290,92. 158 REPORT OF THE SECRETARY OF THE TREASURY Civil Division.—The Civil Division, in cooperation with, and at the request of, the Department of Justice, assists in the handling and preparation for trial of civU internal revenue cases arising hi the Federal district courts, tbe 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 trials of such cases and arguments upon appeals are conducted by the Department of Justice, with the assistance of this Division, pursuant to the President's Executive order of June 10, 1933. . The Division's major activities during the fiscal year are shown in the foUowing tables: Civil cases received and disposed of during the fiscal year 1936 i P e n d i n g J u l y 1,1936: I n court . '• For suit b y t h e United states - -- -- Total L i e n cases i n c o u r t - - . Total S u i t s i n v o l v i n g liens L i e n cases n o t i n s u i t T o t a l , i n c l u d i n g lien cases -. 2,580 267 $183,946, 649. 03 6,670,816. 39 2,847 1,436 190, 617, 465. 42 4,282 T o t a l , i n c l u d i n g lien cases Received d u r i n g year: Suits b y taxpayers For suit b y t h e United States Closed d u r i n g year: Exclusive of lien cases L i e n cases A m o u n t involved Number Cases 2,888 278 154,885, 369.41 65, 649,669.89 3,166 1,281 161 220, 635,029. 30 4,608 . .. 2,080 1,669 .. Total 89,744,164.51 3,649 1 P e n d i n g J u n e 30,1936, exclusive of lien c a s e s . . P e n d i n g J u n e 30,1936, i n c l u d i n g lien cases 3,933 6,241 321, 308,330.21 I Excludes bankruptcy, receivership, insolvency, compromise, and liquor cases. Results obtained in cases closed during the fiscal year 1936 i Number Cases Suits i n s t i t u t e d b y t a x p a y e r s Suits a n d claims b y t h e U n i t e d S t a t e s . . Injunctions, processing taxes •Total Amount claimed Recovered from taxpayers 696 262 1,132 $41, 224, 789. 91 8,092,499. 95 40,426,874. 65 $809,756.10 2,080 89, 744,164. 51 809,756.10 A m o u n t refunded $7,802,100.36 7,802,100.36 1 Excludes bankruptcy, receivership, insolvency, compromise, lien, and liquor cases. Results obtained in lien cases closed during the fiscal year 1936 Cases Pending in court Not pending in court. Total. Number 1,445 124 Amount collected $318,226. 69 1 62,973.66 381,200.34 > Amount collected since Apr. 8,1936, the date these cases were transferred to the Civil Division from the Interpretative Division. 159 REPORT OF THE SECRETARY OF THE TREASURY Civil cases pending in courts July 1, 1935 and 19S6 i July 1, 1935 District courts. . . . . Circuit courts of appeals Court of Claims Supreme Court State courts and miscellaneous.* Pending payment of judgment claims Total l - July 1, 1936 1,813 117 648 4 21 O 77 2,938 125 475 2 30 74 2, 680 3,644 L 1 Excludes bankruptcy, receivership, insolvency, compromise, lien, and liquor cases. The number of cases of the Civil Division tried by the Department of Justice and also the number decided by the courts during the fiscal year are shown in the following table: Tax cases tried and decided by the Federal courts during the fiscal year 1936 Cases decided Cases tried Courts District courts Circuit courts of appeals. Court of Claims.Supreme Court Total . . - - For the Government Against the Government Partly for and partly against the Government Total 235 106 65 23 144 60 47 1460 40 16 17 34 5 6 0 638 105. 67 23 428 257 532 44 833 1 Includes 398 permanent injunctions entered in district courts on basis of the Supreme Court decision in the case of Rickert Rice Mills, Inc., v. Fontenot, Collector. Compromise Section.—The Section is charged with the responsibility of considering and passing upon offers submitted in compromise of tax liability arising in the Miscellaneous Tax Unit of the Bureau, except those offers involving criminal prosecution, fraud penalties, or specific penalties. It is also charged with the solution of legal problems arising in the collection of taxes from banks in liquidation, from taxpayers who have made assignments of assets for the benefit of creditors, and from estates of deceased taxpayers. During the fiscal year, 583 cases handled in this section were closed by acceptance of offers in compromise and the collection of filed claims in the aggregate amount of $1,716,215. The followuig table shows the volume of cases handled by this section: Pending at beginning of year Received during year Total to be disposed of "Closed or in process of closing Pending at end of year . Number 1,528 1,806 -- 3,333 1,652 1,681 The number of cases pending June 30, 1936, and the tax liabUity involved are as follows: 160 EEPORT OF THE SECRETARY OF THE TREASURY Pending Number Cash offers in compromise Installment offers in compromise Decedent estates Insolvent banks Miscellaneous cases . . _ Total '.. In process of closing Liability Number Liability 266 72 1,096 68 190 $1, 370, 270 1,030,448 21, 679,830 102,042 1, 425, 766 183 32 $1, 206,117 . 2,969,801 1,681 26, 608, 345 216 4,175,918 Interpretative Division.—This Division is charged with the preparation of opuiions relating to the administrative construction of internal revenue laws and the editing of material for publication in the Internal Revenue Bulletin. During the year, it disposed of 2,416 jacketed cases. 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 (occasionally for 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. I t decides 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 upon informers' reward claims under section 3463 of the Revised Statutes. The following table summarizes the work of the Division during the last 2 fiscal years: Cases received and disposed of by the Penal Division during the fiscal years 1935 and 1936 Cases Pending at beginning of year Received during year Total to be disposed of Disposed of Pending at end of year 1935 . . . _ . . __ _ _.^ ^^ _____ ... ._ _. _ _ __. 1936 1,524 1,266 1, 202 1,264 2.790 1,588 1,202 2,466 1,241 1, 225 Review Division.—Tlds Division reviews cases involving refunds, credits, arid abatements of internal revenue taxes. I t prepares public decisions in accordance with Treasury Decisions 4264 and 4583 in all cases where the overassessments exceed $20,000; prepares' reports to the Joint Committee on Internal Revenue Taxation in cases involving credits or refunds in excess of $75,000, as required by section 710 of the Revenue Act of 1928; and also participates in conferences and negotiations in other Bureau agencies on cases involving proposed overpayments. REPORT OF THE SECRETARY OF THE TREASURY 161 There were 287 cases disposed of during the year involving proposed overassessments of tax aggregating $48,454,580.01. As a result of adjustments recommended by this Division, the proposed overassessments were reduced by $7,006,762.29. Some of the principles involved in these adjustments also affected the disposition of other cases pending in the Bureau. Public decisions were promulgated in 126 cases and memoranda were submitted to the joint committee in 18 cases. Legislation and Regulations Division.—The function of this Division is to prepare or review regulations issued under the internal revenue laws; make reports on suggested changes in the internal revenue laws and the existing regulations thereunder, and, if change is found desirable, to explain in detail the reasons therefor and the form to be followed; and consider and prepare reports on legislation introduced in Congress relating to internal revenue matters. During the year the Division received 912 cases, which with those on hand totaled 1,203 cases to be disposed of. Of this number, 927 cases were disposed of, leaving 276 cases on hand on June 30, 1936. Intelligence Unit The principal work of the Intelligence Unit consists in the investigation of tax fraud cases in cooperation with internal revenue agents and deputy collectors. During the year there were 801 investigations of alleged evasion of income tax, and of this number 200 cases, involving 293 individuals, were recommended for prosecution. On this charge there were convictions in 43 cases, involving 55 individuals, and there were acquittals in 9 cases, involving 10 individuals. Investigation of these cases resulted in recommendation for assessment of additional taxes and penalties aggregating $31,033,499. In addition to the collections by the Bureau of Internal Revenue of taxes, penalties, and interest, amounts are covered into the Treasury by way of fines imposed in criminal cases; in some jurisdictions the courts have imposed an additional penalty by requiring the defendants to pay the costs of the investigations—that is, the salaries and expenses of the agents during investigations. There were also investigated during the fiscal year 175 cases of charges against employees in the Internal Revenue Service, resulting in the separation from the service of 103 employees and the prosecution of 14, of which number 7 have been convicted, 3 acquitted, and 2 indictments dismissed. The other two cases have not been tried. There were 4,781 investigations of apphcations of attorneys and agents to practice before the Treasury Department and 97 investigations of charges against enrolled agents and attorneys, resulting in the disbarment of 11, the suspension of 6, the reprimand of 5, and rejection of applications of 34. There were investigated 4,546 cases of miscellaneous character, which included investigations of a number of cases for the Bureau of Narcotics, the Customs Service, national bank examiners, and of persons under consideration for appointment to various positions in the Treasury Department, including officials of branches other than the Bureau of Internal Revenue. 93790—37 -12 . 162 REPORT OF THE SECRETARY OF THE TREASURY Work reliej projects The Bureau of Internal Revenue received allocations for three projects from funds made avaUable by the Emergency Relief Appropriation Act of 1935. Some 3,400 persons have been regularly employed on these projects, more than 90 percent of whom were taken from relief rolls. All workers were paid the security wage rates as stipulated in the Executive order of May 20, 1935, and its amendments, and were recruited and employed in accordance with the regulations of the Works Progress Administration and of the United States Employment Service of the Department of Labor. A survey of miscellaneous taxes in 20 of the largest metropolitan centers in the United States was designed to collect delinquent and deficient taxes, principally on sales of sporting goods, cosmetics, radios, electric refrigerators, jewelry, furs, and on documentary stamps, admissions, and dues. As of June 30, 1936, $1,937,500 had been allocated to this project; obligations amounted to $1,803,121.18 and expenditures $1,723,731.29. As of the same date, this investigation resulted in the collection of $3,411,476.72 and the assessment of an additional amount of $10,500,330.54. A second project, conducted in 28 revenue agents' divisions, involved the examination of income tax returns which ordinarUy would not receive an intensive examination. Allocations to this project amounted to $771,405 up to June 30, 1936; obligations totaled $735,246.14, of which $689,815.91 represented expenditures. As a result of the inspection of these returns, net deficiencies of $1,578,296.71 were disclosed up to June 30, and taxpayers had agreed to these deficiencies to the extent of $1,430,915.15. A third project comprised the inspection of retail liquor stores in 91 metropolitan centers for the detection of noncompliance with the internal revenue laws. The workers on this project were commissioned as deputy collectors of internal revenue to permit them to make collection of any taxes and ad valorem penalties due at the time of inspection, and to receive offers in compromise tendered by taxpayers in settlement of all liability incurred for nonwillful violation of the laws applying to the sale and handling of liquors. A printed notice, covering all of the pertinent requirements of governing laws, was forwarded to each retail liquor dealer prior to actual inspection of his premises. As of June 30, 1936, allocations to this project amounted to $917,683, of which $851,958.61 had been obligated, and actual expenditures amounted to $807,143.07. This investigation disclosed deficiencies of $1,004,707.78, of which $993,924.93 had been collected by June 30, 1936. LEGAL DIVISION During the fiscal year 1936 the Legal Division prepared 81 formal legal opinions and numerous informal opinions for the information and guidance of the administrative officers of the Department, and steps were taken toward publication of selected opinions. The Division collaborated with legislative counsel of both Houses of Congress in legislative matters affecting the Department, furnished technical assistance to 60 committees of the Senate and House of Representatives, and made investigations, analyses, and recommendations with respect to approximately 725 congressional bills affecting the Department. There were prepared or revised approximately 30 REPORT OF THE SECRETARY OF THE TREASURY 163 important bUls deemed necessary or desirable for the more efficient operation of the Department, for the collection of the revenue, and for the safeguarding of national credit. With respect to monetary and public debt matters, in addition to preparing drafts of legislation, the Division drafted proclamations and amendments to regulations relating principally to the payment of gold clause securities, their acceptance in payment of income and profits taxes, the exchange of coins and currencies of the United States, the use of scrap gold in industry and the arts, and the issue, exchange, and redemption of paper currency and coin. Active assistance was rendered in 13 pending cases involving gold coin, bullion, and newly mined gold, in 41 pending cases involving ''gold clause^' obligations, and in numerous suits for penalties under the Emergency Banking Act of 1933 and the Gold Reserve Act of 1934. The Division prepared the text of the adjusted service bonds, the necessary forms in connection with their issue and redemption, two amendments to the Adjusted Compensation Payment Act, and regiUations covering the redemption of the bonds. An annotated compilation of all Federal statutes relating to the public debt of the United States was undertaken and satisfactory progress was made. New research projects commenced by the Division during the year included an analysis of the decentralization plan being tried as an innovation by the Bureau of Internal Revenue in the Cleveland district, and a study of income tax cases in which offers in compromise are made. In a pamphlet prepared by the Division, the practices of sentencing alcohol tax offenders were discussed analytically. Regulations were drafted relating to customhouse brokers under the act approved August 26, 1935, the excise tax on employers under title I X of the Social Security Act, and the administration of the alcohol tax laws under the Liquor Law Repeal and Enforcement Act approved August 27, 1935, and the Liquor Tax Administration Act of 1936, approved June 26, 1936. More than 100,000 compromise cases and petitions for remission were considered during . the year in connection with liability for violations of alcohol tax laws, and numerous claims were reviewed involving all enforcement units of the Department. With respect to the Coast Guard, in addition to reviewing the proceedings in 114 retiring board cases, the Division reviewed the record and prepared the action of the reviewing authority in 74 general court cases, 136 summary court cases, 301 deck court cases, and 209 boards of inquiry, inquest, and investigation. Sixty-five cases were examined for award of life saving medals of honor, and the action necessary for awards was prepared in 55 of such cases. In the field of narcotic drugs, the Division rendered cooperation and assistance to State authorities in connection with the adoption and enforcement of the uniform State narcotic law; regulations were drafted improving the care of prisoners at a United States narcotic farm; and progress was made in a compilation of State laws relating to drug addiction and human sterilization. In the administration of the customs laws, the Division gave consideration to the many legal questions arising from the reciprocal tariff bargaining program. In addition to the examination of several applications for licenses for foreign trade zones, the Division participated in the granting of a license for such a zone in the port of New York. Considerable attention was given to the legal questions 164 REPORT OF THE SECRETARY OF THE TREASURY involved in the application of countervailing duties upon the importation of articles in connection with the production or exportation of which a bounty or grant was paid. The Division considered during the year the legal aspects of the acquisition of 304 sites for construction purposes and 16 additions to sites for extension and remodeling purposes. A total of 847 contracts covering construction and related work was prepared, and more than 2,000 contracts prepared by the Branch of Supply and by other agencies of the Department were examined for legal sufficiency. In the field of taxation the Division handled and prepared the necessary action in aU income, estate, and gift tax appeals; 5,052 appeals, involving $138,863,775, were finally closed during the year, whereas 4,731 new appeals, iavolving $165,525,983, were filed during the same period. At the end of the year 9,478 cases were pending before the Board of Tax Appeals and 624 before the appellate courts. The Division prepares and reviews all cases involving overassessments where the amount proposed for allowance exceeds $20,000; 287 of such cases were disposed of, resiUting in refunds, credits, and abatements amounting to $46,718,653. In the review of these cases reductions in the amounts proposed for refund, and deficiencies in tax discovered and proposed for assessments amounted, in the aggregate, to $7,006,762. The Division prepared data for use by the Department of Justice in the prosecution or defense of 4,890 tax cases (civil and criminal); handled the preparation and publication of more than 900 regiUations, Treasury decisions, and rulings for the guidance of oflacers and employees of the Bureau of Internal Revenue and others concerned; and reviewed more than 1,600 cases involving offers in compromise and extensions of time to pay tax, in addition to a large number of closing agreements prior to transmission from the Commissioner of Internal Revenue to the Secretary of the Treasury for approval. Included in the various Internal Revenue matters, the Division received 1,760 reorganization cases, arising under section 77 B of the Bankruptcy Act, and closed 566 cases involving claims of $10,273,993, which were settled for $3,895,794. A totalof 1,020 bankruptcy and receivership cases was closed involving claims of $6,144,857, and $1,319,051 was coUected. BUREAU OF THE MINT Institutions oj the Mint Service During the fiscal year 1936, six Mint Service institutions were in operation: The coinage mints at Philadelphia, San Francisco, and Denver; the assay office at New York, which handles much importexport gold; the mint at New Orleans, conducted as an assay office; and the assay office at Seattle. The two last-named institutions are, in effect, bullion-purchasing agencies for the large institutions and also serve the public by making assays of ores a r d bullion. The electrolytic refineries at the New York and San Francisco institutions were in operation. Coinage The total number of domestic coins made during the fiscal year 1936 was 471,040,986, which consisted of 1,439,000 standard sUver dollars, 128,876,658 subsidiary (fractional) sUver coins, 88,502,614 REPORT OF THE SECRETARY OF THE TREASURY 165 nickel coins, and 252,222,714 bronze coins. The total value of the domestic coinage was $34,539,163.34. During the prior year the total number of coins made was 608,414,207, with a value of $39,131,127.65. The output of foreign coin by United States mints during the fiscal year 1936 was again extraordinarUy large, the total being 72,180,449 pieces, as compared with the 1935^ total of 68,500,401. Each of the three coinage mints made sUver coins for Mexico, whUe the Philadelphia mint also made sUver, nickel, or bronze coins for Colombia, Costa Rica, Cuba, Honduras, Nicaragua, San Salvador, and Venezuela. The grand total of domestic and foreign pieces coined during the year was 543,221,435, as compared with 676,914,608 during the prior year. The making of proof coins (with highly polished surfaces) which was discontinued some years ago was resumed during the year. These coins are sold to the public at a premium over face value to cover the extra cost of manufacture. Bullion deposit transactions Bullion deposits continued to reach the mints and assay offices in large numbers during the year. The number of deposits totaled 195,279 as compared with 226,701 m 1935, 115,870 in 1934, and 36,098 m 1931. The 1936 total is more than five times that of 1931. Gold operations ° Gold acquired by the mints and assay offices during the year amounted to $1,451,011,081.22; gold transfers to the mints and assay offices consisted of $58,536,481.98 of bullion from Federal Reserve banks, and $1,003,813,951.78 of domestic coin from other Treasury offices. Intermint-service institution transfers amounted to $35,810,301.53. These items total $2,549,171,816.51, as compared with $4,942,920,241.18 for the prior year. The acquisitions include $27,495.18 of gold received at $20.67 + per fine ounce, which had not been previously surrendered under the nationalization orders; on this gold the increment to $35 per fine ounce amounted to $19,081.90. Silver operations The Government's acquisitions of sUver during the fiscal year totaled 609,613,258 fine ounces, at an average cost of 64.8+ cents per fine ounce, and a total cost of $395,313,736. The acquisitions consist of the following: Amount (fine ounces) Item Newly mined domestic silver ...: Nationalized silver Purchase Act silver.. ...... Silver contained in gold bullion deposits, etc Silver received in exchange for Government stamped bars Total .1 _. . Cost 48,784,456 650,462 668,639,669 411,926 1,126, 757 $37,642,417 326,294 366,540,620 222, 207 683,198 609,613,258 395,313,736' 166 REPORT OF THE SECRETARY OF THE TREASURY United States coin received for recoinage totaled 4,762,051 fine ounces, with a recoinage value of $6,583,102. SUver deposited in trust by other governments totaled 11,706,709 fine ounces. SUver transfers between Mint Service institutions totaled 406,579 fine ounces. These items plus the sUver acquired during the year amounted to 626,488,597 fine ounces, as compared with the prior year's total of 461,860,976 fine ounces. During the year 305,432,000 fine ounces of sUver were revalued to $1.29+ per fine ounce, the statutory monetary value defined by the act of June 19, 1934, and the silver was set up as security against sUver certificates. The open market price of sUver in New York (mean of bid and asked) during the fiscal year 1936 averaged $0.55341. The highest pomt was $0.70062, on July 1, 1935, and the lowest was $0.45062, first reached on January 20, 1936. For newly mined domestic sUver the price of $0.7757+ per fine ounce, established by the President's proclamation of April 24, 1935, prevailed throughout the fiscal year. Rejineries The refineries at New York and San Francisco produced during the year 6,842,651 fine ounces (234.6 tons) of electrolytically refined gold bullion and 4,555,602 fine ounces (156.2 tons) of silver bullion. During the prior year the quantities were 2,388,328 fine ounces (81.9 tons) of gold and 1,336,572 fine ounces (45.8 tons) of sUver. The capacity of the New York refinery has been materially increased. The electrolytic refinery at the Denver Mint remained closed, as in the previous year, because of building construction and other more urgent activities. The stock of gold and sUver in unrefined bullion on hand increased during the fiscal year 1936, by about 56 tons, to a total of 1,065 tons; the prior year's increase was about 80 tons.. Commemorative coins The following silver half-dollar coins of special design were issued during the year: Event Providence, R T., tercentennial of founding. . . California-Pacific International Exposition at San Diego, Calif Old Spanish Trail, four hundredth anniversary of opening Date of law _ May 2,1935 May 3,1935 June 5,1935 Pieces 60,000 250,000 10,000 REPORT OF THE SECRETARY OF THE TREASURY 167 Commemorative half dollars which have been authorized but not yet issued are as follows: Event Columbia, S. C , sesquicentennial anniversary of the founding of the capital of South Carolina Cincinnati, Ohio, fiftieth anniversary as a center of music Long Island, N. Y., three hundredth anniversary of first settlement Great Lakes Exposition, centennial celebration of Cleveland, Ohio New Rochelle, N. Y., two hundred and fiftieth anniversary of founding. Bridgeport, Conn., one hundredth anniversary of incorporation Swedes, three hundredth anniversary of landing in Delaware Wisconsin, one hundredth anniversary of establishment of territorial government. Lynchburg, Va., one hundred and fiftieth anniversary of founding Albany, N. Y,, two hundred and fiftieth anniversary of founding Battle of Gettysburg, seventy-fifth anniversary Elgin, 111., one hundredth anniversary of founding Lost Colony, Virginia Dare, three hundred and fiftieth anniversary of Sir Walter Raleigh's colony on Roanoke Island, N. C San Francisco-Oakland Bay Bridge, celebration of opening York County, Maine, three hundredth anniversary of founding Date of law Pieces Mar. 18,1936 Mar. 31,1936 Apr. 13,1936 May 5,1936 .....do May 15,1936 do. . ...do May 28,1936 June 16,1936 do do 25,000 16,000 100,000 60,000 25,000 26,000 26,000 26, 000 20,000 26, 000 50,000 25,000 June 24,1936 June 26,1936 do 25, 000 200,000 30,000 Stock oj coin and monetary bullion in the United States On June 30, 1936, the estimated stock of domestic coin in the United States was $1,017,853,376, of which $547,080,164 was standard silver dollars, $331,716,093 subsidiary silver coin, and $139,057,119 minor coin. The stock of gold bulUon, including coin, held in the Treasury on the same date was valued at $10,608,416,678, an increase of $1,493,035,869; and the stock of silver bullion was 1,076,865,202 fine ounces, an increase of 593,875,690 fine ounces. Production oj gold and silver Domestic gold production during the calendar year 1935 was 3,609,283 fine ounces with a value of $126,324,900, as compared with 3,091,183 fine ounces with a value of $108,191,400 in 1934. The quantity output for 1935 was about 74 percent of that for the record year 1915, when the total was 4,887,604 fine ounces. Domestic silver production during 1935 totaled 45,924,454 ounces, valued.at $33,008,201 on the basis of the average price of $0.71875 per fine ounce for newly mined domestic silver received by the Treasury. The quantity compares with 32,725,353 ounces for 1934 and with the record production of 74,961,075 fine ounces for 1915. Industrial consumption oj gold and silver Gold consumption in the industrial arts during the calendar year 1935 is estimated at $25,929,497. Gold returned from industrial use exceeded the total used by industry by $32,461,178, as compared with an excess of $61,694,490 during the previous year. Silver used in the arts is estimated at 41,192,023 fuie ounces, of which 5,288,916 fine ounces was new material. As compared with the prior year, silver consumption increased about 1,513,000 ounces and gold consumption increased about 334,000 ounces. 168 REPORT OF THE SECRETARY OF THE TREASURY Housing The bullion depository at Fort Knox, Ky., is-nearing completion and will be occupied as a depository for refined gold bullion during the fiscal year 1937. Funds were allotted under the Public Works Administration for the construction of this depository and an appropriation was made in the Deficiency Act of June 22, 1936, for its initial operation. The transfer to the depository of gold now stored at the Philadelphia Mint and the New York assay oflSice will provide additional working'^acUities at these institutions. The addition to the Denver Mint has been partially occupied, and the new mint building at San Francisco is to be occupied soon. Appropriations J expenses j and income Regular appropriations avaUable for the Mint Service during the fiscal year 1936 totaled $1,256,600; the Second Deficiency Act provided $150,000; allotments for meeting emergency expenses amounted to $1,179,098; and reimbursements to appropriations for services rendered amounted to $513,231, making a grand total of $3,098,929. Expenses amounted to $3,134,432, of which $3,022,797 was chargeable to appropriations and $111,635 chargeable to income. The regular income realized by the Treasury from the Mint Service aggregated $19,190,279, of which $13,996,324 was seigniorage. The seigniorage on silver-dollar coin was $578,941; on subsidiary sUver coin, $9,150,865; and on minor coin, $4,266,518. Extraordinary income aggregated $201,437,324, of which $201,418,242 was seigniorage on silver bullion revalued to $1.29+ per ounce, and $19,082 was the increment to $35 per ounce on revalued gold. The number and value of deposits, transfers, gross income, and expenses for the fiscal year 1936 and the number of employees on June 30, 1936, at each institution are shown in the following table: Gold and silver deposits and transfers, income, expenses, and employees, by institutions, fiscal year 1936 Number of deposits of gold and silver Monetary Number of value of gold and silver Mintreceipts, Service Including transtransfers» fers Philadelphia. _ San Francisco... Denver New York __ Niew Orleans Seattle 26,059 94,363 15,892 45, 201 4,020 5,431 794 $666,163,440 30 208,817,922 320, 770,450 1,123 2,376 2, 228, 826,481 2,051,392 i 18,837,747 Total-.. Bureau of the Mint Institution • Grand total Prior fiscal year EmExcess of Gross income (+) ployees, Gross June regular expenses« or of ex30, income ^ penses ( - ) 1936 +$7,619,097 -f 3,482, 264 -f 2,122, 568 +3,024,113 -29, 748 +20, 676 419 193 171 279 18 16 190,966 4,323 3, 344,467,432 19,219, 648 2,980, 679 +16,238,969 183,122 -183,122 1,096 66 190.966 4,323 3,344,467,432 19,219,648 3,163,801 +16,055,847 1,152 220,622 6,179 6,517,089,315 13,899,655 3,598.865 +10,300,790 1,853 $8,814,634 $1,196, 637 4,025,733 543,469 466,888 2, 589,466 695,881 3, 719,994 40,130 10,382 38, 774 69,449 1 Includes interinstitution transactions amounting to $36,017,015. 2 Includes interinstitution transactions amounting to $29,369. REPORT OF THE SECRETARY OF THE TREASURY 169 BUREAU OF NARCOTICS Enjorcement activities The Bureau's policy of directing its principal enforcement activities against major narcotic law violators has resulted in a progressive reduction from year to year in the supply of narcotics available to the domestic illicit traffic. Accordingly, the prices of drugs in the illicit market have continued high during the fiscal year 1936, further increases being in evidence in several localities. The high degree of adulteration previously found in drugs seized in the illicit traffic also was apparent during the year, especially in the case of heroin, which upon analysis was found to contain an average adulteration of 81 percent. The decreased supplies of smuggled narcotics, which forced peddlers and addicts to turn to the channels of legitimate distribution for their supply, continued to be reflected in the robberies of wholesale and retail stocks, the forgery and false execution of narcotic prescriptions, and the improper prescribing and dispensing of narcotics. Of the total violations reported during the year, 41 percent involved persons registered under the law, as compared with 33 percent which involved such persons during the fiscal year 1935, 30 percent during 1934, 18 percent during 1933, and 14 percent during 1932. However, the measures previously initiated by the Bureau, to provide increased safeguards and more secure places of storage for narcotic stocks in the hands of registrants, resulted during the year in a further decrease in the number of thefts reported. The Bureau continues to solicit and receive the active cooperation of State and municipal enforcement agencies. Such cooperation increases in effectiveness with the adoption and enforcement of the Uniform State Narcotic Law in the several States. This law, which was approved by the Conference of Commissioners on Uniform State Laws and by the American Bar Association nearly 4 years ago, and which the Bureau has been urging every State to enact, was adopted with little or no amendment during the fiscal year 1936 in two States— Illinois and Wisconsin. This makes a total of 29 States which had adopted this model legislation before the close of the fiscal year. I t had been previously adopted by Alabama, Arizona, Colorado, Connecticut, Delaware, Florida, Georgia, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Virginia, and West Virginia. The following table shows the number of cases of violation, by registered and nonregistered persons, of the narcotic laws and the cases disposed of during the fiscal year as reported by Federal narcotic enforcement officers: 170 REPORT OF THE SECRETARY OF THE TREASURY Violations of the narcotic laws and the cases disposed of during the fiscal year 1936 Nonregistered persons Registered persons Federal court State court 1 1 Pending July 1, 1935 Reported during 1936: Federal Joint Total to be disposed of State court Federal court 1,070 1 1,459 2,367 57 2,676 860 3,494' 4,894 = Convicted: Federal Joint. Acquitted: Federal Joint Dropped: Federal . Joint Compromised:^ Federal Joint 134 8 6 2 1,782 606 330 91 17 2 1 1 81 33 21 10 1,621 22 18 8 660 194 40 17 . 9 4 0 2,601 3,769 893 1,135 752 Total disposed of... Pending June 30, 1936 i 5a 1 s 1 P 1 o 1 1d o 1 P 2 1 1 & P Sentences imposed: Federal Joint 244 9 10 0 25 0 6 1 7 0 0 3,656 0 1,029 6 6 6 23 206 61 4 9 8 0 Total - 263 10 26 7 7 0 4,686 0 29 267 1 8 Fines imposed: Federal Joint Total-- $21,063. 76 451. 00 $260.00 600.07 $124,195. 75 17,650.03 21, 614. 76 750.07 141.845.78 $6,364.60 . 3,114.00 9.478. 60 1 Revised. 2 Represents 344 cases involving tax liability which were closed on payment of taxes and penalties in the sum of $1,682.77; and 421 cases which were compromised jn the sum of $36,228.05. NOTE.—Federal cases are made by Federal oflBcers working independently, while joint cases are made by Federal and State officers working in cooperation with each other. Extent and trend oj narcotic traffic On June 30, 1936, there were 333,081 registrants under the Harrison narcotic law, as amended, 192 as importers and manufacturers, 1,356 as wholesale dealers, 51,481 as retail dealers, 152,421 as practitioners, and 127,631 as dealers in and manufacturers of untaxed narcotic preparations, the latter number including registrants not required to pay occupational tax under the act. During the year 153,141 pounds of opium were imported as compared with importations of 120,490 pounds during the previous year, or an increase of 32,651 pounds. Of the quantity imported, however, 42,151 pounds were retained in customs bond and were not released to manufacturers. The net quantity made available.to manufacturers showed a decrease of 9,500 pounds as compared with 1935. Coca leaves were imported both for medicinal purposes and for the manufacture of nonnarcotic flavoring extracts. Imports of coca REPORT OF THE SECRETARY OF THE TREASURY 171 leaves for medicinal purposes amounted to 243,089 pounds in 1936 as compared with 194,132 pounds during the previous year, or an increase of 48,957 pounds. ° Imports of coca leaves for the manufacture of nonnarcotic flavoring extracts amounted to 34,969 pounds,, Exports of narcotic drugs of all kinds amounted to 1,579 ounces in 1935 and 1,237 ounces in 1936, or a decrease of 342 ounces,, Total drugs exported during 1936 involved 34,337 taxable ounces of products. The net quantity of pure drugs of all kinds sold to domestic purchasers by manufacturers amounted to 396,317 ounces as compared, with 375,248 ounces during the previous year. DIVISION OF PRINTING The Division of Printing transacts all of the Treasury Department's printing and binding business with the Government Printing Office. This involves the placing of all orders, the handhng of all inquiriesi regarding deliveries, estimates of cost, copy, proof, instructions, and the auditing of vouchers covering payments in connection therewith. The Division is charged with editing and preparing weekly ^ ^Treasury Decisions'' under customs, internal revenue, narcotics, and other laws:; and preparing semiannual bound volumes thereof, and maintaining a maihng list for their distribution. I t is also charged with the responsibility of authorizing engraving work to be done by the Bureau of Engraving and Printing for all Government departments and establishments unless money, bonds,cor postage stamps are involved; control over newspaper and periodical advertising for the Treasury Department; binding of confidential Department records; and the warehousing and distribution of blank books and forms for Washington and field offices of the Department. Appropriations to the Department for printing and binding and for purchases of stationery supplies are under the administrative control of the Division. The total expenditures of the Division during each of the past two fiscal years are shown in the following table: Expenditures for the fiscal years 1935 and 1936, by appropriations Appropriation 1935 1 $672, 639. 00 Printing and binding, Treasury Department 6, 500.00 Printing and binding. Treasury Department, 1935-36 (second deficiency)... 333, 224.32 Printing and binding, other appropriations, w 464, 699.80 Stationery, Treasury Department.. Total 1,465,963.12 1936 1 $840, 697.43 43, 260. 00 956, 233. 00 2 456,880. 00 2.295, 070.43 1 Includes receipts from sales of customs forms (reimbursed to the appropriation). 2 Includes reimbursement for stationery furnished other offices. . Printing and binding The appropriation for printing and binding for the fiscal year 1936 was $630,000. Due to the heavy demands made on the Department, it was necessary to obtain $188,000 in the First Deficiency Act. These sums were augmented by $43,260 from the Second Deficiency Act of 1935-36, making a total of $861,260 available from appropriations for printing and binding for the Treasury Department in the fiscal year 1936. 172 REPORT OF THE SECRETARY OF THE TREASURY Eeimbursements of $29,500 from sales of customs forms increased the total available amount to $890,760. Of this sum, $883,957 was expended, leaving an unobligated balance of $6,803. In addition, $955,233 was expended from appropriations other than the printing and binding appropriation, bringing the total expenditure to $1,839,190. Appropriations, expenditures, and reimbursements for printing and binding for the fiscal years 1935 and 1936 ^ SUMMARY 1936 1935 Appropriation, printing and binding, Treasury Department Printing and binding, Treasury Department, 1936-36 (second deficiency)... Reimbursements from sales of customs forms Expended from other appropriations^ Total available Total expenditures Balance..: .. $646,000.00 6. 600.00 26,839. 00 333, 224.32 $818,000.00 43,260.00 29, 500. 00 965, 233. 00 1,011,663.32 1,010,863.32 1,845,993.00 1,839,190.43 700.00 6,802.67 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. E X P E N D I T U R E S FROM APPROPRIATIONS FOR P R I N T I N G AND BINDING, BY BUREAUS, OFFICES, AND DIVISIONS Secretary, Under Secretary, and Assistant Secretaries.. Appointments Division Bookkeeping and Warrants Division Bureau of Engraving and Printing Division of Research and Statistics Bureau of Narcotics Chief Clerk and Superintendent.. Coast Guard Commissioner of Accounts and Deposits Comptroller of the Currency Customs. Division of Disbursement. Division of Printing Federal Alcohol Administration._ Procurement Division, Branch of Supply Procurement Division, Public Buildings Branch Government Actuary Internal Revenue Mint. National bank depositaries.— Public Debt Service... Public Health Service Secret Service Treasurer of the United States Miscellaneous and department stock. Total 874.72 495. 02 290. 86 976. 63 840. 71 638. 40 080.16 882. 61 101.29 701.12 642. 77 139.43 44, 796. 77 6, 571.34 1, 782.10 292, 267.38 6, 923. 28 1, 602. 77 12. 688. 20 64, 747. 39 696.97 12, 196. 62 65, 064.66 650,800. 00 $11, 737.15 476. 40 31, 094.97 6, 056. 35 2,384.61 3,188. 05 250.24 33,290. 73 1,178.30 26, 002. 73 67,269.38 6,679.91 1, 087.14 2,432.66 41,472. 86 6, 609.90 0) 443, 687.60 3,767.44 56.46 10,971.40 69,121.37 1, 074.68 14, 744. 43 81, 022. 77 854,457.43 R E I M B U R S E D AND E X P E N D E D FROM OTHER APPROPRIATIONS Administration of the Cotton Act (transferred to Internal Revenue, administrative expenses) Administration of the Tobacco Act (transferred to Internal Revenue, administrative expenses). Advances to Agricultural Adjustment Administration: Division of Disbursement Bureau of Internal Revenue... .-. Treasurer of the United States. 1 General expenses. Agricultural Adjustment Administration (transferred to Division of Disbursement) Payments for Agricultural Adjustment, Department of Agriculture: Transferred to Internal Revenue, administrative expenses Transferred to Treasurer of the United States, administrative expenses. Salaries and expenses. Bureau of Engraving and Printing Contingent expenses, national currency: Comptroller of the Currency Currency Redemption Division 1 Included in Division of Research and Statistics. $972. 00 2, 202. 00 12, 565. 00 26, 946. 00 942. 00 2,105.00 1,607.00 6.00 954.00 80.00 1,536.00 REPOET OP THE SECRETARY OF THE TREASURY 173 Appropriations, expenditures, and reimbursements for printing and binding for the fiscal years 1935 and 1936—Continued R E I M B U R S E D A N D E X P E N D E D FROM OTHER APPROPRIATIONS-Continued 1935 C u s t o m s Service, P u e r t o Rico tariff fund A d m i n i s t r a t i v e expenses. A d j u s t e d C o m p e n s a t i o n A c t , 1936-37: D i v i s i o n of D i s b u r s e m e n t . . P u b l i c D e b t Service T r e a s u r e r of t h e U n i t e d S t a t e s Diseases arnd S a n i t a t i o n I n v e s t i g a t i o n s , Social Security Act, P u b l i c H e a l t h Service, 1936 . ... .. E m e r g e n c y Relief, a d m i n i s t r a t i v e expenses: Accounts and D e p o s i t s . . Appointments Division.. . . . Bookkeeping and Warrants Chief Clerk, T r e a s u r y . ... ... Coast G u a r d Division of D i s b u r s e m e n t P r o c u r e m e n t Division, B r a n c h of S u p p l y . . . P u b l i c H e a l t h Service .. Division of Research a n d Statistics Secret Service Division T r e a s u r e r of t h e U n i t e d States E m e r g e n c y Relief, Office of t h e Secretary: B u r e a u of I n t e r n a l R e v e n u e Division of Research a n d Statistics E x c h a n g e stabilization fund, T r e a s u r y D e p a r t m e n t , 1936: A c c o u n t s a n d deposits Division of Research a n d Statistics .. . . E x p o r t a t i o n a n d D o m e s t i c C o n s u m p t i o n of Agricultural C o m m o d i t i e s , D e p a r t m e n t of A g r i c u l t u r e (cotton price a d j u s t m e n t , transferred t o T r e a s ury): D i v i s i o n of D i s b u r s e m e n t . . . . . . . T r e a s u r e r of t h e U n i t e d States . . -. N a t i o n a l b a n k examiners ._ Insolvent national banks . . . . Expenses of loans (act of Sept. 24, 1917, as a m e n d e d a n d extended) E x p e n s e s , E m e r g e n c y B a n k i n g , Gold Reserve a n d Silver P u r c h a s e Acts P r o c u r e m e n t Division: General a d m i n i s t r a t i v e expenses, P u b l i c W o r k s General s u p p l y fund_. Expenses, S e t t l e m e n t of W a r Claims A c t of 1928 Civil W o r k s A d m i n i s t r a t i o n _ . .. .. N a t i o n a l I n s t i t u t e of H e a l t h , conditional gift fund Texas C e n t e n n i a l Exposition (transferred to T r e a s u r y , P u b l i c H e a l t h , act of Aug 12, 1935) W o r k i n g fund (Treasurer of t h e U n i t e d S t a t e s ) : Civil W^orks A d m i n i s t r a t i o n F e d e r a l E m e r g e n c y Relief A d m i n i s t r a t i o n . . . . F a r m Credit A d m i n i s t r a t i o n . . Federal F a r m Corporation H o m e Owners* L o a n C o r p o r a t i o n Reconstruction Finance Corporation Tennessee Valley A u t h o r i t y P u b l i c H e a l t h Service T r e a s u r e r of t h e U n i t e d States .. . .. W o r k i n g fund (Division of D i s b u r s e m e n t ) : Interior, Virgin Islands, N a t i o n a l I n d u s t r i a l R e c o v e r y . W o r k i n g fund. T r e a s u r y , N a t i o n a l I n d u s t r i a l Recovery: Division of D i s b u r s e m e n t . . -N a t i o n a l I n d u s t r i a l R e c o v e r y , 1933-37: Coast G u a r d -Salaries a n d expenses, Division of D i s b u r s e m e n t - . C u s t o m s Service, b l a n k f o r m s . . Total - - ..- ---- 1936 $12. 76 $1, 266. 00 26,866. 00 20, 289.00 13,980. 00 28, 038. 27 278, 076. 00 337. 00 37.00 879. 00 801. 00 118, 810. 00 179,120. 00 24, 763. 00 1, 603. 00 8.00 6, 521. 00 15,961. 00 2, 639. 00 11.00 8.00 10, 639. 66 648. 97. 126, 589. 75 12, 920. 64 1, 023. 26 27.21 2, 262. 06 177. 00 5.00 8, 925. 00 112. 00 168, 314. 00 9, 337. 00 918. 00 2, 706. 00 10, 500. 00 161. 00 270. 00 813.. 00 118. 00 192. 00 69.00 61.00 594. 00 83.10 2, 713.11 27.00 15, 431. 07 2, 650. 00 122. 63 20, 792.18 221. 00 7,303. 00 333, 224. 32 26, 839. 00 966, 233. 00 29, 500. 00 360, 063. 32 984,733.00 Stationery supplies The appropriations, reimbursements, and expenditures for articles of stationery for the past 2 years are summarized in the following table: 174 REPORT OF THE SECRETARY OF THE TREASURY Appropriations, reimbursements, and expenditures for stationery for the fiscal years 1935 and 1936 1935 Appropriations Reimbursements. Available credits... Total expenditures . . .. . Balance .. 1936 $413,000.00 42,100. 00 $450,000. 00 6, 000. 00 456,100. 00 464, 699. 80 456,000. 00 465, 880. 00 600. 20 120. 00 Department advertising Authorizations to publish advertising were issued to 5,806 newspapers and periodicals in the fiscal year 1936, compared with 4,604 in 1935, an increase of 1,202. The expenditures authorized were $57,060.42 in 1935 and $68,304.70 in 1936, an increase of $11,244.28. Engraving work A total of 177,332,308 certificates, checks, commissions, drafts, transportation requests, and warrants was approved by the division for execution by the Bureau of Engraving and Printing for the several departments and establishments of the Government during the fiscal year 1936, compared with 99,756,992 in the preceding year. PROCUREMENT DIVISION The functions of all agencies pertaining to policies and methods of procurement, warehousing and distribution of property, facilities, structures, improvements, equipment, and supplies are consolidated in the Procurement Division, which comprises two main branches, the Branch of Supply and the Public Buildings Branch. .The Federal Alcohol Administration Act, approved August 29, 1935, and the Liquor Law Repeal and Enforcement Act, approved August 27, 1935, augmented the authority held by the Procurement Division under Executive Order No. 6166, June 10, 1933, to control all property, facilities, structures, machinery, equipment, stores, and supplies not necessary to the work of any agency, by authorizing it to dispose of forfeited distUled spirits and all property forfeited to the United States by court decree. Two other acts of Congress, namely. Public No. 330, approved August 26, 1935, and Public No. 351, approved August 27, 1935, provide for the disposition, through the Procurement Division, of surplus real property acquired by Federal agencies. The Procurement Division purchased material, supplies, and equipment for use in activities financed by funds provided in the Emergency Relief Appropriation Act of 1935. Branch oj Supply The Branch of Supply is charged with the determination of policies and methods of procurement, warehousing, and distribution of Government property, facilities, improvements, machinery, equipment, stores, and supplies; and with the determination of policies and methods of coordination and consolidation of the purchasing activities of the various departments and independent estabhshments. I t REPORT OF THE SECRETARY- OF THE TREASURY 175 performs all activities incident to the purchase in definite quantities of those supphes for which requirements can be anticipated and consolidated; contracts for those supplies of the departments and establishments for which requirements cannot be consolidated in definite quantity purchase but for which common contracts can be made with advantage to the Government; and receives, warehouses, and distributes to the departments and establishments supplies maintained as stock items in the Federal warehouse. In connection with purchases made during the fiscal year 1936, 37,846 bids were received and 17,508 contracts were awarded; the total purchases by the departments and establishments therefrom amounted to $45,343,990. Consolidated contracts were executed during the year covering tank car, tank wagon, and steel drum deliveries of motor gasoline and fuel oil for all Federal activities in the 48 States, their requirements totaling approximately 28,500,000 gallons of gasoline and oil. Consolidated contracts were effected covering drayage service for all Federal activities in 57 cities. Materials, supplies, and equipment received at the Federal warehouse amounted to 34,306,294 pounds, and deliveries to the departments and establishments aggregated 39,506,923 pounds. The number of items stored in the warehouse was increased from 1,925 on July 1, 1935, to 2,233 on June 30, 1936. The typewriter repair shop completed 18,427 overhauls and adjustments of typewriting machines for the departments and establishments in Washington, representing charges of $33,573. A 188-page Directory of Inspection Services and Testing Laboratories of the Federal Government, detailing various facilities of this character as an aid to the departments and establishments in inspection, was prepared in collaboration with the Bureau of Standards and distributed to all Federal activities. The Motor Equipment Section regularly serviced 449 passenger cars and trucks, completing 3,173 repair jobs and dispensing 227,583 gallons of gasoline and 6,052 gallons of oU. The Federal Catalog Section revised various sections of the Federal Standard Stock Catalog, and checked and arranged stock lists of the departments and establishments. The Federal Traffic Section issued 4,386 routing orders covering 53,298 cars, in addition to routing 30,934 less-than-carload shipments, and furnished 230,273 rate quotations to the departments and establishments. Under regiUations approved by the Secretary of the Treasury on •January 15, 1936, the Director of Procurement is charged with the disposition of all distilled spirits, including alcohol, wine, and malt beverages forfeited and delivered to the Secretary of the Treasury as provided in section 9 of the Federal Alcohol Administration Act, approved August 29, 1935. Title I I I of the Liquor Law Repeal and Enforcement Act, approved August 27, 1935, provides that all property forfeited to the United States by court decree shall be reported to the Director of Procurement for disposition. The Federal Surplus Property Section handled 3,765 lists of surplus property in the field, effected 3,024 transfers to Federal activities, and granted 2,027 clearances for disposition. There were transferred to Federal activities 243,964 gallons of forfeited alcohol and 176 REPORT OF THE SECRETARY OF THE TREASURY liquor. Surplus property transferred to the various Federal activities in the field during the fiscal year 1936 was valued at $6,703,300. Proceeds from the sale of surplus property at auction and of waste material in the District of Columbia were deposited as miscellaneous receipts in the Treasury in the amount of $113,198. The Federal Specifications Section promulgated 153 new specifications, revisions, and amendments to Federal specifications, bringing the total specifications in effect to 1,088. The 135 Federal business associations, functioning in the field as agencies of the Director of Procurement, performed excellent work such as obtaining bids leading to consolidated drayage contracts, making surveys of Government-owned and-rented space, and supervising the loan of property to the field activities of the Government. As a result of the efforts of these associations, trucks were loaned by the various activities to the Post Office Department for handling mail during the Christmas period of 1935, effecting thereby a saving of $83,338. Special furniture and furnishings, including fioor coverings, window hangings, etc., were designed, and their execution and installation supervised, for offices of Government officials, for courtrooms, libraries, and other rooms requiring special architectural treatment. Among the buildings so furnished are those of the triangle group in Washington and the United States Courthouse in New York City. At the request of the Department of State, drawings and specifications were also prepared for the furnishing of United States legation buildings located in various foreign capitals. Executive Order No. 7034, dated May 6, 1935, directed the Secretary of the Treasury, through the Director of Procurement, to purchase or to provide a system for the purchase of all materials, supplies, and equipment to be procured with funds appropriated under the Emergency Relief Appropriation Act of 1935. In accordance with this order, there was established in each of the 48 States, Hawaii, Puerto Rico, and the Virgin Islands, a State procurement office, operating in cooperation with the State Works Progress Administration Administrator, as well as the Treasury State accounts and disbursing offices. The State procurement officers, under the direct supervision of the Director of Procurement, made practically all purchases of materials used in connection with the work relief program in the several States. Where conditions have warranted, deputy procurement officers have been appointed in the several States to expedite the procurement of materials. Advantage was taken of organized Government procurement facilities, where they^ could be utilized without a d d i tional administrative expense, particularly those of the Army, Navy, the Reclamation Service at Denver, the Veterans' Administration, and certain activities within the Department of Agriculture. State procurement officers purchase materials, supplies, and equipment called for by requisitioning agencies either by selection from the General Schedule of Supplies or through competition and award as prescribed by law. Purchases range from minor items of office supplies to heavy machinery. One of the largest items of purchase was that of textiles, amounting to 142,802,795 yards, valued at $15,168,950, with delivery points ranging between 100 and 200 locations. During the fiscal year 1936, the procurement offices received 768,532 REPORT OF THE SECRETARY OF THE TREASURY 177 requisitions, which resulted in the issuance of 985,181 purchase orders. Total expenditures thereunder amounted to $291,970,519.68. Approximately 4,000 leases covering office and storage space were executed by the State procurement officers, and over 1,000 agreements were consummated covering the use of space at nominal rentals. By an Executive order of August 21, 1935, $3,000,000 was allocated to the Secretary of the Treasury from the appropriation provided in the Emergency Relief Appropriation Act of 1935, to be set aside in the Treasury Department in a special fund known as the work relief supply fund for use in the purchase of materials, supplies, and equipment by the Secretary of the Treasury, through the Procurement Division, pursuant to section I I (A) (2) of Executive Order No. 7034, dated May 6, 1935. To carry out the provisions of this order, °the Emergency Relief Accounts Section was established in the Branch of Supply of the Procurement Division to control, audit, and record financial transactions involving purchases under emergency relief funds. Public Buildings Branch The functions of the Public Buildings Branch are to collect and repare for submission to Congress data and estimates for publico uilding projects; to acquire land for public buUding sites; to prepare- plans,, specifications, and estimates for public building construction and to take bids and award contracts therefor; to supervisee the construction, remodeling, extension, etc., of public buUdings; to repair all public buUdings formerly under control of the Treasury Department which were transferred to the custody of the Post Offic(5 and Interior Departments under Executive Order No. 6166; and to operate, repair, equip, and maintain all public buUdings in the custody of the Treasury Department outside of the District of Columbia. During the fiscal year 1936 the building operations carried on under several different programs and appropriations resulted in th(i completion or practical completion and occupancy during the year of 363 projects with a limit of cost of $47,126,351; 416 projects with a limit of cost of $66,890,244 were placed under contract; and 166 projects with a limit of cost of $26,863,600 were on the market for bids, or in the specification stage, at the end of the year. Plans wem being prepared for 118 projects with a limit of cost of $30,149,000. Land had been acquired for 7 additional projects to cost approximately $602,000, and sites for 8 projects to cost approximately $1,487,000 had been selected or were in process of selection. Office oj the Supervising Architect.—During the year the Office of the Supervising Architect continued the improvement in practices and procedure in the design and construction of buildings, workuig in. close relationship with the advisory committees on engineering, mechanical, and structural problems. The directive board, established last year, is continuing the study of each project in its preliminary stage in order that the requirements may be properly related to site and surroundings, and that an equitable balance may be developed in the use of materials that will spread the benefits of the public building programs as much as possible among all producing industries. E 93790—37 13 178 REPORT OF THE SECRETARY OF THE TREASURY Office oj the Supervising Engineer.—During the fiscal year the Office of the Supervising Engineer, through its field service, governed the execution of over 2,000 contracts, ranging in value from $500 to $10,000,000; made property surveys aind soil investigations of 320 sites; assisted the Department.of Labor in establishing facts on which to base predetermination of wage rates; and conducted investigations for many purposes for the Treasury and other.departments. A large quantity of information was accumulated from which it is proposed to establish a new method for appropriation of funds for handling the repair work of public buildings. This method, when fully established, will furnish a budget for the definite allocation of funds to known purposes in selected buildings. The independent corps of special inspection engineers continues to furnish suggestions of value that are. reflected in the character!, design, nature of materials, and methods of construction used in public buildings. The original public building program.—The Public Building Act, approved May 25, 1926, and subsequent acts enlarging the regular building program, made general authorizations of $702,296,794 and specific authorizations for buildings and land of $496,366,798. During the year 4 projects with a limit of cost of $7,268,500 were completed under this program, bringing the total on June 30, 1936, to 706 projects with a limit of cost of $438,412,328. Twenty-nine projects with a limit of cost of $57,954,470 remained under contract at the end of the year. Amoiig these 29 projects are included buildings which are substantially completed and occupied, but on which certain minor work remains to be doiie. Building program in the District oj Columbia.—The 1926 program for Federal buildings in the District of Columbia has been practically completed, except for certain items for. the Archives Building and the South Building, Department of Agriculture. The Archives Building and a major part of the South Building were occupied during the year. Under the present program for the District of Columbia, which is financed from funds allotted from emergency appropriations, the addition to the Internal Revenue-Building was completed and occupied during the year and work is proceeding on an extension to the Archives Building, the extension to cost approximately $3,600,000. Contracts for the new Interior Department Building, to cost approximately $11,000,000, were awarded in August 1935, and it is expected that this structure will be ready for occupancy before the end of the calendar year. A contract *for the construction of an additional building for the Bureau of Engraving and Printing and a building to be occupied by the Bureau of Economics, Department of Agriculture, to cost approximately $5,500,000, was awarded on June 5, 1936. Contracts for the construction of three animal houses and a shop building for the National Zoological Park, to cost approximately $800,000, were also awarded during the year, and work on these buildings is nearing completion. Specifications for an addition to the Government Printing Office, to cost approximately $6,000,000, are being prepared. In addition to these projects, numerous minor contracts for additional work and improvements to the various buildings in the triangle group have been completed, or are being performed under the original District building program. REPORT OF THE SECRETARY OF THE TREASURY 179 Program under the Public Works Administration.—The number of allotments for public buildings by the Public Works Administration under the National Industrial Recovery Act, approved June 16, 1933, was reduced during the year from 442 to 434. Additional authorizations have increased the total of the allotments during the year from $70,850,768 to $75,763,645. The status of work under this program on June 30, 1936, is shown in the following table: status Number of projects Authorized by the Public Works Administration Completed Under contract In drawing stage Total - Limit of cost 1 $75, 763, 646 219 213 2 22, 086, 993 49,921, 6.32 3, 755,000 434 75,763,645 • 1 Includes augmentations from the $2,500,000 fund provided by the Emergency Appropriation Act of June 19, 1934. Emergency construction program.—In the Emergency Appropriation Act, approved June 19, 1934, Congress appropriated $65,000,000 fox the emergency construction of public buildings throughout the country, to be selected by the Secretary of the Treasury and the Postmaster General from public building projects specified in statements 2 and 3 in House Report 1879, Seventy-third Congress; and also authorized the expenditure of $2,500,000 from Public Works Administration funds for increasing up to 10 percent the limits of cost of both Public Works Administration and emergency construction projects when the bid of the lowest responsible bidder exceeds the amount previously made available for any project. Under dates of August 12, 1935, and June 22, 1-936, additional appropriations of $60,000,000 each were provided by Congress for public buUding construction under practically the same conditions as those contained in the act of June 19, 1934. Under the 1934 act, the projects selected were increased, during the fiscal year 1936, from 355 with a limit of cost of $65,166',945 to 360 with a limit of cost of $65,946,944. The status of the work on June 30, 1936, under this program follows: Status Number of projects Limit of cost J Authorized... 360 $65,946,944 Completed Under contract Bids in, on market, or in specification stage In drawing stage...1 Sites selected and surveys ordered. 107 190 30 31 2 8, 696,978 44, 200,906 4, 679, 500 8,107, 5(K> 263,0(10 360 65,946,944 Total :.. 1 Includes augmentations from the $2,500,000 fund provided by the Emergency Appropriation Act of June 19, 1934. Under the act of August 12, 1935, 365 projects were allocated at a limit of cost of $59,789,468. Included in this number are 12 projects which were authorized under the act of 1934, the limit of cost having been increased. The status of this work on June 30, 1936, follows: 180 KEPORT OF THE SECRETARY OF THE TREASURY Number of projects status Authorized Under contract Bids in, on market, or in specification stage In drawing stage In site and survey stage. . Total Limit of cost 365 $59, 789, 468 126 136 , 90 13 13, 601,368 22, 208, 600 22,153, 500 1, 826, 000 365 59, 789,468 Under the act of June 22, 1936, 351 projects were allocated at a limit of cost of $55,310,000. This number includes 29 projects which were authorized under the acts of 1934 and 1935, for which the limit of cost has been increased. The status of this work on June 30, 1936, follows: Number of projects status Limit of cost $55,310,000 Authorized 351 Under contract On market or in specification stage . . . In drawing stage ..J In site and survey stage 6 6 22 318 921,000 874, 000 6, 720, 000 46, 795, 000 351 55,310,000 Total _. . . . .... _ . - - Program jor other departments.—Funds to the amount of $32,258,946 were transferred to the Treasury Department by other departments for the rehabUitation, extension, and remodeling of old buildings, construction of new buildings, repairs, etc., 41 projects being involved. Projects totaling $21,668,946 were under contract at the end of the fiscal year, the value of work on the market or in the specification stage was $5,890,000, and drawings or specifications were being prepared for projects to cost approximately $4,700,000. Section'oj Space Control.—Procurement Division Order No. 11,dated September 21, 1935, created the Section of Space Control, which consists of the Space Allotment Unit, Space Assignment Unit, Real Estate Unit, and Advance Construction Programs Unit. The Space Allotment Unit contacts the various Federal agencies relative to their space requirements in contemplated or authorized new building construction, obtains basic data, and allocates the necessary space to meet these requirements. Considerable information is furnished the Supervising Architect of the Procurement Division with definite recommendations of the Unit. The size of all new buildings and extensions is determined from this procedure. From October 1, 1935, to June 30, 1936, the Unit submitted recommendations for 260 buildings, all of which are now either under construction or in the drawing stage. Exclusive of post offices, the unit is responsible for the actual assignment during the last 9 months of the fiscal year of 718,000 square feet of space as against 968,000 square feet requested. Specialization in space requirements has enabled a saving of $1,376,000 during this period. A secondary function of the Space Allotment Unit is the reassignment of space in existing buildings devoted to governmental activities. A saving of rent of more than $123,000 was effected in New York Cit}^- alone as a result of the reassignment of space. This fact was responsible for an allocation of funds for six additional floors to the REPORT OF THE SECRETARY OF THE TREASURY 181 Federal Building. Upon completion of this extension, the Government will be enabled to sell 4 of the 17 buildings in the downtown New York area for approximately $15,000,000. Through the Space Allotment Unit, increased efficiency has resulted from the consolidation of governmental activities, as well as substantial savings in operation and maintenance costs. The Space Assignment Unit initiates the actual assignment of governmental activities into the space provided in Government-owned structures. The Unit likewise makes assignments in rented buildings. Chief among its duties are the clearance.of Government leases; determination of further need for Federal supplanted buildings, recommissioning of such buildings and recommending their disposal as surplus property in accordance with law; and consolidation of governmental activities in rented quarters. The Unit is also a clearing house of information relative to space leased from the Government. During the fiscal year 1936, 10,670 leases for rented quarters were cleared through the Space Assignment Unit. In Treasury-owned buildings more than 68,000 square feet were assigned to the various Federal agencies. Approximately $210,000 in rental was saved through the utilization for governmental activities of supplanted and old Federal buildings. Through the cancelation of leased premises in Atlanta, Ga., and a consolidation of governmental agencies into one structure, a saving in excess of $47,000 was accomplished. Large savings in other localities have been efl^ected in a similar manner. The Space Assignment Unit prepared an analysis and compilation of the square feet of space, and the amount paid therefor, released during the period March 1933 to January 1, 1936, due to construction of new Federal buildings and extensions. Space released in commercial buildings, including post offices, amounted to 4,126,400 square feet, with a rental of $2,884,306. The Real Estate Unit supplants the Federal Real Estate Board of the Coordinator's Office and is primarily designed to dispose of surplus real estate by sale or lease. Public No. 251 of the Sixtyninth Congress and Public Nos. 330 and 351 of the Seventy-fourth Congress have enabled the Unit to dispose of Federal properties to the extent of $490,000. In addition, under this special legislation, negotiations are in process for the sale of 12 Federal properties with an estimated return to the Government of $5,500,000. The Unit is obtaining appraisals and estimated values of 63 old Federal buildings which eventually will be sold; it is estimated that the return on these alone will approximate $7,300,000. The Advance Construction Programs Unit continues the purposes and functions as set forth in the Employment Stabilization Act of 1931, which established the Federal Employment Stabilization Board. Later, by Executive order, the Board was changed to the Federal Employment Stabilization Office of the Department of Commerce, and subsequently its activities and personnel were transferred to the Division of Procurement of the Treasury Department. The activities of this Unit include the 6-year advance planning of public works by the Federal construction agencies and the District of Columbia, the preparation of emergency programs of Federal construction, and of estimates of expenditures for construction for which appropriations have been made or authorized, the development of trends of employment and business activity, the collection and dissemination of information concerning advance construction 182 REPORT OF THE SECRETARY OF THE TREASURY plans of States and other public and private agencies, and the making =of progress reports oh expenditures and employment, together with :such other duties as may be assigned to it by the Director of Procurement. Since 1932, advance construction programs have been received :from over 100 Federal agencies, including the District of Columbia,' •covering their requirements over a 6-year period. There is now available in the Unit the 1935 plan, which covers the period 1936-42. The Advance Construction Programs Unit is conducting a Nationwide' inventory of all Government-owned real property, to elicit information for the Bureau of the Budget and Congress in drafting tax legislation. This information will also be used in providing for the disposal, through the Section of Space Control, of large amounts of surplus Federal property which are no longer of service to the Government. With a total personnel of 37 and an annual pay roll of $92,400, the Section of Space Control in its 9 months' operation has effected savings of more than $1,750,000 through its various activities. Section oj Painting and Sculpture..—The Section of Painting and Sculpture has to date.held 53 competitions, in which 1,852 painters and sculptors have competed, submitting 3,147- sketches and models; and 113 contracts were awarded. Of the competitions, 6 were national, 3 for painting and 3 for sculpture, with 62 contracts awarded. During the year the Section studied. 700 buildings in connection with possible mural or sculpture decoration. Of these 700 buildings, 139 have had definite allotments reserved for decorations. Since organization of the Section, reservations, have been made for. mural and sculpture decorations on 389 buildings; 24 contracts have been completed with an expenditure amounting to $35,140; and there are 89 existing contracts involving an obligation of $269,088. In cooperation with the emergency conservation work, the Section is authorized to recommend 100 artists to Civilian Conservation Camps each enrollee period. Their paintings of the life and achievements of the camp have been allocated to public buildings. In addition they have.made safety posters, signs, and illustrations for camp papers, decorated camp hospitals and recreation rooms with marals, and assisted in the general education programs of the camps. At the end of the fiscal year, 53 artists were enrolled. Up to June 30, 1936, 29 exhibitions of the work of the artists have been held, including 294 items, and other exhibitions are scheduled. At the beginning of the fiscal year 1936 the Section was supplemented by the Treasury Relief Art Project which is covered ia the section following. The combined work of the Section and Treasury Relief Art Project, for the convenience of the public, is referred to as the Treasury Department Art Projects. The Bulletin of the Treasury Department Art Projects contains iaformation relative to the activities of the two programs. There have been nine issues up to June 30, 1936, with a circulation of 5,300. A photographic record of painting and sculpture on file represents the work of 3,200 American artists. Treasury Reliej Art Project.—The Treasury Relief Art Project, set up by an allocation of funds made by the President to the Director of Procurement in August 1935, for assistance to educational, professional, and clerical persons, has operated with the Section of 183 REPORT OF THE SECRETARY OF THE TREASURY Painting and Sculpture. The total allocation for the decoration of Federal buildings was $530,784. Up to June 30, 1936, 3 mural projects were completed and 72 were under way, 2,664 easel paintings were produce'd for allocation to Federal buildings, and 27 sculpture projects were in progress. About 325 persons have been employed, of whom more than 75 percent have been taken froni relief rolls. As of June 30, 1936, cumulative obligations amounted to $235,408, of which expenditures constituted $224,883, leaving an unobhgated balance of $295,376. Administration and cost oj Federal buildings under the control oj the Treasury Department.—The administration, number, and cost of completed buildings under the control of the Treasury Department (exclusive of land) as of June 30, 1936, are shown in the follo\^ing table. The control of these buildings is charged to the Procurement Division, and repairs thereto are: payable from annual appropriations for repairs to public buildings. Buildings administered b y - Cost $413,919, 059. 59 12, 309, 085. 93 65, 382, 393. 81 Posr^Office Department Interior Department.,.„_ . _ Procurement Division ] Procurement Division, Federal buildings (old), abandoned or reverted to custody of the Treasury Department .. Bureau of the Mint ' Chief Clerk, Treasury Departinent _ Public Health Service, marine hospitals Public Health Service, quarantine stations ._•._. _.. Total . 23, 781, 262. 35 8, 562, 777. 72 12,027, 875. 24 26,800, 924. 66 6, 925, 983.31 559, 709,362. 60 1 Includes 25 vacant buildings, 24 old buildings used by emergency relief agencies, 33 old buildings used by other Government agencies, and 4 old buildings rented for commercial purposes. 2 Includes Public Health Building, Cincinnati, Ohio; Public Health Laboratory, Hamilton, Mont.; NFarcotic Farm, Lexington, Ky.;-Public Health Building, Philadelphia, Pa.; and National Institute of Health, Washington, D. C . Expenditures.—Expenditures for all purposes by the Public Buildings Branch during the fiscal year 1936, together with outstanding contract liabilities and unencumbered balances of appropriations, are' shown in the following statement: Expenditures and contract liabilities charged against appropriations for the fiscal year 1936, and unencumbered balances as of June 30, 1936 . . Expenditures Sites and additional land...' Construction of new buildings Extension to buildings....... Miscellaneous special items..^ Emergency repairs to public buildings, etc Administrative expenses:. Public Works Administration projects Working fund projects.. Emergency construction projects Emergency repairs projects Unallotted appropriations. Furniture for triangle buildings Outside professional services Repairs, preservation, and equipment, public buildmgs. Furniture and repairs of same for public buildings.. Operating supplies for public buildings General administrative expenses Operating force for public buildings Total Contract liabilities charged Unencumbered June against appro- balances, 30,1936 priations $6, 226,948. 58 $10,410,945. 96 46, 762, 074.11 51, 866, 883. 36 6,165, 219. 59 10, 779,088. .54 819, 702.17 251,780. 98 411, 965. 67 475, 480. 77 • $32,963. 34 36,312,495.98 11, 284, 341. 97, 515,062. 97 • 648,152.78 2, 64^4, 886.11 277,482. 04 4,407, 708. 93 60, 375. 92 652, 924. 60 25,106. 63 1, 037, 765.16 100,084.13 248,360. 77 16,432. 03 248,391. 49 1,071,469. 64 321,095. 49 7, 284, 227. 86 72, 253. 46 4, 233, 345. 36 75,864. 89 190, 991. 66 1, 564, 665. 21 90, 987. 60 429,125. 52 963,498. 04 1, 302, 421. 64 72, 519, Oil. 13 339,693. 04 9, 200. 63 37, 638.11 68, 976. 50 76,146, 692. 50 41, 491. 93 11, 671. 91 37,805. 40 3, 690. 84 88, 421. 98 62, 225,337. 46 184 REPORT OF THE SECRETARY OF THE TREASURY The following table, pursuant to the act approved June 6, 1900 (31 Stat. 592), shows the total expenditures to June 30, 1936, for all purposes for buildings constructed by the Treasury Department: Cumulative expenditures, by types, on each class of public buildings constructed by the Treasury Department to June 30, 1936 Extension, alterations, a n d special items Construction Post-office, courthouse, c u s t o m h o u s e $170, 504, 360. 43 buildings, etc C o u r t h o u s e buildings 13, 707, 742. 76 C u s t o m h o u s e buildings 24,049, 856. 66 M a r i n e hospital buildings 14, 458, 818. 62 Post-office buildings 209, 738,110. 71 Q u a r a n t i n e station buildings 4, 007, 029. 31 Miscellaneous buildings 143, 322, 774. 42 Total $396, 959. 38 14, 944. 43 50, 615. 65 169, 821. 42 732,191. 49 32, 655. 85 167, 466. 99 $204, 982, 677. 08 14, 655, 990. 46 27, 844, 688. 49 22, 657, 418. 57 226, 767, 981. 86 7, 371, 434. 52 156,127,559.11 79, 054, 401. 97 1. 564, 655. 21 600, 407, 750. 09 Cost of sites T o t a l 1. T o t a l expenditures, J u n e 30, 1936 $34, 081, 357. 27 933, 303. 27 3,744,216. IS 8, 028, 778. 53 16, 297, 679. 66 3, 331, 749. 36 12, 637, 317. 70 579, 788, 692. 91 Post-ofEce, courthouse, c u s t o m h o u s e buildings, etc C o u r t h o u s e buildings C u s t o m h o u s e buildings M a r i n e hospital buildings Post-office buildings Q u a r a n t i n e station buildings Miscellaneous buildings .._. A d m i n i s t r a t i v e expenses, working fund projects 1 A d m i n i s t r a t i v e expenses, P u b l i c W o r k s A d m i n i s t r a t i o n projects ' . . . A d m i n i s t r a t i v e expenses, e m e r g e n c y cons t r u c t i o n projects 1 A d m i n i s t r a t i v e expenses, emergency repairs '. • Unallotted appropriations . A n n u a l repairs $47, 373, 795. 87 5. 339, 034. 69 3,886,922.33 892,172.53 79, 402, 54.3:12 339, 587. 60 58, 663, 723.17 O u t s t a n d i n g liabilities charge- U n e n c u m able against a p p r o p r i a t i o n s ' bered balance ofappropriatioiis. J u n e 30, 1936 Buildings Sites $164,195. 00 9, 822, 361. 46 15,000. 00 409, 389. 50 $6, 995, 233. 01 $14,663,945.12 1, 262, 984.17 6, 339, 776. 27 519, 734. 41 281,188. 57 727, 795. 83 683, 872. 27 27,570,518.50 10, 277. 518. 47 248,167. 69 420,123.12 25, 573, 319. 21 6,058, 231. 74 321.095. 49 1,071,469. 64 7, 2S4, 227. 86 72, 253. 46 4, 233, 345. 36 195, 897, 779. 31 10,410,-945.96 62,897,752.88 57, 707,047. 37 1 A d m i n i s t r a t i v e expenses, totaling $1,715,796.29, included $25,106.63 for working fund projects, $652,924.50 for P u b l i c W o r k s A d m i n i s t r a t i o n projects, a n d $1,037,765.16 for emergency construction projects. PUBLIC DEBT SERVICE Division oj Loans and Currency This Division is the active agent of the Secretary of the Treasury for the issue of all public debt obligations of the United vStates and for conducting transactions in such obligations after issue. I t is also responsible for the issue of bonds or other obligations of Puerto Rico and the Philippine Islands, -for which the Treasury Department acts as fiscal agent, and of the securities of various Government corporations and credit agencies. The Division undertakes the safekeeping of these securities for certain Government ofiices. I t also counts and delivers to the Destruction Committee the United States currency canceled as unfit and mutilated paper (spoilage, etc.) received from the Division of Paper Custody and the Bureau of Engraving and Printing. Issue and retirement of securities.—The following is a summary of the issues and retirements of securities conducted through this 185 REPORT OF THE SECRETARY OF THE TREASURY Division during the fiscal year 1936. Detailed accounts of all transactions in public debt securities of the United States are presented in formal statements elsewhere in the report. Transactions in United States and insular securities, and in securities of various Government corporations and credit agencies during the fiscal year 1936 [Par value] Registered Bearer Total Public debt securities: $3,669, 387,110.00 $12, 061,039, 640. 00 $15,730,426, 750. 00 Balance on hand June 30, 1935 Stock returned to the Division unissued 80,004,500. 00 80,004, 600. 00 Received from Bureau of Engraving and Printing.. 4,537, 278, 920. 00 23, 703, 355,000. 00 28, 240, 633,920. 00 Total to be disposed of Stock shipments to Federal Reserve banks and post offices Issued by the Division.. Unissued stock delivered to Register of the Treasury. Total disposed of Balance on hand June 30, 1936 Retired and redeemed. _ Insular securities: Balance on hand June 30, 1935 Received from Bureau of Engraving and Printing.. 8, 286, 670, 530. 00 35,764,394,640.00 44,051,065,170. 00 1,846,425,000.00 20, 364, 252,150. 00 22, 210, 677,160. 00 1, 934, 615, 635. 00 56,189,810. 00 1,990,805, 445. 00 1, 396, 740, 250. 00 1,033, 371, 500. 00 2,430,111,750.00 5,177, 780,885. 00 21,453,813, 460. 00 26,631, 694, 345. 00 3,108,889, 645.00 14,310, 581,180. 00 17,419, 470,825. 00 433, 694, 727. 25 2,511,393,997.25 2,077, 699. 270. 00 121, 391, 500. 00 86,000. 00 23, 510, 000. 00 7,871,000.00 31, 381, 000. 00 Total to be disposed of Issued by the Division 144,901, 500.00 2, 676,000. 00 7,956, 000. 00 7, 388,000.00 152,857, 500. 00 10,064,000.00 Balance on hand June 30, 1936 Retired and redeemed 142, 225, 600. 00 6, 599,000. 00 568,000. 00 6,144,000.00 142. 793, 500. 00 11,743,000.00 1, 385, 661, 400. 00 5, 524,495,825. 00 19, 222,000. 00 6,910,157, 225. 00 19, 222, 000. 00 Government corporations and credit agencies: Balance on hand June 30, 1935 Stock returned to the Division unissued Received from Bureau of Engraving and Printing. . . Total to be disposed o f . Issued by the Division ^ Canceled and delivered to .Register of the Treasury . Total-disposed of:. Balance on hand June 30, 1936 Retired and redeemed 121, 476, 500. 00 182, 555,909.94 2,789, 525,000.00 2,972,080,909. 94 1,568,217,309.94 8, 333, 242,825. 00 9,901,460.134.94 92,113,109. 94 2,047,840,850.^00 2,139,953,959.94 620,900.00 663, 575. 00 1,184, 475. 00 92, 634,009. 94 2,048,604,425. 00 2,141,138,434. 94 1, 475, 583,300. 00 26,029,350. 00 6, 284, 738,400. 00 69, 337, 250. 00 7, 760, 321, 700. 00 85,366, 600. 00 Adjusted service bonds.—During the year the Division received from the Bureau of Engraving and Printing 37,142,000 adjusted service bonds in registered form, in the face amount of $1,857,100,000, of which 26,367,000 bonds in the face amount of $1,318,350,000 were shipped to Federal Reserve banks and 8,904,019 bonds in the face amount of $445,200,9.50 were inscribed in the names of and issued to 836,915 individual veterans. Individual registered accounts.—In connection with registered issues of the United States and of securities of various Government instrumentalities, individual accounts are maintained; and on the interestbearing debt, interest is paid periodically in the form of checks. The accounts open on June 30, 1936, were as follows: 186 REPORT OF THE SECRETARY. OF THE TREASURY Num.ber of accounts Direct public debt issues: Interest-bearing:. , .,.,.' . Pre-war and postal savings bonds ':..... Treasury b o n d s . . . . . : ... .....:!._ . Treasury notes and certificates of indebtedness Total.... Matured Total open accounts ..1 Other issues: Interest-bearing: Home Owners' Loan Corporation bonds..._Federal Farm Mortgage Corporation bonds Consolidated Federal farm loan bonds of the Federal land banks Mutual mortgage insurance f u n d . . . . Total .... . : Principal 38.415 448,901 20 $157, 482, 420.00 2.296,699,600.00 626,142, 000. 00 487, 336 31,867 3,080, 324, 020.00 20. 519, 610.00 519. 203 3,100,8.43,630.00 6, 655 18, 625 6,772 2 216, 926, OO'^. 00 . 236, 566, 600.00 32,262,800.00 5, 909.94 31,054 485, 761, 209. 94 • 13,000.00 Matured Homie Owners' Loan Corporation bonds. _ Total open accounts... .^........ Grand total open accounts 31,063 485,774,209.94 650, 266 3, 686, 617,839.94 There were 269,494 individual accounts closed for registered Liberty bonds. Victory notes, special Treasury notes, pre-w£tr and postal savings issues, and Treasury bonds; 11,887 accounts were increased; and 15,590 accounts were decreased, representing. the retirement: of securities amounting to $1,316,146,300 par value. New accounts numbering 100,296 and amounting to $743j844,860 principal were opened; and 24,733 changes of address for the mailing of interest checks were made on the registered accounts during the Interest on registered Liberty and Treasury bonds was paid on due dates in the form of 865,427 checks amounting to $68,267,311.68; on registered securities of the pre-war and postal savings loans, 77,614 checks for $4,158,375 were issued; and on registered Treasury notes and certificates of indebtedness, interest payable by 4 checks amounting to $22,554,904.41 was certified to the Treasurer. There were received from the Bureau of Engraving and Printing 1,030,200 checks as stock, and there were canceled and delivered to the Destruction Committee 36,349 valid.checks and 3,520 void checks. - Claims.—Clsiiins for relief on account of lost, stolen, destroyed, and mutilated securities handled by the Division during the fiscal year were as follows: N u m b e r of Num.ber of claims securities' On h a n d J u n e 30", i 9 3 5 . . . . . : . . . . . . Received.. Total ...:.:.. . :. ,... 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 . . R e c o v e r y of securities. Disallowance of c l a i m s . . _ T o t a l settled On h a n d J u n e 30, 1936 _ '• ........:..... ' ^.. :.. Par amount of securities 8, 395 1, 874 26,953 5,490 $3,935,901.00 1,007,811.00 10,269 31,443 4, 943, 712.00 1,211 854 123 2, 558 1,629 836 653,787.50 551,145. 00 5, 300.00 2,188 5,023 1,210,232.60; 8,081 26. 420 3, 733, 479. 50 187 REPORT OF THE SECRETARY OF THE TREASURY Sajekeeping oj securities.^^Miing the fiscal year, transactions in securities held in safekeeping were as follows: Balance on hand June 30, 1936 Direct public debt issues Insular securities. Home Owners' Loan Corporation bonds Received and receipts issued Released Balance on hand June 30, 1936 $454, 938. 250 $767, 697, 700 $749, 797, 700 $472,838,260 6, 762, 600 2, 604,500 6, 720, 500 2, 646, 500 20, 776 500,600 6,826 515, 550 461, 721, 525 Total 770, 702,800 752,859,760 479, 564, 675 Mutilated paper and redeemed currency.—Mutilated paper verified and delivered to the Destruction Committee consisted of 68,205,286 sheets and coupons of which 68,204,587 sheets and coupons were received from the Bureau of Engraving and Printing and 699 blank sheets from the Division of Paper Custody. Redeemed currency, unfit for circulation, counted and delivered to the Destruction Committee during the year amounted to 694,159,763 pieces, representing $1,738,261,389.80, detailed as follows: Nurriber of pieces and amount of redeemed currency delivered to the Destruction Committee during the fiscal year 1936 Old series i Curreno United States notes Silver certificates Gold certificates Treasury notes Fractional currency.. Number of pieces . .. Total . . . . New series Number of pieces Face value 427,031 $1, 258, 993.00 962,199 1,167, 612.00 134,560 2, 917, 455.00 1,007 4, 352.00 6,860 1,597.80 55,378,692 616, 930, 354 20, 319,160 $229,003, 647 838, 246, 338 665, 661, 395 1, 531,657 5, 350,009.80 692, 628,106 1, 732, 911, 380 Face value 1 Large size currency in general circulation prior to 1929. In addition to the securities which were delivered to the Register of the Treasury, the Division canceled and delivered to the Register 3,292,661 coupons amounting to $261,600,673.67. Of these, 1,620,525 were public debt coupons amounting to $232,842,113.42, and 1,672,136, amounting to $28,758,560.25, were coupons from securities of Government corporations and credit agencies. United States savings bonds.—On June 30, 1935, there were 1,576,250 United States savings bonds on hand with a maturity value of $125,533,750. During the year the Division received from the Bureau of Engraving. and Printing 2,487,500 bonds with a maturity value of $693,750,000 and 420,825 bonds with a maturity value of $80,004,500 were restored to stock. Of these bonds, 1,879,233 with a maturity value of $529,275,925 were issued, leaving a balance on hand of 2,605,342 bonds with a maturity value of $370,012,325. Sales and redemptions of United States savings bonds, monthly, during the fiscal year 1936, are shown in the, following table: 188 REPORT OF THE SECRETARY OF THE TREASURY Sales and redemptions of United States savings bonds, monthly, fiscal year 1936 SALES 1 N u m b e r of pieces, b y d e n o m i n a t i o n M o n t h of issue Sale price Maturity value $25 $50 $100 $500 $1,000 Total 16,488 12, 560 11, 706 20,434 20, 484 27, 239 13,074 9, 667 8,716 16, 632 16,143 21, 992 32, 312 22, 275 18,129 36, 029 33,819 36, 095 12, 037 7,151 5,648 12, 429 11, 583 15,902 17, 594 9.498 7,190 15, 379 14, 535 21, 587 91, 505 $20,932,200.00 61, 051 •12,070,012.50 9,416, 512. 60 . 51,389 100, 903 19,904.137. 60 96, 564 18, 770, 737. 50 122, 816 26,196, 056. 26 $27,909, 600 16, 093, 360 12, 555, 350 26, 538, 850 25, 027, 650 34,928, 075 86,124 178, 659 64, 750 86, 783 624,227 107, 289, 656. 25 143, 052,875 22,909 18,772 20, 344 19.069 17,253 27,936 52, 029 36, 293 40, 373 38,816 34, 939 47, 918 19,879 11,958 13,695 13,115 11,410 14,128 43,111 19,795 23, 254 22,807 19,108 21, 674 167,467 108, 737 121,987 116, 886 103,346 141,142 T o t a l , series B . 148,981 126, 282 250, 368 84,186 149, 749 Series A 1936—July August _.l September October November. December T o t a l , series A . 108,911 Series B 1936—January. . . . 29, 539 21,919 February.. March . ._ 24, 321 23. 079 April 20,636 May 29, 487 June T o t a l sales 45.102, 993. 75 23,167, 406. 26 26,823, 018. 75 26.082, 393. 75 22, 264,087. 50 26, 747, 793. 76 60.137. 325 30,889,876 36, 764, 025 34, 776, 626 29,685,450 35, 663, 726 759,565 170,187, 693. 75 226.916, 925 257,892 212, 406 429, 027 148, 935 235,532 1, 283, 792 277, 477, 350. 00 369, 969,800 R E D E M P T I O N S PRIOR TO MATURITY N u m b e r of pieces, b y d e n o m i n a t i o n Redemption value M o n t h redeemed Maturity value Total $25 $50 $100 $600 1,300 1,046 1,407 1,409 1,320 1,442 1,878 1,854' 2,300 2,321 2,034 1,912 627 610 880 864 642 821 1,122 1,139 1,661 1,757 1,320 1,267 1,287 1,031 1.594 1,753 1,451 1,511 1,962 1,835 2.802 2,882 2,633 2.287 331 283 426 497 416 362 639 . 445 774 834 738 767 222 261 412 •473 449 363 594 493 680 811 690 685 3,767 3,230 4,719 4,996 4,278 4,499 6,096 5,766 • 8,117 8,605 7,415 6,918 $435.037. 50 421, 668. 75 647, 681. 25 731,418.75 650,400. 00 579,150. 00 872,062. 50 751, 725:00 1,115,673.50 1, 253,132.50 1,085, 698. 50 1,064, 054. 00 $580,050 562, 225 863. 575 975, 226 867, 200 772, 200 1,162, 750 1,002,300 1, 482. 750 1,662,075 1, 439,150 1, 408, 350 T o t a l , series A . 20, 222 12, 610 23,028 6,412 6.133 68, 405 9. 607. 702. 25 12, 777,850 177 700 965 1,254 120 511 545 687 280 923 1, 001 1,249 72 252 323 304 83 284 376 459 732 2,670 3,210 3,953 118. 068. 75 409, 012. 50 616, 731. 25 601, 200. 00 157, 425 545,350 688,975 801, 600 T o t a l , series B . 3,096 1,863 3,453 951 1,202 10, 565 1, 645, 012. 60 2,193,350 Total redemptions 23, 318 14,473 26, 481 7,363 7,335 78,970 11, 252, 714. 76 14, 971, 200 $1,000 Series A 1935—July August.. September October November December 1936—January February March April May June /Series B 1936—March April May.June I As indicated by stubs received after sale. 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 2,985,942 printed circulars were distributed to the public during the year. 189 REPORT OF THE SECRETARY OF THE TREASURY Register oj the Treasury The Register of the Treasury conducts the final audit and has custody of-all retired public debt securities, including interest coupons and checks, and performs a like function with respect to the securities of the Home Owners' Loan Corporation, the Federal Farm Mortgage Corporation, and the consolidated obligations of the Federal land banks. The Register also retires bonds of the insular possessions which are exchanged for other securities. The Register renders monthly certification to the ComptroUer General of aU public debt securities redeemed by the Treasurer of the United States and establishes credits due the Federal Reserve banks and the Division of Loans and Currency for securities forwarded by them on account of exchanges, replacements, transfers of registration, etc. The following statement sets forth, by class of security, the total! number and face value of documents which were received by the= Register's Office on account of transactions during the fiscal year 1936: Su7nmary of securities received by the Register of the Treasury on account of transactions during the fiscal year 1936 Registered Bearer Security Pieces Amount Pieces Redeemed U n i t e d States securities: P r e - w a r a n d postal savings b o n d s Liberty loans.. i Treasury bonds T r e a s u r y notes U n i t e d States saving b o n d s A d j u s t e d service b o n d s . Certificates of 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 I n t e r e s t coupons O t h e r securities: H o r n e O w n e r s ' L o a n Corporation: Bonds Interest coupons. I n t e r e s t checks F e d e r a l F a r m M o r t g a g e Corporation: Interest coupons... I n t e r e s t checks Consolidated F e d e r a l farm loans of the Federal land banks: Interest coupons. I n t e r e s t checks Total.. F o r footnotes, see p . IGO. 66,910 270,062 278 78,970 13, 018, 275 159 2,339 $673,171, 930. 00 202, 567, 500. 00 121, 518, 000. 00 11, 252, 714. 75 1 650, 913, 750. X)0 401,461, 000. 00 71, 950. 20 1,457 2, 037, 000. 00 10,055 5, 495, 440. 00 'H566" "e," 650,'974." 75" 5,660 13,488, 725 228 1, 231, 322 81,968 $22, 230.00 1,176, 052,900. 00 l,-500. 00 2, 017,122,850.00 1,616 71, 269 85,120 11, 982, 373 4,158,400. 00 3, 283,135,000. 00 120,820.17 2 643, 229, 717. 38 236, 972 5,475,137 72, 739, 450. 00 2 75,092, 601. 60 1, 967,835 2 32, 212, 224. 36 503,459 2 13, 551, 233. 38 554, 747. ( 2,075, 695,007. 31 21, 637, 307 7, 317,438,826. 88 190 REPORT OF THE SECRETARY OF T H E TREASURY S u m m a r y of securities received by the Register of the Treasury on account of transactions during the fiscal year 1936-—Continued ^ . Registered Bearer Security Pieces Amount Pieces Amount Retired on account of exchanges for other securities, etc. United States securities: Pre-war and postal savings bonds Liberty loans Treasury bonds Treasury notes... United States savings bonds • Certificates of indebtedness '.. Treasury bills •.: Treasury (war) savings securities First 3 4 percent Liberty Loan interim certificates : Other securities: Insular possessions loans Home Owners' Loan Corporation bonds Federal Farm Mortgage Corporation bonds .-Consolidated Federal farm loans, of the| Federal land banks, bonds . Total United States securities: Pre-war and postal savings bonds Liberty loans Treasury bonds Treasury notes United States savings bonds Adjusted service bonds Treasury bills _ Interest coupons Treasury (war) savings securities Other securities: Home Owners' Loan Corporation: Bonds Interest ooupons Federal Farm Mortgage Corporation: Bonds Interest coupons Consolidated Federal farm loans of the Federal land banks: Bon^s Interest coupons i. Total '. 17,770 8,604 84,094 6 4,107 4 $10,102,440. 00 22,143, 360. 00 293,123,750. 00 81,840, 000. 00 1,028,200.00 255,600.000.00 -76 -380. 00 2,648 46, 241 408,103 311,424 $893,280.00 49, 765,450. 00 1, 774, 768, 600. 00 6,189,083, 600. 00 1,015,488,000.00 13 950.00' 3, 506,000. 00 2,685,000.00 3,506 2,334 5, 241, 650.00 1,112,998 710,948, 500. od' 8, 732 16,356, 600.00 279,955 205,907, 600.00 . 1,363 1,026 127,954 I 2,; 420,300. 00 . 40.850 690.440,710.00 | 2,214,631 Unissued stock retired 12,043 667,122 $66,900,450. 00 1, 327,086, 200. 00 2, 753, 600. 00 174,110 15, 697 31, 393, 975. 00 784, 850. 00 87 33 769,'824 124,900.00 602, 697 11, 003 304, 606 $513,149, 450. 00 14,711,000.00 1,084,178, 300. 00 20,089 3, 036, 283 76 1,089,427,000.00362, 217, 036. 74 380. 00 26,026 1, 808,127 115, 288,000.00= 36,960,461.34 6,893 306,608 7, 776,600. 00 13, 413,825. 27 6 156, 649 1, 429, 439, 975. 00 6, 278, 963 Recapitulation 75,000.00 56,045,000.00 9,006, 406,880.00 6,000. 00 4,378,450. 49 3, 241, 506, 493. 84- United States securities: $750,174,820. 00 2,776 96,723 Pre-war and postal savings bonds... $915, 510. 00 1, 880,160 845, 788 1, 561, 797,050. 00 1, 738, 967,800.00> Liberty loans 419,114 295, 877, 350. 00 84, 782 1, 789,481,100. 00 Treasury bonds _ 697, 998 284 203, 358,000. 00 8, 290,384, 750. 00 Treasury notes.._ 43, 674, 889. 75 257,187 . United States savings bonds 13,033, 972 1 651, 698, 600. 00 .Adjusted.service bonds 1,616 163 657,061,000. 00 4,158, 400. 00' Certificates of indebtedness 100,351 5, 388,050,000. 00Treasury bills •... 71, 570. 20 85,196 . Treasury.(war) savings securities 121,200.17 2,263 16,018, 656 Interest coupons 2 1, 005, 446, 754. 12' First Zhi percent Liberty Loan inter13 im certificates 950. 00 Other securities: 3,606 2, 685,000. 00 Insular possessions loans 3, 606,000. 00 1,353 Home Owners' Loan Corporation: 1,376, 996 7,. 599, 560. 00 898, 975, 950. 00 Bonds 3,835 7,283, 264 2 112,052, 952. 94 Interest coupons....'. 5,495, 440. 00 Interest checks .:. 10,055 Federal Farm Mortgage Corporation: 16,481, 400.00 213, 684,100. 00 Bonds 8,819 2, 274, 443 2 46, 626, 049. 62 Interest coupons "zWm "6," 650," 974'75' Interest checks Consolidated Federal farm loans of the Federal land banks: 1,059 40,856 2,495,300. 00 56,051, 000. 00 Bonds 660,108 2 17,929, 683. 87 Interest coupons :.... "5^660' 554, 747. 61 Interest checks 14,386, 503 4,195, 575, 692. 31 30,130, 901 19, 565, 352, 200. 72 Total 1 Does not include 6,131,562 pieces, aggregating $306,578,100, to be delivered by the Treasurer of the United States, completing June 1936 settlement. 2 Includes June 1936 settlement not yet received from the Treasurer of the United States; settlements of April, May, and June subject to audit. NOTE.—All redemptions, except interest coupons and interest checks, subsequent to December 1935 settlement, are subject to audit. REPORT OF THE SECRETARY OF THE TREASURY 191 Division oj Public Debt Accounts and Audit This Division maintams administrative control accounts for all official transactions in the public debt conducted by the various Treasury offices and the Federal Reserve banks as fiscal agents of the United States, and also for transactions involving paper used for printing public debt and other securities. United States currency, stamps, etc., and miscellaneous securities and documents in the Bureau of Engraving and Printing. Transactions in bonds of the Home Owners' Loan Corporation and the Federal Farm Mortgage Corporation, and in consolidated Federal farm loan bonds of the Federal land banks, conducted by the Treasury and Federal Reserve banks, similar to those in public debt securities, are also included in the administrative control accounts of this Division. Numerous adrninistrative jaudit functions are performed in connection with the foregoing. The Division also maintains control accounts for various cl asses of unissued currency in reserve stocks of the Treasurer of the United States, and conducts administrative examinations and physical audits of such unissued stocks of currency and of cash balances in custody, and of collateral securities held in trust in the offices of the Treasurer of the United States. During the fiscal year 140 physical audits were conducted, involving securities, currency, paper, interest checks, etc., amounting to about $25,000,000,000 in face value^ and 128,000,000 in number of pieces. Unissued currency in the reserve vaiUts of the Treasurer of the United States was under the constant seal of this Division throughout the year. At the beginning of the year this amount was $6,900,192,400, during the year $1,356,288,000 was received and $6,085,440,000 was released for issue or destruction, arid the balance at the close of the fiscal year was $2,171,040,400. The Division determined and certified credits to the. cumulative sinking fund arid amounts in the sinking fund available for expenditure frpni time to time, interest'on all classes of public debt securities which ;became due and payable on their respective interest-payment dates, and the amount of each form of public debt securities and unpaid ihterest= outstanding each month. I t prepared estimates of interest to become payable on public debt securities in future fiscal years, and of expenditures to be made on account of retirements for the 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 pertaining to public debt transactions for various interested offices and individuals were also compiled. During the latter months of the fiscal year the activities of the Division were greatly increased on account of audit and accounting work in connection with the issue of adjusted service bonds, which necessitated a considerable temporary increase in personnel. The continued sale of United States savings bonds by the Post Office Department and the extension of their sale to Federal Reserve banks, involving the audit of all stubs of bonds sold, have also increased the work of the [Division. 192 REPORT OF THE SECRETARY OF THE TREASURY ' Division oj Paper Custody A summary of the operations of the Division of Paper Custody during the fiscal year 1936 is presented in the following tables: Receipts and issues of distinctive and nondistinctive paper during the fiscal year 1936 Sheets Kind D i s t i n c t i v e paper for U n i t e d States currency a n d Federal Reserve notes, 12 subjects -. D i s t i n c t i v e paper for U n i t e d States b o n d s , 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 paper D i s t i n c t i v e p a p e r for C u b a n c u r r e n c y D i s t i n c t i v e paper for P h i l i p p i n e Islands currency P o s t a l card for Philipp.ine I s l a n d s . . On hand J u n e 30, 1936 On h a n d J u l y 1,1935 Receipts Issues 20, 064, 248 5, 612, 745 64,800,062 13, 265,908 69,642, 821 14, 588, 752 15,221,489 4, 289,901 120,866 574, 959 239,434 176 19, 844 99,814 126, 240 205, 000 1,100, 000 146,164 297,151 410, 204 751, 019 74, 516 404,048 34, 230 349,157 19,844 79, 597, 024 85,836,111 20, 393,185 Total... Federal Reserve notes, series 1928 and series 1934, received and issued during the fiscal year 1936 [000 o m i t t e d ] Federal Reserve notes, series 1928 F e d e r a l Reserve ' bank. Boston N e w York Philadelphia.. Cleveland Richmond Atlanta Chicago.. S t . Louis Minneapolis.. Kansas C i t y . . Dallas S a n Francisco. Total... On hand J u l y 1, R e c e i v e d 1935$299,920 362, 680 387, 540 371, 380 186, 320 175.120 681. 380 105, 800 119,560 164i 520 160, 980 159, 460 3,174, 660 $8,160 12, 000 "8,'400' 4, 320 1,260 14, 220 Issued On hand J u n e 30, 1936 F e d e r a l Reserve notes, series 1934 On hand J u l y 1, R e c e i v e d 1935 Issued $50,840 $257, 240 355, 560 7,120 39, 880 347, 660 73, 080 310,300 26, 680 159, 640 38, 000 145, 520 37, 000 644, 380 87,080 18, 720 104,160 15, 400 152,030 16, 780 133, 240 29, 000 116,260 57, 420 $53, 760 $223, 560 $158, 760 1121, 600 589, 320 • 387,820 47, 520 215, 280 151, 480 197,100 8,040 165, 360 175, 440 45, 960 93, 080 148,920 65, 320 2,400 75, 060 375, 600 278, 000 133, 200 38,660 76, 740 73,500 27, 540 39, 900 123,000 60,520 6,000 116,760 56,920 204,420 118.140 409, 920 2, 813,100 426, 540 2, 576,100 1, 652,040 On hand J u n e 30, 1936 $118, 560 323,100 111, 320 39, 780 128,320 86,000 172, 660 95.120 61,140 68,480 59, 840 86,280 1,350,600 There were no transactions in Federal Reserve bank notes, series 1929, during the year, the amourit on hand remaining at $450,800,000. Destruction Commi^ee 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 Ifiscal year 1936: 193 REPORT OF TH]S SECRETARY OF THE TREASURY Number of pieces and face amount of securities destroyed by the Destruction Committee during the fiscal year 1936 Pieces Division of L o a n s a n d C u r r e n c y T r e a s u r e r of t h e U n i t e d States: U n i t e d States notes Silver certificates Gold certihcates Treasury notes. F r a c t i o n a l notes Face value and $230, 969,140. 00 8.37. 770,-500. 00668; 578,-85b.'004, 352. 00 1, 597. 80 55, 950, 860 61,7, 725, 852 -• 20,^453/720 1, 007 6,860 694,138, 299 C o m p t r o l l e r of t h e C u r r e n c y a n d national banks: N a t i o n a l b a n k notes (retired) Federal Reserve b a n k notes ( r e t i r e d ) . . Emergency currency. Unissued vault stock. _ 40, 508, 088 39, S6eM 73 19, 694,19VA $1, 737, 324, 4.39.80 400, 945, 730. 00 72, 662. 50 1,350.00 171, 201, 405. 00 60,242,219 C o m p t r o l l e r of t h e C u r r e n c y a n d Federal Reserve agents: 122, 421, 662 Federal Reserve notes 2, 410, 576 Federal Reserve b a n k n o t e s . . 572, 221,147. 50 1, 345, 583, 960. 00 30, 981, 700. 00 124,832, 237 B u r e a u of I n t e r n a l R e v e n u e : Miscellaneous s t a m p s from: S t a m p Division Tobacco Division Sales T a x D i v i s i o n . Alcohol' T a x Uiiif. Silver T a x Division Processing T a x D i v i s i o n . 1, 376, 665, 660.00 57, 789, 743. 99 975, 318. 00 92,103.35 11-422.04 521. 07 3, 345. 65 68,872, 454.10 Register of t h e T r e a s u r y : 11, 481,381 I n t e r e s t coupons, unissued C o u p o n b o n d s a n d notes, lots ex7, 594, 377 changed 1, 223, 722 C o u p o n b o n d s a n d notes (redeemed.)'.. Nonregistered war-savings s t a m p s 342 (redeemed) I n t e r e s t coupons, paid lots (redeemed). 336, 983, 498 Federal land b a n k s , consblidate'd 443, 623 b o n d s a n d coupons P u b l i c D e b t Service, p h o t o s t a t s Division of L o a n s a n d C u r r e n c y , Security Section, interest checks W a r D e p a r t m e n t , B u r e a u of I n s u l a r Affairs, P h i l i p p i n e railway b o n d s F e d e r a l Reserve Board, checks a n d duplicates — 413, 077, 903. 00 2,112, 660, 450. 00 347,84.3,600.00 1,420.46 1,123,876, 209.85 388, 080, 092. 21 357, 726,943 151 : — 39,869 6,949,000.00 6,949 35,818 , 237, .022, 48.5 G r a n d total.. : 8, m , 472i 376. 92 Sheets Division of 'Loans a n d C u r r e n c y ( 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 spoilage): M o n e y of all k i n d s Postage s t a m p s . Internal revenue s t a m p s . . B o n d s a n d certificates of i n d e b t e d n e s s .. C u . s t o m s a n d miscellaneous s t a m p s . . . Postal savings certificates C u b a n currency E x p e r i m e n t a l , security p a p e r Void coupons .. Total Division of L o a n s a n d C u r r e n c y ( D i \ i s i o n of P a p e r Cust o d y ) : B o n d paper Coupons 3,901, 680M 7,809, 27l3'5%80i 4, 628, 9513Hi 1, 376, 803% 8,972,701*H80 165, 915H 36, 220^^ 4, 323 41, 248, 723 26, 955, 8674492%!200 699 26,956,5664492%i20o G r a n d total.. 4,385,539,675.52 41, 248, 723 A miscellaneous quantity of proof sheets, counterfeit notes, coins, and counterfeiters^ tools and equipment was received from other sources and was destroyed or disposed of as directed by the Secretary of the Treasury. 93790—37 14 194 REPORT OF THE SECRETARY OF THE TREASURY PUBLIC HEALTH SERVICE Division oj Sanitary Reports and Statistics The Public Health Service continued to act as a clearing house for information concerning the prevalence of diseases dangerous to the public health. Data were collected from States, counties, and cities in the United States and from foreign countries. The information was tabulated and made available to health officers throughout the country by publication in the weekly Public Health Reports and by special bulletins. Preliminary reports for the calendar year 1935 from the health officers of 25 States gave a death rate of 10.8 per 1,000 population, as compared with 10.9 per 1,000 reported in 1934 for 28 States. In May 1935, an outbreak of poliomyelitis (infantile paralysis) occurred in the northern part of North Carolina, spreading into Virginia in June. The peak was reached in North Carolina in July and in Virginia in August. About August 1, 1935, unusual prevalence of poliomyelitis was reported in the northeastern part of the country. Division oj Foreign and Insular Quarantine Quarantine transactions.—During the fiscal year, quarantine officers of the Public Health Service inspected 15,981 vessels, carrying 733,495 passengers and 1,182,232 seamen. Of a total of 3,823 airplanes, carrying 37,352 persons, which arrived :at airports of entry in the United States from foreign countries and required quarantine inspection, only 2,281 airplanes, carrying 31,898 persons, of whom 5,537 were aliens, were inspected by medical officers of the Public Health Service prior to entry, due to many arrivals at airports at which medical officers are not available. Fumigations were made of 1,193 vessels either for the destruction of rats or because of the presence on board of some contagious disease. Examinations for plague infection were made of 2,971 of the 4,585 rats retrieved following fumigation. No importation of any of the quarantinable diseases into the United States or its possessions occurred during the year. The International Sanitary Convention for Aerial Navigation concluded at The Hague in 1933 became effective in regard to the United States on November 22, 1935. The only noteworthy change in existing procedures resulted from the provisions of article 9 which substitute a journey log for the bill of health formerly required to be carried by aircraft. The increased hazards to public health resulting from the inauguration of trans-Pacific aircraft service required the issuance of special instructions to the quarantine stations at San Francisco, Honolulu, and Manila, in order to effect adequate quarantine inspection and treatment of these aircraft in an effort to prevent the introduction of quarantinable diseases into the United States and the introduction of mosquito carriers of malaria into the Territory of Hawaii, where this disease does not now exist. Scientific experimental work conducted by the Public Health Service has enhanced the efficiency and safety of ship fumigation. Experimental work has also resulted in developing an effective nonflammable mosquitocide which is the best yet developed for use on REPORT OF THE SECRETARY OF THE TREASURY 195 aircraft to prevent the transportation of mosquito carriers of human disease. Maritime commerce between the United States and Cuba has been aided by the mutual agrec^ment between the chiefs of the respective quarantine services providing for the recognition of deratization exemption certificates issued by each country to vessels which are maintained in a rat-free condition. Steps have been taken, through recommendations to the International Office of Public Health aiid by cooperation with the Post Office Department, to effect adequate sanitary supervision of infectious material and insect carriers of human disease in international mail. Medical examination oj aliens.—Medical officers at the various ports of entry in the United States examined 824,401 alien passengers and 722,756 alien seamen. Of these numbers, 15,106 passengers and 1,119 seamen were certified to the proper immigration officials, in accordance with the act of Congress approved Februiary 5, 1917, as being affiicted with some mental or physical defect or disease. ' A total of 38,619 applicants for immigration visas was examined by medical officers of the Public Health Service stationed in American Consulates in foreign countries, 26,103 having been examined in American consulates in the Eastern Hemisphere and 12,516 in American consulates in the Western Hemisphere. Of those examined, 545 in the Eastern Hemisphere and 75 in the Western Hemisphere were reported by the medi(3al officers td the American consuls as being afflicted with one or more of the defects or dised,ses requiring exclusion; and 5,214 of those examined in the Eastern Hemisphere and 1,664 of those examined in the Western Hemisphere were reported as being afflicted with a disease or condition which was likely to affect their ability to earn a living. Only 4 of the aliens who had been given a preliminary medical examination in American consulates in foreign countries and to whom visas had been issued, were certified upon arrival at a United States port as being afflicted with a condition' requiring deportation. Division oj Scientific Research A survey of health arid, health facilities in the United States on a Nation-wide scale was made possible by an allocation from funds provided in the Emergency Relief Appropriation Act of 1935 early in the fiscal year. Five thousand persons were engaged in collecting data in 90 cities and 23 rural counties. A study of chronic diseases, disabling illness, physical impairments, and medical care among 865,000 families constituted one phase of the study. The compiled data will provide information on such problems of national interest as illness as a cause of unemployment, illness and medical care among certain groups of the population, crippled children, accidents as a cause of disability, and the relationship of illness and housing. Another phase was the survey of 214,000 families in order to study the incidence and fatality of 13 communicable diseases, chiefly among persons under 25 years of age. Studies based on records of the financial status of 6,000 families and 5-year records of height and weight of children in these families were completed during the year, .and a* report of the findings was 196 REPORT OF THE SECRETARY OF THE TREASURY published, as part of the Health and Depression Studies, in the Public Health Reports. Analyses of recent Census Bureau statistics on accidental deaths of persons under 15 years of age directed attention to the great number of deaths due to fatal accidents among children—more than twice as many being reported as from the combined causes of measles, scarlet fever, and diphtheria. A new field laboratory for malaria research was set up at Savannah, Ga.,for the purpose of studying the bionomics of Anopheles mosquitoes. The artificial means of malaria control which are effective in urban communities are expensive. I t is hoped that studies at this laboratory will result in the discovery of some method of control by natural and self-perpetuating means which will be applicable to rural communities. Epidemiological investigations combined with laboratory studies have shown that there are several previously unrecognized infections likely to be confused with poliomyelitis and that comparisons of epidemics. and of the regular occurrence of poliomyelitis should be based on the number of frank paralytic cases. A side result of the epidemiological studies on poliomyelitis has been the discovery that vaccines against this disease might give rise, in rare cases, to the disease itself. The largest quantity of Rocky Mountain spotted fever vaccine ever produced in a 12-month period was prepared during the fiscal year at the Rocky Mountain Laboratory, Hamilton, Mont. Vaccine was distributed to physicians in 23 States, the bulk of it being used in the northern Rocky Mountain States. The Civilian Conservation Corps obtained a supply sufficient to vaccinate the personnel in 48 camps in the most dangerous endemic areas. During the season of 1936, virulent strains of B. pestis were isolated from ground squirrels in two counties of Montana, and ecological studies relating to sylvatic plague in the northwestern part of the State were made from a temporary field laboratory near Dillon. Construction of a new building for rearing experimental animals and for quarters was begun in 'April. Studies during the past year at the Leprosy Investigation Station, Honolulu, have dealt almost entirely with investigations concerning the relation of the state of nutrition to the susceptibility to and the progress of leprosy in laboratory animals. Animal experimentation has demonstrated that the incubation period can be shortened by depleting rats of vitamin Bi before inoculating them with the virus of rat leprosy. Tests for the pellagra-preventive value of foodstuffs were continued. Results indicate that canned mackerel is a good source of the pellagra-preventive factor, and that certain liver extracts may be of considerable value in the treatment of pellagra. At the National Institute of Health special attention has been given to two virus infections of the central nervous system, lymphocytic choriomeningitis and epidemic encephalitis (St. Louis type). I t has been found that sodium aluminum sulphate and picric acid, or a combination of the two, when instilled into the nostrils of experimental animals before the introduction of the virus of epidemic encephalitis or poliomyelitis have the property of preventing the development of infection. Assistance was given to health officers and to practicing physicians in the diagnosis^of typhus and spotted fever. The total number of' reported cases*of both typhus and spotted fever was REPORT OF THE SECRETARY OF THE TREASURY 197 approximately the same as in the preceding year, with both diseases being reported from a somewhat increased area. Chemistry researches have been continued. Study of the 7-carbon sugar, d-mannoheptulose, from the avocado pear, yielded results interesting not only from the purely chemical point of view, but also on account of practical applications. Experiments on rabbits have shown that this sugar is metabolized, its tolerance being very high. The first experimental evidence of the significance of glutathione in causing fairly rapid tumor growth in mice was obtained. The work of the Division of Zoology has been reorganized and new investigations have been undertaken, the most important among these being studies of trichinosis and oxyuriasis. Research on cancer problems was also continued by the Office of Cancer Investigations located at the Harvard Medical School. Biophysical, biological, and cytological aspects of the problem have been studied, mice being used for the experimental work. Particular attention was given to the study of the carcinogenic properties of certain substances, among others the polycyclic hydrocarbons. In addition, simpler benzene derivatives are being tested in an attempt to discover which compounds are responsible for causing the so-called aniline cancer of the dye industry. Studies on the chemical treatment of mouse tumor cells were also continued. Skin hazards in the mam:Lfacturing processes involved in 14 factories were studied, while special investigations of outbreaks of dermatitis were made in five plants upon request of the management, and recommendations submitted for prevention of further occurrences. In cooperation with operators and workers, studies of various dust exposures affecting the health of workers in the hatters' fur cutting industry were completed during the year. A bulletin on AnthracoSilicosis among Hard Coal Miners was published. A study of occupational environment and sickness, as shown by the records of sick-benefit associations covering more than 500,000 persons, was made through funds made available under the Emergency Relief Appropriation Act of 1935. In addition, a study along similar lines covering approximately 100,000 automobile workers is being carried on under the guidance of the Public Health Service. The intensity of ultraviolet radiation in daylight was studied in 14 cities and a manuscript prepared for publication. A program of establishing active industrial hygiene units in State health departments was inaugurated. Some 24 million workers will be given service in this field by health agencies. One of the results of the year's work on stream pollution was the development and practical application of a method of treatment for sludge bulking by using smaU amounts of chlorine. A study begun in the preceding year to determine whether or not there is a quantitative relation between fluoride concentration of the common water supply and the development of chronic endemic dental fluorosis Xmottled enamel) was completed and the findings were published. Examinations for mottled enamel were made on 3,136 children during the year. .At present there are about 335 reported or surveyed endemic areas distributed among 25 States. A survey by means of questionnaires was made of all State and local health departments in order to compile information as to milk-borne disease outbreaks during the ypar; 16 outbreaks of milk-borne typhoid 198 REPORT OF THE SECRETARY? OF THE TREASURY fever, 2 of paratyphoid, 2 of scarlet fever, and 9 of septic sore throat were reported. Studies have been pursued looking to the discovery of a nonpathogenic organism for use in testing the efficiency of pasteurization machinery and the testing of processes for the bacterial treatment of dairy and inilk plant containers and equipment. Public health work under the Social Security Act Title VI of the Social Securitj^ Act of August 14, 1935, authorized the appropriation of funds for public health work. In section 601 an appropriation of $8,000,000 was authorized for each fiscal year, beginning with the fiscal year 1936, for the purpose of assisting States (including Alaska, Hawaii, and the District of Columbia), counties, health districts, and other political subdivisions of the States in establishing and maintaining adequate public health services, including the training of personnel for State and local health work. Under section 602 allotments are to be made to the States by the Surgeon General, with the approval of the Secretary of the Treasury, on the basis of population, special health problems, and financial needs; and the moneys so paid to the States are to be expended solely in carrying out the purposes specified in section 601 and in accordance with plans presented by the health, authorities of the respective States and approved by the Surgeon General of the Public Health Service. The Supplemental Appropriation Act of February 11, 1936, appropriated $3,333,000 for the rerriainder of the fiscal year 1936 for grants to States for public health work under the provisions of sections 601 and 602 of the Social Security Act. By the close of the year, the full amount had been allotted and $2,451,140.79 was paid out, leaving a balance of $881,859.21 to be carried over into the fiscal year 1937, as provided in the Social Security Act. The table following shows the amount allotted to each State, Alaska, Hawaii, and the District of Columbia: Allotments to States from fiends appropriated under the provisions of sec. 601 of the Social Security Act, for the fiscal year 1936 . Amount^ state Alabama • Alaska .' Arizona Arkansas . California . . Colorado Connecticut Delaware... District of Columbia Florida..... i ... . Georgia Hawaii Idaho Illinois. Indiana . . . Iowa Kansas. Kentucky ._._ Louisiana. . Maine . Maryland . . _ Massachusetts... Michigan Minnesota Missouri Montana... _. Amount state $96,824 48 Nebraska. ..1 • 14.115 49 Nevada 29, 450 07 N e w H a m p s h i r e . . . ' ._• N e w Jersey _ _. 69,020 90 114, 510 48 N e w Mexico . . 41, 272 80 N e w Y o r k N o r t h Carolina . 37, 007 98 10, 405 68 North Dakota 20,795 14 Ohio.- . Oklahoma 47,999 24 104, 462 56 Oregon ._ 22,888 39 . P e n n s y l v a n i a 24,711 31 Rhode Island -. 148, 709 64 South Carolina. South Dakota . . . . . 81,696 88 70, 330 24 Tennessee 48, 690 90 Texas . . . . . . Utah.. _. 89,293 40 62,399 22 Vermont .. ... . 24, 512 57 Virginia! 42.116 90 Washington . 94,821 30 W e s t Virginia 97,425 14 Wisconsin 75, 875 90 Wyoming.. • 81," 344 22 • 84,881 74 Total... 21,993 06 .. $40,067. 06 13,992.98 16,490.90 78, 555. 48 34, 303. 40 255,861. 98 115, 686. 64 26, 080. 39 128,179. 39 70,490.90 33,954. 24 179, 266. 32 25, 680. 48 69, 500. 65 26, 518. 65 97,-881. 73 156,917. 98 21,076. 48 19,072. 56 80,345. 24 38,866.98 62, 511. 66 66,580.40 17, 671.90 3, 333,000.00 REPORT OF THE SECRETARY OF THE TREASURY 199 In addition to the $8,000,000 authorized annually, section 603 of the Social Security Act authorized an annual appropriation of $2,000,000 for expenditure by the Public Health Service for investigation of disease and problems of sanitation and for expenses incident thereto, including those of commissioned officers of the Public Health Service engaged in such investigations or detailed to cooperate with the health authorities of any State in carrying out the purposes specified in section 601. The Supplemental Appropriation Act of February 11, 1936, made available $375,000 for the last 5 months of the fiscal year 1936, for carrying out the provisions of section 603. This made it possible to broaden the technical advisory service to State and local health agencies, which formerly applied in the field of general public health administration and public health engineeringy to include public health nursing, maternal and child hygiene, dental hygiene, industrial hygiene, and venereal disease control. To facilitate these activities, five groups of regional consultants have been placed in strategic centers where they are readily accessible to. the States. Two officers of the Service were assigned to States for special administrative duties. One was detaUedto serve as State health officer of Colorado during the'year in which the regular health officer was taking a course in public health administration; the other was sent to North Dakota to assist the State health officer in the organization of local health activities. A third officer has been continued on duty as acting State health officer of the State of Washington. A program designed to,establish active industrial hygiene units in the health departments of various States was inaugurated by the Public Health Service in cooperation with the Industrial Hygiene Committee of the State and Provincial Health Authorities. This program has been and still is carried on with the assistance of the Office of Industrial Hygiene and Sanitation of the Division of Scientific Research. Prior to the passage of the Social Security. Act, $37,788 was being spent by States annually for industrial hygiene activities. The new budgets for industrial hygiene in the 17 States which have established industrial hygiene units in their departments of health call for an expenditure of approximately $330,357, which amounts to $0,014 per worker in these States. With the inauguration of these activities in State departments, public health services wUl be available to some 24 million employees. . . The cooperative work of the Division of Venereal Diseases with State and local health departments was expanded under the provisions of the Social Security Act. Officers were assigned in an advisory capacity to State health departments in five States during the last few months of the year. ,. Domestic Quarantine Division Cooperation with States.-—Under the provisions of the Social Security Act, the Public Health Service cooperated with State and local health departments, both for the purpose of strengthening existing health services and for the extension of such assistance into fields not hitherto included. Advisory service to the States was also expanded to embrace many new fields. For a detailed discussion of the cooperation with States in public health work under the Social Security Act, see page 198. 200 , REPORT OF THE SECRETARY OF THE TREASURY Public health engineering activities.—With the cooperation of the State health agencies, certification of sources of drinking and culinary water used on all classes of common carriers was continued. Of the 2,150 supplies listed by the carriers in 1935, 89 percent were inspected and certified, and 3,948 certificates were issued. Of the supplies listed, 46 were prohibited for use and 296 provisionally certified. Of 1,743 vessels actively engaged in interstate traffic during the calendar year 1935, 46.8 percent were inspected and certified as complying with the regulations of Government- drinking and culinary systems. Temporary certificates were issued to 651 vessels pending inspection, and nonapproved certificates were issued to 2 vessels. During the year, 25 cases of typhoid were reported among members of crews of all vessels under United States registry, including Government-owned vessels. Of this number only 4 cases occurred among crews subject to the interstate quarantine regulations. For the third consecutive year there have been no cases of typhoid among members of crews of Great Lakes vessels. Routine surveys and inspections to determine the efficiency of State control of shellfish areas and establishments were continued. Advice was rendered to State health departments and Federal agencies relative to stream pollution study programs. Assistance to Federal agencies.—Public Health Service cooperation with the Interior Department in the sanitary supervision of national parks was continued, but on ajarger scale than previously, owing to the fact that attendance at the national parks is increasing rapidly year by year. As in previous years, the Service has given sanitary engineering advice to the Bureau of Indian Affairs in connection with the Indian reservations, and to the Lighthouse Service and ,the Coast Guard Service in connection with the water supply and sewage disposal problem on ships and at stations, particularly in the region of the Great Lakes. I t has also given engineering assistance to the Forestry Service, Bureau of Public Roads, Bureau of Prisons, Bureau of Entomology, Arnay Engineers, National Resources Committee, and the District of Columbia. The engineering field force of the Service devoted 33.2 percent of its time to 17 other Federal agencies. In response to a request from the Resettlement Administration for a public health officer to render advisory assistance in matters of health and sanitation, an officer of the regular corps has been assigned to this duty. In like manner an officer of the regular corps has been assigned to the Social Security Board to assist in the administration of the section of the Social Security Act which has to do with aid to the blind. Works Progress Administration projects.—In cooperation with the Works Progress Administration, the Public Health Service has continued its work of supervising community sanitation, malaria control drainage, and mine sealing projects. Tlirough these activities, 344,250 potential sources of typhoid fever were eliminated during the year by the construction of sanitary latrines in 38 States; and 100,000 acres of malaria-mosquito breeding areas were drained in 16 States, through the construction of 6,000 miles of ditches. Supervision of projects for sealing abandoned bituminous coal mines in 7 States in order to prevent formation and discharge of acid REPORT OF THE SECRETARY OF THE TREASURY 201 therefrom was assumed by the Public Health Service during the fiscal year. This is a continuation of the work begun under the Civil Works Administration. I t is estimated that over 28,000,000 pounds of sulphuric acid are discharged from bituminous mines, both active and abandoned, in the 7 States each day, and that of this amount approximately 17,500,000 pounds per day are from abandoned and unworked mines. To date the work has eliminated the discharge of about 2,000,000 pounds of acid per day. At the request of the Works Progress Administration, technical advice and general supervision of projects for plumbing inspection in Federal buildings in New York: and Detroit were also furnished by the Public Health Service. Suppression oj interstate transmission oj disease.—Foremost in this category are the rodent plague control measures on the island of Maui, Territory of Hawaii, under the direction of a Service engineer, and the plague control activities on the western slope of the Rocky Mountains under the direction of a medical officer. The work on the island of Maui has demonstrated some fundamental principles in rodent eradication, at least in tropical climates. For practical public health purposes the control of ra.ts on this island may be considered as almost complete. The findings of the plague investigation in the States on the Pacific slope of the United States are not at all encouraging. Plague-infected ground squirrels and plague-infected fleas from ground squirrels have been found rather extensively in northern California, eastern Oregon, eastern Idaho, and southwestern Utah. The infection is very definitely advancing eastward, having been found only a few miles from Yellowstone Park. In addition to the rodent infection, two positive cases of human plague occurred in California. Of the 15 species of ground squirrels encountered duruig the year, plague infection was found in 4. Nineteen species of fleas have been found on 14 species of ground squirrels. One of the most significant results of the plague investigation studies has been the practical demonstra-tion of the u«e of fleas to determine plague foci in the absence of demonstrable rodent infection. In several instances the finding of infected fleas has preceded the discovery of infected animals. This demonstration should greatly facilitate the determination of plague infection foci. Insofar as is known, there was during the fiscal year only one instance of disease traceable to shellfish. This was a small isolated epidemic of typhoid fever which was quickly brought under control. On the whole, the control of shellfish sanitation through certification of shippers engaged in interstate traffic has accomplished the desired results. Measures for preventing the interstate spread of human psittacosis continued to be effective. No human case of this disease was reported. This is thought to be an outstanding example of the results that may be accomplished through a coordinated and cooperative program for disease control in which the States and the Federal Government assume their respective shares of the responsibility. Division oj Marine Hospitals and Reliej The marine hospitals and other relief stations treated a daily average of 5,203 in-patients and 3,529 out-patients. There were 54,208 patients who received hospital treatment during the year as compared 202 REPORT OF THE SECRETARY OF THE TREASURY to 49,018 last year. Hospital and out-patient care was furnished at marine hospitals and other relief stations to 331,215 beneficiaries. The number of hospital days was 102,573 more than last year. The ratio of personnel to patients in the average civilian hospital as reported by the American Hospital Association is 1.25 to 1, whereas in the United States Marine Hospitals it is only 0.6 to 1. Because, of an increase in the number of old-line beneficiaries and Employees' Compensation Commission patients, together with a steady rise in the cost of hospital supplies, it was necessary to request a deficiency appropriation of $159,000. ^ In the face of increased prices for supplies of all sorts, the per diem cost was kept down to $3.39, but this was accomplished only by keeping personnel at the lowest practicable number and foregoing replacement and repair of equipment in normal amount. Division oj Venereal Diseases The projected and retrospective studies of syphilis, in cooperation with five of the leading syphilis clinics of the United States, included, various subjects related to the protean manifestations of syphilis. The cooperative investigations which were completed during the year dealt with cardiovascular syphilis and asymptomatic central nervous system syphilis. Laboratory studies relating particularly to the. diagnosis, prevention, and public health control of syphilis and gonorrhea were carried on. at the venereal disease research laboratory in New York City., The evaluation of serodiagnostic tests for. syphilis included a determination of the efficiency.of serologic test performance, in State, municipal, and private laboratories. In the study of untreated syphilis in the Negro, the confirmation of the original clinical findings, which were published during, the year, is making rapid progress through necropsy studies of the individuals included in this investigation. Because of the restricted appropriation available for the Public Health Service Chnic, Hot Springs National Park, Ark., it was necessary to limit the new cases admitted. The cooperative work with State and local health departments was expanded under the provisions of the Social Security Act. The educational and informative program of the Public Health Service in venereal disease control work was continued. Division oj Mental Hygiene The activities of the Division of Mental Hygiene included studies of the nature and treatment of drug addiction and dissemination of information upon the subject; studies of the abusive uses of narcoticdrugs; administrative functions incident to, the estabhshment and operation of narcotic farms; supervision and furnishing of medical and psychiatric services for the Federal penal and correctional system; studies on the causes, prevalence, and means for the prevention and treatment of nervous and mental diseases; and cooperation with other agencies interested in the various phases of work with which the Division is concerned. Special studies of the nature of drug addiction were continued during the year at the Public Health Service Hospital (Narcotic Farm) at Lexington, Ky. Investigations were continued on the value of certain substitutes for morphine, studies being completed REPORT OF THE SECRETARY OF THE TREASURY 203 on dihydroheterocodeine and dihydroisocodeine. Both of these substitutes were found to have addictive properties similar to morphine. Studies on the value of rossium in the treatment of drug addiction indicate that this substance has no demonstrable beneficial effect on the abstinence syndrome. Studies were also inaugurated during the year, in cooperation with the Division of Comparative Psychobiology of Yale University, dealing with the behavior responses of the chimpanzee to certain habit-forming drugs. Several publications were issued during the year on the various phases of drug addiction. . Since the opening of the Narcotic Farm at Lexington, in May 1935, 1,240 patients have been admitted. Of these, 960 were admitted during the fiscal year 1936 and 479 were discharged, leaving 761 patients in the institution at the close of the year. Of the voluntary patients discharged as cured, none is known to have relapsed, but some of those discharged as having received maximum benefit have relapsed, as well as some of the prisoners released conditionally-or paroled. Proposals were solicited for the construction of the initial buildings for the United States Narcotic Farm at Fort Worth, Tex. I t is anticipated that the contract will be awarded sometime during the early part of the ensuing fiscal year. The Service continued the work of supervising and furnishing the medical and psychiatric services for the Federal penal and correctional system. Plans were inaugurated to furnish psychiatric diagnostic services to Federal courts for a period of 1 year as a research project to determine the wisdom and feasibility of establishing such services as a permanent activity of the Pubhc Health Service. The first unit was organized in Boston, Mass., in May 1936, and similar units will be established at other points throughout the country. Division of Personnel and Accounts Personnel.—On July 1, 1936, the regular commissioned corps of the Public Health Service consisted of 366 commissioned officers and 51 reserve officers on active duty. Other personnel of the Service totaled 6,957, not including 4,769 collaborating and assistant collaborating epidemiologists who served at nominal compensation and who were for the most part officers or employees of State and local health organizations. Financial statement.—Following is a statement of funds made available to the Public Health Service and the expenditures therefrom for the fiscal year 1936: Appropriation Emergency Relief, Treasury, Public Health Service, 1935-37 (health survey) Emergency Relief, Federal Emergency Relief Administration (grants to states).Texas Centennial .__ , Veterans' Administration, working fund Department of Justice: Prison camps. Medical and hospital service, penal institutions Total Available $2, 721, 750. 00 $2,412, 320. 56 238, 920. 00 32, 500. 00 1 313, 312. 50 238. 920. 23 24,344. 00 313, 312. 50 7, 600. 00 489, 600. 00 6, 306. 65 487,157. 00 3, 803, 682. 50 3, 482, 360. 94 1 This amount does not include $142,772.50 credited direct to appropriation. Expended 204 REPORT OF THE SECRETARY OF THE TREASURY Appropriated Received from other sources $304, 670 1, 728, 734 335, 000 1, 000, 000 25, 000 64, 000 450 6, 817, 460 322,150 253, 668 $1, 745 64, 733 Salaries, OflQce of Surgeon General P a y . etc., commissioned ofl5cers P a y of acting assistant surgeons P a y of other employees Freight, transportation, etc. M a i n t e n a n c e , N a t i o n a l I n s t i t u t e of H e a l t h . BooksP a y of personnel a n d m a i n t e n a n c e of hospitals Q u a r a n t i n e service _ P r e v e n t i n g t h e s p r e a d of epidemio.diseases i..... P r e v e n t i n g t h e ' s p r e a d of epidemic diseases, 1935-36 Field investigations of p u b l i c h e a l t h Interstate quarantine service..._ .... s t u d i e s of r u r a l s a n i t a t i o n C o n t r o l of biologic p r o d u c t s Expenses: Division of Venereal Diseases , D i v i s i o n of M e n t a l H y g i e n e E d u c a t i o n a l exhibits .. . I n v e s t i g a t i o n of disease a n d p r o b l e m s of s a n i t a t i o n Graiits to States 3 ___._. W o r k i n g capital f u n d . P a y m e n t to officers a n d employees in foreign countries d u e to a p p r e c i a t i o n of foreign c u r r e n c y Total. 1,125, 582 775 6,485 240, 36, 25, 45, 000 535 000 000 "2,'282" 80, 000 650, 000 1,000 375, 000 3, 333, 000 5,920 49, 423 14, 636, 567 Total available Expended $306,315 1, 793, 467 335, 000 1,000, 000 25, 000 64, 000 450 6, 943, 042 322, 925 253, •668 6,485 240, 000 38, 817 25, 000 45, 000 $306,114 1 1, 774, 658 307, 500^ 2 995, 918. 24,711 62, 683 448: 6,915,182317,150' 243,5826, 469' 236, 059' 36, 956 24, 338; 44,112 80, 000 665, 920 1,000 375, 000 3, 333, 000 49, 423 77,781 648, 417 771 358, 575 2,451,141 39,377 46, 200 46, 200 42, 000^ 1, 303,145 16, 939, 712 14,913,942; 1 I n c l u d e s $2,500 transferred to t h e Division of D i s b u r s e m e n t . 2 I n c l u d e s $1,500 transferred to t h e Division of D i s b u r s e m e n t . 3 Balance of $881,859 available in 1937. The revenues derived from operations of the Public Health Service during the year and covered into the Treasury as miscellaneous, receipts were as follows: Source General fund receipts: Q u a r a n t i n e charges H o s p i t a l charges a n d expenses Sale of subsistence Sale of occupational t h e r a p y p r o d u c t s : Sale of obsolete, c o n d e m n e d , a n d unserviceable e q u i p m e n t Rents R e i m b u r s e m e n t for G o v e r n m e n t p r o p e r t y lost or d a m a g e d C o m m i s s i o n s on telephone p a y s t a t i o n s installed in service b u i l d i n g s Sale of refuse, garbage, a n d other b y p r o d u c t s Sale of livestock a n d livestock p r o d u c t s O t h e r revenues Total T r u s t fund receipts: Sale of effects of deceased p a t i e n t s I n m a t e s ' funds Grand t o t a l . . : $237, 847. 21 25,106.9211,843.09' 600.55 4, 868.14 3, 640. 50' 79. 901, 420.15 1, 050.83. 210. 88 1,159. oa 287, 827.17 2, 458. 47 25, 618.17 _ _ 315, 903. 81 DIVISION OF RESEARCH AND STATISTICS The Division of Research and Statistics in the Office of the Secretary provides, for the use of the Secretary of the Treasury, information and economic and financial analyses relating to Treasury operations in the fields of taxation. Federal financing, and monetary problems. The Director of Research and Statistics is responsible for the production, analysis, and publication of statistics, and the conduct of economic research in all branches of the Department. REPORT OF THE SECRETARY OF THE TREASURY 205 Taxation Estimates of Federal receipts from internal revenue taxes and customs duties are prepared for the Bureau of the Budget for use in all regular and interim budget reports. In connection with proposed revenue legislation, estimates are prepared of probable revenue under various rate schedules. Economic analyses of the Federal tax structure are made covering both immediate and contemplated legislative needs, and dealing with the efl^ectiveness and equitableness of the Federal tax system as it exists and with proposed changes...in' the system. Studies are undertaken pertaining to the extent and character of conflicting and overlapping taxation by Federal, State, and local Governments, and comparative studies are made of selected taxes in foreign countries and of certain foreign tax systems as a whole. Federal jinancing The Division carries on research and security analysis in connection with problems relating to Federal financing. Current and prospective conditions in the money and capital markets are studied in relation to both longer-term programs of Federal financing and to the types of securities, the coupon rates, and maturities to be employed in particular financing operations. The investment portfolios of Government trust funds and of governmental corporations and credit agencies are analyzed for the purpose of recommending changes which may appear advantageous. Studies are made of existing laws and of legislative proposals in their relation to Treasury financing and Federal fiscal policies. Monetary problems For the use of the Secretary in connection with stabilization fund operations and the acts pertaining to the purchase of gold and silver, analyses are made of international movements of gold and silver, the 'flow of capital funds into and out of the United States, the position of the dollar in relation to foreign currencies, the monetary policies of foreign countries, exchange and trade restrictions adopted abroad, and similar problems affecting Treasury policy and operations. Under Executive order of January 15, 1934, and Treasury Regulations of November 12, 1934, detailed reports covering security and foreign exchange transactions and changes in bank balances between the United States and foreign countries are made weekly by banks, bankers, brokers, and dealers throughout the country who are engaged in such operations. These reports provide data from which are prepared current analyses and interpretations of international capital movements. Actuarial analysis Analyses and reports are made on actuarial matters pertaining to Treasury operations, including reports on the actuarial status of the old-age reserve account established under the Social Security Act and of other pension and trust funds for which the Treasury is responsible. In connection with retirement legislation, estimates are made of probable cost of existing and proposed plans. The Government Actuary is a member of the Board of Actuaries, established under the Civil Service Retirement Act, and serves in a consulting capacity on actuarial matters for governmental agencies outside the Treasury Department. 206 REPORT OF THE. SECRETARY OF THE TREASURY DIVISION OF,SAVINGS BONDS The Division of Savings Bonds in the Office of the Fiscal Assistant Secretary of the Treasury and the position of Chief of the Division were created by an order of the Secretary dated March 4, 1936, under which the Chief of the Division is responsible to the Fiscal Assistant Secretary for the promotion of the- sale of United States savings bonds. This order also created an Information Section of this Division, the function of which is to answer inquiries and disseminate information to promote the sale of savings bonds. The creation of this Division consolidated under a single head the saJes promotion work which had previously been performed by several special assistants to the Secretary and the Under Secretary. One of the important activities of this Division is the placing, through advertising agencies, of full page advertisements in publications with national circulation, the advertisements being keyed in such a manner as to enable the Division to measure the results of each advertisement. The Division also distributes booklets, application forms, circulars, and other literature, such as posters and signs for display in post offices and banks, on mail trucks, etc. Until recently most of this distribution was handled,by the companies printing the literature, but it was found possible to effect a very considerable saving in cost by uiidertaldng this work in the Division itself, and accordingly a maiUng unit has been organized for this purpose. A statistical section has recently been set up in the Division and is engaged in compiling statistics of various kinds in connection with the sale of United States savings bonds. Previously such statistics as were available were obtained too late,to be of material value as a guide for the advertising and other activities of the Division. SECRET SERVICE DIVISION During the fiscal year 1936, 3,153 persons were arrested by agents' of the Service, or by their direction, on cjiarges involving, counterfeiting of the obligations and coins of the United States and forgery, as well as miscellaneous offenses against the statutes relating to the Treasury Department. Of this number, 937 were note counterfeiters and note passers, 28 were note raisers and passers.of altered currencjT^, 651 were coin counterfeiters and coin passers, 880 were check forgers, 5 were apprehended fpr negotiating stolen or forged bonds, 29 for presenting false claims against the Government, 36 for maldng and possessing counterfeit strip stamps, 8 for violating the Gold Reserve Act of .1934, 25 for violating the provisions of the Farm Loan Acb, 34 for conspiracy, 6 for counterfeiting Government checks, and 61 for miscellaneous offenses. Thirty-two counterfeit note issues were discovered, all photomechanical productions and, for the most part, deceptive and warranting distribution of descriptive warning circulars. In addition, 43 counterfeits of varying types of workmanship were discovered in different sections of the country. These notes, some hand-drawn, others photographic or transfer specimens of poor workmanship, were generally crude and'were quickly suppressed. Counterfeit notes aggregating $1,030,053.23 were captured or seized during the year by operatives of the Service. This total includes altered currency aggregating $8,655, of which $5,940 was made and passed in foreign countries, and fractional currency amounting REPORT OF THE SECRETARY OF THE TREASURY 207 to $199.73. Counterfeit coins to the amount of $121,786.61 were confiscated by agents in connection with raids and subsequent arrests, and $497.30 in counterfeit foreign notes and coins were also seized. In connection with arrests and investigations, operatives captured or seized 236 metal plates, 192 film and glass negatives for printing counterfeit obligations and securities, 29K steel dies, 118.)^ metal molds, 482 plaster molds, Sji plaster molds for counterfeiting coins of foreign countries, and a large quantity of miscellaneous materials and counterfeiting paraphernalia. Of the counterfeit notes captured during the year, $292,850 were used in evidence against the makers and passers, and $980 in altered notes were likewise used in the prosecution of note raisers and passers of altered currency. Counterfeit coins totaling $54,251.24 were also used in evidence in cases of this character. Of the cases brought to trial, 1;633 persons were convicted and sentenced, 91 were acquitted, 745 are awaiting the action of the courts, while others were variously disposed of, some being committed to insane asylums and others delivered to the military and police authorities. Of the total number arrested, 453 persons were held for inves.tigation and subsequently dismissed. Agpnts during the year conducted, investigations in 4,729 check cases, 74 bond cases, and 4 war savings stamp cases. In check investigations, $7,127.30 was received in restitution and transmitted to the Treasu^ry Department. There were referred to the Service for investigation 18 cases from the Veterans' Administration involving violation of the World War Adjusted Compensation Act; 37 cases from the Farm Credit Administration involving violation of the Farm Loan Act; and 444 cases involving offenses against the Gold Reserve Act of 1934. Inquiries in 7 cases were received from the Procurement Division for information concerning prospective bidders on Government supplies and 44 similar inquiries were received from the Works Progress Administration. TREASURER OF THE UNITED STATES Public moneys are received and disbursed through the accounts of the Treasurer of the United States. Deposit accounts are carried with designated Government depositaries and the Treasury at Washington. Credit accounts with disbursing officers of the Government are maintained on the books of the Treasurer. Funds appropriated by Congress for the use of the various departments and establishments of the Government are advanced to disbursing officers as required through credits to their accounts with the Treasurer, and disbursements are made by checks drawn by disbursing officers on their accounts with the Treasurer. The following table presents a comparison of total receipts, exclusive of postal revenues, and total expenditures of the Government in the fiscal years 1935 and 1936. The figures in this table, and throughout the administrative report of the Treasurer (pp. 207 to 212, inclusive), are on the basis of daily Treasury statements (revised). (For a description of bases used in the tables in this report and of accounts through which Treasury transactions are effected, see pp. 311 and 312.) 208 REPORT OF THE SECRETARY OF THE TREASURY 1936 Receipts, exclusive of postal r e v e n u e s : General a n d special accounts $3, 800,972,151.02 $4,114,714, 278. 51 T r u s t accounts, etc.: 232,112,359: 51 237, 358, 693. 94 Trust accounts. I n c r e m e n t resulting from reduction in t h e 1, 722,751.97 780, 443. 56 weight of t h e gold, dollar 175,789, 416. 49 140, 111, 441. 47 Seigniorage i 18, 949,421. 44 U n e m p l o y m e n t t r u s t fund Total. Expenditures: T r a n s a c t i o n s in checking accounts of Governm e n t a l agencies (net) C h a r g e a b l e against i n c r e m e n t on gold: M e l t i n g losses, etc P a y m e n t s to Federal Reserve b a n k s (sec. 13b, F e d e r a l . Reserve Act, as amended) F o r r e t i r e m e n t of national b a n k notes U n e m p l o y m e n t t r u s t fund P u b l i c d e b t r e t i r e m e n t s chargeable against o r d i n a r y rer-f-ipts All other e x p e n d i t u r e s . . . Total. Excess of e x p e n d i t u r e s over receipts, including t r u s t accounts, etc Increase ( + ) or decrease (—) +$313,742,127.49 -6,246,334.43 -942,308. 41 + 3 5 , 677,974.02 +18,949,421.44 4,180,165,038. 40 4, 542, 346,918. 61 +362,180,880.11 -437,074,669. 68 85, 530, 574.56 +522, 605, 244. 24 675,121. 93 791,845. 87 -+116, 723. 94 20,931, 857. 34 91, 415, 6.50. 00 5, 614, 453. 63 397, 422,480. 00 18,909,000. 00 -15,317,403.71 +306, OOn, 830.00 + 1 8 , 909, 000. 00 573, 567, 250. 00 6, 984, 397, 309. 27 403, 342, 250. 00 -170,215,000.00 8,664, 608, 339. 38 +1,680,211,030.11 7, 233,902, 518.86 9, 576, 218, 943. 44 + 2 , 342,316, 424. 58 3,053, 737, 480. 46 5,033,873,024.93 +1,980,135, 644.47 > R e p r e s e n t s t h e seigniorage resulting from t h e issuance of silver certificates equal to t h e cost of t h e silver acquired u n d e r t h e Silver P u r c h a s e Act of 1934 a n d t h e , a m o u n t r e t u r n e d for t h e silver received under, t h e PreMdent's proclamation-dated'^Aug. 9, 1934'. J Excess of credits. R e p r e s e n t s transfers aggregating $333,245,377.93 of balances in checking accounts of special agencies of t h e G o v e r n m e n t as of M a y 31, 1935, a n d n e t transactions since t h a t d a t e to J u n e 30, 1935, of $103,829,291.75. Receipts and expenditures on account of the principal of the public debt during the fiscal year 1936 were as follows: Class Receipts Expenditures Public debt increase ( + ) or decrease (—) $3, 556,159,000. 00 $3, 283,135,000.00 +$273,024,000.00 T r e a s u r y bills 4,158,400.00 -4,158,400.00 Certificates of i n d e b t e d n e s s . Certificates of i n d e b t e d n e s s (adjusted service 383,300,000.00 -28,700,000.00 certificate fund series) _.:. 354, 600,000.00 Certificates of i n d e b t e d n e s s (unemployment 18,161,000.00 +18,909,000.00 37,070,000. 00 t r u s t fund series) 2,017,122,850. 00 +1,368,660, 700. 00 Treasury notes. T r e a s u r y notes (civil service r e t i r e m e n t fund 3, 385, 783, 550.00 64, 200,000.00 +27,000,000.00 series) 91, 200,000. 00 T r e a s u r y notes (foreign service r e t i r e m e n t fund 440,000.00 +191,000.00 series) '. 631,000.00 T r e a s u r y notes ( C a n a l Zone r e t i r e m e n t fund 2, 378, 000.00 1,878, 000.00 +500, 000.00 series) 65,000, 000. 00 30,000, 000. 00 T r e a s u r y notes (Postal Savings S y s t e m s e r i e s ) . _ . - 2 5 , 000, 000.00 1, 500.00 + 4 , 484, 359, 800. 00 4, 484, 361, 300.00 Treasury bonds _. _ 11, 252, 714. 75 265, 439, 358. 50 U n i t e d States savings b o n d s . . +254,186, 643. 75 957,491, 850. 00 1, 668, 752,150. 00 +711, 260, 300.00 Adjusted service b o n d s . . - 1 6 , 010. 00 W a r savings securities • 16, 010.00 - 6 0 , 618.00 T r e a s u r y savings securities 60, 618. 00 101, 395, 400. 00 -101,395, 400. 00 First Liberty bonds 169, 000. 00 - 1 6 9 , 000. 00 Second L i b e r t y b o n d s 253, 300.00 - 2 5 3 , 300.00 Third Liberty bonds 1, 276, 754, 850. 00 -1,276,754, 850. 00 Fourth Liberty bonds _ 47, 850. 00 - 4 7 , 850. 00 Victory n o t e s _ . 1, 798, 160. 00 + 1 8 , 945, 840. 00 20, 744,000. 00 P o s t a l savings b o n d s - 5 9 6 , 705, 650.00 596, 705, 650. 00 Consols of 1930 74, 687, 260.00 - 7 4 , 687, 260.00 P a n a m a Canal bonds 4, 687. 80 Other debt items .-.•... - 4 , 687. 80 Deposits for, a n d r e t i r e m e n t of. national b a n k 428,476, 842. 50 - 2 0 4 , 866, 727. 50 223, 610,115. 00 notes a n d Federal Reserve b a n k notes Total. :. 14,120,728,473.50 9,276,510,943.05 +4,844,217,530.45 REPORT OF THE SECRETARY OF THE TREASURY 209 Public debt retirements chargeable against ordinary receipts, included in the above public debt expenditures, were as follows: Cumulative sinking fund Forfeitures, gifts, etc Total $403, 340, 750 1,500 403,342,250 .°. The number of pieces of public debt principal obligations examined, verified, and redeemed during the year was 21,039,689 as compared with 4,105,416 for the previous fiscal year. Checks in payment of interest on the registered obligations of the United States verified and paid numbered 977,335, and amounted to $76,460,785.82. Interest coupons of Government obligations examined, verified, and paid numbered 11,982,427 and amounted to $643,230,986.81. The gold holdings of the Treasury as of June 30, 1935 and 1936, valued at $35 an ounce, are shown in the following table: Account June 30, 1935 June 30, 1936 Increase (+) or decrease (—) Reserve against gold certificates outstanding... $787, 646, 039. 00 $2, 916, 234, 579. 00 +$2,128, 588, 540. 00 Gold certificate fund—Board of Governors, Federal Reserve System 5, 509, 710,115. 48 5, 291, 078, 912. 60 -218, 631, 202. 88 Redemption fund. Federal Reserve notes 22,879,855. 28 12, 948, 478. 00 - 9 , 931, 377. 28 Reserve against United States notes and Treasury notes of 1890 156, 039,430. 93 156, 039, 430. 93 1,800, 000, 000. 00 1,800, 000, 000. 00 Exchange stabilization fund 839, 368, 051. 28 Gold in General Fund ,. 432,115, 277. 71 -407, 252, 773. 57 Total- 9,115, 643, 491. 97 10, 608, 416, 678. 24 +1, 492, 773,186. 27 The increase in the gold holdings was made up as follows: Purchases by mints and assay offices on account of imports, etc., (valued at $35 an ounce). .-.$1,490,866,710.17 Received under the order of the Secretary of the Treasury of Dec. 28, 1933 (valued at $20.67+ an ounce)...: 1,126,032.54 Increment resulting from reduction in the weight of the gold dollar... ._ 780,443. 66 Total... 1,492,773,186.27 Paper currency of each class issued and redeemed during the fiscal year 1936 and the amounts outstanding, including Treasury and Federal Reserve bank holdings, on June 30, 1935 and 1936, were as follows: Outstanding J u n e 30, 1935 Class Gold certificates. Silver certificates U n i t e d States notes .. T r e a s u r y notes of 1890 Federal R e s e r v e notes F e d e r a l R e s e r v e b a n k notes N a t i o n a l b a n k notes Total... Issued $787, 772,849 815, 764,887 346, 681, 016 1,183, 350 3,492, 853, 620 84, 354, 373 773,116, 745 $2,800, 000, 000 1, 220, 276, 000 . 236, 884, 000 6, 301, 726, 840 Redeemed Outstanding J u n e 30, 1936 50, 000 $670, 932, 770 896, 402,400 236, 884, 000 5,502 1, 511,459, 060 31, 054, 363 400, 947, 080 $2, 916,840, 079 1,139, 638, 487 346, 681, 016 1,177, 848 4, 296, 309, 660 53, 300, 010 372, 219, 665 6, 572,125, 000 3,747,685,176 9,126,166, 665 2, 314, 915, 000 The paper currency held by Treasury offices and Federal Reserve banks on June 30, 1936, was as follows: 93790—37- -15 210 EEPORT OF THE SECRETARY OF THE TREASURY H e l d in Treasu r y offices a n d b y Federal Reserve-banks a n d agents in c u s t o d y for t h e Treasurer Glass Gold certificates Silver certificates United States n o t e s . . i T r e a s u r y notes of 1890 F e d e r a l Reserve notes F e d e r a l R e s e r v e - b a n k notes N a t i o n a l b a n k notes .. Total-- „ . • . . . . Held b y Federal R e s e r v e banks Total $605, 500 5,853,315 2, 618, 582 1,226 13,856, 785 821, 631 1 2,988,092 $2,815,463, 500 179,193,353 65,872, 253 280, 237, 000 524,850 3,126, 320 $2,816, 069, 000 185, 046, 668 68, 490,835 1,226 294, 093, 785 1, 346,481 6,114,412 26, 745,131 3, 344,417, 276 3, 371,162,407 1 Includes $497,850 held by the Comptroller of the Currency for destruction. The amount of United States paper currency shipped during the fiscal year 1936 from the Treasury in Washington to Treasury offices. Federal Reserve banks and branches, and others amounted to $4,207,606,188, an increase of $3,067,700,730 as compared with the previous year. Of this increase, $2,815,455,600 was on account of the shipment of gold certificates, series of 1934, to the Federal Reserve banks, which certificates are held by the Federal Reserve banks and Federal Reserve agents. During the year the Treasurer's office directed shipments of current silver and minor coins between the United States Treasury, the United States mints, and the Federal Reserve banks and branches for use in public disbursements, etc., as follows: Kind Silver: S t a n d a r d dollars Half d o l l a r s . . . Q u a r t e r dollars Dimes Minor: Nickels Cents Shipments from T r e a s u r y t o F e d e r a l Reserve b a n k s and branches $28,702,695. 00 8,130,500.00 10,397, 200. 00 7, 643,900.00 . Total Shipments from m i n t s t o Treasury and Federal Reserve b a n k s and branches $11«, 000 5,222,499.90 2,789, 869.00 110,000 62.886, 663.90 Shipments between Federal Reserve banks and branches $1,495,000 1,310,000 50,000 327,000 3,182,000 Shipments and transfers of gold coin and bullion and of uncurrent silver and minor coins to the mints from the Treasury and the Federal Reserve banks and branches were authorized in the amounts of $512,926,672.03 and $9,046,103.74, respectively. The proceeds of currency counted into the Treasurer's cash by the Currency Redemption Division (a consolidation of the National Bank Redemption Agency and the Redemption Division) during the year amounted to $488,901,677.63, of which $373,003,838.50 was in national bank notes, $30,595,854 in Federal Reserve bank notes, $65,431,335 in Federal Reserve notes, and $19,870,650.13 in United States currency. Canceled Federal Reserve notes, amounting to $1,316,264,710, were received from Federal Reserve banks and branches for credit of Federal Reserve agents during the year. 211 EEPORT OF THE SECRETARY OF THE TREASURY Public nioneys on deposit in designated Government depositaries on June 30, 1936, exclusive of items in transit on that date, amounted to $1,899,259,466.63 and were distributed as follows: Class of depositary To credit of Treasurer To credit of other Government officers $690,103,434.19 Federal Reserve banks and branches Special depositary banks (account of sales of Gov1,150,331,350.43 ernment, securities) 10, 669, 664. 61 $15,936,356.61 General depositary banks .-.. 27, 381,394.83 Limited depositary banks^ 969,269.92 1,900,919.69 Foreign depositary banks. _. 2, 067,086.36 Treasury of the Philippine Islands 1. 1,854,040,795.50 Total. 45, 218,671.13 Total $690,103,434.19 1,160,331,350.43 26,606,021.22 ' 27,381,394.83 ' 2,870,179.61 2,067,086.35 1,899,259,466.63 Securities held in custody by the Treasurer on June 30, 1936, amounted to $19,804,437,592, an increase of $320,271,448 over the previous year. The following table shows the amounts of securities held in custody on June 30, 1935 and 1936, classified according to purpose for which held: Purpose for which held To secure national bank note circulation . To secure deposits of public moneys in depositary banks. To secure postal savings funds For special trust accounts For'District of Colurhbia teachers' retirement fund For longshoremen's and harbor workers' fund For District of Columbia workmen's compensation fund. Total June 30,1936 June 30,1936 $143, 743,910 50,646,700 408, 308,238 18,875,310,556 6,022,390 114,350 21,000 $600,000 55, 618,025 206,117,048 19, 635,3'()3,^97d 6, 663,490 124,050 21,000 19,484,166,144 19,804,437,592 The checks issued by the Treasurer of the United States in payment of interest on the registered obligations of governmental agencies and insulargovernmentsnumbered 54,977, and amounted to $13,591,635.30. Interest coupons of obligations of governmental agencies and insular governments paid numbered 8,086,156 and amounted to $124,077,615.47. Funds were advanced to United States disbursing officers by. accountable warrants issued in an aggregate amount of $9,757,443,701.81. Warrants aggregating $10,905,690,472.97 were also issued covering public debt principal and interest payments by the Treasurer. Treasurer's checks aggregating $78,972,167.43 were issued on settlement warrants in payment of claims settled by the Comptroller General. Checks drawn on the Treasurer of the United States by Government disbursing officers and agencies and paid during the year numbered 128,315,503. Of this number 62,092,004 were for work relief payments and were paid by the Federal Reserve banks acting as agents for the Treasurer. The total number of checks paid during the fiscal year 1935 was 71,340,442, or 56,975,061 less than the number paid during the current fiscal year. The checks issued under authority of the Adjusted Compensation Payment Act and paid during the fiscal year numbered 4,056,858. 212 REPORT OF THE SECRETARY OF THE TREASURY The balances to the credit of disbursing officers and agencies on June 30, 1936, amounted to $2,003,119,811.08 in 5,781 accounts, as compared with the balances of $1,277,067,364.17 in 4,690 accounts on June 30, 1935, an increase of $726,052,446.91 in balances and an increase of 1,091 in the number of accounts. Drafts in 69 different kinds of foreign currencies, aggregating 2,628 in number, were purchased during the year by the Treasurer of the United States for the Comptroller General and for other departments and bureaus of the Government at a total cost of $200,411.53. Personal checks, drafts, and postal and express money orders, aggregating 1,785,815 items and amounting to $53,696,507.04, were deposited with the Treasurer of the United States for collection by Gov^ ernment officers during the fiscal year 1936. WAR FINANCE CORPORATION (In liquidation) Under authority of the act approved March 1, 1929, the liquidation of the assets of the War Finance Corporation and the winding up of its affairs were continued during the year. Only $10,000 of the Corporation's original capital stock of $500,.000,000 is outstanding, $499,990,000 of capital stock having been retired at par. The Corporation made two payments into the Treasury of'$50,000 and $40,000, on March 13, 1936, and June 17, 1936, respectively, increasing to $64,821,271.70 the amount paid into the Treasury on account of earnings. The total amount of advances made by the Corporation, from> its creation, not including such part of new applications as represented proceeds used to retire other advances, aggregated $690,431,100, of which amount $688,606,559 has been repaid. The total receipts during the year amounted to $2,509.21, and the expenditures, excluding $90,000 paid into the Treasury, amounted to $609.86. The remaining assets still carried on the books of the Corporation as of Jime 30, 1936, amounted to $40,745.86, consisting of cash of $34,119.50, furniture and .fixtures of $1, and agricultural and livestock loans (including expense advances of $372.22) of $6,625.36. EXHIBITS 213 THE PUBLIC DEBT Public issues of Treasury bonds, Treasury notes, and Treasury bills Exhibit 1 ^ Offering of lYs percent Treasury notes of series B-1939 On July 8, 1935, Secretary of the Treasury Morgenthau offered for subscription V/s percent Treasury notes of series B-1939, as described in the following circular: [Department Circular No. 545. Public Debt] TREASURY DEPARTMENT, Washington, July 8, 1935. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States, for 1%, percent notes of the United States, designated Treasury notes of series B-1939. The amount of the offering is $500,000,000, or thereabouts. DESCRIPTION OF NOTES The notes will be dated July 15, 1935,.and will bear interest from that date at the rate of iy% percent per annum, payable on a semiannual basis on December 15, 1935, and thereafter on June 15 and December 15 in each year. They will mature December 15, 1939, and will not be subject to call for redemption prior to maturity. The notes shall be exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes 0 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 will be acceptable to secure deposits of public moneys, but will not bear the circulation privilege. 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. SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official agencies. Applications from incorporated banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Applications from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 percent of the amount of notes applied for, whichever is the greater; and, if for $5,000 or less, by payment in full. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of notes applied for, to make allotments in full upon applications for smaller amounts and to make reduced allot1 Similarly, the exemEi\tion does not apply to the gift tax, see Treasury Decision 4560. 215 216 REPORT OF THE SECRETARY OF THE TREASURY ments upon, or to reject, applications for larger amounts, to make classified allotments or to make allotments upon a graduated scale, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, subscriptions for amounts up to and including $5,000 will be given preferred allotment, and subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced. PAYMENT Paj^ment at par and accrued interest, if smj, for notes allotted hereunder mu^t be made or completed on or before July 15, 1935, or on later allotment. In every case where pa3^ment is not so completed, the payment with application up to 5 percent of the amount of notes applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. 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. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve banks of the respective districts, to issue allotment notices, to receive payment for notes allotted, to make delivery of notes on full-paid subscriptions allotted, and they may issue interim receipts pending delivery of the definitive notes The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which will be communicated promptly to the Federal .Reserve banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury, Exhibit 2 Subscriptions and allotments. Treasury notes of series. B-1939 {from press releases, July 9, 11, and IS, 1935) On July 9, 1935, Secretary of the Treasury Morgenthau announced that the subscription books for the offering of 1^ percent Treasury notes of series B-1939 closed at the close of business, July 8, 1935. Reports received from the Federal Reserve banks show that subscriptions aggregated $2,970,169,700. Subscriptions in amounts up to and including $5,000 were allotted in full, and those in amounts over $5,000 were allotted 17 percent, but not less than $5,000 oh any one subscription. Subscriptions and allotments were divided among the several Federal Reserve districts and the Treasury as follows: Federal Reserve district Total subscriptions received Boston N e w York Philadelphia _ _ _ _ Cleveland Richmond.Atlanffl Chicago _- - St. Louis $230, 368,800 1,603,005,500 142,897,100 154,429, 700 68, 912, 500 81, 439,800" 303,853, 200 72, 061, 500 • Total subscriptions allotted $40,294,300 275,007,400 24,925,700 27,666,000 12,642,500 14,710,300 57,032,100 14, 225, .800 Total subscriptions allotted Federal Reserve district Total subscriptions received Minneapolis Kansas City Dallas San Francisco Treasury $30,866,200 64,103,300 50, 641, 600 177,065, 500 525,000 $6, 335,000 10,840,200 11, 587, 200 30,876, 600 90,000 2,970,169, 700 626, 233,000 Total... REPORT OF THE SECRETARY OF THE TREASURY 217 Exhibit 3 Inviting tenders for ;?% percent Treasury bonds of 1955-60 {additional) On July 15, 1935, Secretary of the Treasury Morgenthau invited tenders for a second additional issue of 2J^ percent Treasury bonds of 1955-60, as described in the following circular: [Department Circular No. 546. Public Debt] TREASURY DEPARTMENT, Washington, July 15, 1935. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, offers to the people of the United States $100,000,000, or thereabouts, 2% percent Treasury bonds of 1955-60, and invites tenders therefor at not less than par and accrued interest from March 15, 1935, to July 22, 1935. DESCRIPTION OF BONDS The bonds now offered will be an addition to and will form a part of the series of 2% percent Treasury bonds of 1955-60 issued pursuant to Department Circulars No. 531, dated March 4, 1935, and No. 536, dated April 22, 1935, will be freely interchangeable therewith, are identical in all respects therewith, and are described in the following quotation from Department Circular No. 531: ''The bonds will be dated March 15, 1935, and will bear interest from that date at the rate of 2% percent per annum, payable semiannually, on September 15, 1935, and thereafter on March 15 and September 15 in each year until the principal amount becomes payable. They will mature March 15, 1960, but may be redeemed at the option of the United States on and after March 15, 1955, in whole or in part, at par and accrued interest, on any interest day or days, on 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption the bonds to be redeemed will be determined by such method as may be prescribed by the Secretary of the Treasury. From the date of redemption designated in any such notice, interest on the bonds called for redemption shall cease. ''The bonds shall be exempt, both as to principal and interest, from all taxation now or hereafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes,1 and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an amount of bonds authorized by the Second Liberty Bond Act, approved September 24, 1917, as amended j the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (b) above. "The bonds will be acceptable to secure deposits of public moneys, and will bear the circulation privilege only to the extent provided in the act approved July 22, 1932, as amended. They will not be entitled to any privilege of conversion. "Bearer bonds with interest coupons attached, and bonds registered as to principal and interest, will be issued in denominations of $50, $100, $500, $1,000, $5,000, $10,000, and $100,000. Provision will be made for the interchange of bonds of different denominations and of coupon and registered bonds, and for the transfer of registered bonds under rules and regulations prescribed by the Secretary of the Treasury. "The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States bonds.'' TENDERS AND ALLOTMENTS Tenders will be received at the Federal Reserve banks and branches thereof up to 12 o'clock noon, eastern standard time, Wednesday, July 17, 1935, and unless received by that time will be disregarded. Tenders will not be received at the Treasury Department, Washington. Each tender must state the face amount of bonds bid for, which must be $1,000 or any even multiple thereof, and the price offered. The price offered must be stated exclusive of accrued interest from 1 Similarly, the exemption does not apply to the gift tax, see Treasury Decision 4550. 218 REPORT OF THE SECRETARY OF THE TREASURY March 15, 1935, to July 22, 1935; and must be expressed on the basis of 100, with fractions expressed as 32ds of 1 percent, in accordance with usuafc practice, e. g., 1011^^2. Tenders at less than par will not be considered. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied in every case by a deposit of 5 percent of the face amount of bonds bid for, except where the tender is accompanied by an express guaranty of payment by an incorporated bank or trust company. If the tender is accepted, in whole or in part, the deposit will be applied toward payment for the bonds, the balance to be paid as hereinafter provided. If the tender is rejected, the deposit will be returned to the bidder. Tenders must be enclosed in envelopes, securely sealed, addressed to the Federal Reserve bank, or branch, of the district, and plainly marked "Tender for 2% percent Treasury Bonds of 1955-60." The Federal Reserve banks will supply printed forms and special envelopes for submitting tenders. Incorporated banks and trust companies not located in a city where a Federal Reserve bank or branch is located may, in their discretion, submit tenders by telegram, but such telegrams must be received at the Federal Reserve bank or branch before the time fixed for closing. Immediately after the closing hour for the receipt of tenders on July 17, 1935, all tenders received in writing or by telegraph at the Federal Reserve banks or branches thereof up to the closing hour (12 o'clock noon, eastern standard time) will be opened. The Secretary of the Treasury will determine the acceptable prices offered and will make public announcement thereof as soon as possible after the opening of tenders. Those submitting tenders will be advised by the Federal Reserve banks of the acceptance or rejection thereof, and payment on accepted tenders must be made as hereinafter provided. In considering the acceptance of tenders, the highest prices offered will be accepted in full down to the amount required; and if the same price appears in two or more tenders and it is necessary to accept only a part of the amount offered at such price, tenders for smaller amounts may be accorded preference and tenders for larger amounts prorated to the extent necessary in accordance with the respective amounts bid for. The Secretary of the Treasury expressly reserves the right, however, to reject any or aU tenders or parts of tenders, and to award less than the amount bid for, and any action he may take in any such respect or respects shall be final. PAYMENT Payment for any bonds allotted on accepted tenders must be made or completed on or before July 22, 1935, in cash or other immediately available funds, and must include the face amount, and the premium which the bidder has agreed to pay, together with accrued interest on the face amount from March 15, 1935, to July 22, 1935.1 In every case where payment is not so completed, the 5 percent deposit with application shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. GENERAL PROVISIONS Federal Reserve banks, as fiscal agents of the United States, are authorized and requested to receive tenders, to make allotments as indicated by the Secretary of the Treasury to the Federal Reserve banks of the respective districts, to issue allotment notices, to receive payment for bonds allotted, to make delivery of bonds on full-paid allotments, and to perform such other acts as may be necessary to carry out the provisions of this circular. Pending delivery of the definitive bonds, Federal Reserve banks may issue interim receipts. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the receipt of tenders and the sale of bonds under this circular, which will be communicated promptly to the Federal Reserve banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. 1 Accrued interest from March 15, 1936, to July 22, 1935, on $1,000 face amount is $10.078125. REPORT OF THE SECRETARY OF THE TREASURY ,219 Exhibit 4 Acceptance of tenders for Treasury bonds of 1955-60 {from press release, July 18,1935') On July 18, 1935, Secretary of the Treasury Morgenthau announced the result of the offering by the Treasury of $100,000,000, or thereabouts, of 2% percent Treasury bonds of 1955-60, tenders for which were received at the Federal Reserve banks up to 12 o'clock noon on July 17. Tenders for $510,958,000 face amount of bonds were received, of which $101,971,000 was accepted at prices ranging from 1012J^2 down to 101i?^2, and accrued interest from March 15, 1935, to July 22, 1935. The average price of the bonds issued w^as slightly above 101i%2, and a total premium of $1,631,979 was received. Based on the average price at which the bonds were issued on July 22, 1935, the yield was about 2.77 percent to the earliest call date, March 15, 1955, and about 2.78 percent to maturity, March 15, 1960. Exhibit 5 Inviting tenders for 2% percent Treasury bonds of 1955-60 (additional) On July 29, 1935, Secretary of the Treasury Morgenthau invited tenders for a third additional issue of 2% percent Treasury bonds of 1955-60, as described in the following circular: [Department Circular No. 647. Public Debt] TREASURY DEPARTMENT, Washington, July 29, 1935. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, offers to the people of the United States $100,000,000, or thereabouts, 2% percent Treasury bonds of 1955-60, and invites tenders therefor^ at not less than par and accrued interest from March 15, 1935, to August 5, 1935. DESCRIPTION OF BONDS The bonds now offered will be an addition to and will form a part of the series of 2% percent Treasury bonds of 1955-60 issued pursuant to Department Circulars No. 531, dated March 4, 1935, No. 536, dated April 22, 1935, and No. 546, da;ted.July 15, 1935, will be freely interchangeable therewith, are identical in all respects therewith,-,and are described in the following quotation from Department Circular No. 53.1:2 * * * "The bonds will be acceptable to-secure deposits.of public moneys,^ * * *. They will not be entitled to any privilege of conversion.2 * * *'* TENDERS AND ALLOTMENTS Tenders will be received at the Federal Reserve banks and branches thereof up to 12 o'clock noon, eastern standard time, Wednesday, July 31, 1935, and unless received by that time will be disregarded. Tenders will not be received at the Treasury Department, Washington. Each tender must state the face amount of bonds bid for, which must be $1,000 or an^r even multiple thereof, and the price offered. The price offered must be stated exclusive of accrued interest from March 15, 1935, to August 5, 1935; and must be expressed on the basis of 100, with fractions expressed as 32ds of 1 percent, in accordance with usual practice, e. g., 101^^2. Tenders at less than par will not be considered.^ * * * Immediately after the closing hour for the receipt of tenders on July 31, 1935, all tenders received in writing or by telegraph at the Federal Reserve banks or branches thereof up to the closing hour (12 o'clock noon, eastern.standard time) will be opened. 2 * * * 1 Revised July 22, 1935. 8 Omitted portions similar to corresponding sections of Department Circular No. 646, p. 217. 3 The original circular contained the following further language at this point: "and will bear the circulation privilege only to the extent provided in the act approved July 22,1932, as amended." This provision is now inapplicable since the circulation privilege referred to expired July 22, 1935. 220 REPORT OF THE SECRETARY OF THE TREASURY PAYMENT Payment for any bonds allotted on accepted tenders must be made or completed on or before August 5, 1935, in cash or other immediately available funds, and must include the face amount, and the premium which the bidder has agreed to pay, together with accrued interest on the face amount from March 15, 1935, to August 5, 1935.1 In every case where payment is not so completed, the 5 percent deposit with application shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States.^ * * * HENRY MORGENTHAU, JR., Secretary of the Treasury. Exhibit 6 Acceptance of tender^ for Treasury bonds of 1955-60 {from press release, Aug. 1, 1935^) On August 1, 1935, Secretary of the Treasury Morgenthau announced the result of the offering by the Treasury of $100,000,000, or thereabouts, of 2J^ percent Treasury bond^ of 1955-60, tenders for which were received at the Federal Reserve banks up to 12 o'clock noon on July 31. Tenders for $320,981,000 face amount of bonds were received, of which $106,541,000 was accepted at prices ranging from 1012)^2 down to 101^)^2, and accrued interest from March 15, 1935, to August 5, 1935. Only part of the amount bid for at the latter price was accepted, tenders for amounts up to and including $10,000 being accepted in full, and 25 percent of tenders for larger amounts being accepted, but not less than $10,000 on any such tender. The average price of the bonds issued was about 1011^^2, and a total premium of $1,664,723 was received. Based on the average price at which the bonds were issued on August 5, 1935, the yield was about 2.771 percent to the earliest call date, March 15, 1955, and about 2.787 percent to maturity, March 15, 1960. Exhibit 7 Inviting tenders for 2}i percent Treasury bonds of 1955-60 {additional) On August 12, 1935, Secretary of the Treasury Morgenthau invited tenders for a fourth additional issue of 2% percent Treasury bonds of 1955-60, as. described in the following circular: [Department Circular No. 648. Public Debtl TREASURY DEPARTMENT, Washington, August 12, 1935. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, offers to the people of the United States $100,000,000, or thereabouts, 2% percent Treasury bonds of 1955-60, and invites tenders therefor at not less than par and accrued interest, from March 15, 1935, to August 19, 1935. DESCRIPTION OF BONDS The bonds now offered will be an addition to and will form a part of the series of 2% percent Treasury bonds of 1955-60 issued pursuant to Department Circulars No. 531, dated March 4, 1935, No. 536, dated April 22, 1935, No. 546, dated July 15, 1935, and No. 547, dated July 29, 1935, will be freely interchangeable therewith, are identical in all respects therewith, and are described in the following quotation from Department Circular No. 531:2 * * * "The.bonds will be acceptable to secure deposits of public moneys,^ * * * They will not be entitled to any privilege of conversion.2 * * *" 1 Accrued interest from Mar. 15, 1935, to Aug. 5, 1935, on $1,000 face amount is $11.171875. 2 Omitted portions similar to corresponding sections of Department Circular No. 546, p. 217. 3, Revised Aug. 8, 1935. 4 The original circular contained the following further language at this point: "and will bear the circulation privilege only to the extent provided in the act approved July 22,1932, as amended". This provision is now inapplicable since the circulation privilege referred to expired July 22,1936. REPORT OF THE SECRETARY OF THE TREASURY 221 TENDERS AND ALLOTMENTS Tenders will be received at the Federal Reserve banks and branches thereof up to 12 o'clock noon, eastern standard time, Wednesday, August 14, ,1935, and unless received by that time will be disregarded. Tenders will not be received at the Treasury Department, Washington. Each tender must state the face amount of bonds bid for, which must be $1,000 or any even multiple thereof, and the price offered. The price offered must be stated exclusive of accrued interest from March 15, 1935, to August 19, 1935; and must be expressed on the basis of 100, with fractions expressed as 32ds of 1 percent, in accordance with usual practice, e. g., iOV%2. Tenders at less than par will not be considered.^ * * * . Immediately after the closing hour for the receipt of tenders oh August 14, 1935, all tenders received in writing or by telegraph at the Federal Reserve banks or branches thereof up to the closing hour (12 o'clock noon, eastern standard time) will be opened. * * * PAYMENT Payment for any bonds allotted on accepted tenders must be made or completed on or before August 19, 1935, in cash or other immediately, available funds, and must include the face amount, and the premium which the bidder has agreed to pay, together with accrued interest on the face amount from March 15, 1935, to August 19, 1935.2 In every case where payment is not so completed, the • 5 percent deposit with application shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. * * * HENRY MORGENTHAU, JR., Secretary of the Treasury. Exhibit 8 Acceptance of tenders for Treasury bonds of 1955-60 (from press release, Aug. 15, 1935^) On August 15, 1935, Secretary of the Treasury Morgenthau announced the result of the offering by the Treasury of $100,000,000, or thereabouts, of 2y% percent Treasury bonds of 1955-60, tenders for which were received at the Federal • Reserve banks up to 12 o'clock noon on August 14. Tenders for $147,-264,000 face amount of bonds were received, of which $98,215,000 was accepted at prices ranging from 101^^2 down to 1002J^2, and accrued interest from March 15, 1935. to August 19, 1935. The average price of the bonds issued was about 1002^2, and a total premium of $777,150 was received. Based on the average price at which the bonds were issued on August 19, 1935, the yield was about 2.822 percent to the earliest call date, March 15, 1955, and about 2.829 percent to maturity, March 15, 1.9.60. Exhibit 9 Offering of 2%, percent Treasury bonds of 191^5-If.! and lYi percent Treasury notes of series C-1939 On September 3, 1935, Secretary of the Treasury Morgenthau offered for subscription 2% percent Treasury bonds of 1945-47.and IH percent Treasury notes of series C-1939, both in exchange for Fourth Liberty Loan 4J4 percent bonds of 1933-38 caUed for redemption on October 15, 1935, and at the same time invited cash subscriptions for $500,000,000, or thereabouts, of the Treasury notes. In the related press release it was stated that about $1,250,000,000 of the Fourth Liberty Loan bonds were included in the fourth and final call for redemption on October 15, 1935. 1 Omitted portions similar to corresponding sections of Department Circular No. 646, p. 217. 2 Accrued interest from Mar. 15, 1936, to Aug. 19, 1936, on $1,000 face amount is $12.265626. 3 Revised Aug. 26, 1935. 222 REPORT OF THE SECRETARY OF THE TREASURY [Treasury bonds of 1946-47. Department Circular No. 650. Public Debt] TREASURY DEPARTMENT, Washington, September 3, 1935. EXCHANGE OFFERING OF BONDS The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, for refunding purposes, invites subscriptions from the people of the United States for 2% percent bonds of the United States, designated Treasury bonds of 1945-47, in payment of which only Fourth Liberty Loan 4)^ percent bonds of 1933-38 included in the fourth and final call for redemption on October 15, 1935 (hereinafter referred to. as fourthcalled. Fourth 4>i's) may be tendered.^ The amount of the offering will be limited to the^ iamount of fourth-called Fourth 4^'s tendered and accepted. /, Fourth Liberty Loan bonds not included in the fourth and final call for redemption on October 15, 1935, all of which have previously been called for redemption and on which interest has ceased, will not be accepted for exchange under this circular Fourth-called Fourth 4J4's will be received on exchange at par, and 2% percent Treasury bonds of 1945-47 will be issued at par, with the right reserved by the Secretary of the Treasury to. increase the issue price by public announcement effective as to subscriptions tendered after the time, not earlier than September 10, 1935, fixed in the announcement. In ad<iition to the exchange offering under this circular, holders of fourth-called Fourth 4>i's are offered the privilege of exchanging all or any part of such called bonds for 3J^ year IJ/2 percent Treasury notes of series C-1939, which offering is set forth in Department Circular No. 551, issued simultaneously with this circular. DESCRIPTION OF BONDS ^, The bonds will be dated September 16, 1935, and will bear interest from that date at the rate of 2% percent per annum, payable on a semiannual basis on March 15 and September 15 in each year until the principal amount becomes payable. They will mature September 15, 1947, but may be redeemed at the option of the United States on and after September 15, 1945, in whole or in part, at par and accrued interest, on any interest day or days, on 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption the bonds to be redeemed will be determined by such method as may be prescribed by the Secretary of the Treasury. From the date of red'einption designated in any such notice, interest on the bonds called for redemption shall cease. The bonds shall be exempt, both as to principal and interest, from all taxation now or herafter imposed by the United States, any State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, or gift taxes, and (b) graduated additional income taxes, commonly known as surtaxes, and excess-profits and war-profits taxes, now or herafter imposed by the United States, upon the income or profits of individuals, partnerships,, associations, or corporations. The interest on an amount of bonds authorized'by the Second Liberty Bond Act, approved September 24, 1917, as amended, the principal of which does not exceed in the aggregate $5,000, owned by any individual, partnership, association, or corporation, shall be exempt from the taxes provided for in clause (b) above. The bonds will be acceptable to secure deposits of public moneys^ but will not bear the circulation privilege and will not be entitled to any privilege of conversion. Bearer bonds with interest coupons attached, and bonds registered as to principal and interest, will be issued in denominations of $50, $100, $500, $1,000, . $5,000, $10,000, and $100,000. Provision will be made for the interchange of bonds of different denominations and of coupon and registered bonds, and for the transfer of registered bonds, under rules and regulations prescribed by the Secretary of the Treasury. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States bonds. I Pursuant to the fourth and final callfor redemption (see Department Circular No. 539, dated May 13, 1935) all outstanding Fourth Liberty Loan 434 percent bonds of 1933-38 bearing serial numbers ending in 3 or 4 (in the case of permanent coupon bonds preceded by the distinguishing letter C or D, respectively) have been called for redemption on October 15, 1935, on which date interest on such bonds will cease. REPORT OF THE SECRETARY OF THE TREASURY 223 SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official agencies. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, and to close the books as to any or all subscriptions at any time without notice; and any action he may take in these respects shall be final. Subject to these reservations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment. TERMS OF PAYMENT AND ISSUE Treasury bonds offered under this circular will be issued at par, or at such increased issue price as may be fixed by public announcement in the case of bonds issued upon subscriptions tendered to a Federal Reserve bank or branch or to the Treasury Department after the time stated in the announcement. The effective time for any increase which may be made in the issue price will be after the date of the announcement and in no event earlier than September 10, 1935. Any such announcement fixing an increase in the issue price and the time when such increase becomes effective will be communicated promptly to the Federal Reserve banks. Payment for any bonds allotted under this circular may be made only in fourth-called Fourth 4}^'s, which will be accepted at par, provided that payment of the premium by reason of any increase in the issue price shall be made incash oi* other immediately available funds. The bonds tendered in payment, and the premium, if any, should accompany the subscription. • On all exchanges, interest on fourth-called Fourth 4>^'s will be paid in full to October 15, 1935, on which date interest on all fourth-called Fourth 4:}i's will cease. Such payments will be made, in the case of coupon bonds, through payment of coupons dated October 15, 1935, when due, which coupons should be detached by holders before presentation of the bonds for exchange, and, in the case of registered bonds, through the issue of interest checks for final interest due October 15, 1935, in accordance with the assignments on the bonds surrendered. SURRENDER OF FOURTH-CALLED FOURTH 4j4's ON EXCHANGE Coupon bonds.—Fourth-called Fourth 4}^'s in coupon form tendered in exchange for Treasury bonds offered hereunder, should be presented and surrendered with the subscription to a Federal Reserve bank or to the Treasurer of the United States. Coupons dated April 15, 1936, and all coupons bearing dates subsequent to April 15, 1936, should be attached to such coupon bonds when surrendered, and if any such coupons are missing, the subscription must be accompanied by cash payment equal to the face amount of the missing coupons.^ The bonds must be delivered at the expense and risk of the holder. Facilities for transportation of bonds by registered mail insured may be arranged between incorporated banks and trust companies and the Federal Reserve banks, and holders may take advantage of such arrangements when available, utilizing such incorporated banks and trust companies as their agents. Incorporated banks and trust companies are not agents of the United States under this circular. Registered feonrfs.;;—Fourth-called Fourth 4>fs in registered form tendered in exchange for Treasury bonds offered hereunder should be assigned by the registered payee or the assignee thereof, in accordance with the general regulations of the Treasury Department governing assignments for transfer or exchange, in one of the forms hereafter set forth, and thereafter should be presented and surrendered with the subscription to a Federal Reserve bank or to the Treasury Department, Division of Loans and Currency, Washington. The bonds must be delivered at the expense and risk of the holder. If Treasury bonds are desired registered in the same name as the fourth-called Fourth 4^'s surrendered, the assignment should be to ''The Secretary of the Treasury for exchange for Treasury bonds of 1945-47"; if Treasury bonds are desired registered in another name, the assignment should be to ''The Secretary of the Treasury for exchange for Treasury bonds of 1945-47 in the name of "; if 1 The final coupon attached to temporary coupon bonds became due on Oct. 15, 1920. The holders of any such temporary bonds which are included in the fourth and final call for redemption on Oct. 15, 1935, will receive the past due interest from Oct. 15, 1920, if such bonds are tendered for exchange under this circular. 224 REPORT OF THE SECRETARY OF THE TREASURY Treasury bonds in coupon form are desired, t h e assignment should be to " T h e Secretary of t h e Treasury for exchange for Treasury bonds of 1945-47 in coupon form to be delivered to ". GENERAL PROVISIONS As fiscal agents of t h e United States, Federal Reserve b a n k s are authorized and requested to receive subscriptions, to m a k e allotments on t h e basis a n d up to t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve b a n k s of t h e respective districts, to issue allotment notices, to receive p a y m e n t for bonds allotted, to m a k e delivery of bonds on full-paid subscriptions allotted, and they m a y issue interim receipts pending delivery of t h e definitive bonds. T h e Secretary of t h e Treasury m a y a t any time, or from time to time, prescribe supplemental or a m e n d a t o r y rules and regulations governing t h e offering which will be communicated p r o m p t l y to t h e Federal Reserve banks. HENRY MORGENTHAU Jr., Secretary of the Treasury. [Treasury notes, series C-1939. Department Circular No. 551. Public Debt] TREASURY DEPARTMENT, Washington, September 3, 1935. O F F E R I N G OF NOTES T h e Secretary of t h e Treasury, p u r s u a n t t o t h e a u t h o r i t y of t h e Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions from the people of the United States for I H percent notes of t h e United States, designated Treasury notes of series C-1939. Cash subscriptions are invited a t p a r a n d accrued interest. T h e a m o u n t of t h e issue for cash will be $500,000,000, or thereabouts. Exchange subscriptions, in paym.ent of which only F o u r t h Liberty Loan 4>4 percent bonds of 1933-38 included in t h e fourth a n d final call for redemption on October 15,1935 (hereinafter referred t o as fourth-called F o u r t h 4)^'s) m a y be tendered, are invited a t par.i T h e a m o u n t of t h e issue upon exchange subscriptions will be limited to t h e a m o u n t of fourth-called F o u r t h 4)4's tendered and accepted. F o u r t h Liberty Loan bonds n o t included in t h e fourth a n d final call for redemption on October 15, 1935, all of which have previously been called for redemption a n d on which interest has ceased, will not be accepted for exchange under this circular. I n addition to t h e exchange offering under this circular, holders of fourth-called F o u r t h 4>^'s are offered t h e privilege of exchanging all or any p a r t of such called bonds for 10-12 year 2% percent Treasury bonds of 1945-47, which offering is set forth in D e p a r t m e n t Circular No. 550, issued simultaneously with this circular. DESCRIPTION OF NOTES T h e notes will be d a t e d September 16, 1935, a n d will bear interest from t h a t d a t e a t t h e r a t e of 1}^ percent per a n n u m , payable on a semiannual basis on M a r c h 15 a n d September 15 in each year. T h e y will m a t u r e M a r c h 15, 1939, a n d will n o t be subject t o call for redemption prior t o m a t u r i t j ^ T h e notes shall be exempt, b o t h a s t o principal a n d interest, from all t a x a t i o n (except estate or inheritance taxes, or gift taxes) now or hereafter imposed by t h e United States, any State, or any of t h e possessions of t h e United States, or by any local taxing authority. T h e notes will 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 by 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 t h e notes. 1 Pursuant to the fourth.and final call for redemption (see Department Circular No. 539, dated May 13, 1935) all outstanding Fourth Liberty Loan 4H percent bonds of 1933-38 bearing serial numbers ending in 3 or 4 (in the case of permanent coupon bonds preceded by the distinguishing letter C or D, respectively) • have been called for redemption on October 15, 1935, on which date interest on such bonds will cease. REPORT OF THE SECRETARY OF THE TREASURY 225 The notes willbe acceptable to secure deposits of public moneys, but will not bear the circulation privilege. Bearer notes with interest coupons attached will be issued in denominations of $50, $100, $500, $1,000, $5,000, $10,000, and $100,000. The notes will not be issued in registered form. SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official- agencies. Cash subscriptions from incorporated banks and trust companies for their own account will be. received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Cash subscriptions from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 percent of the amount of notes applied for, whichever is the greater; and, if for $5,000 or less, by payment in full. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of notes applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed b}^ him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment, and cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and exchange subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced. . TERMS OF PAYMENT AND ISSUE Cash subscriptions.—Paym.ent at par and accrued interest, if any, for notes allotted on cash subscriptions must be made or completed on or before September 16, 1935, or on later allotment. In every case where payment is not so completed, the payment with application up to 5 percent of the amount of notes applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. 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. Exchange subscriptions.—-Paym.ent for notes allotted on exchange subscriptions may be m.ade only in fourth-called Fourth 4J4's, which will be accepted at par, and should accompany the subscription. On all exchanges, interest on fourthcalled Fourth 4>^'s will be paid in full to October 15, 1935, on which date interest on all fourth-called Fourth 4}^'s will cease. Such payments will be made, in the case of coupon bonds, through payment of coupons dated October 15, 1935, when due, which coupons should be detached by holders before presentation of the bonds for exchange, and, in the case of registered bonds, through the issue of interest checks for final interest due October 15, 1935, in accordance with the assignments on the bonds surrendered. S U R R E N D E R OF FOURTH-CALLED F O U R T H iH'S O N E X C H A N G E Coupon bonds.—Fourth-called Fourth 4}i's in coupon form tendered in exchange for Treasury notes offered hereunder, should be presented and surrendered with the subscription to a Federal Reserve bank or to the Treasurer of the United States. Coupons dated April 15, 1936, and all coupons bearing dates subsequent to April 15, 1936, should be attached to such coupon bonds when surrendered, and if any such coupons are missing, the subscription must be accompanied by cash payment equal to the face amount of the missing coupons.^ The bonds must 1 The final coupon attached to temporary coupon bonds became due on Oct. 15, 1920. The holders of any such temporary bonds which are included in the fourth and final call for redemption on Oct. 15, 1935, will receive the past due interest from Oct. 15, 1920, if such bonds are tendered for exchange under this circular. 93790—37 16 226 REPORT OF THE SECRETARY OF THE-TREASURY be delivered at the expense and risk of the holder. Facilities for transportation of bonds by registered mail insured may be arranged between incorporated banks and trust companies and the Federal Reserve banks, and holders may take advantage of such arrangements when available, utilizing such incorporated banks and trust companies as their agents. Incorporated banks and trust companies are not agents of the United States under this circular. Registered bonds.—Fourth-called Fourth 4>^'s in registered form tendered in exchange for Treasury notes offered hereunder should be assigned by the registered payee or the assignee thereof to "The Secretary of the Treasury for exchange for Treasury notes of series C-1939", in accordance with the general regulations of the Treasury Department governing assignments for transfer or exchange, and thereafter should be presented and surrendered with the subscription to a Federal Reserve bank,or to the Treasury Department, Division of Loans and Currency, Washington. If the Treasury notes are to be delivered for the account of other than the registered payee or the assignee thereof, the assignment should be to "The Secretary of the Treasury for exchange for Treasury notes of series C-1939 to be delivered to ". The bonds must be delivered at the expense and risk of the holder. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve banks of the respective districts, to issue allotment notices, to receive payment for notes allotted, to make delivery of notes on full-paid subscriptions allotted, and they may issue interim receipts pending delivery of the definitive notes. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 10 Subscriptions and allotments. Treasury bonds of 1945-47 and Treasury notes of series C-1939 {from^press releases, Sept. 4) 6, 10, 12, 17, and 24i and Oct. 1, 8, and 17, 1935 i) On September 4, 1935, Secretary of the Treasury Morgenthau announced that the subscription books for the cash offering of V/2 percent Treasury notes of series C-1939 closed at the close of business September 3, 1935. Reports received from the Federal Reserve banks show that for this offering, which was for $500,000,000, or thereabouts, total subscriptions aggregated $1,274,565,350, of which $512,434,350 was allotted. Subscriptions in amounts up to and including $5,000 wereallotted in full, and those in amounts over $5,000 were allotted 40 percent, but not less,than $5,000 on any one subscription. The subscription books for the offering of Treasury notes of series C-1.939 for which fourth-called Fourth,Liberty Loan bonds were tendered in payment were closed at the close of business September 14, 1935. These exchange subscriptions, amounting to $429,179,400, were allotted in full. The subscription books for the offering of Treasury bonds of 1945-47 in exchange for fourth-called Fourth Liberty Loan bonds were closed at the close of business October 11, 1935. Total subscriptions amounted to $568,717,800 and were allotted in full. Subscriptions and allotments for the two issues were divided among the several Federal Reserve districts and the Treasury as follows: 1 Revised Dec. 4,1935, and Jan. 3,1936. ° 227 REPORT OF THE SECRETARY OF THE TREAStTRY T r e a s u r y notes of series C-1939 F e d e r a l Reserve district Boston N e w York Philadelphia Cleveland Richniorid Atlanta Chicago S t . Louis Minneapolis Kansas City Dallas S a n Francisco Treasury Total _. .... Treasury b o n d s of 1946-47, exchange subscriptions received a n d allotted Cash s u b scriptions received Exchange subscriptions received a n d allotted Total subscriptions received Cash s u b scriptions allotted $79,385,100 696, 757, 250 35; 419, 500 51,603,500 26, 080, 900' 42,037,350 164, 002,350 18, 639, 900 9, 082,000 8, 299,000 19,828, 500 123,430, 000 $26, 859, 950 286, 291,350 • 7,047, 650 16, 667, 050 5,460,400' 2, 312,850 53, 295, 400 8, 687,000 9, 053,150 6, 779,150 272, 750 6, 294,150 2, 258, 550 $106,245,050 983,048, 600 42,467,150 68,270,556.. 31,541,300 44, 350, 200 217, 297, 750 27, 226, 900 18,135,150 14, 078,150 20,101, 250 128, 724,150 2, 268, 550 $31,964,850 278,986,750 14, 302,000 20,768, 500 10, 580,400 17,169, 500 66,145, 750 7, 547,400 3, 796,000 3,447,200 8,.219, 000 49, 608, 000 $58,824, 800 $19,829,360 665,278,100 276,446,000 21,349, 650 27, 417, 750 .37,435,550. • 61,985,' 300 16,040,800 13, 258,350 19,482,350 9, 301,300 119,441,150 66,089, 450 16,134,400 27,389,400 12, 848,150 7, 658,800 9, 226,350 21, 214,400 8, 491, 750 8, 731,300 54,802,150 25,104,100 2,258,550 15, 392, 300 429,179, 400 1, 703, 744, 750 512,434,350 941,613, 750 1, 274, 565,350 Total subscriptions allotted 568, 717,800 Exhibit 11 Offering of 2%. percent Treasury bonds of 1945-47 {additional) and lYi percent Treasury notes of series C-1940 On December 2, 1935, Secretary of the Treasury Morgenthau offered for cash subscription 2% percent Treasury bonds of 1945-47 and 1}^ percent Treasury notes of series C-1940. At the same time holders of 2}^ percent Treasury notes of series D-1935, maturing December 15, 1935, were offered the privilege of exchanging their maturing notes either for the Treasury bonds or the Treasury notes. In the related press release it was stated that $418,291,900 of Treasury notes of series D-1935 would mature on December 15, 1935. [Treasury bonds of 1945-47. Department Curcular No. 655. Public Debt] TREASURY DEPARTMENT, Washington, December 2, 1935, OFFERING OF BONDS The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and. accrued interest from September 16, 1935; from the people of the United States for 2% percent bonds of the United States designated Treasury bonds of 1945-47. The amount of the offering is $450,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase'the offering by an amount sufficient to accept all subscriptions for which Treasury notes of series D-1935, maturing December 15, 1935, are tendered in payment and accepted. DESCRIPTION OF BONDS The bonds now offered will be an addition to and will form a part of the series of 2% percent Treasury bonds of 1945-47 issued pursuant to Department Circular No. 550, dated September 3, 1935, will be freely interchangeable therewith, are identical in all respects therewith, and are described in the following quotation from Department Circular No. 550:^ * * * . SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the 1 Omitted portions similar to corresponding sections of Department Circular No. 650, p. 222, 228 REPORT OF THE SECRETARY OF THE TREASURY Treasury Department are authorized to act as official agencies. Cash subscriptions from incorporated banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Cash subscriptions from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 pereent of the amount of bonds applied for, whichever is the greater; and, if for $5,000 or less, by payment in full including accrued interest from September 16 to December 16, 1935, On the bonds applie;d for. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of bonds applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up,to and including $5,000 will be given preferred allotment, and cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of ser.ies D-1935 are tendered will be allotted in full. 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 from September 16, 1935, for bonds allotted on cash subscriptions must be made or completed on or before December 16, 1935, or on later allotment. In every case where payment is not so completed, the payment with application up to 5 percent of the amount of bonds applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. Any qualified depositary will be permitted to make payment by credit for bonds allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve bank of its district. If payment is to be made in Treasury notes of series D-1935, maturing December 15, 1935, the notes will be accepted at part and should accompany the subscription, and accrued interest from September 16 to December 16, 1935, on the bonds allotted should be paid in cash on or before December 16, 1935. Accrued interest at 2% percent from September 16, 1935, to December 16, 1935, on $1,000 face amount is $6,875. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions. * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. [Treasury notes, series C-1940. Department Circular No. 556. Public Debtl TREASURY DEPARTMENT, Washington, December 2, 1935. OFFERING OF NOTES , The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States for IJ^ percent notes of the United States, designated Treasury notes of series C-1940. The amount of the offering is $450,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase the offering by an amount sufficient to accept all subscriptions for which Treasury notes of series D-1935, maturing December 15, 1935, are tendered in payment and accepted. REPORT OF THE SECRETARY OF THE TREASURY 229 DESCRIPTION OF NOTES The notes will be dated December 16, 1935, and will bear interest.from that date at the rate of 1)4 percent per annum, payable on a semiannual basis on June 15 and December 15 in each year. They will mature December 15, 1940, and will not be subject to call for redemption prior to maturity. The notes shall be exempt, both as to principal and interest, from all taxation (except estate or inheritance taxes, or gift 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.^ * * * SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasury Department are authorized, to act as official agencies. Cash subscriptions from incorporated banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Cash subscriptions from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 percent of the amount of notes applied for, whichever is the greater; and, if for $5,000 or less, by payment in full. The Secretary of the- Treasury reserves the right to, close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of notes applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any or all of said rnethods or such other methods of allotment and classification of allotments as shall be deemed h j him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment, and cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of series D-1935 are tendered will be allotted in full. 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, if any, for notes allotted on cash subscriptions must be made or completed on or before December 16, 1935, or on later allotment. In every case where payment is hot so completed, the payment with application up to 5 percent of the amount of notes applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. 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 notes of series D-1935, maturing December 15, 1935, will be accepted at par in payment for any notes subscribed for and allotted and such payment should be made when the subscription is tendered. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions. * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. 1 Omitted portions similar to corresponding sections of Department Circular No. 645, p. 215. 230 REPORT OF THE SECRETARY OF THE TREASURY Exhibit 12 Subscriptions and allotments, Treasury bonds of 1945-47 {additional) and Treasury notes of series C-1940 {from press releases, Dec. 3, 4, 5, and 10, 1935') On December 2, 1935, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e cash offering of 2% percent Treasury bonds of 1945-47 and 1}^ percent Treasury notes of series C-1940 closed a t t h e close of business December 2, 1935. Reports received from Federal Reserve banks show t h a t for t h e offering of bonds, which was for $450,000,000, or thereabouts, cash subscriptions aggregated $2,034,979,700, of which $484,423,400 was allotted. Subscriptions in a m o u n t s up to and including $5,000 were allotted in full a n d those in a m o u n t s over $5,000 were allotted 23 percent, b u t not less t h a n $5,000 on any one subscription. For t h e cash offering of Treasury notes, which was for $450,000,000, or thereabouts, subscriptions aggregated $2,487,264,900, of which $487,808,700 was allotted. Cash subscriptions in a m o u n t s up to a n d incuding $5,000 were allotted in full a n d those in a m o u n t s over $5,000 were allotted 19 percent, b u t not less t h a n $5,000 on any one subscription. T h e subscription books for t h e offering of Treasury bonds of 1945-47 a n d of Treasury notes of series C-1940 for w h i c h ' T r e a s u r y , notes of series D - 1 9 3 5 , m a t u r i n g December 15, 1935, were tendered in p a y m e n t , closed a t t h e close of business December 5, 1935. Total exchange subscriptions for Treasury bonds of 1945-47 a m o u n t e d to $161,312,700, a n d for Treasury notes of series C-1940 a m o u n t e d to $249,352,900. T h e exchange subscriptions were allotted in full. Subscriptions a n d allotments for t h e two issues were divided a m o n g t h e several Federal Reserve districts a n d t h e Treasury as follows: Treasury bonds of 1945-47 Federal Reserve district Cash subscriptions received Exchange subscriptions received and allotted Total subscriptions received Cash subscriptions allotted Total subscriptions allotted Boston New York PhiladelphiaCleveland Richmond Atlanta Chicago -. St. Louis Minneapolis.. Kansas City.. Dallas San Francisco. Treasury $141,755,900 999,987,850 96,168, 300 86, 357, 650 69, 342,900 82,728, 500 198,787,550 57, 280, 000 19,424, 900 43,161,150 56,867, 900 182, 434,100 683, 000 $5, 047, 600 100, 657, 300 2, 565, 500 1, 509, 000 3,062, 400 762, 500 39, 950,100 1,962, 300 950, 000 3, 327, 500 744, 500 656,000 118,000 $146,803, 500 1,100, 645,150 98, 733,800 87, 866, 650 72, 405,300 83,491, 000 238, 737, 650 69,,242, 300 20, 374, 900 46,488, 650 57, 612, 400 183. 090,100 801,000 $33, 680, 400 231, 244, 600 22,497,950 21,410, 350 17, 239,400 20,170, 600 48,'303,950 14, 308,450 5, 240,900 11, 614, 650 15, 790,150 42,754, 600 167, 600 $38,728,000 331,901,900 25,063,450 22, 919,350 20,301,800 20, 933,000 88,254,'050 16, 270,750 6,190,900' 14,942,150 16, 534, 650 43, 410, 600 285, 600 Total... 2, 034,979, 700 161,312, 700 2,196,292,400 484, 423,400 646,736,100 T r e a s u r y notes of series C-1940 Boston New York Philadelphia... Cleveland..... Richmond Atlanta Chicago St. Louis Minneapolis... Kansas City... Dallas San.Francisco.. Treasury Total 1 Revised Jan. 6, 1936. $163, 185, 200 1,308, 829, 200 128, 222, 700 155, 714,400 70, 473,800 71, 661,300 251, 243,100 54, 440,100 23, 569, 500 41, 601,400 50, 323, 200 167, 491,000 610, 000 $174, 392, 600 $11,207,400 138,324, 600 1,447, 153,700 3, 708, 000 131, 930,700 5, 793, 500 161, 507,900 23,162,000 93, 635,800 6,830,000 77, 491,300 31, 094,800 282, 337,900 7, 612,800 61, 962,900 6,186,000 28, 756, 500 50, 034,800 8, 433,400 52, 585,700 2, 262, 500 • 6, 677,'000 174, 168,000 671,000 161,000 $32, 677, 200 $43, 784, 600 249, 682,900 388, 007, 400 24, 703, 400 28,411,400 30, 631, 200 36,424,700 38,242,800 15,080,800 14, 573, 500 20,403, 500 81, 617, 700 50, 422,900 18,866,900 11,354,100 10,383, 000 6,197, 000 17,454,100 9,020, 700 14, 582, 500 12,320,000 38,822,.000 32,145,000 261,000 100,000 2,487,264,900 249, 352, 900 2,736, 617,800 487,808, 700 737,161, 600 REPORT OF THE SECRETARY OF THE TREASURY 231 Exhibit 13 Offering of 2yi percent Treasury bonds of 1948-51 and iy2 percent Treasury notes of series A-1941 On March 2, 1936, Secretary of the Treasury Morgenthau offered for cash subscription 2% percent Treasury bonds of 1948-51 and IJ^ percent Treasury notes of series A-1941. At the same time the holders of 2J^ percent Treasury notes of series C-1936, maturing April 15, 1936, were offered the privilege of exchanging their maturing notes either for the Treasury bonds or the Tr,easury notes. In the related press release it was stated that aibout $133,000,000 of interest on the public debt and $452,000,000 of Treasury bills would be payable on March 16, 1936, and that $558,819,000 of Treasury notes of series C-1936 would mature on April 15, 1936. [Treasury bonds of 1948-61. Department Circular No. 667. Public Debtl TREASURY DEPARTMENT, Washington, March 2, 1936. OFFERING OF BONDS The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States for 2% percent bonds of the United States, designated Treasury bonds of 1948-51. The amount of the offering is $650,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase the offering by an amount sufficient to accept all subscriptions for which Treasury notes of series C-1936, maturing April 15, 1936, are tendered in payment and accepted. D E S C R I P T I O N O F BONDS The bonds will be dated March 16, 1936, and will bear interest from that date at the rate of 2% percent per annum, payable on a semiannual basis on September 15, 1936, and thereafter on March 15 and September 15 in each year until the principal amount becomes payable. They will mature March 15, 1951, but may be redeemed at the option of the United States on and after March 15, 1948, in whole or in part, at par and accrued interest, on any interest day or days, on 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption the bonds to be redeemed will be determined by such method as may be prescribed by the Secretary of the Treasury. From the date of redemption designated in any such notice, interest on the bonds called for redemption shall cease.^ * :i« * SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the. Treasury Dlepartment, Washington. Banking, institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasurj^ Department are authorized to act as official agencies. Cash subscriptions from incorporated banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust compan}^ Cash subscriptions from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 percent of the amount of bonds applied for, whichever is the greater; and, if for $5,000 or less, by payment in'full. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of bonds applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, 'applications for larger amounts, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action 1 Omitted portions similar to corresponding sections of Department Circular No. 560, p. 222. 232 REPORT OF THE SECRETARY OF THE TREASURY in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment, and cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of series C-1936 are tendered will be allotted in full. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced. Payment at par and acrued interest, if any, for bonds allotted on cash subscriptions must be made or completed on or before March 16, 1936, or on later allotment. In every case where payment is not so completed, the payment with application up to 5 percent of the amount of bonds applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. Any qualified depositary will be permitted to make payment by credit for bonds allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve bank of its district. Treasury notes of series C-1936, maturing April 15, 1936, will be accepted at par in payment for any bonds subscribed for and allotted and such payment should be made when the subscription is tendered. Coupons dated April 15, 1936, must be attached to the notes when surrendered, and accrued interest from October 15, 1935, to March 16, 1936 ($12.01844 per $1,000), will be paid following acceptance of the notes. GENERAL PROVISIONS . As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions.1 * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. [Treasury notes, series A-1941. Department Circular No. 568. Public Debt] TREASURY DEPARTMENT, Washington, March 2, 1936. OFFERING OF NOTES The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States for 1% percent notes of the United States, designated Treasury notes of series A-1941. The amount of the offering is $600,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase the offering by an amount sufficient to accept all subscriptions for which Treasury notes of series C-1936, maturing April 15, 1936, are tendered in payment and accepted. DESCRIPTION OF NOTES The notes will be dated March 16, 1936, and will bear interest from that date at the rate of 1}^ percent per annum, payable on a semiannual basis on September 15, 1936, and thereafter on March 15 and September 15 in each year. They will mature March 15, 1941, and will not be subject to call for redemption prior to maturity. The notes shall be exempt, both as to principal and interest, from all. taxation (except estate or inheritance taxes, or gift 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.2 * * * SUBSCRIPTION AND ALLOTMENT „ Subscriptions will be received at the Federal" Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally will handle applications for subscribers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official agencies. Cash 1 Omitted portions similar to corresponding sections of Department Circular No. 650, p. 222. 2 Omitted portions similar to corresponding sections of Department Circular No. 646, p. 216. REPORT OF THE SECRETARY OF THE TREASURY . 233 subscriptions from incorporated banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank' or trust company. Cash subscriptions from all others must be accompanied, if for more than $5,000, by payment of $5,000 or 5 percent of the amount of notes applied for, whichever is the greater; and, if for $5,000 or less, by payment in full. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves tbe right to reject any subscription, in whole or in part, to allot less than the amount of notes applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment, and cash subscriptions for amounts over $5,000 will be allotted oh an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of series C-1936 are tendered will be allotted in full. 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, if any, for notes allotted on cash subscriptions must be made or completed on or before March 16, 1936, or on later allotment. In every case where payment is not so completed, the payrhent with application up to 5 percent of the amount of notes applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. 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 notes of series C-1936, maturing April 15, 1936, will be accepted at par in payment for any notes subscribed for and allotted and such payment should be made when the subscription is tendered. Coupons dated April 15, 1936, must be attached to the notes when surrendered, and accrued interest from October 15, 1935, to March 16, 1936 ($12.01844 per $1,000), will be paid following acceptance of the notes. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions. * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 14 Subscriptions and allotments. Treasury bonds of 1948-51 and Treasury notes of series A-1941 {from press releases. Mar. 3, 4, 6, and 12, 1936 ') On March 3, 1936, Secretary of the Treasury Morgenthau announced that the subscription books for the cash offering ot 2% percent Treasury bonds of 1948-51 and iy2 percent Treasury notes of series A-1941 closed at the close of business March 2, 1936. Reports received from the Federal Reserve banks show that for the offering of bonds, which was for $650,000,000,. or thereabouts," the cash subscriptions aggregated $5,106,913,850, of which $727,033,950 was allotted. Subscriptions in amounts up to and including $5,000 were allotted in full and those in amounts over $5,000 were allotted 13 percent, but not less than $5,000 on any one subscription. For the cash offering of Treasury notes which was for $600,000,000, or thereabouts, subscriptions aggregated $3,354,464,300, of which $628,625,600 was allotted. Cash subscriptions up to and including $5,000 were allotted in full, and those in amounts over $5,000 were allotted 18 percent, but not less than $5,000 on any one subscription. 1 Revised Apr. 3,1936. 234 REPORT OF THE SECRETARY OF THE TREASURY The subscription books for the offering of Treasury bonds of 1948-51 and Treasury notes of series A-1941, for which Treasury notes of series C-1936, maturing April 15, 1936, were tendered, closed at the close of business March 5, 1936. The total exchange subscriptions which comprised $496,462,900 for the bonds and $48,082,000 for the Treasury notes, were allotted in full. Subscriptions and allotments for the two issues were divided among the Federal Reserve districts and the Treasury as follows: Treasury bonds of 1948-51 Federal Reserve district Exchange Cash Total Cash Total subscriptions subscriptions subscriptions subscriptions jsubscriptions received and allotted received allotted received allotted Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas C i t y . . Dallas San Francisco. Treasury $455, 436,100 2, 730,256,800 257, 631,900 235, 022, 750 123, 417,050 221, 608, 550 429, 927,450 112, 796, 750 53, 345, 500 79, 313, 050 85, 636,000 320, 596, 960 2, 025, 000 $462, 086, 200 $6,650,100 379, 581,000 3,109, 837,800 6, 760,100 264, 382,000 6, 5S7,300 240, 610,050 6,325,800 128, 742,850 2,874,700 224, 483, 250 481, 203, 450 61, 276, 000 117, 269,450 4,472, 700 61, 608, 000 8, 262, 500 83, 293,450 3,980,400 86i 367, 700 831,700 332, 625,450 11, 928, 600 8,942,100 10, 967,100 Total:.. 5,106,913,850 496,462,900 $64,830, 260 $71,480,350 361, 916,450 741,497, 450 43, 223,050 36,472,950 42, 228, 450 36, 641,150 26, 660,900 21, 335,100 35,661, 300 32,786,600 65, 795,160 117, 071,150 24,801,750 20, 329,050 9, 316, 200 17, 678,700 19,468, 500 15,488,100 17, 615, 000 18,446, 700 44, 226, 960 56,154,450 9, 224,100 282, 000 5, 603, 376, 760 727, 033, 950 1,223,496,850 Treasury notes of series A-1941 Boston New York PhiladelphiaCleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas C i t y . . Dallas.-_ San Francisco. Treasury $268, 078,400 1, 652,370, 300 175, 841,700 219, 259, 600 106, 698,600 103, 736, 600 319, 126, 600 90, 314,300 40, 585, 600 63, 556,800 64, 123,300 260, 272,500 600,000 $1, 541, 000 $259, 619,400 36, 436, 800 1, 688,807,100 1, 609, 200 177, 450,900 222, 734, 600 3,475, 000 106, 850,100 151, 500 103, 857, 900 121,300 321, 561, 200 2,434, 600 90, 697, 200 382, 900 40, 746, 600 161,000 63, 712, 600 155, 700 64, 141,300 18, 000 261, 782, 500 1, 510,000 586,000 85,000 $49,115, 500 $50, 656, 500 299,383, 200 335,820,000 34, 008, 800 32,399, 600 41, 020, 300 44, 495, 300 20,897, 600 20, 746,100 20, 678, 600 20, 799, 900 63,871,400 61,436,800 19,134,300 18,761,400 8, 529,400 8,368,400 13, 622, 700 13, 778,400 15,325,000 15,307, 000 49, 216,000 47, 706,000 175, 000 90,000 Total... 3,354, 464,300 48,082,000 628,625,600 3,402,646,300 676,707,600 Exhibit 15 Offering of 2% percent Treasury bonds of 1951-54 dnd P/s percent Treasury notes of series B-1941 On June 1, 1936, Secretary of the Treasury Morgenthau offered for cash subscription 2y4 percent Treasury bonds of 1951-54 and 1^^ percent Treasury notes of series B-1941. At the same time holders of 1}^ percent Treasury notes of series E-1936, maturing June 15, 1936, and 3K percent Treasury notes of series A-1936, maturing August 1, 1936, were offered the privilege of exchanging such notes either for the Treasury bonds or the Treasury notes. In the related press release it was stated that about $116,000,000 of interest on the public debt and $686,616,400 of maturing Treasury notes of series E-1936 would be payable on June 15, 1936, and $364,138,000 of Treasury notes of series A-1936 would mature on August 1, 1936. REPORT OF THE SECRETARY OF THE TREASURY 235 [Treasury bonds of 1951-64. Department Circular No. 661. Public Debtl TREASURY DEPARTMENT, Washington, June 1, 1936. OFFERING OF BONDS The Secretary of-the Treasury,- pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States for 2% percent bonds of the United States, designated Treasury bonds of 1951-54. The amount of the offering is $600,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase the offering by an amount sufficient to accept all subcriptions for which Treasury notes of series E-1936, maturing June 15, 1936, or Treasury notes of series A-1936, maturing August 1, 1936, are tendered in payment and accepted. DESCRIPTION OF BONDS The bonds will be dated June 15, 1936, and will bear interest from that date at the rate of 2% percent per annum, payable semiannually, on December 15, 1936, and thereafter on June 15 and December 15 in each year until the principal amount becomes payable. They will mature June 15, 1954, but may be redeemed at the option of the United States on and after June 15, 1951, in whole or in part, at par and accrued interest, on any interest day or days, on 4 months' notice of redemption given in such manner as the Secretary of the Treasury shall prescribe. In case of partial redemption the bonds to be redeemed will be determined by such method as may be prescribed by the Secretary of the Treasury. From the date of redemption designated in any such notice, interest on the bonds called for redemption shall cease.^ * * * SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally may submit subscriptions for account of customers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official agencies. Others than banking institutions will not be permitted to enter subscriptions except for their own account. Cash subscriptions from banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Cash subscriptions from all others must be accompanied, if for $5,000 or less, by payment in full; and, if for more than $5,000, by payment of 10 percent of the amount of bonds applied for, but not less than $5,000. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of bonds applied for, to make allothients in full upon applications for smaller amounts, and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment; cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of series E-1936 or Treasury notes of series A-1936 are tendered will be allotted in full. 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, if any, for bonds allotted on cash subscriptions must be made or completed on or before June 15, 1936, or on later allotment. In every case where payment is not so completed, the payment with application up to 10 percent of the amount of bonds applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the 1 Omitted portions similar to corresponding sections of Department Circular No. 550, p. 222. 236 REPORT OF THE SECRETARY OF THE TREASURY United States. Any qualified depositary will be permitted to make payment by credit for bonds allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve bank of its district. Treasury notes of series E-1936, maturing June 15, 1936, will be accepted at par in payment for any bonds subscribed for and allotted. Treasury notes of series A-1936, maturing August 1, 1936, with coupon dated August 1, 1936, attached, will be accepted at par with an adjustment of accrued interest as of June 15, 1936, in payment for any bonds subscribed for and allotted. Payment through surrender of Treasury notes of series E-1936 or of series A-1936 should be. made when the subscription is tendered. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions.^ * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. [Treasury notes, series B-1941. Department Circular No. 562. Public Debt] TREASURY DEPARTMENT, Washington, June U 1936. OFFERING OF NOTES The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, invites subscriptions, at par and accrued interest, from the people of the United States for 1% percent notes of the United States, designated Treasury notes of series B-1941. The amount of the offering is $400,000,000, or thereabouts, with the right reserved to the Secretary of the Treasury to increase the offering by an amount sufficient to accept all subscriptions for which Treasury notes of series E-1936, maturing June 15, 1936, or Treasury notes of series A-1936, maturing August 1, 1936, are tendered in payment and accepted. DESCRIPTION OF NOTES The notes will be dated June 15, 1936, and will bear interest from that date at the rate of 1^^ percent per annum, payable semiannually, on December 15, 1936, and thereafter on June 15 and December 15 in each year. They will mature June 15, 1941, and will' not be subject to call for redemption prior to maturity .2 * * * 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. SUBSCRIPTION AND ALLOTMENT Subscriptions will be received at the Federal Reserve banks and branches and at the Treasury Department, Washington. Banking institutions generally may submit subscriptions for account of customers, but only the Federal Reserve banks and the Treasury Department are authorized to act as official agencies. Others than banking institutions will not be permitted to enter subscriptions except for their own account. Cash subscriptions from banks and trust companies for their own account will be received without deposit but will be restricted in each case to an amount not exceeding one-half of the combined capital and surplus of the subscribing bank or trust company. Cash subscriptions from all others must be accompanied, if for $5,000 or less by payment in full; and, if for more than $5,000, by payment of 10 percent of the amount of notes applied for, but not less than $5,000. The Secretary of the Treasury reserves the right to close the books as to any or all subscriptions or classes of subscriptions at any time without notice. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of notes applied for, to make allotments in full upon applications for smaller amounts and to make reduced allotments upon, or to reject, applications for larger amounts, or to adopt any * Omitted portions similar to corresponding sections of Departrnent Circular No. 550, p. 222. 2 Omitted portions similar to corresponding sections of Departmental Circular No. 551, p. 224. REPORT OF THE SECRETARY OF THE TREASURY 237 or all of said methods or such other methods of allotment and classification of allotments as shall be deemed by him to be in the public interest; and his action in any or all of these respects shall be final. Subject to these reservations, cash subscriptions for amounts up to and including $5,000 will be given preferred allotment; cash subscriptions for amounts over $5,000 will be allotted on an equal percentage basis, but not less than the maximum preferred allotment; and subscriptions in payment of which Treasury notes of series E-1936 or Treasury notes of series A-1936 are tendered will be allotted in full. 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, if any, for notes allotted on cash subscriptions must be made or completed on or before June 15, 1936, or on later allotment. In every case where payment is not so completed, the payment with application up to 10 percent of the amount of notes applied for shall, upon declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. 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 notes of series E-1936, maturing June 15, 1936, will be accepted at par in payment for any notes subscribed for and allotted. Treasury notes of series A-1936, maturing August 1, 1936, with coupon dated August 1, 1936, attached, will be accepted at par with an adjustment of accrued interest as of June 15, 1936, in payment for any notes subscribed for and allotted. Payment through surrender of Treasury notes of series E-1936 or of series A-1936 should be made when the subscription is tendered. GENERAL PROVISIONS As fiscal agents of the United States, Federal Reserve banks are authorized and requested to receive subscriptions. * * * HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 16 Subscriptions and allotments, Treasury bonds of 1961-54 and Treasury notes of series B-1941 (from press releases, June 2, 5, and 10, 1936 ') On June 2, 1936, Secretary of the Treasury Morgenthau announced that the subscription books for the cash offering of 2% percent Treasury bonds of 1951-54 and V/s percent Treasury notes of series B-1941 closed at the close of business June 1, 1936. Reports received from the Federal Reserve banks show that subscriptions for the cash offering of Treasury bonds, which was for $600,000,000, .or thereabouts, aggregated $4,281,967,000, of which $670,846,550 was allotted. Subscriptions in amounts up to and including $5,00,0 were allotted.in full and those in amounts over $5,000 were allotted 14 percent, but not less than $5,000 on any one subscription. For the cash offering of Treasury notes, which was for $400,000,000, or thereabouts, subscriptions aggregated $2,772,780,900, of which $435,164,500 was allotted. Subscriptions in amounts up to and including $5,000 were allotted in full and those in amounts over $5,000 were allotted 15 percent, but not less than $5,000 on any one subscription. The subscription books for both issues for which payment was tendered in Treasury notes of series E-1936, maturing June 15, 1936, or Treasury notes of series A-1936, maturing August 1, 1936, closed at the close of business June 3, 1936. The exchange subscriptions were allotted in full. The exchange subscriptions for the Treasury bonds amounted to $955,841,600, which inchided $619,910,100 of the notes of series E-1936 and $335,931,500 of the notes of series A-1936. For the Treasury notes of series B-1941, the exchange subscriptions amounted to $68,713,000, which included $58,500,000 of the notes of series E-1936, and $10,213,000 of the notes pf series A-1936. » R e v i s e d J u l y 2, 1936. 238 REPORT OF THE SECRETARY OF THE TREASURY Subscriptions a n d allotments for t h e two issues were divided among t h e Federal Reserve districts a n d t h e Treasury as follows: Treasury, b o n d s of 1951-54 Federal Reserve district Boston New York Philadelphia Cleveland-Richmond Atlanta Chicago St. L o u i s Minneapolis Kansas City Dallas San Francisco Treasury.- Exchange subscriptions received a n d allotted Cash subscriptions received Treasury Treasury notes, series notes, series E-1936 A-1936 •$404,-340,^200- .$12,.673„800, $12,327,400 _. 2,234,791,300 335,080,000 263, 742, 200 239,148,300 7, 262, 500 4, 904,-600 244, 664,460 10,144, 500 1, 701, 900 140, 575,100 34,378, 500 4, 568,100 108,040, 000 9, 716,000 451, 900 376,426, 700 123, 608,300 34, 300,100 112, 264,300 13,188,700 6,351, 700 60, 206,350 26, 332,400 1, 224, 200 77,851,550 30, 790,300 3, 910, 200 83, 606. 950 6, 653, 000 487,100 198, 264,100 '9, 025, 600 9,176, 900 1, 787, 700 1,066, 600 2, 796, 300 Total 4, 281,967,000 619, 910,100 335, 931, 500 T o t a l subscriptions received Cash subscriptions allotted ..$429,341,400 $60, 519,300 2, 823, 613,500 320, 938,150 37,705,200 251, 315,300 40, 664,200 256, 610,860 24, 021,800 179, 511, 700 20,334,950 118, 207, 900 65,039, 660 534, 335,100 22, 936,000 131,804, 700 LI, 701,160 87, 762,950 17,118,100 112, 562, 050 18, 664,150 90, 747,050 216, 466, 500 ' 30, 988,100 316, 800 5, 639, 600 5, 237, 808, 600 Total subscriptions allotted . $85, 520„;600' 909,760,360 49,872, 200 62,410, 600 62, 968,400 30, 502,860 222, 948,060 42,476,400 39,257,750 61,818, 600 25, 804, 260 49,190,600 4,167, 700 670,846, 560 1,626, 688,150 T r e a s u r y notes of series B-1941 Boston New York Philadelphia Cleveland Richmond Atlanta Chicago... St. Louis Minneapolis Kansas City Dallas San Francisco Treasury Total . $200,309,800 1, 440, 353, 800 146, 006, 000 198, 529, 500 94, 809, 300 7,2,664,-500 252,356,200 76,270,600 40, 824, 200 57,140. 500 54, 669, 800 138,446, 700 1, 500, 000 $2,409,600 42, 662,100 1, 816, 200 1, 268, 000 422, 500 424, 500 4, 040,100 588, 800 2, 277, 000 1,191, 300 362,000 1,018, 000 20,000 $2,116,300 3, 272,400 143, 500 81, 500 . 380,800 140, 700 652,900 113, 300 539,000 720, 000 20,000 2,033, 600 $204, 834, 600 1,486, 288, 300 146, 965, 700 199, 879,000 95, 612, 600 73, 229, 700 257,049, 200 76,972,700 43, 640, 200 59, 051, 800 64, 961, 800 141,498, 300 1, 520,000 $31,169,100 217, 663,300 22, 264, 600 30, 810, 200 15,199,300 12,437,400 42,066,000 14,188,900 7,167,000 10, 507,200 9,985, 500 21,481,000 225,000 $35, 693, 900 263, 697, 800 24,224, 300 32,159, 700 16,002, 600 13,002,,600 • 46,769,000 14,891,000 9, 983, OOO 12,418, 500 10,367, 500 24, 532, 600 245,000 2, 772, 780, 900 58, 500; 000 10, 213, 000 2, 841,493, 900 435,164, 500 603, 877, 600 I s s u e s of Treasury bills Exhibit 17 Inviting tenders for two issues of Treasury bills dated J u l y 3, 1935 {press release, J u n e 28, 1935) TREASURY DEPARTMENT, Washington, J u n e 28, 1935. T h e Secretary of t h e Treasury gives notice t h a t tenders are invited for two series of Treasur}^ bills to t h e aggregate a m o u n t of $100,000,000, or thereabouts. One series will be 133-day bills and t h e other series will be 273-day bills. Both series w411 be sold on a discount basis to the highest bidders. Tenders will be received a t t h e Federal Reserve banks, or t h e branches thereof, up to 2 o'clock p. m., eastern s t a n d a r d time, on Monday, July 1, 1935. Tenders will not be received a t t h e Treasury D e p a r t m e n t , Washington. T h e Treasury bills will, as stated, be issued in two series, $50,000,000, or thereabouts, m a t u r i n g on November 13, 1935, and $50,000,000, or thereabouts, m a t u r i n g on April 1, 1936; both series to be dated July 3, 1935. Bidders will be required to specify the particular series for which .each tender is m a d e . T h e face, a m o u n t of t h e bills of each series will be payable without interest on their respective m a t u r i t y dates. T h e bills will be issued in bearer form only, a n d in a m o u n t s or denominations of $1,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value). I t is urged t h a t tenders be m a d e on t h e printed forms and forwarded in t h e special envelopes which will be supplied by the Federal Reserve banks or branches upon application therefor. REPORT OF THE SECRETARY OF THE TREASURY 239 No tender for an amount less than $1,000 will be considered. Each tender must be in multiples of $1,000. The price 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. Tenders will be accepted without cash deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by a deposit of 10 percent of the face amount of Treasury bills applied for, unless the tenders are accompanied by an express guaranty of payment by an incorporated bank or trust company. Immediately after the closing hour for receipt of tenders on July 1, 1935, 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 for each series 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. Any tender which does not specifically refer to a particular series will be subject to rejection. 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 iramediately available funds on July 3, 1935. 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 inheritence taxes. (Attention is invited to Treasury Decision 4550, ruling that Treasury bills are not exempt from the gift tax.) No loss from the sale or other disposition of the Treasury bills shall be allowed 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 18 Acceptance of tenders for two issues of Treasury bills dated July S, 1935 {press release, July 2, 1935) TREASURY DEPARTMENT, Washington, July 2^ 1935. Secretary of the Treasury Morgenthau announced last evening that the tenders for two -series of Treasury bills, to be dated July 3, 1935, which were offered on June 28, were opened at the Federal Preserve banks on July 1, 1935. Tenders were invited for the two series to the aggregate amount of $100,000,000, or thereabouts, and $246,571,000 was applied for, of which $100,007,000 was accepted. The details of the two series are as follows: 133-DAY T R E A S U R Y BILLS, MATURING NOVEMBER 13, 1935 For this series, which was for $50,000,000, or thereabouts, the total amount apphed for was $88,147,000, of which $50,007,000 was accepted. The accepted bids ranged in price from 99.978, equivalent to a rate of about 0.060 percent per annum, to 99.970, equivalent to a rate of about 0.081 percent per annum, on a bank discount basis. Only part of the amount bid for at the latter price was accepted. The average price of Treasury bills of this series to be issued is 99.973 and the average rate is about 0.072 percent per annum on a bank discount basis. 273-DAY T R E A S U R Y B I L L S , M A T U R I N G A P R I L 1, 1936 For this series, which was for $50,000,000, or thereabouts, the total amount apphed for was $158,424,000, of which $50,000,000 was accepted. The accepted bids ranged in price from 99.926, equivalent to a rate of about 0.098 percent per annum, to 99.917, equivalent to a rate of about 0.109 percent per annum, on a bank discount basis. Only part of the amount bid for at the latter price was accepted. The average price of Treasury bills of this series to be issued is 99.919 and the average rate is about 0.107 percent per annum on a bank discount basis. Exhibit 19 Press releases pertaining to Treasury bill issues during the fiscal year 1936 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 bills offered during the fiscal year 1936 B i d s accepted Total ount D a y s " aa m pplied to m a for (in turity thousands) D a t e of issue D a t e of m a t u r i t y 1935 1935 a n d 1936 N o v . 13, 1935 A p r . 1,1936 _. N o v . 20, 1935. July3 T 1 O July 3 J u l y 10 JulylO__ J u l y 17 J u l y 24 J u l y 31 Aug. 7 A u g . 14 A u g . 21 _ . A u g . 28 Sept. 4 Sept. 11 Sept. 18 S e p t . 25 Oct. 2 Oct. 2 Oct. 9 Oct. 9 Oct. 16 Oct. 16 Oct. 23 - . Oct. 23 Oct. 30 Oct. 30 Nov. 6 N o v . 6N o v . 13 N o v . 13 N o v . 20 N o v . 20 N o v . 27 N o v . 27 1936 Apr. 8 A p r . 15 A p r . 22 A p r . 29 May 6 M a y 13 M a y 20 M a y 27 June 3 J u n e 10 J u n e 17 J u n e 24 M a r . 16 July 1 M a r . 16 July 8 M a r . 16 J u l y 15 - _ M a r . 16 . J u l y 22 M a r . 16 . . _. J u l y 29. Mar. 16... _-- A u g . 5 M a r . 16 A u g . 12 M a r . 16 A u g . 19 _ M a r . 16 A u g . 26 -. . -. ,. .. _ __. - Average Amount E q u i v a - (in t h o u EquivaEquivaPrice Price Price sands) (per h u n - lent r a t e i (per h u n - lent r a t e i (per h u n - lent r a t e ' (percent) dred) (percent) dred) dred) (percent) Lowest Highest 133 273 133 $88,147 168,424 124,306 $99.978 99.926 99. 977 0.060 .098 .062 273 273 273 273 273 273 273 273 273 273 273 273 166 273 169 273 152 273 145 273 138 273 131 273 124 273 117 273 110 273 197, 310 223,998 160, 295 158,852 150,119 139,638 123,036 84,157 163,683 158,.384 149,236 114,836 108,794 161,318 170,699 145,025 193,039 193,452 288,950 186,248 189,802 142, 391 145, 210 166, 236 192, 570 160, 648 112,392 160,918 124,026 166,467 99. 955 99.980 99. 963 99. 963 99. 962 2 99. 960 99.960 99.942 99.909 99. 902 99.909 99. 856 99. 991 99. 840 99. 934 3 99. 841 99. 945 99.867 99.960 99.900 99. 969 99. 901 99.972 99. 887 99. 975 99. 897 99. 980 99.900 2 99. 991 99.905 .069 .026 .049 .049 .'050 .053 .053 .076 .120 .129 .120 .190 .020 .211 .149 .210 .130 .189 .099 .132 .081 .131 .077 • .149 .073 .136 .062 .132 .029 .125 $99.970 99.917 99.973 99.936 99. 955 99. 953 99.941 99. 942 99.941 99.934 99.885 99.870 99. 861 99.833 99. 811 99. 901 99. 797 99. 921 99. 813 99. 937 99. 841 ^9.953 99.863 99.959 99.866 99. 964 99. 874 99.972 99.887 99.975 99.890 99.980 99.898 0.081 .109 .073 .084 .069 .062 .078 .076 .078 .087 .152 .171 .196 .220 .249 .215 .268 .179 .247 .149 .210 .117 .181 .107 .177 .099 .166 .081 .149 .077 .145 .065 .135 $50,007 • 50,000 50,045 50,100 50,062 50,015 50, 050 60,102 £0,072 50.045 50,000 50, 046 60,031 50,.015 50,040 50,107 60,003 50,006 50,025 50,205 50,111 50,830 50,030 50, 325 50.046 £0,143 50,102 60,132 60,017 50,015 50,003 50, 2£0 60, 050 $99.973 99. 919 99. 976 99.939 99. 961 99. 957 99.946 99. 947 99. 945 99. 938 99.904 99.885 99. 866 99. 850 99.827 89. 912 99.808 S9. 924 99. 823 99. 939 99.845 99. 956 99. 865 99. 961 99.872 99.966 99.878 99. 973 99.892 99. 977 99. 893 99. 981 99.901 D a t e of press releases 1936 1935 .0.072 j j u n e 28 a n d J u l y - 2 . .107 .068 [july 5 and 9 .080 .052 .057 .071 .070 .073 . 082 .127 .161 .176 .198 . 228 .191 .253 .171 .233 .144 .205 .109 .177 .101 .169 .095 .161 .079 .143 .071 .142 .063 .131 D a t e of closing J u l y 1. J u l y 8. J u l y 12 a n d 16 J u l y 19 a n d 23. J u l y 26 a n d 30 Aug. 2 and 6 A u g . 9 a n d 13 A u g . 16 a n d 20 A u g . 23 a n d 27 _ A u g . 28 a n d 31 Sept. 6 a n d 10 _ . . _ . Sept. 13 a n d 17 S e p t . 20 a n d 24. J u l y 16. J u l y 22. J u l y 29. A u g . 5. A u g . 12. A u g . 19. _._ _ A u g . 26. A u g . 30. __. . . S e p t . 9. S e p t . 16. S e p t . 23. S e p t . 30. Oct. 7. Oct. 14. Oct. 21. j o c t . 18 a n d 22 j o c t . 26 a n d 29 j O c t . 30 a n d N o v . 2 . : . . O c t . 28. N o v . 1. N o v . 8. "NTn-jr 1 "^ « n H 1Q INHV 99 nnri 9fi N o v . 18. N o v . 26. i3ec. Dec. Dec. Dec. «e D e c . 4 11 18 24 31 - o 1936 9 Jan. 8 1 J a n . 16 ^ Jan. 22.. J a n . 29 Feb. 5 F e b . 11 t i F e b . 19. F e b . 26 Mar. 4 M a r . 11 Mar. 18.. . M a r 25 Apr. 1.. Apr. Apr. Apr Apr. May May May 8 15 22 29 6 6 13- May May May May June June June June June June June June 20._ 20 . 2727 3. 3 1010... 17 17_.. 24... 24... ^^^ept. Sept. Sept. Sept. Sept. 2 9 16 23 30 -. _. : Oct. 7 . Oct. 14 Oct: 21 Oct. 28 Nov. 4 ___i_ N o v . 10 N o v . 18 N o v . 25 . Dec. 2 -.. Dec. 9 Dec; 16 ' . • D e c . 23' D e c . 30 _. _ 1936 a n d 1937 J a n . 6, 1 9 3 7 - — ' . . . J a n . 13, 1937. J a n . 20; 1 9 3 7 - - . . . . : J a n . 27, 1937— D e c . 16, 1 9 3 6 . . . — F e b . 3, 1937D e c . 16,, 1936--" F e b . 10, 1 9 3 7 - . , . : D e c . 16, 1 9 3 6 . . . . . . . F e b . 17, 1937 , D e c . 15, 1936 F e b . 24, 1937 D e c . 15, 1936 M a r . 3, 1937. D e c . 15, 1936 .. M a r . 10, 1 9 3 7 — — Dec. 15, 1936 M a r . 17, 1937 D e c . 15, 1936 M a r . 24, 1937 273 273 273 274 274 9U. 917 99.920 99. 947 2 99.950 99.950 132.204 99. 940 273 99.940 190i 515 273 99.932 273. 212,610 273. • 170,307 99.934 273 99.932 192,133 273 99.936 .184, 669 273 99.942 143,432 273 99. 950 98,970 273 99.950 109,838 '273 99.962 123,071 273 99.950 '129, 256 273 • 147.495 99. 930 273 137, 648 , ^99.930 273 273 273 273. 223 . • 273 216 273 209 273 •202 273 196' 273' 188 273 181 273 174 273 J Bank discount basis. 2 Except for 1 bid of $60,000 at 100.. 144,^70. 239, 296 200,906.. -138,166 79,312 201,806; 150,991 146,908 117,748 94,59993,918 187,9.41, 125, 607 140,736 161, 330 • 131,665 148,465 . 146,415. 134,960 152, 610 113,830 133,883 . 116,172 135,202 146.116 .. 99.926 99.932 99. 934 fi 99. 940 . 99.950 99. 940 99.930 99.939 99. 936 99. 888 • 99.916 99. 871 .: 99.916 99.864 99.9i6 99.900 99. 916 • 99.900 99. 935 6 99. 830 - .133 .113 .099 .085 .086 60,045 60,000 60, 216 £0,070 60,000 99. 906 99.918 99. 934 . 99.939 99.939 .124 .108 .087 .080 .080 Nov Dec, Dec. Dec. Dec. .119 .107 .096 .100 .095 .088 .080 .080 . .096 .115 .111 .124 .136 60,060 60.050 50,130 50,074 50, 296 50,546 50,100 50; 000 50,010 60,000 50,025 50,085 .60,028 99. 919 99. 924 99. 929 99. 926 99:928 99. 934 99. 941 99. 944 99.937 99. 921 99.921 99.;911 99.904 .107 .100 .093 .098 .095 .087 .078 .074 .084 .104 .104 .118 .126 1936 Jan. 3 and 7 . J a n . 10 a n d 14 J a n . 17 a n d 21 J a n . 24 a n d 28 J a n . 31 a n d F e b . 4 Feb. 5 and 8 F e b . 14 a n d 18. F e b . 21 a n d 25 . . F e b . 28 a n d M a r . 3 M a r . 6 a n d 10 M a r . 13 a n d 1 7 . . . M a r . 20 a n d 24 M a r . 27 a n d 31 .109 .106 .070 .066 .066 99.899 99.914 99.925 99.935 99.935 .079 .079 .090 .087 .090 .084 .076 .066 .066 .050 .066 .092 .092 99. 910 99.919 99.927 99.924 99.928 99.933 99.939 99.939 99. 928 99.913 99.916 99.906 99.897 . .098 .090 .087 .079 .081 .079 .117 .080 .110. 148 :150 .170 • .155 .179 .161 .132 .167 .132 .134 .224 99.910 99. 920 99.928 99.929 99.913 99.895 99.901 99.843 99. £98 99.849 99. S93 99. 838 99. £93 99.827 99.£96 99. 815 99. £97 99. 807 99.908. 99.811 . .119 .106 .096 .094 .140 .138 ' .165 .207 .176 .199" .191 . .214 .198 .228 .199 .244 .205 .255 .190 . 249 » Except for 1 bid of $10,000 at 99.910. « Except for 1 bid of $6,000 at 99.950. 99.914 50,196 99. 924 50,008 99. 929 50,077 99. 933 50,110 99.924 £0,024 99. 905 60,102 99. 909 60,005 99.868 £0,111 99.910 60,000. 60,005 • 99.863 99.902 50, 060 50,060 • 99.848 •99.600 60, OSO '99.836 50, 295 £0,140 • 99.902 99. 826 50;035 99.904 50,018 99.816 60. 012 99.912 60; 050 99.818 50, 008 .113 .100 .093 .089 .123 .125 .151 • . 188 .156: .181 .175 .200 .184 .218 .187 .230 .191 .242 .183 .240 Apr. Apr. Apr. Apr. 2S a n d D e c 3 6 a n d 10 13 a n d 17 18 a n d 21 24 a n d 28 t)ec Dec. Dec. .._.; Dec. -•— D e c . 3 and 7 10 a n d 14 17 a n d 21 24 a n d 28 [ M a y 8 a n d 12 >Mfl.v 15 a n d IQ 2 9 16. 20. 27. 1936 J a n . 6. ._ J a n . 13. ; J a n . 20. J a n . 27. F e b . 3. F e b . 7. F e b . 17. F e b . 24. M a r . 2. . . M a r . 9. M a r . 16. . . M a r . 23. ^ . . . r . M a r . 30. •.. A p r . Apr. ._ A p r . Apr. May 6. 13. 20. 27. 4. O n o xn o . . . . M a y 11. M a y 18. O M a y 26. J u n e 1. June 8 J u n e 22 W H > xn «Except for 1 bid of $15,000 at 99.975. 6 Except for 1 bid of $225,000 at 99.871. to 242 REPORT OF THE SECRETARY OF THE TREASURY United States savings b o n d s Exhibit 20 Offering of United States savings bonds, series B On J a n u a r y 1, 1936, Secretary of t h e Treasury Morgenthau offered for sale, through t h e Postal Service, United States savings bonds, series B, as described in t h e following circular: [Department Circular No. 554, as amended.i Public Debt] TREASURY DEPARTMENT, Washington, December 16, 1935. OFFERING OF UNITED STATES SAVINGS BONDS, SERIES B 1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second Liberty Bond Act, approved September 24, 1917, as amended, offers for sale, to t h e people of the United States, t h r o u g h t h e Postal Service, an issue of bonds of t h e United States, designated United States savings bonds, series B, which will be issued on a discount basis, will m a t u r e in 10 years, b u t will be redeemable before m a t u r i t y a t t h e option of owners. Beginning J a n u a r y 1, 1936, these bonds will be on sale a t post offices of t h e first, second, a n d t h i r d classes and at. selected post offices of t h e fourth class, in a m o u n t s of $25 (maturity value) and multiples thereof; a n d m a y also be purchased by mail upon application to t h e Treasurer of t h e United States, Washington, D . C , or to any Federal Reserve bank,^ accompanied by a remittance to cover t h e issue price. United States savings bonds, series B, will continue to be on sale until this offering is t e r m i n a t e d by notice given by t h e Secretary of t h e Treasury to t h e Postmaster General. 2. By notice heretofore given to t h e Postmaster General, t h e sale of United States savings bonds of series A p u r s u a n t to D e p a r t m e n t Circular No. 529, dated F e b r u a r y 25, 1935, will t e r m i n a t e on December 31, 1935. All applications for United States savings bonds received by mail by t h e Treasury D e p a r t m e n t subsequent to December 31, 1935, will be t r e a t e d as applications for series B bonds. T h e bonds of series B now offered for sale beginning J a n u a r y 1, 1936, have terms and conditions of issue substantially identical with the savings bonds' of series A DESCRIPTION OF BONDS OFFERED 3. United States savings bonds, series B, will be issued only in registered form, in denominations of $25, $50, $100, $500, and $1,000 (maturity value), a t prices hereinafter set forth, and will bear t h e n a m e a n d address of t h e owner, t h e date as of which issued, and t h e date of m a t u r i t y , which on original issue shall be inscribed thereon by t h e authorized postmaster (or other agent) a t t h e time of issue. All such savings bonds are to be d a t e d as of t h e first day of t h e m o n t h in which t h e issue price is received, a n d will m a t u r e and be payable 10 years from such issue date. T h e y m a y be redeemed prior to m a t u r i t y (but n o t within 60 days after t h e issue date), a t t h e owner's option, in accordance with t h e table of redemption values appearing a t t h e end of this circular. A table of redemption values for each bond appears on t h e face thereof. Partial p a y m e n t of savings bonds of denominations larger t h a n $25 (maturity value) will be p e r m i t t e d in accordance with Treasury D e p a r t m e n t Circular No. 530, as amended. No interest will be paid on savings bonds, b u t t h e purchase price has been fixed so as to afford an investment yield of a b o u t 2.9 percent per a n n u m compounded semiannually if t h e bonds are held to m a t u r i t y . If t h e owner exercises his option to redeem his bond prior to m a t u r i t y t h e yield will be less, varying with t h e respective redemption values. 4. T h e savings bonds will n o t be transferable, a n d will be payable only to t h e owner n a m e d thereon, except in case of d e a t h or disability of t h e owner or as a<^ 1 Amendment of Mar. 18, 1936, in italics. REPORT OF THE SECRETARY OF THE TREASURY 243 result'of judicial proceedings, and then only in accordance with regulations Lpj^gs.cribed^from time to time by the-Secretary of the Treasury. (See Treasury Department Circular No. 530, as amended.) "Savings bonds issued through a post office shall be valid only if inscribed with the owner's name and address, dated the first day of the month in which the issue price is received, and duly delivered by an authorized postmaster; th-ey will bear the facsimile signature of the Secretary of the Treasury, the seal of the Treasury Department will be impressed thereon, and they will bear the post-office dating (money order) stamp. 1 5. The savings bonds shall be exempt, both as to principal and interest, from all taxation now or hereafter im.posed by the United States, an}^ State, or any of the possessions of the United States, or by any local taxing authority, except (a) estate or inheritance taxes, or gift taxes, and (6) graduated additional income taxes, comir.only known as surtaxes, and excess-profits and war-profits taxes, now or hereafter imposed by the United States, upon the income or profits of individuals, partnerships, associations, or corporations. The interest on an am,ount of bonds authorized by the Second Liberty Bond Act, approved Septem.ber 24, 1917, as am.ended, the principal of which does not exceed in the aggregate $5,000,. own^d by any individual, pai-tnership, association, or corporation, shall be exemp;t from the taxes provided for in clause {b) above. For the purposes of detern^iiiing taxes and tax exemptions, the increment in value of savings bonds represented by the difference between the price paid and t h e redemption value riceived (whether at or before m-aturity) shall be considered as interest. PURCHASE 6. Savings bonds of series B may be purchased for cash, at post offices of the first, second, and third classes, and at selected post offices of the fourth class, at any time while this offer is in effect; and, subject to regulations prescribed by the Board of Trustees of the Postal Savings System, the Mdthdrawal of postal savings deposits will be permitted for the purpose of acquiring savings bonds. Savings bonds may also be purchased by mail upon application to the Treasurer of the United States, Washington, D. C , or to any Federal Reserve bank,^ accom.panied by a remittance to cover the issue price. The issue prices of the various denominations of savings bonds of series B follow: Issue {purDenom.ination (maturity value):' .chase)mice $25 $18. 75 50.. 37. 50 100 :J__. 7km 500 375.00 1,000 750.00 7. It shall not be lawful for any one person at any one time to hold savings bonds issued during any one calendar year in an aggregate amount exceeding $10,000 (maturity value). AUTHORIZED FORMS OF REGISTRATION . .8. Full information as to the,authorized fqrms of registration for United States savings bonds is given in section I of Department Circular No; 5B0; as amendeii'i copies of which circular may be seen at any post office and m.ay be obtained from the Treasury Departm.ent, Division of Loans and Currency, Washington, D. C , or from any Federal Reserve bank. 1 If savings bonds are issued or reissued at the Treasury Department under the provisions of Department Circular No. 530, as amended, they will bear the dating stamp of the Division of Loans and Currency, Treasury Department; if issued by a Federal Reserve bank they will bear the dating stamp of that bank. See note 2. 2 Amendment of Mar. 18, 1936, in itahcs. 244 REPORT OF THE SECRETARY OF THE TREASURY DELIVERY. AND SAFEKEEPING OF BONDS 9. Postmasters from whom, savings bonds may be purchased are authorized to deliver such bonds duly inscribed and dated upon receipt of the issue price. Delivery should not be accepted by iany. purchaser until he has verified that his name and address are duly and :correctly inscribed on the face of the bond and that the bond is duly dated the first day of the month in which payment of the issue price was received, . . ^ 10. Any savings bond will be held in safekeeping by the Secretary of the Treasury if the purchaser so desires, and in this connection the Secretary will utilize the facilities of the.Federal Reserve banks as fiscal agents of the United States. ^ The purchaser, may arrange for such safekeeping as provided in Department Circular No.. 530, as amended, at the time he purchases his bond or subsequently. Postmasters generally will assist owners in arranging for safekeeping, but will not act as safekeeping agents. PAYMENT AT MATURITY OR ON REDEMPTION PRIOR TO MATURITY 11. Payment, including partial payment, of any savings bond in accordance with its terms, at maturity or at the . appropriate redemptmn value prior to maturity (but not within 60 days after the issue date), will be^piade, as provided in Department Circular No. 530, as amended, following pres&itation and surrender of the bond, by registered mail or otherwise, at the expense and risk of the owner, to the Treasury Department, Division of Loans and Currency, Washington, D. C , either direct or through any Federal Reserve bank, with the request for payment appearing on the back of the bond duly executed by the owner and certified (1) by any United States postmaster from whom United States savings bonds may be purchased, or by any other post office official authorized for that purpose (see Department Circular No. 530, as amended), whose signature must be authenticated by the imprint of his post-office dating stamp, (2) by an executive officer of an incorporated bank or trust company (.authenticated by the impress of the corporate seal of the bank or trust company), •or (3) by any other person duly designated by the Secretary ot the Treasury for the purpose. Payment will be made by check drawn to the order of the owner, promptly after discharge of registration at the Treasury Department. In case of the death or disability of the registered owner, instructions should be obtained from the Treasury Department, Division of Loans and Currency, Washington, D. C , before the request for payment is executed. Postmasters generally will assist owners in securing payment at or before maturity, but they will not make payment of savings bonds. GENERAL PROVISIONS 12. All savings bonds issued pursuant to this circular shall be subject to regulations prescribed from time to time by the Secretary of the Treasury. Such regulations may require, among other things, reasonable notice in case of presentation of savings bonds for redemption prior to maturity. The regulations noAV in effect governing sayings bonds are contained in Treasury Department Circular No. 530, as amended. 13. The Secretary of the Treasury may designate agencies other than post •dffices for the sale of savings bonds of this series, and he reserves the right to refuse to issue or permit to be issued hereunder any such savings bonds in any ..case or class of cases if he deems such action to be in the public interest. The Secretary of the Treasury further reserves the right to terminate this offer a t any time, on notice to the Postmaster General. 245 REPORT OF THE SECRETARY OF THE TREASURY 14. Postmasters of the first, second, and third classes, and selected postmasters of the fourth class, under regulations promulgated by the Postmaster General, arid FederarR'eserve banks', as fiscal agents of the Uriited'^ States,' are" authorized to perform such fiscal agency services as may be requested of them in connection with the, issue, delivery, safekeeping, redemption, and payment of savings bonds. 15. The Secretary, of the Treasury m.ay at any tim,e or from time to time supplement or amend the terms of this circular, inform.ation as to which will be promptly furnished to the Postmaster General and to Federal Reserve banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Table showing how United States savings bonds of series B increase in value during successive hialf-years following issue: ^ Maturity value.. Issue price.--—- $26.00 18.76 $60. 00 37. 50 $100. 00 75.00 $500. 00 $1,000. 00 750. OD 375. 00 Redemption values after the issue date First year 1 to IK years.-. IH to 2 years-.. 2 to 23^ years-_. 2K to 3 years-.. 3 to3H years. _. 33^ to 4 years... 4 to 43^ years.-. 4M to 5 years.-. 6 to 6K years-_. 6K to 6 years--. 6 to 63/^ years--. 63^ to 7 years--. 7 to 7H years... 7M to 8 years.-. 8 to 83^ years... 8>^ to 9 years.-. 9 to 93^ years... 93^ to 10 years.. Maturity value. 18.75 19.00 19.25 19.50 19.75 20.00 20.25 20.50 20.75 21.00 21.25 21.50 21.76 22.00 22.50 23.00 23.50 24.00 24.50 26.00 37.50 38.00 38.50 39.00 39.50 40.00 40.50 4L00 41.60 42.00 42.50 43.00 43.50 44.00 45.00 46.00 47.00 48.00 49.00 50.00 375.00 75.0076.00 380.00 77.00 385.00 78.00 390.00 79.00 395.00 80.00 400.00 81.00 405.00 82.00 410.00 .415.00 83.00 84.00 420.00 425.00 86.00 86.00 430.00 87.00 435.0088.00 440.00 90.00 .450.00 92.00 460.00 94.00 470.00 - 96.00 . 480.00 98.00 490.00 100.00 500.00 750.00 760.00 770.00 780.00 790.00 800.00 810.00 820.00 830.00 840.00 850.00 860.00 870.00 880.00 900.00 920.00 940.00 960.00 980.00 1,000.00 Exhibit 21 Sales of United States savings bonds from March 1, 1935, to June SO, 1936 United States savings bonds are sold direct to purchasers at post offices, and receipts from such sales are deposited in Government depositaries to the credit of the Postmaster General. Daily reports of such receipts by depositaries are made to the Treasurer of the United States, but these receipts are not actually transferred to the credit of the Treasurer as public debt receipts until after audit of the postmasters' accounts for the month in which the sales were made. I t follows that receipts of sales by postmasters are not reflected in public debt accounts and statements until some time after the close of the month in which the sales were made. Sales on application by mail to the Treasurer of the United States and the Federal Reserve banks are credited currently as public debt receipts. The following table shows the cash receipts from sales on the basis of reports by depositaries; the actual receipts determined by audited reports; and the public debt receipts, as shown on the daily statements of the Treasury. 1 This table also applies to United States savings bonds of series A (issued between Mar. 1 and Dec. 3U 1936). 246 REPORT OF THE SECRETARY OF THE TREASURY Sales of United States savings bonds, by months, from M a r . 1,1935, to J u n e 30,1936 Receipts on basis of d e p o s i t a r y A u d i t e d receipts reports March April May June Public debt receipts (daily Treasury statements) 1935 - - . . .. T o t a l fiscal year 1935 JulyAugust September October November December . ._. ._ . . i .. $32, 639,948. 97 24, 576,'826. 52 19, 823,836. 54 15, 664, 797. 43 $38, 813, 643. 75 23, 786,156. 25 17, 847, 393. 75 15, 918, 393. 75 $38, 799, 750.00 23, 767, 293. 76 92, 705, 409. 46 96, 365, 587. 50 62, 567, 043. 75 21, 600,112. 68 13, 057, 330. 89 9,129, 263. 88 17, 326, 225. 43 19, 802, 205. 52 20, 630,070. 72 20,932, 200. 00 12, 070, 012. 50 9, 416, 612. 50 19,904,137. 50 18, 770, 737. 50 26,196, 056. 25 17, 837, 756. 25 15, 960, 787. 50 20, 715, 356. 26 12,423,187. 50 9, 352, 068. 75 18, 592,156. 26 46, 398,'700.19 25, 363,053. 73 26, 347,426. 26 26,891,976.-. 07 . 22,'78l,062.26 25, 391,128. 80 46,102,993. 75 23,167, 406. 25 26, 823, 018. 75 26,082,-393. 75. 22,264,087.50 26, 747, 793. 75 18, 262,162. 50 26,055, 225. 00 45, 382, 676. 00 25,905,176.26 26, 350,058!'25 28, 401,910. 50 1936 January.. February March,. _ April.. May. June ... . . _. _ T o t a l fiscal year 1936 T o t a l 1935 a n d 1936 : 274, 718, 556. 43 277, 477, 350. 00 367, 423, 965. 89 373,842, 937." 50 Series A b o n d s : Fiscal year 1935 Fiscal year 1936 327, 806, 564. 75 96, 365, 587. 50 107, 289, 656. 25 Total Series B b o n d s : Fiscal year 1936 Total- 265, 239, 521.00 • :... 203, 655, 243. 75 170,187, 693. 75 373,842, 937. 50 -" Exhibit 22 Supplement, September 17, 1935, to Department Circular No. 529, offering for sale United States savings bonds, series A TREASURY DEPARTMENT, Washington, September. 17, 1935. I n view of t h e provisions of section 341 of Title I I I of t h e Banking Act of 1935, approved August 23, 1935, D e p a r t m e n t Circular No. 529, d a t e d F e b r u a r y 25, 1935, is hereby amended so t h a t t h e first sentence under t h e heading ' ' P u r c h a s e " shall r e a d as follow^s: Savings bonds of series A m a y be purchased for cash, a t post offices of t h e first, second, and third classes, a n d a t selected post offices of t h e fourth class, a t any t i m e while this offer is in effect; and, subject to regulations prescribed by t h e Board of Trustees of t h e Postal Savings System, t h e withdrawal of postal savings deposits will be p e r m i t t e d for t h e purpose of acquiring savings bonds. T. J. COOLIDGE, Acting Secretary of the Treasury. REPORT OF THE SECRETARY OF T H E TREASURY 247 0 Exhibit 23 Regulations governing United States savings bonds, December 2, 1935 [Department Circular No. 530, as amended.^ Public Debt] TREASURY DEPARTMENT, Washington, December 2, 1935. To Owners of United States Savings Bonds, and Others Concerned: T h e following regulations governing United States savings bonds are published for t h e information a n d guidance of all concerned: I. REGISTRATION 1. United States savings bonds will be issued only in registered form. Except as otherwise specifically provided in these regulations, t h e Treasury D e p a r t m e n t reserves t h e right to t r e a t as conclusive t h e ownership and interest in t h e bond as stated in t h e registration. 2. T h e following forms of registration are authorized: (a) I n t h e n a m e of any individual, including minors. No designation of an agent or a t t o r n e y to receive p a y m e n t on behalf of t h e owner m a y be m a d e in the registration. (6) In t h e names of two {but not more than two) n a t u r a l persons in t h e alternative, as, for example, ' ' M r . John Jones or Mrs. M a r y J o n e s . " T h e addresses of both persons should be inscribed on t h e savings bond. No other form of registration in two names is authorized except as provided in subparagraphs (c) and y ) ' hereof. (c) I n t h e name of one individual and a single designated beneficiary in case of death, as, for example, " M r . J o h n Smith, payable on d e a t h to Mrs. M a r y Smith", in which case t h e address of the registered owner a n d t h e address of the beneficiary should be inscribed on t h e face of t h e savings bond. {d) "In t h e name of one or more guardians, executors, administrators, trustees, or other fiduciaries of a single estate, trust, etc. (but not agents or a t t o r n e y s ) . (1) In t h e case of guardians, executors, administrators, or any fiduciaries other t h a n trustees t h e name a n d capacity of all such fiduciaries should be inscribed on t h e savings bond, as, for example, "A, guardian of B " ; "A a n d B, executors under t h e will of X " ; or "A, administrator of t h e estate of X . " (2) In the case of trustees t h e names of all such trustees should be inscribed on t h e savings bond, followed by a reference to t h e t r u s t instrument, if any, or ' by other words clearly identifying t h e trust, a n d t h e names of t h e organization or t h e persons for whose benefit the t r u s t exists; provided t h a t t h e names of t h e individual trustees need not be given in the case of trustees of unincorporated lodges, churches, societies, schools, or similar institutions (for example, "A a n d B, trustees under t h e will of C, for t h e benefit of X, Y, a n d Z " ; " T h e X Corporation, trustee under an agreement of t r u s t executed by Y, dated J a n u a r y 1, 1935, for the benefit of Y and Z", or "Trustees of t h e First Baptist Church, Clarendon, V a . " ) . In a n y case where t h e names of all t h e persons for whose benefit t h e t r u s t exists cannot conveniently be given the. Treasury D e p a r t m e n t m a y require a copy of the t r u s t instrument. (3) Registration will not be p e r m i t t e d in a form indicating t h a t t h e persons whose names appear on t h e bonds m a y not hold full legal title to, a n d t h e right to receive p a y m e n t of, t h e savings bonds, as, for example, "A, under article 10 of t h e will of X " , or "A, guardian of B, subject to t h e order of t h e p r o b a t e court of X count3^" (e) I n t h e n a m e of a n y corporation, unincorporated association, partnership, or joint stock company. T h e n a m e of t h e owner should be followed by t h e word or words "corporation", "unincorporated association", " p a r t n e r s h i p " , or "joint stock company", as the case m a y be, and no designation of an officer or agent to receive p a y m e n t in behalf of t h e corporation, unincorporated association, p a r t n e r ship, or joint stock company m a y be m a d e in t h e registration; provided, however, t h a t bonds m a y be registered in t h e title, omitting t h e name, of an officer of a State, county, city, town, or other political or municipal body corporate, entrusted with public funds, followed by t h e designation of a particular fund, if any, as, for.exarnple, "Treasurer, State of Colorado (Employees' Retirement F u n d ) . " 1 Originally issued Feb. 25, 1935. 248 REPORT OF THE SECRETARY OF THE TREASURY II. BONDS NOT TRANSFERABLE United States savings bonds are not transferable and are payable only to theowner named thereon except in the case of the disability or death of the owner or as the result of judicial proceedings,.and. then only to the extent specifically provided in sections VIII, IX, XIV, and XV hereof. III. LIMITATION ON HOLDINGS 1. Under the provisions of section 22 of the Second Liberty Bond Act, approved September 24, 1917, as amended, it is not law^ful for. any one person at any one time to hold savings bonds issued during any one cale^idar year in an aggregate amount exceeding $10,000 (maturity value). In determining whether the $10,000 limitation on the holdings of any one person has been exceeded, the full maturity value of savings bonds issued in any one calendar year held fbr the benefit of such person in the name of a fiduciary or fiduciaries, or held by such person as coowner with any other person (but not of bonds of which such person is merely the de'sigriated beneficiary in case of the death of the owner), shall beadded to the full maturity value of such bonds held by such person in his or her own name alone, arid'the sum miist not exceed $10,000 (maturity value). If any person should in any way become such holder of savings bonds in an amount in excess of the lawful limit, he should immediately surrender the excess amount of bonds held by him, which will be paid at their redemption value O'n; the dateon which the excess holding was acquired. IV. LOST, STOLEN, OR DESTROYED BONDS 1. Under the provisions of the Revised Statutes, duplicates may be issued or payment inade upon proof of the loss, theft, or destruction of savings bonds. Application for relief in such cases will be governed by the regulations found in Department Circular No. 300. Full information as to the requirements, as well as appropriate forms, may be secured from the Treasury Department, Division: of Loans and Currency, Washington, D. C. 2. The Treasury Department, Division of Loans and Currency, should ba notified immediately of any such loss, theft, or destruction. V. SAFEKEEPING FACILITIES 1. Any savings bond will be held in safekeeping by the Secretar}?- of the Treasury if the purchaser so desires, and in this connection the Secretary will utilize the facilities of the Federal Reserve banks as fiscal agents of the United States. The purchaser may arrange for such safekeeping at the time he purchases his bond or subsequently. If the owner desires his savings bond held in safekeeping, he may obtain from the postmaster an appropriate envelope, and an application blank which he should fill out, address to the appropriate Federal Reserve bank, sign and enclose with the savings bond in the envelope, which should be addressed to the appropriate Federal Reserve bank. The postmaster will then register the envelope, at the owner's expense, and the registry receipt will serve as the owner's; temporary receipt. 2. Upon receipt of the savings bond the Federal Reserve bank will place it in safekeeping and issue a receipt which will be.mailed to the owner at the address given in the application. The Federal Reserve bank will, at any time deliver the bond to the owner upon his application and upon such identification as the bank may require. 3. Postmasters generally will assist owners in arranging for safekeeping, but. will not act as safekeeping agents. VI. GENERAL PAYMENT PROVISIONS 1. Savings bonds will be payable at or after maturity at their full value, or, a t the option of the owner, prior to maturity (but not within 60 days after the issue date) at the appropriate redemption value as shown on the face of each bond. In order to secure payment the owner should present and surrender the bond to the Treasury Department, Division of Loans and Currency, Washington, D. C , or to any Federal Reserve bank, with the request for payment appearing on the back of the bond properly executed in accordance with the succeeding paragraphs. Such presentation will be at the expense and risk of the owner and, for his protection, the bond should be forwarded by registered mail if not presented in person. REPORT OP THE SECRETARY OF THE TREASURY 249 2. The request for payment must be signed in ink or indelible pencil by the person in whose name the savings bond is inscribed, or by the person entitled to receive payment under the provisions hereof. No request signed in behalf of the • owner by an agent or person acting under a power of attorney will be recognized by the Treasury Department. The request must be signed in the presence of, and be certified by, one of the following officers: (a) Any United States postmaster, acting postmaster, or inspector in charge of a post office authorized to sell United States savings bonds, or— (1) At any post office of the first class, the assistant postmaster, the postal •cashier, the superintendent of money orders, the money order cashier, or the superintendent or assistant superintendent of a classified station or branch, or, in the •abi^ence of the superintendent and assistant superintendent, the clerk in actual charge of such station or branch; (2) At any post office of the second class, the assistant postmaster, or, if there is none, the clerk in actual charge. If any of the above designated officials other than a postmaster, acting postmaster, or inspector in charge of an office certifies to a request for payment, he should certify in the name of the postmaster, acting postmaster, or inspector in •charge, followed b> his own signature and official title, as, for example, "John Doe, postmaster, by Richard Roe, postal cashier." The certification of any postoffice official must be authenticated by a legible imprint of a dating stamp of his post office. (6) Any executive officer oi an incorporated bank or trust company, whose signature must be authenticated by the impression of the corporate seal of the bank or trust company. (c) Any officer authorized generally to witness assignments of United States registered bonds. (See pars. 33-35 Department Circular 300, as amended.) 3. No person authorized to certify req^ its for payment may certify a request signed by himself, either in his own right or in any representative capacity. 4. Certifying officers should require positive identification of the person executing the request for payment as the person whose name appears on the face of the bond, or the person entitled to request payment under the provisions of these regulations, and will be held fully responsible therefor. Vll. PARTIAL PAYMENT 1. A savings bond in a denomination larger than $25 may be paid in part at the appropriate redemption value corresponding to any authorized denomination or denominations, upon presentation and surrender of the bond in accordance with the provisions of section VI hereof, except that before the request for payment is executed it should be amended with pen and ink or typewriter by inserting at the end of the first sentence the words "to the extent of $ " (this amount must correspond to the redemption value at that time of an authorized denomination or denominations), so as to make the entire sentence read as follows: "I am the registered owner of the within savings bond, and hereby make request for the payment thereof to the extent of $ __." Upon payment in part, a savings bond or bonds for the remainder.will be issued in the same name subject to the provisions of section XVI hereof. VIII. MINORS 1. If a savings bond is registered in the name of a minor and the Treasury Department has notice that a guardian of the estate of such minor has been appointed by a court of competent jurisdiction, payment will be made only to such •guardian. In this case the request for payment appearing on the back of the bond should be signed: "A, minor, by B, guardian" and must be supported by a certificate from the proper court, or by a certified copy of the order appointing the guardian, showing his appointment and qualification. The certificate, or certified copy, must, be under the seal of the court and should be dated not more than 1 year prior'to the presentation of the bond. 2. If the Treasury Department has no notice that a guardian of the estate of a minor owner of a savings bond has been appointed or is otherwise legally qualified, payment will be made direct to such minor owner, provided such minor is a t the time payment is requested, of sufficient competency and understanding to sign his name to the request and to comprehend the nature thereof. In general, the fact that the request for payment has been signed by the minor and duly •certified in accordance with section VI hereof will be accepted as sufficient proof of such competency and understanding. If the Treasury Department is prop- 250 REPORT OF THE SECRETARY OF THE TREASURY erly advised in the request for payment that such minor owner is not of sufficient competency and understanding to execute the request for payment, payment will be made to either parent of the minor with whom he resides, or in the event that such minor resides with neither parent, then to the person with whom he does reside. In executing the request for payment the parent or other person shall sign the minor's name as well as his own name, and state his relationship to the minor, and there shall be inserted above the space for signature in the request for payment a statement showing that the owner is a minor, that he is not of sufficient competency and understanding to execute the request for payment, and that the person signing the request is the person with whom the minor resides. An appropriate form is as follows: "I am the of John Jones and the person with (State relationship) whom he resides. He is years of age and is not of sufficient competency and understanding to sign this request. Mary Jones, on behalf of John Jones." IX. DISABILITY OF OWNERS 1. If the owner of a savings bond has been legally declared-to be incompetent to manage his affairs and the Treasury Department has notice that a conservator or other legally constituted representative of his estate has been appointed by a court of competent jurisdiction, payment will be made only to such conservator or other legal representative. In this case the request for payment should be signed: "A, incompetent, by B, conservator (guardian or committee as the case may be)", and must be supported by a certificate from the proper court or a certified copy of the order of the court appointing such conservator or other legal representative showing his appointment and qualification. The certificate, or certified copy, should be under the seal of the court and dated not more than one year prior to the date of the presentation of the savings bond for payment. 2. In cases where the owner of a savings bond has been judicially declared incompetent, or his incompetency, in the opinion of the Secretary of the Treasury, is otherwise established and no guardian or other legal representative of his estate has been appointed or is otherwise legally qualified, and the entire gross value of his estate, both real and personal, does not exceed $500, payment will be made to a member of his family standing in the position of voluntary guardian upon presentation of proof satisfactory to the Secretary of the Treasury that the proceeds of the bonds are required, and are to be used for the purchase of necessaries for the incompetent or for his wife or minor children or other persons dependent upon him for support. In all such cases instructions should be requested of the Treasury Department, Division of Loans and Currency, Washington, D. C , or of any Federal Reserve bank, before executing the request for payment or submitting any evidence. X. COOWNERS A savings bond registered in the names of two persons in the alternative, as, for example, "Mr. John Jones or Mrs. Mary Jones" will be paid to either coowner upon request duly executed by him, without requiring the signature of the other person named on the bond; and upon such payment to either coowner the other person shall cease to have any interest in the bond. Upon the death of one coowner and proof of the survivorship of the other coowner, even though the latter should thereafter die, the savings bond will be paid or reissued as though the survivor had been the sole owner. XI. BENEFICIARIES 1. A savings bond registered in the form "A, payable on death to B" will be payable to the registered owner, until the Treasury Department has received notice of his death, upon the execution by him alone of the request for payment, as if the beneficiary were not named on the savings bond. If the beneficiary should predecease the registered owner the savings bond will be paid as though such beneficial registration had not been made. Registration naming beneficiaries at the death of the registered owner cannot be changed so as to add, eliminate, or substitute beneficiaries. 2. Upon proof of the death of the registered owner and proof of the survivorship of the beneficiary, even though the beneficiary should thereafter die, the savings bond will be paid or reissued as though the beneficiary had been the registered owner. REPORT OF THE SECRETARY OF THE TREASURY 251 XII. FIDUCIARIES 1. A savings bond registered in the name of a fiduciary will be paid to such fiduciary without proof of his authority upon presentation of the savings bond with the request for payment duly signed by him and certified in accordance with section VI hereof; provided, that a request for payment before maturity executed on behalf of a corporate fiduciary must be authorized by a resolution of the governing body of the corporation or by a standing bylaw, a certified copy of which must be filed with the Treasury Department. The request for payment should be signed by the fiduciary in exactly the same manner as his name and designation as fiduciary appear on the face of the savings bond. 2. In the event of the death or disqualification of a fiduciary in whose name a savings bond is registered, such savings bond will be paid to, or, if desired, reissued in the name of, his successor upon satisfactory proof of the appointment and qualification of such successor. 3. Reissue of a savings bond registered in the name of a fiduciary may be made, in authorized denominations only and subject to the provisions of section XVI hereof, in the name of a person beneficially entitled to such savings bond, or to a fractional interest therein to the extent of such interest, upon the request of the fiduciary and his certification that the person in whose name reissue is requested is entitled thereto and has agreed to such reissue. 4. Payment, or reissue in authorized denominations only and subject to the provisions of section XVI hereof, of a savings bond registered in the name of a fiduciary may be made to a person beneficially entitled to such savings bond, or to a fractional interest therein to the extent of such interest, as though such person were the registered owner thereof, upon his request accompanied by satisfactory proof that the trust has terminated, that there is no person qualified to make distribution of the trust fund, and that he is entitled to the payment or reissue requested. XIII. CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, ETC. 1. A savings bond registered in the name of a corporation, unincorporated association, or joint stock company will be paid upon a request for payment signed by a duly authorized officer of such organization. The signature to the request should be in the form, "The . Company, by John Jones, President." The fact that the request for payment is signed and duly certified in accordance with section VI hereof may be accepted as sufficient proof of the officer's authority. 2. A savings bond registered in the name of a partnership will be paid upon a request for payment signed by any general partner. The signature to the request should be in the form "Smith and Jones, a partnership,, by John Jones, a general partner." The fact that the request for payment is signed and duly certified in accordance with section VI hereof may be accepted as sufficient proof that the person signing the request is a general partner. XIV. DECEASED OWNERS 1. With administration.—If the owner of a savings bond dies leaving a will which is duly admitted to probate and on which letters testamentary are issued, or dies intestate and the estate is administered in a court of competent jurisdiction, payment wiU be made to the duly appointed representative of the estate. The request for payment should be signed in the form, "A, executor (administrator) of the estate of B, deceased", a^d must be supported by a certificate under the seal of the court appointing such representative, dated not more than 6 months prior to the presentation of the savings bond for payment, showing the appointment and qualification of such representative and stating that the appointment is still in force; or, in the absence of such a certificate, by a duly certified copy of the representative's letter of appointment, the certification of which must be dated not more than 6 months prior to the presentation of the bond for payment, and must state that the appointment is still in force. Reissue of a savings bond registered in the name of a deceased owner will be made in the name of the heir or legatee entitled thereto, or of an heir or legatee entitled to a fractional interest therein to the extent of such interest, in authorized denominations only and subject to the provisions of section XVI hereof, upon the request of the representative and his certification that the heir or legatee in whose name reissue is requested is entitled thereto and has agreed to such reissue (use' form P. D. 1455); provided, that if the representative is himself the heir or legatee entitled to the savings bond, or to a fractional interest therein, and 252 REPORT OF THE SECRETARY OF THE TREASURY desires reissue in his own name, a special order of the court authorizing such reissue must be submitted. 2. Without administration.—(a) If the owner of a savings bond dies and no legal representative of his estate is to be ajDpointed and it is established to the satisfaction of the Secretary of the Treasury, either that the gross value of the personal estate does not exceed $500, or that administration of the estate is not required in the State of the decedent's domicile, payment, or reissue in authorized denominations only and subject to the provisions of section XVI hereof, of the savings bond will be made to a person entitled to such savings bond, or to a fractional interest therein to the extent of such interest, without requiring administration of the estate. Affidavits will be required of all persons entitled to any share in the estate setting forth the facts in detail, and requesting and agreeing to the payment or reissue in question, supported by proof that the debts of the decedent and of his estate have been paid or provided for, affidavits by two disinterested persons having personal knowledge of the decedent and his ,family, and a death certificate or other proof of the death of the owner (use form L. & C.° 285, copies of which may be procured from the Treasury Department, Division of Loans and Currency, Washington, D. C , or from any Federal Reserve bank). If the gross value of the personal estate exceeds $500 the Secretary of the Treasury may further require an affidavit or a certificate from a practicing attorney or judicial officer of the State of the decedent's domicile showing that administration of the estate is not required in such State and referring specifically.to the statutes or the decisions of the courts of such State under which exemption from administration is claimed, or showing that it is a general and well recognized practice in that State to settle such estates without administration. (6) No payment or reissue without administration will be permitted in a case where any of the persons entitled are minors or under disability, except to them or in their names or upon compliance with the provisions of sections VIII and IX hereof governing the payment of savings bonds in the names of such persons. XV. CREDITORS' RIGHTS 1. Payment of a savings bond will be made in accordance with a judgment or decree of a court of competent jurisdiction, or proceedings pursuant to such judgment or decree, except in cases where the action is instituted for the purpose of giving effect to an attempted transfer by the owner contrary to section II hereof. In appropriate cases the Treasury Department will require proof that the court acting had jurisdiction over the parties and subject matter, and proceeded in due course of its jurisdiction, and that the judgment or decree is final and conclusive, that it has fully and effectually transferred the title of the owner, and that it is not open to attack in any jurisdiction whatever. For this purpose duly authenticated copies of the complaint, order of service, return of service, answer, or other pleading, the final judgment or order of the court and any further proceedings thereunder, must be furnished, together with a certificate, under seal, from the clerk of the court showing that no appeal, motion for new trial, or other proceeding which may result in modifying the judgment has been taken, made, or applied for; that the time for such action has expired (or if any such proceedings have been had they have been terminated), and that the judgment is in full force and effect and has become final under the laws of the jurisdiction. The Secretary of the Treasury in any case may require such further information, documents, arid security as he deems necessary. • . . • j XVI. R E I S S U E AND DENOMINATIONAL EXCHANGE 1. Reissue of a savings bond in a different form of registration will be made only in the following instances: (a) To correct an established error in the original issue; (6) To show a change in the name of the owner whether by marriage or in any other legal manner; ^ (c) As specifically provided in sections XI, XII, and XIV hereof. Reissues pursuant to (6) and (c) above will be made only at the Treasury Department, Division of Loans and Currency, Washington, D. C , and requests therefor should be made on appropriate forms, copies of which may be obtained from that division or from any Federal Reserve bank. 2. Exchange as between authorized denominations of savings bonds will not , be permitted except in cases of partial redemption or as necessarily incident to authorized cases of reissue. REPORT OF THE SECRETARY OF THE TREASURY 253 3. In all cases of reissue the savings bonds issue will bear the same issue and maturity dates as the savings bonds surrendered, and will be issued in the largest available authorized denominations. XVII. FURTHER PROVISIONS 1. These regulations are prescribed by the Secretary of the Treasury as governing United States savings bonds issued under the authority of the Second Liberty Bond Act, approved September 24, 1917, as amended, and the provisions of Treasury Department Circular No. 300, as amended, have no application to such savings bonds except as hereinbefore specifically provided. 2. The Secretary of the Treasury may at any time, or from time to time prescribe supplemental or amendatory rules and regulations governing United States savings bonds. HENRY MORGENTHAU, Jr. Secretary of the Treasury. — _ _ _ ^ — — — _ _ i> Adjusted service bonds Exhibit 24 Issue of adjusted service bonds of 1945, June 15, 1936 {from press releases, June -7 and 17, 1936) J On June 6, 1936, Secretary of the Treasury Morgenthau announced the issuance of Treasury Department Circular No. 560, prescribing regulations governing adjusted service bonds issued on and after Jiine 15, pursuant to the Adjusted Compensation Payment Act, 1936, in payment of amounts due veterans on adjusted service certificates. The bonds are dated June 15, 1936, and will mature on June 15, 1945, but will be redeemable at the option and request of the veteran '. at any time before maturity. The bonds bear interest at the rate of 3 percent per annum from June 15, 1936, to the date of maturity, June 15, 1945, or to the date of redemption before maturity, whichever is earlier, and such interest will be paid with the principal sum, provided that no interest will be paid on any bond redeemed prior to June 15, 1937. The first mailing of bonds to veterans was on June 15, 1936, and each shipment consisted of the full complement of $50 .bonds due the veteran and a, check for any fractional amount. On June 17, 1936, the Secretary announced that up to the close of business June 13, the Treasury had received certifications from the Administrator of Veterans' Affairs of the amounts due 3,004,782 veterans In payment of adjusted service certificates. Shipments for 2,923,760 veterans were delivered to the Postal Service for dispatch by registered mail up to midnight June 15. Included in the shipments were 30,636,089 adjusted service bonds, each for $50, in the total amount of $1,531,804,450, and checks totahng $68,950,508, making an aggregate total value of bonds and notes of $1,600,754,958. Additional shipments were made in accordance with the balance of the above, certifications and subsequent certifications received from the Administrator of Veterans' Affairs. Exhibit 25 An act to provide for the immediate payment of World War adjusted service certificates,, for the cancelation of unpaid interest accrued on loans secured by such certificates j, and for other purposes [Public No. 426, 74th Cong., H. R. 98701 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That notwithstanding the provisions of the World War Adjusted Compensation Act, as amended (U. S. C , 1934 edition, title 38j, ch. 11), the adjusted service certificates issued under the authority of such act are hereby declared to be immediately payable. Payments on account of such certificates shall be made in the manner hereinafter provided, upon application therefor to the Administrator of Veterans' Affairs, under such rules and regulations as he may prescribe, and upon surrender of the certificates and all rights thereunder (with or without the consent of the beneficiaries thereof). The pay- 254 REPORT OF THE SECRETARY OF THE TREASURY m e n t in each case shall be in an a m o u n t equal to t h e face value of t h e certificate, except t h a t if, a t t h e time of application for p a y m e n t under this act, t h e principal a n d unpaid interest accrued prior to October 1, 1931, with respect to a n y loan upon any such certificate has not been paid in full by the veteran (whether or n o t t h e loan has m a t u r e d ) , then the- Administrator shall (1) p a y or discharge such unpaid principal and interest as is necessary to m a k e t h e certificate available for p a y m e n t under this act, (2) deduct such unpaid principal a n d so m u c h of such u n p a i d interest as accrued prior to October 1, 1931, from t h e a m o u n t of t h e face value of t h e certificate, and (3) certify to t h e Secretary of t h e Treasury as payable a n a m o u n t equal to t h e diffierence between t h e face value of t h e certificate and t h e a m o u n t so deducted. S E C . 2. I n t h e case of each loan heretofore m a d e p u r s u a n t to law by t h e Administrator of Veterans' Aft'airs and/or by any national bank, or any b a n k or t r u s t c o m p a n y incorporated under t h e laws of any State, Territory, possession, or t h e District of Columbia, upon t h e security of an adjusted service certificate, any interest unpaid accrued subsequent to September 30, .1931, t h a t has been, or, in. consequence of existing law, would be charged against t h e face value of such certificate shall be canceled insofar as t h e veteran is concerned, n o t w i t h s t a n d i n g a n y provision of law to t h e contrar}^ Any interest on any such loan payable t o a n y such b a n k or t r u s t companj^ shall be paid by t h e Administrator of Veterans' Affairs. I n t h e case of smy such loan which is unpaid and held by a bank or t r u s t com- . p a n y a t t h e time of filing an application under this act, the b a n k or t r u s t company holding t h e note and certificate shall, upon notice from t h e Administrator of Veterans' Affairs, present t h e m to t h e Administrator for p a y m e n t to t h e b a n k or t r u s t company in full satisfaction of its claim for t h e a m o u n t of unpaid principal a n d unpaid interest, except t h a t if t h e b a n k or t r u s t company, after such notice, fails to present t h e certificate and note to t h e Administrator within fifteen days after t h e mailing of t h e notice, such interest shall be paid only up to t h e fifteenth d a y after the mailing of such notice. S E C . 3. (a) An application under this act for p a y m e n t of a certificate m a y be m a d e a n d filed a t any time before the m a t u r i t y of t h e certificate (1) personally by t h e veteran, or (2) in case physical or m e n t a l incapacity prevents t h e making or filing of a personal application, then by such representative of the veteran and in such m a n n e r as m a y be b y regulations prescribed. An application m a d e by a person other t h a n a representative authorized by such regulations shall be held void. (b) If t h e veteran dies after t h e application is m a d e and before it is filed it m a y be filed by any person. If t h e veteran dies after t h e application is made it shall be valid if t h e Administrator of Veterans' Affairs finds t h a t it bears the bona-fide signature of t h e applicant, discloses an intention to claim the benefits of this act, a n d is filed before p a y m e n t is m a d e to t h e beneficiary. If t h e d e a t h occurs after t h e application is filed b u t before the receipt of the p a y m e n t under this act, or if t h e application is filed after the; d e a t h occurs b u t before mailing of t h e check in p a y m e n t to t h e beneficiary under section 501 of t h e World War Adjusted Compensation Act, as amended, p a y m e n t under this act shall be m a d e to t h e estate of t h e veteran irrespective of any beneficiary designation. If the veteran dies witho u t making a valid application under this act no p a y m e n t under this act shall be made. If the veteran dies on or after the passage of this act without having filed an application under section 1, in making any settlement there shall be deducted on account of any loan m a d e on an adjusted service certificate only interest accruing prior to October 1, 1931. (c) Where t h e records of t h e Veterans' Administration show t h a t an application, disclosing an intention to claim t h e benefits of this act, has been filed and t h e application cannot be found, such application shall, be presumed, in the absence of affirmative evidence to the contrary, to have been valid when originally filed. (d) If a t t h e time this act takes effect a veteran entitled to receive an adjusted service certificate has not m a d e application therefor he shall be.entitled, upon application m a d e under section 302 of t h e World W^ar Adjusted Compensation Act, as amended, to receive, a t his option, under such rules and regulations-as-the Adniinistrator m a y prescribe, either t h e certificate under-section 501 of such act, as amended, or p a y m e n t under this act. S E C . 4. T h e aniount certified p u r s u a n t to section 1 of this act shall be paid t o t h e veteran or his estate on or after June 15, 1936, by the Secretary of the Treasury by t h e issuance of bonds of t h e United States, registered in the name of t h e veteran only, in denominations of $50 having a total face value up to the highest multiple of $50 in t h e aniount certified as due t h e veteran, and the difference REPORT OF THE SECRETARY OF THE TREASURY 255 between t h e a m o u n t certified as due t h e veteran and the face a m o u n t of the bonds so issued shall be paid to the veteran or his estate by the Secretary of .the Treasury out of t h e fund created by section 505 of t h e World W a r Adjusted Compensation Act, as amended. The bonds shall be dated June 15, 1936, and shall m a t u r e on June 15, 1945, b u t shall be redeemable a t the option of the veteran or his estate at any time, a t such places, including post offices, as the Secretary of the Treasury m a y designate. Such bonds shall be issued under the a u t h o r i t y and subject to the provisions of the Second Liberty Bond Act, as amended, and shall not be transferable, assignable, subject to a t t a c h m e n t , levy, or seizure under any legal or equitable process and shall be paj^able only to the veteran or, in case of d e a t h or incompetence of the veteran, to the representative of ^his estate. Interest on each bond issued hereunder shall accrue a t the rate of 3 per centum per a n n u m from June 15, 1936, to date of m a t u r i t y or p a y m e n t of the principal of t h e bond, whichever is earlier, and will be paid with such principal: Provided, however, T h a t no interest will be paid on any bond redeemed prior to June 15, 1937. The provisions of this section shall be carried out subject to regulations of t h e Secretary of the Treasury to be issued from time to time to effectuate the purposes of this act. SEC. 5. The Secretary of t h e Treasury is authorized and directed to redeem, from t h e United States Government life insurance fund all adjusted service certificates held by t h a t fund on account of loans made thereon, and to pay to the United States Government life insurance fund t h e a m o u n t of t h e outstanding liens against such certificates, including all interest due or accrued, together with such a m o u n t s as m a y be due under subdivision (m) of section 502 of t h e World War Adjusted Compensation Act, as amended. T h e Secretary of t h e Treasury is authorized and directed to make such p a y m e n t by issuing, to the United States Government life insurance fund, bonds of t h e United States which shall bear interest at. t h e r a t e of 4}^ per centum per a n n u m . No such bonds shall m a t u r e or be callable until t h e expiration of a period of a t least, ten years from date of issue, except t h a t any such bond shall be redeemed by the Secretary of t h e Treasury and the principal and accrued interest thereon paid to t h e United States Government life insurance fund a t any time upon certification by the Administrator of Veterans' Affairs t h a t the a m o u n t represented by such bond is required to meet current liabilities. Bonds issued for the purposes of this section shall be issued under t h e Second Liberty Bond Act, as amended, subject to the provisions of this section. SEC. 6. The,adjusted service certificate fund is hereby made available for p a y m e n t s authorized by this act. SEC. 7. Notwithstanding the provisions of Public Law Numbered 262; S e v e n t y fourth Congress, approved August 12, 1935, no deductions on account of any indebtedness of t h e veteran to the United States, except on account of any lien against the adjusted service certificate authorized by law, shall be made from t h e adjusted service credit or from any a m o u n t s due under t h e World War Adjusted Compensation Act, as amended, or this act. SEC. 8. There is hereb}^ authorized to be appropriated such sums as m a y be necessary to carry out the provisions of this act. SEC. 9. If any provision of this act, or t h e application thereof to any person or circumstance is held invalid, t h e remainder of the act, a n d the application of such provision to other persons or circumstances, shall not be affected thereby. SEC. 10. Whoever knowingly makes a n y false or fraudulent s t a t e m e n t of a material fact in any application, certificate, or document m a d e under t h e provisions of this act, shall, upon conviction thereof, be fined not more than $1,000, or imprisoned not more t h a n five years, or both. SEC. 11. This act m a v be cited as t h e Adjusted Compensation P a y m e n t Act, 1936. JOSEPH W . BYRNS, Speaker of the House of Representatives. JNO. N . GARNER, Vice President of the United States and President of the Senate. I N T H E H O U S E OF R E P R E S E N T A T I V E S of THE UNITED STATES, J a n u a r y 24, 1936. T h e House of Representatives having proceeded to reconsider t h e bill (H. R. "9870) entitled "An Act to provide for the immediate p a y m e n t of World War adjusted service certificates, for t h e cancelation of unpaid interest accrued on loans secured by such certificates, and for other purposes", returned by t h e Presi- 256 REPORT OF THE SECRETARY OF THE TREASURY d e n t of t h e United States with his objections, t o t h e House of Representatives^ in which it originated, it was Resolved, T h a t t h e said bill pass, two-thirds of t h e House of Representatives agreeing t o pass t h e same. Attest: S O U T H T R I M B L E , Clerk. 1 certify t h a t this a c t originated in t h e House of Representatives. SOUTH TRIMBLE, Clerk. I N T H E SENATE OF T H E U N I T E D STATES, J a n u a r y 16 {calendar day J a n u a r y 27), 1936. T h e Senate having proceeded t o reconsider t h e bill ( H . R. 9870) entitled " A n Act t o provide for t h e immediate p a y m e n t of World War adjusted service certificates, for t h e cancelation of unpaid interest accrued on loans secured by such certificates, a n d for other purposes", returned by t h e President of t h e United States, t o t h e House of Representatives, in w^hich it originated, with his o.bjections, a n d passed b y t h e House on a reconsideration of t h e same, it was Resolved, T h a t t h e said bill do pass, two-thirds of the-Senators present h a v i n g voted in t h e affirmative. Attest: E D W I N A. H A L S E Y , Secretary. Exhibit 28 A n act to protect the United States against loss in,the delivery through the mails of ^ checks i n payment of benefits provided for by laws.administered by the Veterans^ Administration [Public No. 634, 74th Cong., H. R. 94961 Be it enacted by the Senate and House of Representatives of the United States of America i n Congress assembled. T h a t section 3 of t h e a c t entitled " A n Act making appropriations for t h e p a y m e n t of invalid a n d other pensions.of t h e United States for t h e fiscal year ending June thirtieth, nineteen hundred and' thirteen, a n d for other purposes", approved August 17, 1912 (37 Stat. 312* 38 U. S. C., sec. 50), is hereby amended t o read as follows: " S E C . 3. Pensions, compensation, insurance, or othisr allowances or benefits provided for by laws administered by t h e Veterans' Administration shall be paid by checks drawn, p u r s u a n t t o certification by t h e Administrator of Veterans' Affairs, b y t h e Division of Disbursement of t h e Treasury D e p a r t m e n t in such form.as t o protect t h e United States against loss, without separate vouchers o r receipts, a n d payable by t h e Treasurer of t h e United States, except in any case in which t h e Administrator of Veterans' Affairs may consider a voucher necessary for t h e protection of t h e Government. Such checks shall be transmitted b y mail t o t h e payee thereof a t his last-known address, a n d t h e envelope or cover thereof m a y bear a n appropriate notice of t h e prohibition hereafter set forth in this section. " P o s t m a s t e r s , delivery clerks, letter carriers, a n d all other postal employees are prohibited from delivering a n y mail addressed by t h e United States bearing such notice a n d containing a n y such check (except t h a t in t h e case of checks in p a y m e n t of allowances a n d benefits other t h a n pensions, compensation, or insurance, t h e prohibition shall apply only insofar as t h e Administrator of Veterans' Affairs deems i t necessary t o protect t h e United States against loss), t o any. person whomsoever, if t h e addressee h a s died or removed, or in t h e case of a widow believed by t h e postal employee intrusted with t h e delivery of such mail to have remarried (unless such mail is addressed by t h e United States in t h e n a m e which t h e widow shall have acquired b y remarriage); a n d t h e postmaster in every such case shall forthwith return such mail with a s t a t e m e n t of t h e reason for so doing, a n d if because of death or remarriage, t h e date thereof, if known. Checks r e t u r n e d as herein provided on account of d e a t h or remarriage shaU b e canceled." S E C . 2. Section 4 of t h e Adjusted Compensation P a y m e n t Act, 1936, is hereby amended b y adding a t t h e end thereol t h e following paragraphs: " A t t h e request of t h e Secretary of t h e Treasury, t h e Postmaster General, under such regulations as he m a y prescribe, shall designate postmasters a n d o t h e r employees of t h e Post Office D e p a r t m e n t a n d of t h e Postal Service t o perform, without extra compensation, such fiscal-agency services as m a y be desirable REPORT OF THE SECRETARY OF THE TREASURY 257 and practicable in connection with the redemption and payment of the bonds issued under this section; and the Postmaster General may require each such employee to furnish such bond as he may determine for the faithful performance of such fiscal-agency duties. "The Secretary of the Treasury is authorized to advance, from time to time, to the Postmaster General, from the appropriation contained in the Supplemental Appropriation Act, fiscal year 1936, approved February 11, 1936, for ^Administrative expenses. Adjusted Compensation Payment Act, 1936, Treasury Department, 1936 and 1937,' such sums as are certified by the Postmaster General to be required for the expenses of the Post Office Department in connection with the handling of the bonds issued hereunder. Such bonds, when received by the postmasters for purposes of redemption and payment, shall be handled by the postmasters under such special regulations as may be promulgated by the Postmaster General. They shall be transmitted between post offices or from any post office to the Treasury Department, or fiscal agent thereof, without advance payment of any required postage. The Secretary of the Treasury shall reimburse the Postmaster General, from the aforesaid appropriation contained in said Supplemental Appropriation Act, for such postage and registry fees as may be required in connection with such transmittal. Whenever it is proved to the Secretary of the Treasury, by clear and satisfactory evidence, that any such bond is lost, stolen, or destroyed while being so transmitted, the Secretary of the Treasury may, in accordance with such rules and regulations as he may prescribe, issue a duplicate thereof without requiring the furnishing of an indemnity bond.'^ Approved, June 3, 1936. Exhibit 27 An act to eliminate unnecessary expense in the administration of estates of deceased and incompetent veterans, and for other purposes [Public No. 833, 74th Cong., H. R. 13001] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That section 4 of the Adjusted Compensation Payment Act, 1936, as amended, is hereby further amended by striking out the last sentence of the first paragraph thereof and inserting in lieu thereof the following sentences: "In cases of deceased or incompetent veterans, the payments provided by this paragraph, whether of the amoun-t certified, by issuance of bonds and by checks payable out of the fund created by section 505 of the World War Adjusted Compensation Act, as amended, or whether of such bonds on redemption thereof, shall be made to the person or persons determined by the Secretary of the Treasury to be lawfully entitled thereto, without the necessity of the appointment by judicial proceedings or otherwise of a legal representative of the estate of any veteran or of any other persons, or of compliance with State law in respect of the administration of estates. . Such checks may be endorsed on behalf of the Secretary of the Treasury in the name of the veteran, if that is determined by the Secretary to be appropriate for the effectuation hereof. All determinations by the Secretary of the Treasur}^ under this paragraph shall be final and conclusive and neither any other official of the Urxited States nor, except in the case of prior judicial determination, any State or Federal court, shall have jurisdiction to' review any such determination. The provisions of this paragraph shall be carried out subject to regulations of the Secretary of the Treasury to be issued from time to time to effectuate the purposes of this Act." Approved, June 26, 1936. Exhibit 2S Regulations governing adjusted service bonds of 1945 ,^ June 6, 1936 [Department Circular No. 560. Public Debt] TREASURY DEPARTMENT, Washington, June 6, 1936. To Owners of Adjusted Service Bonds, and Others Concerned: The following regulations are prescribed, effective on June 15, 1936, to govern bonds of the United States, designated "Adjusted service bonds of 1945", issued » Supplemented and amended, see p. 260. 93790—37 18 258 REPORT OF THE SECRETARY OF THE TREASURY to veterans in p a y m e n t of a m o u n t s due on adjusted service certificates. T h e bonds are issued under t h e a u t h o r i t y and subject to t h e provisions of t h e Second Liberty Bond Act, as amended, a n d t h e Adjusted Compensation P a y m e n t Act, 1936. PAYMENT TO A REGISTERED OWNER 1. I n order for a registered owner to obtain p a y m e n t of a bond, t h e bond m u s t be presented a t any United States post office, or t r a n s m i t t e d to t h e Treasurer of t h e United States, Washington, D. C , in either case with t h e request for paym e n t on t h e back of the bond properly executed. All signatures m u s t be made in ink or indelible pencil. 2. Postmasters a t a n u m b e r of post offices (hereinafter referred to as paying offices) t h r o u g h o u t t h e country have been authorized to receive bonds presented for p a y m e n t and to issue checks in p a y m e n t therefor. All other postmasters are authorized to receive bonds presented for payment, a n d forward them, a t t h e risk a n d expense of t h e United States, to a paying office. The Treasurer of t h e United. Sta.tes. is authorized to issue checks in pajanent of bonds t r a n s m i t t e d to him. 3. If a bond is to be presented at a paying office, or at any other post office for transmittal to a pa,ying office, the request for payinent must be signed by the registered owner in the presence of and must be certified by the postm.aster or other authorized post office official at such office, who will receive the bond and issue a receipt therefor. 4. if a bond is to be t r a n s m i t t e d to t h e Treasurer of t h e United States for p a y m e n t , t h e request for p a y m e n t m u s t be signed by t h e registered owner in t h e presence of a n d m u s t be certified by one of t h e officers authorized in p a r a g r a p h 11, a n d thereafter the bond m u s t be t r a n s m i t t e d to t h e Treasurer of the United States, Washington, D . C. In a foreign country, request for p a y m e n t should be executed as provided in p a r a g r a p h 11. (e) a n d t h e bond forwarded to the Treasurer of t h e United States. 5. Special arrangements for execution of request for p a y m e n t will be provided for registered owners who m.ay be inmates of any institution, information concerning which m a y be obtained from t h e Treasury D e p a r t m e n t by the head of the institution. 6. P a y m e n t in all cases will be made by check drawn to the order of the registered owner, and mailed to him a t the address stated in his request for p a y m e n t . PAYMENT I N CASE OF DEATH OR INCOMPETENCE OF REGISTERED OWNER 7. I n cases of d e a t h or incompetence of the registered owner, if p a y m e n t is desired, it will be m a d e as hereinafter provided. T h e provisions of D e p a r t m e n t Circular 3,00, as amended, will, so far as applicable, apply to such cases, all of which will be handled oi^ly by t h e Treasury D e p a r t m e n t , Division of Loans and Currency, Washington, D. C. 8. With administration.—When a legal representative of the estate of a deceased bond owner has been duly appointed, p a y m e n t will be m a d e only to him. The request for paym.ent should be signed, " E s t a t e of A, deceased, b}^ B, executor (administrator)", m u s t state the address of the representative, and m u s t be signed in t h e presence of and m u s t be certified by one of the officers authorized in paragraph 11. T h e bond m u s t t h e n be t r a n s m i t t e d to the Treasury Department, Division of Loans and Currency, Washington, D. C. Unless satisfactory evidence of qualification of the representative is already on file with t h e Treasury D e p a r t m e n t , t h e bond m u s t be accompanied by a certificate (which m a y be a certified copy of t h e representative's letter of appointment) under the seal of the court appointing such representative, dated not more t h a n 6 m o n t h s before presentation of t h e bond for paj'-ment, showing t h e a p p o i n t m e n t and qualification of such representative and stating t h a t the a p p o i n t m e n t is still in force. 9.' Legal guardianship.—When t h e Treasury D e p a r t m e n t has notice t h a t a legal representative of the estate of an incompetent bond owner has been duly appointed, p a y m e n t will be m.ade only to such representative. If p a y m e n t is desired, t h e request for p a y m e n t should be signed "A, incompetent, by B, guardian (conservator or c o m m i t t e e ) " and m u s t state the representative's address. I t m u s t be signed in the presence of and m u s t be certified by one of the officers authorized in p a r a g r a p h 11. T h e bond m u s t then be t r a n s m i t t e d to the Treasury D e p a r t m e n t , Division of Loans and Currency, Washington, D. C. Unless satisfactory evidence of qualification of t h e representative is already on file with the Treasury D e p a r t m e n t , the bond m u s t be accompanied by a certificate (which REPORT OF THE SECRETARY OF THE TREASURY 259 m a y be a certified copy of t h e court order appointing such representative) under the seal of t h e court, dated not more t h a n 1 year before presentation of the bond for p a y m e n t , and showing the a p p o i n t m e n t and qualification of such representative. 10. Without administration or legal guardianship.—When no legal representative of the estate of a deceased or of an incompetent registered owner has been, or is to be appointed, and p a y m e n t is desired, and it is established to the satisfaction of t h e Secretary of t h e Treasury: (1) I n t h e case of a deceased owner either t h a t t h e value of the gross personal estate does not exceed $2,000, or t h a t administration of the estate is not required in t h e State of the decedent's dom.icile; or (2) in the case of an incompetent owner t h a t the value of the gross personal estate does not exceed $2,000, and t h a t p a y m e n t is necessary for the support of the incompetent or his dependents, p a y m e n t will be m a d e to such representative of the estate as m a y be recognized by the Secretary of the Treasury. All such p a y m e n t s will be m a d e in accordance with the provisions of D e p a r t m e n t Circular 300, a s amended, insofar as applicable, such provisions to be construed in a m a n n e r consistent with, the provisions of the Adjusted Compensation P a y m e n t Act, 1936, and t h e provisions of these regulations. Special forms, for use in such cases have been prepared and will be furnished upon request. I n all such cases instructions should be requested of the Treasury Department, Division of Loans and Currency, Washington, D. C , before a request for payment is executed or a bond submitted. OFFICERS AUTHORIZED TO CERTIFY REQUESTS FOR PAYMENT 11. T h e following officers are authorized to witness requests for p a y m e n t and certify thereto: {a) Any United States postmaster, acting postmaster, inspector in charge of a post office, or other post-office employee designated by the postmaster under authority of the Postmaster General, under a legible imprint of a dating s t a m p of his post office; (6) The officer in charge of any home, hospital, or other facihty of the Veterans' Administration, b u t only as to patients a n d members actually domiciled a t t h e station over which t h e certifying officer exercises jurisdiction; (c) Any executive officer of a bank or t r u s t company (Or branch thereof) incorporated in the United States, its organized Territories or insular possessions, under the corporate seal of the bank or t r u s t company; {d) Judges a n d clerks of United States courts, under t h e seal of t h e c o u r t ; United States Collectors of Customs and Internal Revenue; commanding officers of t h e Army, N a v y , Marine Corps, and Coast Guard of the United States for members of their respective establishments; officials of the Treasury D e p a r t m e n t , who m a y be designated from time to time by t h e Secretary of the Treasury;. (e) In a foreign country: United States diplomatic and consular representatives and attach6s, under their respective seals; managers and executive officers of foreign branches of banks or t r u s t companies incorporated in the United States. 12. No person authorized to certify requests for p a y m e n t m a y certify a request signed by himself, either in his own right or in any representative capacity. 13. Certifying officers will be held responsible for positive identification of t h e person requesting p a y m e n t as t h e person whose name appears on the face of t h e bond, or the person entitled to request p a y m e n t under these regulations, a n d , if necessary, should require witnesses to identify t h a t person. Provision for signatures and addresses of witnesses, a n d for fingerprints in exceptional cases, is made on t h e back of t h e bond. GENERAL PROVISIONS 14. No request for p a y m e n t signed by an agent or person acting under a power of attorney, in behalf of t h e registered owner or t h e representative of his estate, will be recognized by the Treasury D e p a r t m e n t . I n no case will any p a y m e n t be made other t h a n to t h e registered owner or t h e reprsentative of his estate. 15. I n cases where documents are required to support a request for p a y m e n t a n d two or more bonds are presented a t the same time, only one set of documents will be required. TRANSMISSION OF BONDS 16. Any transmission of a bond to t h e Treasury D e p a r t m e n t will be a t t h e risk and expense of the owner. T h e use of registered mail is suggested. 260 REPORT OF THE SECRETARY OF THE TREASURY L O S T , S T O L E N , OR D E S T R O Y E D B O N D S 17. I n case of loss, theft, or destruction of a bond, t h e Treasury Department,^ Division of Loans and Currency, Washington, D. C , should be notified immediately of the serial number of the bond and the name a n d address of the registered owner. Upon receipt of such notice full information as to requirements for issuance of a duphcate will be provided. Apphcation for relief in such cases will be governed in general by the regulations found in D e p a r t m e n t Circular 300, a s amended. T h e Treasury D e p a r t m e n t should likewise be notified of t h e recovery of any bond reported lost, stolen, or destroyed. TAXATION 18. I n accordance with applicable law, t h e bonds are exempt, b o t h as t o principal and interest, from all taxation, except estate, inheritance, or gift taxes, now or hereafter imposed by t h e United States, any State, or any 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 . AMENDMENTS 19. T h e Secretary of t h e Treasury reserves t h e right a t any time, or from t i m e to time, t o revoke, or amend these regulations, or to prescribe and issue supplem e n t a l or a m e n d a t o r y rules a n d regulations governing adjusted service bonds. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 29 Supplement, J u n e 26, 1936, to Department Circular No. 560, prescribing regulations governing adjusted service bonds of 1945 TREASURY DEPARTMENT^ Washington, J u n e 26, 1936. T O O W N E R S OF A D J U S T E D S E R V I C E B O N D S , AND O T H E R S C O N C E R N E D : D e p a r t m e n t Circular No. 560, d a t e d J u n e 6, 1936, is hereby supplemented by t h e following additional regulations: 1. Disposition luithout administration or legal guardianship.—When no legal representative of t h e estate of a deceased or of an incompetent veteran has been or is to be appointed and p a y m e n t of t h e a m o u n t certified as due upon his adjusted service certificate through t h e issuance and delivery of bonds (and check if any) has n o t been accomplished, and it is established to t h e satisfaction of t h e Secretary of t h e Treasury:. (1) in t h e case of a deceased payee either t h a t t h e value of t h e gross personal estate does not exceed $2,000, or t h a t administration of t h e estate is not required in t h e S t a t e of t h e decedent's domicile; or (2) in t h e case of an incompetent payee t h a t t h e value of t h e gross personal estate does n o t exceed $2,000, such p a y m e n t will be m a d e to t h e person or persons determined by t h e Secretary of t h e Treasury to be lawfully entitled thereto. Such p a y m e n t will be m a d e in accordance with t h e provisions of D e p a r t m e n t Circular No. 300, as amended, and t h e provisions of D e p a r t i n e n t Circular No. 560, insofar as each is applicable, all such provisions to be construed in a m a n n e r consistent with t h e provisions of t h e Second Liberty Bond Act, as amended, and t h e Adjusted Compensation P a y m e n t Act, 1936, as amended. Special forms for use in such cases h a v e been prepared a n d m u s t be complete.d a n d executed in compliance with accompanying instructions. These forms m a y be obtained from t h e Treasury D e p a r t m e n t , Division of Loans a n d Currency, Washington, D . C. 2. T h e Secretary of t h e T r e a s u r y reserves t h e right a t a n y time, or from t i m e to time, to revoke, or a m e n d these regulations, or to prescribe a n d issue supplem e n t a l or a m e n d a t o r y rules a n d regulations governing adjusted service b o n d s . JOSEPHINE ROCHE, Acting Secretary of the Treasury, REPORT OF THE SECRETARY OF THE TREASURY 261 Exhibit 30 Order of the Acting Secretary of the Treasury, June 10, 1936, authorizing officers of the Treasury Department to witness and certify requests for payment of adjusted service bonds Pursuant to the provisions of Department Circular No. 560, dated June^ 6» 1936, establishing regulations governing adjusted service bonds, the following 'Officers of the Treasury Department in Washington are hereby authorized to witness and certify requests for payment by the Treasurer of the United States of adjusted service bonds: I. The officers authorized to witness assignments of United States registered issues under Department Circular No. 300, as amended, are as follows: Secretary of the Treasury. Under Secretary of the Treasury. The several Assistant Secretaries of the Treasury. Commissioner of the Public Debt. Assistant Commissioner of the Public Debt. Deputy Commissioner of the Public Debt. Chief of the Division of Loans and Currenc}^ Assistant Chief of the Division of Loans and Currency. Treasurer of the United States. Assistant Treasurer of the United States. Executive Assistant to the Treasurer of the United States. II. In addition, the following officers are authorized to witness and certify requests for payment by the Treasurer of the United States made by veterans •employed in the respective services specified: For the Department generally. Chief Clerk and Superintendent. For the Bureau of Internal Revenue, head, or acting head, Personnel Division. For the Bureau of Engraving and Printing, chief accountant and assistant •chief accountant. For the Procurement Division, administrative assistant. Branch of Supply. The attention of all officers authorized to witness and certify requests for payment of adjusted service bonds is called to the requirement of Department 'Circular No. 560 that the witnessing officer must make certification that the person signing the request for payment appeared personally before him, and that such person was known or proved to him to be the payee of the particular bond. Certifying officers will be held to strict accountability in these respects, .and will be expected to respond in respect to any losses resulting from want of •care on their part. The witnessing officer must affix to the certification of the request for payment his official signature, title, and address, and the date of certification. WAYNE C . TAYLOR, Acting Secretary, Issue of Federal Farm Mortgage Corporation bonds guaranteed as to interest and principal by the United States Exhibit 31 inviting tenders for Federal Farm Mortgage Corporation l}i percent bonds of 1939 On August 26, 1935, the Secretary of the Treasury, on behalf of the Federal Farm Mortgage Corporation, invited tenders for bonds of the Corporation, as •described in the following circular: [Department Circular No. 549. Public Debt] TREASURY DEPARTMENT, Washington, August 26, 1935. The Secretary of the Treasury, on behalf of the Federal Farm Mortgage Corporation, offers to the people of the United States $100,000,000, or thereabouts, 1J4 percent bonds of 1939 of the Federal Farm Mortgage Corporation, and invites tenders therefor, through the Federal Reserve banks. 262 REPORT OF THE SECRETARY OF THE TREASURY DESCRIPTION OF BONDS T h e bonds will be dated September 3, 1935^ a n d will bear interest from t h a t date a t t h e r a t e of one a n d one-half percent per a n n u m , payable on a s e m i a n n u a l basis on M a r c h 1, 1936, a n d thereafter semi-annually on September 1 a n d M a r c h 1 in each year until t h e principal a m o u n t becomes paj^able. T h e y will m a t u r e September 1, 1939, and will not be subject to call for redemption prior to m a t u r i t y . Bearer bonds with interest coupons a t t a c h e d will be issued in denominations of $100, $500, $1,000, $5,000, $10,000, a n d $100,000. T h e bonds will n o t be issued in registered form. Provision will be made for the interchange of bonds of different denominations a t any Federal Reserve b a n k or a t t h e Division of Loans and Currency of t h e United States 'Treasury, Washington, D. C , and through any other agency designated for t h e purpose by the Federal F a r m Mortgage Corporation. These bonds are issued under the authority of t h e Federal F a r m M o r t g a g e Corporation Act, approved J a n u a r y 31, 1934, as amended, which provides t h a t these bonds and the income derived therefrom shall be exempt from Federal,. State, municipal, and local taxation (except surtaxes, estate, inheritance, a n d gift taxes). Section 16 {a) of t h a t act contains the following provisions: " T h e first sentence of t h e eighth paragraph of section 13 of the Federal Reserve Act, as amended, isfurther amended b}^ inserting before t h e semicolon after t h e words 'Section 13 (a) of this Act' a comma and t h e following: 'or by the deposit or pledge of Federal F a r m Mortgage Corporation bonds issued under t h e Federal F a r m Mortgage Corporation Act'." Thus, t h e bonds are legally acceptable to secure 15-day borrowings from t h e Federal Reserve banks. Section 4 of the Federal F a r m Mortgage Corporation Act, as amended, alsoprovides as follows: ''* * * Such bonds shall be fully and unconditionally guaranteed both as to interest and principal by the United States and such, g u a r a n t y shall be expressed on t h e face thereof, and such bonds shall be lawful, investments, and m a y be accepted as security, for all fiduciary, trust, and public funds t h e investment or deposit of which shall be under t h e authority or control of t h e United States or any officer or officers thereof. I n t h e event t h a t t h e Corporation shall be unable to pay upon demand, when due, t h e principal of^ or interest on, sugh bonds, t h e Secretary of t h e Treasury shall pay to t h e holder t h e a m o u n t thereof which is hereby authorized to be appropriated, out of any moneys in t h e Treasury not otherwise appropriated a n d thereupon to t h e e x t e n t of t h e a m o u n t so paid t h e Secretary of t h e Treasury shall succeed to all t h e rights of t h e holders of such bonds. * * *" T E N D E R S AND ALLOTMENTS Tenders will be received a t t h e Federal Reserve b a n k s and branches thereof up to 12 o'clock noon, eastern s t a n d a r d time, Wednesday, August 28, 1935,. and unless received by t h a t time will be disregarded. Tenders will not be received a t t h e Treasury D e p a r t m e n t , Washington. E a c h tender m u s t state the face a m o u n t of bonds bid for, which m u s t be $1,000 or any even multiple thereof, a n d the price offered. T h e price offered m u s t be expressed on the basis of 100, with fractions expressed as 32ds of 1 percent, in accordance with usual practice, e. g., 10016/32. Tenders will be received without deposit from incorporated b a n k s and t r u s t companies a n d from responsible a n d recognized dealers in investment securities. Tenders from others m u s t be accompanied in every case by a deposit of 5 percent of the face a m o u n t of bonds bid for, except where t h e tender is accompanied by an express g u a r a n t y of p a y m e n t by an incorporated b a n k or t r u s t company. If t h e tender is accepted, in whole or in p a r t , t h e deposit will be applied toward p a y m e n t for t h e bonds, t h e balance to be paid as hereinafter provided. If t h e tender is rejected, t h e deposit will be returned to t h e bidder. Tenders m u s t be enclosed in envelopes, securely sealed, addressed to t h e Federal Reserve bank, or branch, of the district, a n d plainly marked ''Tender for IH percent bonds of 1939 of the Federal F a r m Mortgage Corporation." T h e Federal Reserve b a n k s will supply printed forms a n d special.envelopes for submitting tenders. Incorporated banks and t r u s t companies not located in a city where a Federal Reserve b a n k or branch is located may, in their discretion, submit tenders by telegram, b u t such telegrams m u s t be received a t t h e Federal Reserve b a n k or branch before t h e time fixed for closing. Immediately after t h e closing hour for the receipt of tenders on August 28, 1935, all tenders received in writing or by telegraph a t t h e Federal Reserve banks or branches thereof up to t h e closing hour (12 o'clock noon, eastern s t a n d a r d REPORT OF THE SECRETARY OF THE TREASURY 263 time) will be opened. T h e Secretary of t h e Treasury will determine the acceptable prices offered and will make public announcement thereof as soon as possible after the opening of tenders. Those submitting tenders "will be advised by t h e Federal Reserve banks of t h e acceptance or rejection thereof, and p a y m e n t on accepted tenders m u s t be made as hereinafter provided. I n considering t h e acceptance of tenders, the highest jprices oft'ered will be accepted in full down to the a m o u n t required; a n d if t h e same price api^ears in two or more tenders and it is necessary to accept only a p a r t of t h e a m o u n t offered a t such price, tenders for smaller a m o u n t s m a y be accorded preference and tenders for larger a m o u n t s prorated to the extent necessary in accordance with the respective a m o u n t s bid for. T h e Secretary of t h e Treasury expressly reserves t h e right, however, t o reject any or all tenders or p a r t s of tenders, a n d to award less t h a n t h e a m o u n t bid for, and any action he m a y take in any such respect or respects shall be final. PAYMENT P a y m e n t for a n y bonds allotted on accepted tenders m u s t be made or completed on or before September 3, 1935, in cash or other immediately available funds. I n every case where p a y m e n t is not so completed, t h e 5 percent deposit with the application shall, upon declaration m a d e by t h e Secretary of t h e Treasury in his discretion, be forfeited to the Federal F a r m Mortgage Corporation. GENERAL PROVISIONS Federal Reserve banks, as fiscal agents of the United States, are authorized a n d requested to receive tenders, to m a k e allotments as indicated by t h e Secret a r y of t h e Treasury to t h e Federal Reserve b a n k s of t h e respective districts, to issue allotment notices, to receive p a y m e n t for bonds allotted, to m a k e delivery of bonds on full-paid allotments, and to perform such other acts as m a y be necessary to carry out the provisions of this circular. Pending delivery of the definitive bonds. Federal Reserve banks m a y issue interim receipts. T h e Secretary of t h e Treasury m a y a t any time, or from time to time, prescribe supplemental or a m e n d a t o r y rules and regulaiJions governing t h e receipt of tenders and the sale of bonds under this circular, which will be communicated p r o m p t l y to t h e Federal Reserve banks. H E N R Y M O R G E N T H A U , Jr., Secretary of the Treasury. Exhibit 32 Acceptance of tenders for Federal F a r m Mortgage Corporation bonds of 1939 {from press release, Aug. 29, 1935 ^) On August 29, 1935, Secretary of t h e Treasury Morgenthau announced the result of the offering by the Treasury of $100,000,000, or thereabouts, of V/i percent bonds of 1939 of t h e Federal F a r m Mortgage Corporation, tenders for which were received a t t h e Federal Reserve banks up to 12 o'clock noon, August 28. Tenders for $85,592,000 face a m o u n t of bonds were received, of which $85,122,000 was accepted a t prices ranging from 100 down to 98. T h e average price of t h e bonds issued was approximately 99. Based on t h e average price at which t h e bonds were issued on September 3, 1935, the yield was about 1.762 percent to m a t u r i t y , September 1, 1939. Miscellaneous Exhibit 33 Receipt of Treasury bonds and Treasury notes for Federal estate or inheritance taxes [Seventh supplement to Department Circular No. 225. Public Debt] TREASURY DEPARTMENT, October 15, 1935. 1. D e p a r t m e n t Circular No. 225, dated J a n u a r y 31, 1921, prescribed the regulations governing t h e receipt of bonds and notes of t h e United States for Federal estate or inheritance taxes p u r s u a n t to the provisions of section 14 of t h e Second Liberty Bond Act, approved September 24, 1917, as amended (U. S. C , title 31, 1 Hevised Sept. 10, 1935. .264 REPORT OF THE SECRETARY OF THE TREASURY sec. 765). Said circular has been supplemented on J u n e 30, 1922, July 3 1 , 1923, October 15, 1925, October 30, 1926, February 14, 1931, and J a n u a r y 12, 1934, to show t h e bonds and notes on such dates, respectively, outstanding a n d receiv-able for such p a y m e n t s . Said circular is hereby further supplemented to show t h a t the only bonds a t this date outstanding bearing interest a t a higher r a t e t h a n 4 percent per a n n u m which come within t h e provisions of said D e p a r t m e n t Circular No. 225, dated J a n u a r y 31, 1921, are the 4K percent Treasury bonds of 1947-52, dated October 16, 1922. Treasury notes outstanding a t this time do n o t come within the provisions of said circular. 2. For t h e calculation of accrued interest on t h e current coupons of bonds tendered in p a y m e n t of estate or inheritance taxes under this circular, t h e method outlined in Exhibit B to D e p a r t m e n t Circular No. 225, d a t e d J a n u a r y 3 1 , 1921, should be followed. ^T. J. COOLIDGE, Acting Secretary of the Treasury. Exhibit 34 Letter of the Secretary of the Treasury, May 27, 1936, to the presidents of the Federal Reserve banks, relative to the announcements of offerings of and the submission of subscriptions for obligations of the United States M a y 27, 1936. M Y D E A R S I R : In advance of the. J u n e 15 financing, which I now expect will be announced on Monday, J u n e 1, it seems desirable to call t h e attention of subscribing banks and any others concerned to the provisions m a d e for announcem e n t s of offerings and t h e submission of subscriptions. Accordingly, I a m addressing this communication to you with t h e request t h a t you will t r a n s m i t a copy to each banking institution in your district, and others concerned. On the occasion of a public offering of interest-bearing obligations of t h e United States, announcement will be m a d e by the Secretary of the Treasury through t h e press, and each Federal Reserve bank will mail, to banking institutions in its district, full information concerning t h e offering, together with application forms for use in entering subscriptions. Effort will be m a d e to arrange the mailing so t h a t information will be received a t each banking institution addressed on t h e morning of the opening day. In case a banking institution which may be interested in subscribing is so far distant from t h e Federal Reserve bank of its district t h a t announcements are n o t ordinarily received on t h e opening day, it m a y request the Federal Reserve bank t h a t it be listed to receive telegraphic advice of all offerings. T h e subscription books for a n y offering m a y be closed by t h e Treasury without advance notice, and therefore each subscribing bank, upon receipt of information as to t h e terms of a Treasury offering, either in t h e press, through the mail, or by telegram, should p r o m p t l y file with t h e Federal Reserve bank any subscriptions for itself and its customers. No assurance can be given as to t h e period t h e subscription books m a y remain open, and subscribing banks, even before t h e receipt of official subscription blanks m a y file their subscriptions by telegram or b y mail to t h e Federal Reserve banks. Any subscription so filed by telegram or mail in advance of receipt by subscribing bank of subscription blanks furnished for t h e particular issue, should be confirmed immediately by mail, and on t h e blanks provided when such blanks shall have been received. This is necessary, for each subscribing bank or t r u s t company is required to give t h e names a n d addresses of its customers subscribing to t h e offering and t h e a m o u n t subscribed by each, and to make certification with respect to t h e subscription by t h e bank for its own account and for account of its customers. Subscriptions will be received a t the Federal Reserve b a n k s a n d branches a n d a t t h e Treasury D e p a r t m e n t , Washington. Banking institutions generally may submit subscriptions for account of customers. Others t h a n banking institutions will not be permitted to enter subscriptions except for their own account. Cash subscriptions from banking institutions for their own account will be received without deposit, b u t will be limited on each issue to an a m o u n t which will be stated in t h e Treasury offering. Recently t h e limit placed has been onehalf of the a m o u n t of t h e combined capital and surplus. A cash subscription from any other subscriber m u s t be accompanied by p a y m e n t in an a m o u n t which also will be specified in such offering. T h e purpose of this initial p a y m e n t is to limit t h e a m o u n t of customers' subscriptions to their legitimate requirements, a n d i t REPORT OF TUE SECRETARY OF THE TREASURY 265' tends to defeat this purpose if unsecured loans, or loans without collateral other than the securities subscribed for, are made to cover the initial deposit. Bankinginstitutions will'greatly assist if they will cooperate in avoiding this practice. In receiving applications from customers for cash offerings, each banking institution is requested to certify that, to the best of its knowledge and belief, itscustomers' applications are made in good faith for the customers' legitimate requirements, and that the bank itself has no beneficial interest therein. Attention is invited to the following certificate which will appear on all subscription blanks furnished b37^ Federal Reserve banks for cash offerings, for the use of subscribing banking institutions: "We hereby certify: That we have received applications from our customers^ in the amounts set opposite the customers' names on the attached list which i8> made a part of this subscription; that there has been paid to us by each such customer, not subject to withdrawal until after allotment and payment in full for securities allotted, the full amount required to accompany his application: (a) if for $ or less the amount in full, or {b) if for more than $ ,percent of the amount applied for but not less than $ ; that each such application, to the best of our knowledge and belief, is made in good faith, for the customer's legitimate requirements; and that we have no beneficial interest therein. "We agree: In consideration of the receipt by you of this subscription, to makepayment in full for the entire amount which may be allotted on this subscription, at par on or before the date of issue, or at par and accrued interest if on later allotment. Such pa5'^ment will be made by the method indicated, hereon." The purpose of these provisions is to provide for an equitable allotment and distribution of securities to all classes of subscribers and the cooperation of" banking institutions to this end is requested. Federal Reserve banks as fiscal agents of the United States are authorized and instructed to examine applications for cash offerings of interest-bearing securities^ of the United States and to report to the Secretary of the Treasury any which appear to be excessive, with recommendation as to the reduction or rejection of any such applications, which recommendations will be promptly acted upon by the Secretary. Federal Reserve banks as fiscal agents of the United States arealso authorized and instructed to take such other action as may be necessary to assure compliance with the procedure outlined in this letter and the provisions of any offering circular. The right is reserved to withdraw, amend, or supplementthis letter at any time or from time to time. Sincerely yours, HENRY MORGENTHAU, J R . , Secretary of the Treasury,, Exhibit 35 Order of the Acting Secretary of the Treasury, June 10, 1936, authorizing officers of the Treasury Department to witness assignments of registered issues of United States bonds and notes Department Circular No. 300, as amended, prescribing regulations with respect to United States bonds and notes, makes provision for the assignment of registered issues at the Treasury Department. The following officers are hereby authorized to witness such assignments: The Secretary of the Treasury. The Under Secretary of the Treasury. The several Assistant Secretaries of the Treasury. The Commissioner of the Public Debt. The Assistant Commissioner of the Public Debt. The Deputy Commissioner of the Pubhc Debt. The Chief of the Division of Loans and Currency. The Assistant Chief of the Division of Loans and Currency. The Treasurer of the United States. The Assistant Treasurer of the United States. The Executive Assistant to the Treasurer of the United States. No other officers in the Treasury Department at Washington are authorized to witness the assignments of registered issues of the United States. The attention of all officers authorized to witness assignments is called to the Department's requirement that the witnessing officer must make certification 266 REPORT OF THE SECRETARY OF THE TREASURY t h a t t h e person executing t h e assignment appeared personally before him, t h a t such person was known or proved to him to be t h e payee of t h e particular .security assigned, or his duly constituted assign, and t h a t such person executed t h e transfer, acknowledging it to be his free act and deed. Witnessing officers will be held to strict accountability in these respects, and w i l l b e expected to respond in respect to any losses resulting from w a n t of care on their p a r t . T h e witnessing officer m u s t affix to t h e assignment his official signature, title, and address, and the d a t e of t h e assignment. This order supersedes t h e order of August 19, 1921. W A Y N E C . TAYLOR, Acting Secretary. MONEY 1 Exhibit 36 Joint resolution authorizing exchange of coins and currencies and immediate payment of gold clause securities by the United States; withdrawing the right to sue the United States thereon; limiting the use of .certain appropriations; and for other purposes [Public Res. No. 63, 74th Cong., H. J. Res. 3481 Whereas in order to maintain t h e uniform value of all coins and currencies of t h e United States, Public Resolution Numbered 10 of J u n e 5, 1933, declared provisions known as "gold clauses" to be against public policy, prohibited their use in obligations thereafter incurred, a n d provided t h a t money of t h e United States legal tender for obligations generally was legal tender for all obligations with or without gold clauses; and Whereas t h e United States has paid and will continue to p a y to t h e holders of all its securities their principal a n d interest, dollar for dollar, in lawful money of the United States: Now, therefore, be it Resolved by the Senate and House of Representatives of the United States of America in Congress assembled. T h a t t h e lawful holders of t h e coins or currencies of t h e United States shall be entitled ^o exchange them, dollar for dollar, for other coins or currencies which m a y be lawfully acquired a n d are legal tender for public and private debts; and t h a t t h e owners of the gold clause securities of t h e United States shall be, a t their election, entitled to receive immediate p a y m e n t of t h e stated dollar a m o u n t thereof with interest to t h e date of p a y m e n t or to prior m a t u r i t y or to prior redemption date, whichever is earlier. T h e Secretary of t h e Treasury is authorized and directed to m a k e such exchanges a n d p a y m e n t s upon presentation hereunder in the m a n n e r provided in regulations prescribed by him. T h e period within which t h e owners of gold clause securities shall be entitled hereunder to receive p a y m e n t prior to m a t u r i t y shall expire J a n u a r y . 1, 1936, or on such later date, not after July 1, 1936, as m a y be fixed by t h e Secretary of t h e Treasury. SEC. 2. Any consent which t h e United States m a y have given to t h e assertion against it of any right, privilege, or power, whether by way of suit, counterclaim, set-off, recoupment, or other affirmative action or defense in its own n a m e or in t h e n a m e of any of its officers, agents, agencies, or instrumentalities in any proceeding of any n a t u r e whatsoever (1) upon anj'- gold clause securities of t h e United States or for interest thereon, or (2) upon any coin or currency of t h e United States, or (3) upon any claim or demand arising out of any surrender, requisition, seizure, or acquisition of any such coin or currency or of a n y gold or silver and involving t h e effect or validity of any change in t h e metallic content of t h e dollar or other regulation of t h e value of money, is w i t h d r a w n : Provided, T h a t this section shall not apply to any suit heretofore commenced or which m a y be commenced by J a n u a r y 1, 1936, or to any proceeding referred to in this section in which no claim is m a d e for p a y m e n t or credit in an a m o u n t in excess of t h e face or nominal value in dollars of t h e securities, coins, or currencies of t h e United States involved in such proceeding. SEC. 3. Except in cases with respect to which consent is not withdrawn under section 2, no sums, whether heretofore or hereafter appropriated or authorized to be expended, shall be available for, or expended in, p a y m e n t upon securities, coins, or currencies of t h e United States except on an equal and uniform dollar for dollar basis. 1 Amendments, Aug. 26, 1935, and Dec. 24, 1935, to the Provisional Regulations Issued Under the Gold Reserve Act of 1934, as amended, are available separately and are not reproduced here. REPORT OF THE SECRETARY OF THE TREASURY 267 SEC,' 4. As used in this resolution t h e phrase "gold clause" means a provision contained in or m a d e with respect to an obligation which purports to give t h e obligee a right to require p a y m e n t in gold, or in a particular kind of coin or curr e n c y of t h e United States, or in an a m o u n t in money of t h e United S t a t e s m e a s u r e d thereby, declared to be against public policy by Public Resolution N u m b e r e d 10 of J u n e 5, 1933; and t h e phrase "securities of t h e United S t a t e s " m e a n s t h e domestic public debt obligations of t h e United States, including bonds, notes, certificates of indebtedness, a n d Treasury bills, and other obligations for t h e r e p a y m e n t of money, or for interest thereon, made, issued, or guaranteed by t h e United States. ^ Approved, August 27, 1935, six p . m., E. S. T. Exhibit 37 Regulations governing the immediate payment of gold clause securities [Department Circular No. 552. Public Debt] TREASURY DEPARTMENT, Washington, September 10, 1935. Public Resolution No. 63, Seventy-fourth Congress, approved August 27, 1935, readsasfollows: ' • [Public resolution omitted here, see p. 2661 P u r s u a n t to the a u t h o r i t y of such resolution the following regulations are hereby prescribed to govern t h e immediate p a y m e n t of outstanding gold clause securities of t h e United States: 1. As used in these regulations, the phrase "gold clause" and t h e phrase ^'securities of the United S t a t e s " have t h e same meaning as used in t h e foregoing resolution. 2. T h e owners of any outstanding gold clause securities of t h e United States are entitled, a t their election, subject to t h e provisions of such resolution a n d of these regulations, to receive p a y m e n t of the stated dollar a m o u n t thereof with interest to the date of p a y m e n t or to prior maturit}^ or to prior redemption date, whichever is earlier, 3. Owners of any outstanding gold clause securities desiring to receive paym e n t hereunder should present and surrender their securities, in t h e m a n n e r provided in t h e next following paragraphs. T h e period during which gold clause securities m a y be presented for immediate p a y m e n t prior to m a t u r i t y under these regulations will expire on J a n u a r y 1, 1936. 4. Surrender of bearer or coupon securities for payment.—Securities in bearer or coupon form should be presented and surrendered to a Federal Reserve bank, or to the Treasurer of the United States, Washington, D . C , and should have t h e next m a t u r i n g coupon and all coupons bearing dates subsequent thereto a t t a c h e d ; and if the securities have been called for redemption, all coupons bearing dates subsequent to t h e redemption date should also be attached. If any such coupons are missing, the a m o u n t thereof will be deducted from t h e p a y m e n t to be m a d e , a n d t h e a m o u n t s so deducted will be t r e a t e d as provided by p a r a g r a p h 26 of D e p a r t m e n t Circular No. 300. 5. Surrender of registered securities for payment.—Securities in registered form should be presented and surrendered to a Federal Reserve bank, or to t h e Treasury D e p a r t m e n t , Division of Loans and Currency, Washington, D . C , and should be assigned by t h e registered payees or assigns thereof in accordance with t h e g e n e r a l . regulations of t h e Treasury D e p a r t m e n t governing assignments for transfer or exchange, in one of t h e two following forms: (1) if p a y m e n t is to be m a d e to the registered payee or his assigns, t h e assignment should be to " T h e Secretary of the Treasury for p a y m e n t under Circular No. 5 5 2 " ; (2) if p a y m e n t is t o be made to another, the assignment should be to " T h e Secretary of t h e T r e a s u r y for p a y m e n t under Circular No. 552 to " 6. Written advice and transportation.—All securities presented and surrendered hereunder m u s t be accompanied by appropriate written advice (see F o r m P. D . 1464 hereto annexed) signed by the owner or his duly authorized agent, describing t h e securities, requesting immediate p a y m e n t , and giving address to which check issued in p a y m e n t is to be mailed. T h e securities m u s t be delivered a t t h e expense and risk of t h e owners. Coupon or bearer securities should be forwarded by registered mail insured, or by express prepaid. Registered securities, 268 REPORT OF THE SECRETARY OF THE TREASURY assigned as herein provided, m a y be forwarded by registered mail. Facilities for t h e t r a n s p o r t a t i o n of securities by registered mail insured m a y be arranged between incorporated b a n k s a n d t r u s t companies a n d t h e Federal Reserve b a n k s , a n d owners m a y t a k e a d v a n t a g e of such a r r a n g e m e n t s when available, utiliziiig^ such incorporated banks a n d t r u s t companies as their agents. 7. P a y m e n t . — P a y m e n t of t h e principal a n d accrued interest due will be m a d e by check issued by t h e Treasurer of t h e United States or by a Federal Reserve bank, and mailed by ordinary mail to t h e address furnished by t h e owner, or his agent. Interest on securities paid prior to m a t u r i t y or redemption d a t e will be c o m p u t e d to and including t h e day on which t h e check in p a y m e n t is issued. 8. General provisions.—The Treasurer of t h e United States, a n d t h e F e d e r a l Reserve banks as fiscal agents of t h e United States, are authorized a n d requested t o receive gold clause securities for p a y m e n t and t o m a k e p a y m e n t thereof in accordance with these regulations. T h e T r e a s u r y D e p a r t m e n t a n d t h e F e d e r a l Reserve banks are t h e only official agents under this circular. 9. T h e Secretary of t h e T r e a s u r y m a y a t a n y time, or from t i m e t o time^. supplement or a m e n d these regulation's. „ HENRY MORGENTHAU, Jr., Secretary of the Treasury,. Approved: THE FRANKLIN D . ROOSEVELT, WHITE HOUSE, September 14, 1935, TREASURY DEPARTMENT. Division of Loans and Currency. Form P. D. 1464 ' • - F O R M O F A D V I C E TO ACCOMPANY U N I T E D S T A T E S " ( J T O L D - C L A U S E " SECURITIES,, I N C O U P O N OR R E G I S T E R E D F O R M , P R E S E N T E D FOR I M M E D I A T E PAYMENTP U R S U A N T TO T H E P R O V I S I O N S O F P U B L I C R E S O L U T I O N N O . 63, A P P R O V E D A U G U S T 27, 1935 IMPORTANT N O T E . — R e g i s t e r e d securities should be s u b m i t t e d t o t h e T r e a s u r y D e p a r t m e n t , Division of Loans and Currency, Washington, D. C , or a F e d e r a l Reserve bank. Coupon securities should be s u b m i t t e d t o t h e Treasurer of t h e United States, Division of Securities, Washington, D . C , or a Federal Reserve b a n k . Use a separate form for each issue of securities presented. In t h e spaces, provided therefor giye a full description of t h e securities presented, including; t h e exact form of registration of registered bonds: Please type or write plainly.. To THE T R E A S U R Y D E P A R T M E N T , D I V I S I O N O F L O A N S AND C U R R E N C Y , INGTON, D . C. WASH- or T H E T R E A S U R E R OF THE U N I T E D STATES, D I V I S I O N OF SECURITIES, INGTON, D . C. WASH- or FEDERAL RESERVE UNITED STATES. BANK OF _, FISCAL AGENT OF T H E P u r s u a n t t o t h e provisions of Public Resolution N o . 63, 74th Congress, a p proved August 27, 1935, and of Treasury D e p a r t m e n t Circular No. 552, d a t e d September 10, 1935, t h e undersigned presents a n d surrenders herewith for i m mediate p a y m e n t , a t par, with any interest t h a t m a y be p a y a b l e u n d e r t h e t e r m s of t h e said resolution a n d circular, t h e ^1 United S t a t e s (coupon or registered) "gold-clause" securities described below. T h e registered bonds presented are registered in t h e n a m e of __ a n d h a v e been duly assigned t o t h e Secretary of t h e T r e a s u r y for p a y m e n t , in t h e m a n n e r provided in said circular. REPORT OF THE SECRETARY OF THE TREASURY Title of securities Number of pieces 269 (class, rate of interest, redemption, or maturity years) Denomination Serial numbers $ Face amount $. 50 100 500 1,000 5,000 10,000 50, 000 100, 000 Total :. and requests that remittance covering payment thereof be mailed to the undersigned at the address indicated below. Signature and address of the person presenting the securities to the Treasury Department or Federal Reserve bank. If presented by a firm or corporation, the name of the firm or corporation should be followed by the signature and title of a member or an officer, respectively. Signature Name (please print) _ _ --Address for mail in full Date Exhibit 38 Regulations governing the exchange of coins and currencies of the United States [Department Circular No. 553. Public Debt] TREASURY DEPARTMENT, Washington, September 10, 1935, Public Resolution No. 63, Seventy-fourth Congress, approved August 27, 1935, reads as follows: [Public resolution omitted here, see p. 266] Pursuant to the authority of this resolution, the official agencies of the Treasury Department will continue to exchange the coins and currencies of the United States, dollar for dollar, for other coins or currencies which may be lawfully acquired and are legal tender for public and private debts, to the extent and in the manner in effect immediately prior to the date hereof. HENRY MORGENTHAU, JR., Secretary of the Treasury. Approved: ' I FRANKLIN D . ROOSEVELT, T H E WHITE HOUSE, September 14, 1935. Exhibit 39 Proclamation, January 10, 1936, extending powers conferred by section 10 of the Gold Reserve Act of 1934 and section 43 of the act approved May 12, 19SS Whereas, section 10 of the Gold Reserve Act of 1934, approved January 30, 1934 (Pubhc, Numbered 87, Seventy-third Congress), provides among other things: , "Sec 10. *. * * "(c) All the powers conferred by this section shall expire two years after the date of enactment of this act, unless the President shall sooner declare the existing 270 REPORT OF THE SECRETARY OF THE TREASURY emergency ended and t h e operation of t h e stalDilization fund t e r m i n a t e d ; b u t t h e President inay extend suchpeiriod for not mote thaii brie additibn'ai year aftfcr such date by proclamation recognizing t h e continuance of such emergency"; a n d Whereas, p a r a g r a p h (b) (2), of section 43, title I I I , of t h e act approved M a y 12, 1933 (Public, N u m b e r e d 10, Seventy-third Congress), as amended, provides among other things: ii^2) * * * T h e powers of t h e President specified in this p a r a g r a p h shall be deemed to be separate, distinct, and continuing powers, and m a y be exercised by him, from time to time, severally or.together, whenever and as t h e expressed objects of this section in his j u d g m e n t m a y require; except t h a t such powers shall expire two years after t h e date of e n a c t m e n t of the Gold Reserve Act of 1934 unless t h e President shall sooner declare t h e existing emergency ended, b u t t h e President m a y extend such period for not more t h a n one additional year after such date by proclamation recognizing t h e continuance of such emergency"; and Whereas, such emergency which existed on J a n u a r y 30, 1934, the date of approval of said Gold Reserve Act of 1934, has not been t e r m i n a t e d by international m o n e t a r y agreement or otherwise, but, on the contrary, continues a n d has been intensified in divers respects by unsettled conditions in international commerce and fiha;hce and in foreign'exchange; and Whereas, by virtue of the continuance of such emergency, it is necessar}^ t o extend the period during which t h e powers conferred by said section 10 of said Gold Reserve Act of 1934 and the powers specified in said paragraph (b) (2), of section 43, title I I I , of said act approved M a y 12, 1933, as amended, m a y be exercised: Now, therefore, be it known t h a t I, Franklin D . Roosevelt, President of t h e United States of America, by virtue of t h e a u t h o r i t y vested in me by the acts of Congress above set forth, and by virtue of all other a u t h o r i t y in me vested, recognizing t h e continuance of t h e emergenc}^ existing on J a n u a r y 30, 1934, do hereby proclaim, order, direct, and declare t h a t t h e period of two years within which the'powers conferred by section 10 of the Gold Reserve Act of 1934, and t h e powers specified in p a r a g r a p h (b) (2), of section 43, title I I I , of the act approved May 12, 1933, as amended, m a y be exercised, be, and it hereby is, extended for one additional year from J a n u a r y 30, 1936. I n witness whereof, I have hereunto set m y h a n d and have caused t h e seal of t h e United States of America to be affixed. Done a t t h e City of Washington this 10 day of J a n u a r y , in t h e year of our Lord nineteen hundred and thirty-six, and of the Independence of t h e United States of America t h e one-hundred and.sixtieth. [SEAL] FRANKLIN D ROOSEVELT By t h e President: CoRDELL H U L L , Secretary of State. Exhibit 40 Statement by the Treasury Department, August 15, 1935, relative to the new $1 silver certificate Secretary Morgenthau t o d a y announced t h a t production of a new $1 silver certificate is under way a t t h e Bureau of Engraving and Printing. T h e new certificate is of t h e same size as currency now in circulation, b u t represents changes both in t h e m e t h o d of printing signatures and in design. T h e new certificate is not yet ready for issue and ample notice will be given before it is p u t into circulation. T h e i m p o r t a n t change in t h e face of t h e new certificate deals with t h e m e t h o d of printing signatures on t h e notes. T h e signatures of t h e Secretary of t h e Treasury and of t h e Treasurer of t h e United States, instead of being printed with t h e rest of t h e design, will be typographically over-printed later, from steel dies, when t h e bills are numbered and sealed. There are a n u m b e r of minor changes-in the design of t h e face. T h e design of t h e back of t h e note presents for t h e first time, on a n y mbnfey issued by t h e United States, a representation of b o t h t h e obverse a n d reverse of t h e great seal of t h e United States, first adopted in 1782, prior t o ' t h e adoption of t h e Constitution. T h e obverse of t h e great seal is t h e familiar American eagle with a shield, grasping an olive branch in one talon and arrows in t h e other talon, s u r m o u n t e d by 13 stars a n d t h e Latin m o t t o ' ' E Pluribus U n u m . " REPORT OF THE SECRETARY OF THE TREASURY 271 T h e reverse of the great sieal, used'for t h e first tiine on money, shows an unfinished pyramid, surmounted by an eye in a triangular glory. T h e p y r a m i d bears in r o m a n numerals t h e year of t h e Declaration of Independence, 1776. Above t h e eye is t h e Latin m o t t o , ''Annuit Coeptis", rendered as ' ' H e (God) favored our undertakings." T h e m o t t o a t t h e b o t t o m is " N o v u s Ordo Seclorum" a n d is translated as "A new order of t h e ages." T h e eye a n d triangular glory symbolize an all-seeing Deity. The pyramid is t h e symbol of strength a n d its unfinished condition denotes t h e belief of t h e designers of t h e great seal t h a t there was still work to be done. Both t h e mottoes on the reverse of the seal are condensations of excerpts from Virgil's ^ n e i d . T h e first committee on t h e great seal was formed on t h e afternoon of July 4, 1776, a n d consisted of Benjamin Franklin, T h o m a s Jefferson, and J o h n Adams. The great seal as finally adopted was largely t h e work of Charles Thomson, Secretary of Congress, a n d WiUiam Barton, a private citizen of Philadelphia. T h e design was officially adopted on June 20, 1782, by fundamental law. T h e great seal was again ratified after t h e Constitution was adopted in 1789. The only previous use of t h e reverse of t h e great seal, according to Treasury records,,was in 1882, when a centennial medal was issued by t h e United States M i n t to celebrate t h e one h u n d r e d t h anniversary of t h e great seal's adoption. T h e fundamental law which established t h e great seal includes t h e following description of t h e reverse: ''A P y r a m i d unfinished. I n t h e zenith an Eye in a Triangle, surrounded with a Glory, proper: over t h e E y e these words, 'Annuit Coeptis'. " O n t h e base of t h e P y r a m i d the numerical letters, M D C C L X X V I , and underneath, t h e following m o t t o , 'Novus Ordo Seclorum.' " T h e ex]Dlanation of the reverse design written a t t h e time by Mr. Barton, one of t h e designers, is: " T h e pyramid on t h e reverse signifies strength and duration. T h e eye over it, with t h e m o t t o 'Annuit Coeptis' (Prosper our endeavors), alludes to t h e m a n y signal interpositions of Providence in favor of t h e American cause. T h e date u n d e r n e a t h is t h a t of the Declaration of Independence and t h e words under it signify t h e beginning of t h e new American era, which commenced from t h a t date." Following is a more detailed description of t h e face a n d back designs: Face.—The face of t h e series 1935, $1 silver certificate, printed in black, is similar to t h e present series 1934 design now in circulation with t h e foUowing changes: T h e large ruled face " O N E " has been removed from t h e note a n d is replaced with t h e words "One Dollar" in r o m a n lettering having a graduated ruled face with a ruled shadow approximately 1 inch below t h e t o p edge of t h e note. Below this, in black roman lettering, is t h e wording "Washington, D. C . " On t h e left of t h e portrait, across t h e gothic lettering, a shaded figure " 1 " is engraved, t a k i n g t h e place of the blue surface-printed figure " 1 " on t h e present issue. Space is provided below on either side of t h e portrait to permit of the printing of t h e signatures of both the Secretary of t h e Treasury and t h e Treasurer of the United States from steel engraved dies a t t h e time t h e notes are being numbered a n d sealed. T h e Treasury seal is reduced to five-eighths of an inch in diameter, a n d printed in blue across t h e words "Washington, D. C " , on t h e right side of t h e note: T h e serial numbers have been reduced in size a n d are printed in blue in t h e same positions as on t h e series 1934 note. T h e words "Series of 1935" appear farther to t h e left in t h e upper left-hand corner, a n d farther to t h e right in t h e lower right portion of t h e note. Back.—The back is printed in green. T h e design comprises t h e obverse a n d reverse sides of the great seal of the United States as adopted by the Congress in 1782. T h e reverse of t h e great seal is on t h e left center a n d carries t h e Latin words " A n n u i t CoejDtis" and " N o v u s Ordo Seclorum." T h e obverse of the great seal is on t h e right center. T h e impressions of t h e obverse and reverse of t h e great seal are enclosed by a circular cycloid line p a t t e r n a n d ornamental a c a n t h u s leaf scroll work. Below the reverse side are t h e words " T h e G r e a t Seal", and below the obverse are the words "of t h e United S t a t e s " . T h e outer portion of tlie note consists of the usual conventional geometrical lathe design with t h e title " T h e United States of America" in white-faced r o m a n letters across t h e top of the note in t h e lathe work. T h e words "One Dollar" in similar lettering appear in t h e lower panel of lathe work, having a ruled t i n t on their face. In each corner is a large white-faced numeral " 1 " , and extending across this figure is t h e word " O n e " in white r o m a n lettering. Between t h e reverse a n d obverse of the great seal is the word " O n e " in a ruled face roman letter having a :272 REPORT OF THE SECRETARY OF THE TREASURY ':ruled shadow. This word is approximately 1^^ inch long and ^Ke inch in height. A small cycloid pattern is used to furnish a lacelike edging in the inner edges of the ^lathe work. Exhibit 41 Issue, exchange, and redemption of paper currency and coin [Department Circular No. 55, revised. Treasurer; Mint] TREASURY DEPARTMENT, Washington, March 13, 1936. Paragraph 17 of Treasury Department Circular No. 55, revised, dated January :26, 1927, amended on September 26, 1933, is hereby further amended to read as ^follows: "17. Mutilated coins.—Except as hereinafter provided mutilated coins are .not accepted at their face value but at their bullion value. Silver coins are mutilated when so punched, clipped, chipped, or otherwise mutilated, as to be appre'Ciably reduced in weight, or when so defaced as to be not readily and clearly identified as to genuineness and denomination. Minor coins are mutilated when so defaced as not to be readily identified, or when so punched or clipped or otherwise mutilated as to show a material loss of metal. Silver coins and minor coins which have merely been so altered as to render them available for use as coins -of another denomination will be received at face Value, except that such minor -coins,must first be certified to by a coinage mint as being otherwise eligible for receipt at such value. A charge of 40 cents per thousand pieces or coins shall be made for such pieces or coins received by such mint for certification, with a minimum charge of $1.00 for each such deposit received by it. The payments -80 received shall be covered into the Treasury as a miscellaneous receipt. Such • coins as are not certified by such mint to be eligible for receipt at their face value shall be accepted by such mint at their bullion value or returned to the depositor .-at his expense. Silver or minor coins that are bent or twisted out of shape, but showing no appreciable or material loss of metal, respectively, are not regarded -as mutilated, and will be received at face value. Gold coins are accepted only -as provided in the acts, orders, regulations, and instructions relating to gold. The fraudulent defacement or mutilation of United States coins is a criminal • offense under section 165 of the Penal Code of the United States, and a fine of .not more than $2,000 and imprisonment for not more than five years are prescribed cfor,such an offense. Mutilated coins should not be transmitted to the Federal Reserve banks or branches or to the Treasurer of the United States, but should be 'forwarded to the mints, or as otherwise hereinabove provided, for sale as bullion." MARION BANISTER, Assistant Treasurer of the United States. NELLIE TAYLOE ROSS, Director of the Mint, Approved: March 13, 1936. WAYNE C . TAYLOR, Acting Secretary of the Treasury. TAXATION 1 Exhibit 42 Titles V I I I and I X of the Social Security Act {Public No. 271, approved August 14* 1935) relative to the taxes on employers and employees TITLE VIII—TAXES WITH RESPECT TO EMPLOYMENT INCOME TAX ON EMPLOYEES SECTION 801. In addition to other taxes, there shall be levied, collected, and ]paid upon the income of every individual a tax equal i:o the following percentages -of the wages (as defined in section 811) received by liim after December 31, 1936, with respect to employment (as defined in section 811) after such date: For footnote, see p . 273. REPORT OF THE SECRETARY OF THE TREASURY (1) With respect to employment during the calendar years 1937, 1939, the rate shall be 1 per centum. (2) With respect to employment during the calendar years 1940, 1942, the rate shall be 1}^ per annum. (3) With respect to employment during the calendar years 1943, 1945, the rate shall be 2 per centum. (4) With respect to employment during the calendar years 1946, 1948, the rate shall be 2}^ per centum. (5) With respect to employment after December 31, 1948, the rate per centum. 273 1938, and 1941, and 1944, and 1947, and shall be 3 DEDUCTION OF TAX FROM WAGES SEC. 802. (a) The tax imposed by section 801 shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the wages as and when paid. Every employer required so to deduct the tax is hereby made liable for the payment of such tax, and is hereby indemnified against the claims and demands of any person for the amount of any such payment made by such employer. (b) If more or less than the correct amount of tax imposed by section 801 is paid with respect to smy wage payment, then, under regulations made under this title, proper adjustments, with respect both to the tax and the amount to be deducted, shall be made, without interest, in connection with subsequent wage payments to the same individual by the same employer. DEDUCTIBILITY FROM INCOME TAX SEC. 803. For the purposes of the income tax imposed by Title I of the Revenue Act of 1934 or by any act of Congress in substitution therefor, the tax imposed by section 801 shall not be allowed as a deduction to the taxpayer in computing his net income for the year in which such tax is deducted from his wages. EXCISE TAX ON EMPLOYERS SEC. 804. In addition to other taxes, every employer shall pay an excise taxwith respect to having individuals in his ernploy, equal to the following percentages of the wages (as defined in section 811) paid by him after December 31, 1936, wdth respect to employment (as defined in section 811) after such date: (1) With respect to employment during the calendar years 1937, 1938, and 1939, the rate shall be 1 per centum. (2) With respect to employment during the calendar years 1940, 1941, and 1942, the rate shall be IJ^ per centum. (3) With respect to employment during the calendar years 1943, 1944, and 1945, the rate shall be 2 per centum. (4) With respect to employment during the calendar years 1946, 1947, and 1948, the rate shall be 2}^ per centum. (5) With respect to employment after December 31, 1948, the rate shall be 3 per centum. 1 These exhibits do not include the following laws which modify the tax system: Public No. 407, Aug. 30.1935, Eevenue Act of 1935; Public No. 740, June 22,1936, Revenue Act of 1936; Public No. 262, Aug. 12, 1935, exempts from taxation payments of benefits to a beneficiary under laws relative to veterans; Public No. 374, Aug. 27, 1935, exempts from taxation official compensation of certain foreign representatives and provides for the deductibility from income of certain dividends on certain stocks owned by the United States or instrumentalities thereof; Public No. 470, Mar. 12, 1936, subjects all minerals including oil and gas produced after Apr. 26, 1931, on the lands of Five Civilized Tribes in Oklahoma to Federal and State taxes; Public No. 490, Apr. 10, 1936, exempts certain small firearms from the provisions of the National Firearms Act; Public No. 482, Mar. 20, 1936, reaffirms the immunity from the Federal, State, and local tax of shares and preferred stock, capital notes and debentures of banks while owned by the Reconstruction Finance Corporation; Public No. 528. Apr. 20, 1936, exempts the members of the Xth Olympiade Committee of the Games of Los Angeles, United States of America, 1932, Ltd., from income on gift taxes in respect to any surplus receipts from the Olympic Games if donated to the State of California and to the city or county of Los Angeles; Public No. 815, June 26,1936, reduces by 50 percent the rates of tax on wines, liqueurs, etc.; Public No. 837, June 29, 1936, waives any exclusive Federal jurisdiction over the premises of Public Works Administration slum clearance and low cost housing projects, and authorizes payments to States and political subdivisions in lieu of taxes on such premises; Public No. 842, June 29,1936, reduces the stamp tax on transfers of stock from 4 cents per $100 to 2 cents per .$100 after July 1, 1937; Public No. 845, June 29, 1936, waives any exclusive Federal jurisdiction over premises of Resettlement or Rural.Rehabilitation projects and authorizes pa3^ments to States and political subdivisions in lieu of taxes on such premises; Public No. 320, Aug. 24, 1935, title I, amends the Agricultural Adjustment Act of May 12, 1933, with respect to the taxation of certain farm products, and title II, the Potato Act of 1935; Public Res. No. 109, June 19, 1936, terminates the processing, compensating, and floor stock taxes on sugar beets and sugarcane and the products thereof; and Public No. 433, Feb. 10, 1936, repeals Public 169, Apr. 21, 1934, the Bankhead Cotton Act of 1934, except section 24 thereof. Public No. 483, June 28, 1934, as amended, the Kerr Tobacco Act, and title II of Public No. 320, Aug. 24,1935, the Potato Act of 1935. 93790—37 -19 274 REPORT OF T H E SECRETARY OF T H E TREASURY ADJUSTMENT OF E M P L O Y E R S ' TAX S E C . 805. If more or less t h a n t h e correct a m o u n t of t a x imposed b y section 804 is paid with respect to a n y wage p a y m e n t , then, under regulations m a d e under this title, proper adjustments with respect to t h e t a x shall be m a d e , without interest, in connection with subsequent wage p a y m e n t s t o t h e same individual by t h e same employer. R E F U N D S AND D E F I C I E N C I E S SEC. 806. If more or less t h a n t h e correct a m o u n t of t a x imposed b y section 801 or 804 is paid or deducted with respect to a n y wage p a y m e n t a n d t h e overp a y m e n t or u n d e r p a y m e n t of t a x cannot be adjusted under section 802 (b) or 805 t h e a m o u n t of t h e overpayment shall be refunded a n d t h e a m o u n t of t h e u n d e r p a y m e n t shall be collected, in such manner a n d a t such times (subject to t h e statutes of limitations properly applicable thereto) as m a y be prescribed by regulations made under this title. COLLECTION AND PAYMENT OF T A X E S SEC. 807. (a) T h e taxes imposed b y this title shall be collected b y t h e Bureau of Internal Revenue under t h e direction of t h e Secretary of t h e Treasury a n d shall be paid into t h e Treasury of t h e United States as internal revenue collections. If t h e t a x is not paid when due, there shall be added as p a r t of t h e t a x interest (except in t h e case of adjustments made in accordance with t h e provisions of sections 802 (b) and 805) a t t h e r a t e of one-half of 1 per centum per m o n t h from t h e date t h e tax became due until paid. (b) Such taxes shall be collected a n d paid in such manner, a t such times, and under such conditions, not inconsistent with this title (either by making a n d filing returns, or by stamps, coupons, tickets, books, or other reasonable devices or methods necessary or helpful in securing a complete a n d proper collection and p a y m e n t of t h e tax or in securing proper identification of t h e taxpayer), as m a y be prescribed by t h e Commissioner of I n t e r n a l Revenue, with t h e approval of t h e Secretary of t h e Treasury. . (c) All provisions of law, including penalties, applicable with respect to a n y tax imposed b y section 600 or section 800 of t h e Revenue Act of 1926, a n d t h e provisions of section 607 of t h e Revenue Act of 1934, shall, insofar as applicable and not inconsistent with the provisions of this title, be applicable with respect to t h e taxes imposed b y this title. (d) I n t h e p a y m e n t of a n y t a x under this title a fractional p a r t of a cent shall be disregarded unless it a m o u n t s to one-half cent or more, in which case it shall be increased to 1 cent. RULES AND REGULATIONS SEC. 808. T h e Commissioner of I n t e r n a l Revenue, with t h e approval of the Secretary of t h e Treasury, shall make a n d publish rules a n d regulations for t h e enforcement pf this title. SALE O F S T A M P S BY POSTMASTERS S E C . 809. T h e Commissioner of I n t e r n a l Revenue shall furnish t o t h e Postmaster General without p r e p a y m e n t a suitable q u a n t i t y of stamps, coupons, tickets, books, or other devices prescribed by t h e Commissioner under section 807 for the.collection or p a y m e n t of any t a x imposed b y this title, to be distributed to, a n d kept on sale by, all post offices of t h e first a n d second classes, a n d such post offices of t h e third and fourth classes as (1) are located in county seats, or (2) are certified b y t h e Secretary of t h e Treasury to t h e Postmaster General as necessary to t h e proper administration of this title. T h e Postmaster General m a y require each such postmaster to furnish bond in such increased aniount as he m a y from time to time determine, a n d each such postmaster shall deposit t h e receipts from t h e sale of such stamps, coupons, tickets, books, or other devices, to t h e credit of, a n d render accounts to, t h e Postmaster General a t such times and in such form as t h e Postmaster General m a y by regulations prescribe. T h e Postmaster General shall a t least once a m o n t h transfer to t h e Treasury as internal revenue collections all receipts so deposited together with a s t a t e m e n t of t h e additional expenditures in t h e District of Columbia a n d elsewhere incurred by t h e Post Office D e p a r t m e n t in performing t h e duties imposed upon said D e p a r t m e n t b y this act, a n d t h e Secretary of t h e Treasury is hereby authorized a n d directed to advance from time to time to t h e credit of t h e Post Office D e - REPORT OF THE SECRETARY OF THE TREASURY 275 partment from appropriations made for the collection of the taxes imposed by this title, such sums as may be required for such additional expenditures incurred by the Post Office Department. PENALTIES SEC. 810. (a) W^hoever iDuys, sells, offers for sale, uses, transfers, takes or gives in exchange, or pledges or gives in pledge, except as authorized in this title or in regulations made pursuant thereto, any stamp, coupon, ticket, book, or other device, prescribed by the Commissioner of Internal Revenue under section 807 for the collection or payment of any tax imposed by this title, shall be fined not more than $1,000 or imprisoned for not more than six months, or both. (b) Whoever, with intent to defraud, alters, forges, makes, or counterfeits any stamp, coupon, ticket, book, or other device prescribed by the Commissioner of Internal Revenue under section 807 for the collection or payment of any tax imposed by this title, or uses, sells, lends, or has in his possession any such altered, forged, or counterfeited stamp, coupon, ticket, book, or other device, or makes, uses, sells, or has in his possession any material in imitation of the material used in the manufacture of such stamp, coupon, ticket, book, or other device, shall be fined not more than $5,000 or imprisoned not more than five years, or both. DEFINITIONS SEC. 811. [Definitions of terms used in this title omitted.] TITLE IX—TAX ON EMPLOYERS OF EIGHT OR MORE IMPOSITION OF TAX SECTION 901. On and after January 1, 1936, every employer (as defined in section 907) shall pay for each calendar year an excise tax, with respect to having individuals in his employ, equal to the following percentages of the total wages (as defined in section 907) payable by him (regardless of the time of payment) with respect to employment (as defined in section 907) during such calendar year: (1) With respect to employment during the calendar year 1936 the rate shall be 1 per centum; (2) With respect to employment during the calendar year 1937 the rate shall be 2 per centum; (3) With respect to employment after December 31, 1937, the rate shall be 3 per centum. CREDIT AGAINST TAX SEC. 902. The taxpayer may credit against the tax imposed by section 901 the amount of contributions, with respect to employment during the taxable year, paid by him (before the date of filing his return for the taxable year) into an unemployment fund under a State law. The total credit allowed to a taxpayer under this section for all contributions paid into unemployment funds with respect to employment during such taxable year shall not exceed 90 per centum of the tax against which it is credited, and credit shall be allowed only for contributions made under the laws of States certified for the taxable yea,r as provided in section 903. CERTIFICATION OF STATE LAWS SEC. 903. (a) The Social Security Board shall approve any State law submitted to it, within thirty days of such submission, which it finds provides that— (1) All compensation is to be paid through public employment offices in the State or such other agencies as the Board may approve; (2) No compensation shall be payable with respect to any day of unemployment occurring within two years after the first day of the first period with respect to which contributions are required; (3) All money received in the unemployment fund shall immediately upon such receipt be paid over to the Secretary of the Treasury to the credit of the . Unemployment Trust Fund established by section 904; (4) All money withdrawn from the Unemployment Trust Fund by the State agency shall be used solely in the payment of compensation, exclusive of expenses of adiriinistration; (5) Compensation shall not be denied in such State to any otherwise eligible individual for refusing to accept new work under any of the following conditions: (A) If the position offered is vacant due directly to a strike, lockout, or other 276 ^ REPORT OF THE SECRETARY OF^THE TREASURY labor dispute; (B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; (C) if as a condition of being employed the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization; (6) All the rights, privileges, or immunities conferred by such law or by acts done pursuant thereto shall exist subject to the power of the legislature to amend or repeal such law at any time. The Board shall, upon approving such law, notify the Governor of the State of its approval. (b) On December 31 in each taxable year the Board shall certify to the Secretary of the Treasury each State whose law it has previously approved, except that it shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Board finds has changed its law so that it no longer contains the provision specified in subsection (a) or has with respect to such taxable year failed to comply substantially with any such provision. (c) If, at any time during the taxable year, the Board has reason to believe that a State whose law it has previously approved, may not be certified under subsection (b), it shall promptly so notify the Governor of such State. UNEMPLOYMENT TRUST FUND SEC. 904. (a) There is hereby established in the Treasury of the United States a trust fund to be known as the "Unemployment Trust Fund", hereinafter in this title called the "Fund." The Secretary of the Treasury is authorized and directed to receive and hold in the fund all moneys deposited therein by a State agency from a State unemployment fund. Such deposit may be made directly with the Secretary of the Treasury or with any Federal reserve bank or member bank of the Federal Reserve System designated by him for such purpose. (b) It shall be the duty of the Secretary of the Treasury to invest such portion of the fund as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at par, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of special obligations exclusively to the fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations of the United States then forming part of the public debt; except that where such average rate is not a multiple of one-eighth of 1 per centum, the rate of interest of such special obligations shall be the multiple of one-eighth of 1 per centum next lower than such average rate. Obligations other than such special obligations may be acquired for the fund only on such terms as to provide an investment yield not less than the yield which would be required in the case of special obligations if issued to the fund upon the date of such acquisition. (c) Any obligations acquired by the fund (except special obligations issued exclusively to the fund) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest. (d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the fund shall be credited to and form a part of the fund. (e) The fund shall be invested as a single fund, but the Secretary of the Treasury shall maintain a separate book account for each State agency and shall credit quarterly on March 31, June 30, September 30, and December 31, of each year, to each account, on the basis of the average daily balance of such account, a proportionate part of the (earnings of the fund for the quarter ending on such date. (f) The Secretary of the Treasury is authorized and directed to pay out of the fund to any State agency such ainount as it may duly requisition, not exceeding the amount standing to the account of such State agency at the time of such payment. ADMINISTRATION, REFUNDS, AND PENALTIES SEC. 905. (a) The tax imposed by this title shall be collected by the Bureau of Internal Revenue under the direction of the Secretary of the Treasury and shall REPORT OF THE SECRETARY OF THE TREASURY 277 be paid into the Treasury of the United States as internal revenue collections. If the tax is not paid when due, there shall be added as part of the tax interest at the rate of one-half of 1 per centum per month from the date the tax became due until paid. (b) Not later than January 31, next following the close of the taxable year, each employer shall make a return of the tax under this title for such taxable year. Each such return shall be made under oath, shall be filed with the collector of internal revenue for the district in which is located the principal place of business of the employer, or, if he has no principal place of business in the United States, then with the collector at Baltimore, Maryland, and shall contain such information and be made in such manner as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulations prescribe. All provisions of law (including penalties) applicable in respect of the taxes imposed by section 600 of the Revenue Act of 1926, shall, insofar as not inconsistent with this title, be applicable in respect of the tax imposed by this title. The Commissioner may extend the time for filing the return of the tax imposed by this title, under such rules and regulations as he may prescribe with the approval of the Secretary of the Treasury, but no such extension shall be for more than sixty days. (c) Returns filed under this title shall be open to inspection in the same manner, to the same extent, and subject to the same provisions of law, including penalties, as returns made under title II of the Revenue Act of 1926. (d) The taxpayer may elect to pay the tax in four equal installments instead of in a single payment, in which case the first installment shall be paid not later than the last day prescribed for the filing of returns, the second installment shall be paid on or before the last day of the third month, the third installment on or before the last day of the sixth month, and the fourth installment on or before the last day of the ninth month, after such last day. If the tax or any installment thereof is not paid on or before the last day of the period fixed for its payment, the whole amount of the tax unpaid shall be paid upon notice and demand from the collector. (e) At the request of the taxpayer the time for payment of the tax or any installment thereof may be extended under regulations prescriJDed by the Commissioner with the approval of the Secretary of the Treasury, for a period not to exceed six months from the last day of the period prescribed for the payment of the tax or any installment thereof. The amount of the tax in respect of which any extension is granted shall be paid (with interest at the rate of one-half of 1 per centum per month) on or before the date of the expiration of the period of the extension. ' ' ^(f) In the payment of any tax under this title a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. INTERSTATE COMMERCE SEC. 906. No person required under a State law to make payments to an unemployment fund shall be relieved from compliance therewith on^the ground that he is engaged in interstate commerce, or that the State law does not distinguish between employees engaged in interstate commerce and those engaged ,in intrastate commerce. DEFINITIONS SEC. 907. [Definitions of terms used in this title omitted.] RULES AND REGULATIONS SEC. 908. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, shall make and publish rules and regulations for the enforcement of this title, except sections 903, 904, and 910. ALLOWANCE OF ADDITIONAL CREDIT SEC. 909. (a) In addition to the credit allowed under section 902, a taxpayer may, subject to the conditions imposed by section 910, credit against the tax imposed by section 901 for any ^taxable year after the taxable year 1937, an amount, with respect to each State law, equal to the amount, if any, by which the contributions, with respect to employment in such taxable year, actually 278 REPORT OF THE SECRETARY OF THE TREASURY paid by the taxpayer under such law before the date of filing his return for such taxable year, is exceeded by whichever of the following is the lesser—'• (1) The amount of contributions which he would have been required to pay under such law for such taxable year if he had been subject to the highest rate applicable from time to time throughout such year to any employer under such law; or (2) Two and seven-tenths per centum of the wages payable by him with respect to employment with respect to which contributions for such year were required under such law. (b) If the amount of the contributipns actually so paid by the taxpayer is less than the amount which he should have paid under the State law, the additional credit under subsectidn (a) shall be reduced proportionately. (c) The total credits allowed to a taxpayer under this title shall not exceed 90 per centum of the tax against which such credits are taken. CONDITIONS OF ADDITIONAL CREDIT ALLOWANCE SEC. 910. (a) A taxpayer shall be allowed the additional credit under section 909, with respect to his contribution rate under a State law being lower, for any taxable year, than that of another employer subject to such law, only if the Board finds that under such law— (1) Such lower rate, with respect to contributions to a pooled fund, is permitted on the basis of not less than three years of compensation experience; (2) Such lower rate, with respect to contributions to a guaranteed employment account, is permitted only when his guaranty of employment was fulfilled in the preceding calendar year, and such guaranteed ernployment account amounts to not less than 7^2 per centum of the total wages payable by him, in accordance with such guaranty, with respect to employment in such State in the preceding calendar year; (3) Such lower rate, with respect to contributions to a separate reserve account, is permitted only when (A) compensation has been payable from such account throughout the preceding calendar year, and (B) such account amounts to not less than five times the largest amount of compensation paid from such account within any one of the three preceding calendar years, and (C) such account amounts to not less than 7}i per centum of the total wages payable by him (plus the total wages payable by any other employers who may be contributing, to such account) with respect to employment in such State in the preceding calendar year. (b) Such additional credit shall be reduced, if any contributions under such law are made by such taxpayer at a lower rate under conditions not fulfilling the requirements of subsection (a), by the amount bearing the same ratio to such additional credit as the amount of contributions made at such lower rate bears to the total of his contributions paid for such year under such law. (c) As used in this section— (1) The term "reserve account" means a separate account in an unemployment fund, with respect to. an employer or group of ehiployers, from which compensation is payable only with respect to the unemployment of individuals who were in the employ of such employer, or of one of the employers comprising the group. (2) The term "pooled fund" means an unemployment fund or any part thereof in which all contributions are mingled and undivided, and from which compensation is payable to all eligible individuals, except that to individuals last employed by employers with respect to whom reserve accounts are maintained by the State agency, it is payable only when such accounts are exhausted. (3) The term "guaranteed employment account" means a separate account, in an unemployment fund, of contributions paid by an employer (or group of employers) who (A) guarantees in advance thirty hours of wages for each of forty calendar weeks (or more, with one weekly hour deducted for each added week guaranteed) in twelve months, to all the individuals in his employ in one or more distinct establishments, except that any such individuaPs guaranty may commence after a probationary period (included within twelve or less consecutive calendar weeks), and (B) gives security or assurance, satisfactory to the State agency, for the fulfillment of such guaranties. REPORT OF THE SECRETARY OF THE TREASURY 279 from which account compensation shall be payable with respect to the unemployment of any such individual whose guaranty is not fulfilled or renewed and who is otherwise eligible for compensation under the State law. • (4) The term "year of compensation experience", as applied to an employer, means any calendar year throughout which compensation was payable with respect to any individual in his employ who became unemployed and was* eligible for compensation. Exhibit 43 An act to levy an excise tax upon carriers and an income tax upon their employees, and for other purposes [Public No. 400, 74th Cong., H. R. 86521 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, DEFINITIONS SECTION 1. That as used in this act means March 1, 1936. * * * * * * (e) the term "effective date" INCOME TAX ON EMPLOYEES SEC. 2. In addition to other taxes, there shall be levied, collected, and paid upon the income of every employee, 3)4 per centum of the compensation of such employee (except a representative) not in excess of $300 per month, received by him after the effective date. DEDUCTION OF TAX FROM WAGES SEC. 3. (a) The tax imposed by section 2 of this act shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the compensation of the employees as and when paid. Every employer required so to deduct the tax is hereby made liable for the payment of such tax and is hereby indemnified against the claims and demands of any person for the amount of any such payment made by such employer. (b) If more or less than the correct amount of tax imposed by section 2 is paid with respect to any compensation payment, then, under regulations made under this act by the Commissioner of Internal Revenue, proper adjustments, with respect both to the tax and the amount to be deducted, shall be made, without interest, in connection with subsequent wage payments to the same employee by the same employer. EXCISE TAX ON CARRIERS SEC. 4. In addition to other taxes, every carrier shall pay an excise tax of 3>^ per centum of the compensation not in excess of $300 per month paid by it to its employees after the effective date. ADJUSTMENT OF TAX SEC. 5. If more or less than the correct amount of the tax imposed by section 4 is paid, with respect to any compensation payment, then, under regulations made by the Commissioner of Internal Revenue, proper adjustments with respect to the tax shall be made, without interest, in connection with subsequent excise tax payments made by the same employer. REFUNDS AND DEFICIENCIES SEC. 6. If more or less than the correct amount of the tax imposed by sections 2 or 4 of this act is paid or deducted with respect to any. compensation payment and the overpayment or underpayment of the tax cannot be adjusted under sections 3 or 5, the amount of the overpayment shall be refunded, or the amount of the underpayment shall be collected in such manner and at such times (subject to the statute of limitations properly applicable thereto) as may be prescribed by regulations under this act as made by the Commissioner of Internal Revenue. 280 REPORT OF THE SECRETARY OF THE TREASURY INCOME TAX ON EMPLOYEES^ REPRESENTATIVE SEC. 7. In addition to other taxes, there shall be levied, collected, and paid upon the compensation of each employees' representative received by such representative an income tax of 7 per. centum annually upon that portion of the compensation of such employees' representative not in excess of $300 per month. The compensation of a representative for the purpose of ascertaining the tax thereon shall be determined according to such rules and regulations as the Commissioner of Internal Revenue shall deem just and reasonable and as near as may be shall be the same compensation as if the representative were still in the employ of the last former carrier. COLLECTION AND PAYMENT OF TAXES SEC. 8. (a) The taxes imposed by this act shall be collected by the Commissioner of Internal Revenue and shall be paid into the Treasury of the United States as internal revenue receipts. If the taxes are not paid when due, there^ shall be added as part of the tax (except in the case of adjustments m.ade in accord with the provisions of this act) interest at the rate of 6 per centum per annum, or for any part of a month, from the date the tax became due until paid. (b) . Such taxes shall be collected and paid quarterly in such manner and under such conditions not inconsistent with this act as m.ay be prescribed by the Commissioner of Internal Revenue. (c) All provisions of law, including penalties, applicable with respectfto an}'tax imposed by section 600 or section 800 of the Revenue Act of 1926, and the provisions of section 607 of the Revenue act of 1934, insofar as applicable and not inconsistent with the provisions of this act, shall be applicable with respect to the taxes imposed by this act. (d) In the paym.ent of any tax under this act a fractional part of a cent shall be disregarded unless it amounts to one-half cent or more, in which case it shall be increased to 1 cent. COURT JURISDICTION SEC. 9. The several District Courts of the United States and the Supreme Court of the District of Columbia, respectively, shall have jurisdiction to entertain an application and to grant appropriate relief in the following cases which may arise under the provisions of this act: (a) An application by the Commissioner of Internal Revenue to compel an employee or other person residing within the. jurisdiction of said court or a carrier subject to service of process within said jurisdiction, to comply with any obligations imposed on said employee, other person, or carrier under the provisions of this act. (b) The jurisdiction herein specifically conferred upon the said Federal courts shall not be held exclusive of any jurisdiction otherwise possessed by said courts to entertain actions at law or suits in equity in aid of the enforcement of rights or obligations arising under the provisions of this act. PENALTIES SEC. 10. Any person or any carrier which shall willfully fail or refuse to make any report in accordance with this act required by the Commissioner of Internal Revenue in the administration of this act, or which shall knowingly make any false or fraudulent statement or report in response to any report or statement required by this act shall be punished on conviction by a fine of not less than $100 nor more than $10,000. SOCIAL SECURITY ACT SEC. 11. The term "em.ployment", as defined in subsection (b) of section 811 of title VIII of the Social Security act, shall not include service performed in the employ of a carrier as defined in subdivision (a) of section 1 of this act. TERMINATION OF TAXES SEC. 12. The taxes imposed by this act shall not apply to any compensation received or paid after February 28, 1937. SEPARABILITY SEC. 13. If any provision of this act, or the application thereof to any person or circumstance, is held invalid, the remainder of the act, and the application of such provision to other persons or circumstances shall not be affected thereby. Approved, August 29, 1935, 3 p. m. Exhibit 44 Major tax rate changes made by the Revenue Acts of 1935 and 1936, and the rates which they superseded, together with legal citations and effective dates Superseded Revenue Act of 1935 Tax Legal citation Income tax: Surtax on individuals. Sec. 101 Effective date Rate Rate Effective period Legal citation O Graduated from 4 percent Graduated from 4 percent Taxable years beginning Revenue Act of 1934, sec. on surtax net incomes on surtax net incomes after Dec. 31, 1933, and 12(b). between $4,000-$6,000 to between $4,000-$6,000 to before Jan. 1, 1936. 75 percent on surtax net 59 percent on surtax net incomes over $5,000,000. incomes over $1,000,000. Revenue Act of 1934, sec. do Graduated from 12)^ per- 3 3 ^ percent of net income. Corporation Sec. 102 do cent on net incomes not 13 (a), 141. in excess of $2,000 to 15 percent on net incomes over $40,000.1 Revenue Act of 1934, sec. Surtax on personal hold- Sec. 1 0 9 . . . . . do _ - . - Graduated from 20 per- 30 percent of the undistri- .._-.do.___ 351 (a). cent of the undistributed buted adjusted net ining companies. adjusted net income not come not in excess of in excess of $2,000 to 60 $100,000 plus 40 percent percent of the amount of the amount thereof in thereof in excess of excess of $100,000. $1,000,000. $1 per $1,000 of adjusted Each year ending June 30, Revenue Act of 1934, sec. 701. Each year ending June $1.40 per $1,000 of adjusted 1934 and 1935. Sec. 105 Capital stock tax declared value of capital 30, beginning with the declared value of capital stock. year ending June 30, stock.2 1936, Sec. 106 , Income-tax taxable year 6 percent of a corporation's 5 percent of a corporation's Income-tax taxable year Revenue Act of 1934, sec. Excess profits tax___ 702. net income in excess of ending after June 30, ending after June 30, net income in excess of 10 percent and not in 1934, and before July 1, 1936. 12K percent of the adexcess of 15 percent of the 1936. justed declared value of adjusted declared value I capital stock. ^of its capital stock plus 12 percent of a corporation's net income in excess of 15 percent of the adjusted declared value of its capital stock. » The rate of tax for consolidated returns of electric and steam railroads for the years 1934 and 1935 was 15^ percent. This rate in the Revenue Act of 1934 was in lieu of the corporation income tax and in the Revenue Act of 1935 it was in lieu of the graduated income tax. The 1936 act does not distinguish between the rates applicable to corporations privileged to file consolidated returns and other corporations. The 1936 act extended the privilege to file consolidated returns to street, suburban, or interurban electric railways. 3 Under the law an entirely new value may be declared for the capital stock, regardless of any declaration of value made for any previous year. O Taxable years beginning after Dec. 31, 1935. w ui fel o > Kl O w d OD Major tax rate changes made by the Revenue Acts of 1935 and 1936, and the rates which they superseded, together with legal citations and effective date^—Continued Additional estate tax Legal citation Sec. 201 to Superseded Revenue Act of 1935 Tax 00 Effective date Rate Rate Effective period Legal citation Deaths after Aug. 30, 1935. Graduated from 2 percent on net estates not in excess of $10,000 to 70 percent on net estates in excess of $50,000,000. Graduated from lyi percent on net gifts not in excess of $10,000 to 523^ percent on net gifts in excess of $50,000,000. Hs of 1 cent per barrel Graduated from 1 percent on net estates not in excess of $10,000 to 60 percent on net estates in excess of $10,000,000. Graduated from ^ percent on net gifts not in excess of $10,000 to 45 percent on net gifts in excess of $10,000,000. Mo of 1 cent per barrel. Deaths from May 11, 1934, through August 30, 1935. Revenue Act of 1934, sec. 405. Calendar year 1935 Revenue Act of 1934, sec. 520. June 9, 1934, to Sept. 1, 1935. Revenue Act of 1934, sees. 604, 605. o Gift tax . . Sec. 301 Calendar year 1936 and calendar years thereafter. Taxes on production and refining of crude petroleum. Sec. 407 Sept. 1, 1935 Revenue Act of 1936 n o w o Superseded Tax Legal citation Corporation income tax: Corporations subject to surtax on undistributed profits: Normal tax Surtax Effective date Rate Rate Sees. 13, 141. Taxable years beginning after Dec. 31, 1935. Sec. 14 . . . do - - Graduated from 8 percent Graduated from 12H peron normal-tax net incent on net incomes not comes not in excess of in excess of $2,000, to 15 $2,000, to 15 percent on . percent on net incomes net incomes over $40,000.i over $40,000.1 --- Graduated from 7 percent of the undistributed net income not in excess of 10 percent of the adjusted net income to 27 percent of the undistributed net income in excess of 60 percent of the adjusted net income. Effective period Legal citation Taxable years beginning after Dec. 31, 1935, but actually never in effect. Revenue Act of 1935, sec. 102. . • O .^ > Hi ;^ ^5 O 03 oW ^ asags ^ flO 03 42 cn 13 < 03 0 + ? -M ;;5^ 3Zu g " cs ri W O 3d ow 13 5 o 2 ^ TO « ; 0 bJD';r; a 03 03 - ^ O 03 o 03 o rr-j CO ' - i ^ * ^ M o ft--^ X p .. P C/1 p X fto.w r/i T3 _o d d CO d d cd 1^0 0 ^d s a <=i^ a SSo'So ^ j (^ 03 O p § CO o g o gs§r§8 p.9 O P3 CO g 03 03 o S ?5.H CO 03 o " *^^ d d o 8a§|^ Uc O O <i' 03 03 o o *-" O ' ^ . d ^3- O 03 •"doftar/^'O.SSdir^Q^^- >'E2':3 REPORT OF THE SECRETARY OF THE TREASURY > 03 S" s 05 cl O 03 ^ 9. o oy •^ w o 3 ' ^ . t ; 4 : ^ d OcSO..,C0^g||-^^C0g^-gC0 o.d+j ^ g ^ j-ico cs ft p d p . 2 ; 9<> c nB^si 283 Major tax rate changes made by the Revenue Acts of 19S5 and 1936, and^the rates which they superseded^ together with^legal citations and_effective dates—Continued Revenue Act of 1936 Tax Legal citation do Surtax on personal holding companies. Sec. 351 Tax on unjust enrichment. Sees. 501,504. Taxable years ending during the calendar year 1935, and subsequent taxable years. Capital stock tax Sec. 401 Excise taxes: Jewelry Sec. 809 Furs Sec. 810 Tax on imports of— Sunflower oil, rapeseed oil, kapok oil, hempseed oil, and perilla oil. Hempseed, perilla seed, rapeseed, sesame seed, and kapok seed. For footnote, see p. 281. Sec. 701 Each year ending June 30, beginning with the year ending June 30, 1936. June 23, 1936 do_-.- Aug. 21, 1936 : Superseded Rate Effective date to 00 Rate Effective period Legal citation Graduated from 8 percent Graduated from 20 percent Taxable years beginning Revenue Act of 1935, sec. of the undistributed adof the undistributed adafter Dec. 31, 1935, but 109. justed net income not in justed net income not in actually never in effect. excess of $2,000, to 48 perexcess of $2,000, to 60 percent of the amount cent of the amount thereof in excess of thereof in excess of $1,000,000. $1,000,000. 80 percent of net income arising from: (a) Federal excise taxes shifted to vendee but not paid by vendor, (6) Federal excise taxes shifted by vendee for which he was reimbursed by the vendor, (c) refunds or credits of Federal excise taxes shifted to others. $1 per $1,000 of adjusted $1.40 per $1,000 of adjusted Each year ending June 30,. Revenue Act of 1935, sec. declared value of capital declared value of capital beginning with the year 105. stock.2 stock. ending June 30, 1936, but actually never in effect. Repealed 10 percent of selling price.. June 21, 1932, to June 23, 1936. 3 percent of selling price of all articles. 10 percent of selling price of May 10, 1934, to June 23, articles selling for $75 or 1936. more. 4 ^ cents per pound Revenue Act of 1932, sec. 605, as amended by Revenue Act of 1934, sec. 609. Revenue Act of 1932, sec. 604, as amended by Revenue Act of 1934, sec. 608. o o w o > o •^ W H > d td Kj do-_.-.- do__ 2 cents per pound REPORT OF THE SECRETARY OF THE TREASURY 285 Exhibit 45 Processing tax rates under the Agricultural Adjustment Act, and rates of tax on cotton ginning, tobacco sales, and potatoes, during the fiscal year 1936, with effective dates 1 Source of tax Effective date Rate Processing 2 Wheat Cotton Tobacco ^ July 9, 1933 Aug. 1, 1933 Feb. 1, 1935 ' Oct. 1, 1935 > 30 cents per bushel of 60 pounds. 4.2 cents per pound. Cigar leaf (including all types of tobacco used in manufacture of cigars and scrap chewing and smoking tobacco): Used in cigars: Fire-cured tobacco—3.0, 3.25, and 4.3 cents per pound. Other—3.0, 3.75, and 5.0 cents per pound. Used in scrap chewing and smoking tobacco—2.0, 2.5, and 3.3 cents per pound. Maryland—0 cents per pound. Burley: Used in chewing tobacco—2.5, 2.9, and 3.9 cents per pound. Other—6.1, 7.0, and 9.5 cents per pound. Flue-cured: Used in chewing tobacco—2.0, 2.3, and 2.9 cents per pound. Other—4.2, 4.7, and 6.1 cents per pound. Fire-cured: Used in chewing tobacco—2.0, 2.2, and 2.9 cents per pound. Other—2.9, 3.2, and 4.1 cents per pound. Dark air-cured: Used in chewing tobacco—2.0, 2.3, and 3.1 cents per pound. Other—^3.3, 3.8, and 5.1 cents per pound. Cigar leaf (including all types of tobacco used in manufacture of cigars and scrap chewing and smoking tobacco): Used in cigars: Fire-cured tobacco—3.0, 3.25, and 4.3 cents per pound. Other—3.0, 3.75, and 5.0 cents per pound. Used in scrap chewing and smoking tobacco—2.0, 2.5, and 3.3 cents per pound. \ On Jan. 6,1936, the taxes imposed by the Agricultural Adjustment Act, as amended, were held unconstitutional by the United States Supreme Court. On Feb. 10, 1936, the taxes imposed upon the ginning of cotton, the sale of tobacco, and the first sale or first change in form of potatoes were repealed. 2 Tax applies to the first domestic processing and is measured by the quantity of the commodity put in process, unless otherwise specified. 3 The three rates given apply, respectively, to farm sales weight, tobacco from which the stem has not been removed, and tobacco from which the stem has been removed. 286 REPORT OF THE SECRETARY OF THE TREASURY Processing\tax rates under the Agricultural Adjustment Act, arid rates of tax on cotton ginning, tobacco sales, and potatoes, during the fiscal year 1936, with effective dates 1—Continued Source of tax Effective date Rate Processing 2—Continued Tobacco 3—Continued Oct. 1, 1935 Field^corn Hogs Sugar.^beets and^sugarcane. Nov. 5, 1933 Mar. 1, 1934 June 8, 1934 Peanuts Oct. Rice Paper__. Apr. 1, 1935 June 12, 1934 1, 1934 Oct. 1, 1933 June 12, 1934 Dec. 1,1933 Nov. 1,1935 Jute- June 12, 1934 Dec. 1, 1933 Rye For footnotes see p. 285. Sept. 1, 1935 Maryland—3.62, 3.85, and 5.2 cents per pound. Burle}^: Used in chewing tobacco—2.5, 2.9, and 3.9 cents per pound. Other—3.5, 4.0, and 5.4 cents per pound. Flue-cured—1.89, 2.13, and 2.73 cents per pound. Fire-cured—2.14, 2.36, and 3.1 cents per pound. Dark air-cured: Used in chewing tobacco—2.0, 2.3, and 3.1 cents per pound. Other—3.3, 3.8, and 5.1 cents per pound. 5 cents per bushel of 56 pounds. $2.25 per hundred pounds. Direct-consumption sugar—0.5 cents per pound of sugar raw value. Sirup of cane juice and edible molasses from sugarcane—0.125 cent per pound of sugar content, raw value. Other than those used in the m,anufacture of peanut oils—1 cent per pound. 1 cent per pound. Used in— Bags, as defined, other than open m,esh: 4.5- to 5.4-pound size—$1.24 per thousand bags. 5.5- to 7.9-pound size—$1.47 per thousand bags. 8- to 10.9-pound size—$2.02 per thousand bags. 11- to 12.9-pound size—$2.25 per thousand bags. 13- to 16.9-pound size—$3.11 per thousand bags. 17- to 29.9-pound size—$3.96 per thousand bags. 30- to 74.9-pound size—$7.91 per thousand bags. Open-m.esh paper bags—2.14 cents per pound of open-mesh fabric. Paper towels—0.346 cents per pound of paper. Gum.med paper tape—4.06 cents per pound of paper. Reinforced paper fabric tape—21.7 cents per thousand 1-inch yards. Fabric into small bags—2.1 cents per pound of fabric. Yarn into twine—2.9 cents per pound of yarn. 30 cents per bushel of 56 pounds. KEPORT OF THE SECRETARY OF THE TREASURY 287 Processing tax rates under the Agricultural Adjustment Act, and rates of tax on cotton ginning, tobacco sales, and potatoes, during the fiscal year 1936, with effective dates ^—Continued Source of tax Effective date Rate Other agricultural adjustment Cotton ginning: _ __ Tobacco sales Potato stamp tax June 18, 1935 6.0 cents per pound of lint cotton produced from ginning.4 Oct. 21, 1935 5.45 cents per pound of lint cotton produced from ginning.^ July 1^ 1935 33>^ percent of the price received from first bona-fide sale. Dec. 1, 1935 0.75 cent per pound on either the first sale or the first change in form. 1 See note 1, p. 285. < 50 percent of average central market price as determined and proclaimed by the Secretary of Agriculture in accordance with provisions of the act. Exhibit 46 Executive order, August 29, 1935, requiring the preparation and publicity of written decisions in respect of overassessments of income, profits, estate, and gift taxes allowed in excess of $20,000 By virtue of and pursuant to the authority vested in me by section 257 (a) of title II of the Revenue Act of 1926 (ch. 27, 44 Stat. 9, 51); section 55 of title I of the Revenue Act of 1928 (ch. 852, 45 Stat. 791, 809); section 55 of title I of the Revenue Act of 1932 (ch. 209, 47 Stat. 169, 189), as amended by section 218 (h) , of the National Industrial Recovery Act (ch. 90, 48 Stat. 195, 209); and section 55 (a) of title I of the Revenue Act of 1934 (ch. 277, 48 Stat. 680, 698), it is hereby ordered that written decisions in respect of overassessments of income, profits, estate, and gift taxes allowed in excess of $20,000 shall be prepared and shall be open to public inspection in accordance with the regulations prescribed by the Secretary of the Treasury amending paragraph 16 of Treasury Decision 4359, as amended, and approved by me this date. FEANKLIN D ROOSEVELT. T H E WHITE HOUSE, August 29, 1935. Exhibit 47 An act relating to the filing of copies of income returns, and for other purposes [Public No. 610, 74th Cong., H. R. 11365] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That section 54 of the Revenue Act of 1934, as amended, is amended by, inserting at" the end thereof the following new subsection: ''(d) COPIES OF RETURNS.—If any person, required by law or regulations made pursuant to law to file a copy of any income return for any taxable year beginning after December 31, 1934, fails to file such copy at the time required, there shall be due and assessed against such person $5 in the case of an individual return or $10 in the case of a fiduciary, partnership, or corporation return, and the collector with whom the return is filed shall prepare such copy. Such amount shall be collected and paid, without interest, in the same manner as the amount of tax due in excess of that shown by the taxpaj^er upon a return in the case of a mathematical error appearing on the face of the return. In case of a person who filed a return for any taxable year not beginning after December 31, 1935, such amount of $5 or $10 shall be due and assessed only if the copy is not filed before the expiration of fifteen days after the mailing by the collector in whose office the 288 REPORT OF THE SECRETARY OF THE TREASURY return is filed, of a request to such person for the filing of the copy. returns filed or prepared pursuant to this subsection shall remain on period of not less than two years from the date they are required to be may be destroyed at any time thereafter under the direction of the sioner." Approved, April 10, 1936. Copies of file for a filed, and Commis- OBLIGATIONS OF FOREIGN GOVERNMENTS Exhibit 48 Correspondence exchanged between the Government of the United States and various foreign governments and statements concerning foreign debts owing to the United States AUSTRIA Announcing the inability of Austria to make payment of the amounts due on January 1, 1936 {State Department press release, Jan. 7, 1936) The Austrian Minister at Washington notified the Department of State under date of December 26, 1935, that Austria is not in a position to make payment of the amounts due on January 1, 1936, on the Austrian relief debt to the United States. The amounts due were: Principal of bond no. 8, dated Jan. 1, 1928, due Jan. 1, 1936, under agreement of May 8, 1930 $460,093. 00 Third annual annuity due Jan. 1, 1936, under the moratorium agreement of Sept. 14, 1932 34, 767. 23. Total 494, 860. 23 Previous Austrian payments to the United States which have fallen due since January 1, 1933, have been postponed under a clause in the.agreement of May 8, 1930, that ''the obligation, of Austria to pay annuities during the years 1929 to 1943 will in the case of each annuity not arise if the trustees of the reconstruction loan of 1923 prior to the preceding December first have raised objection to the payment of the annuity in question on the due date", and that any payment so postponed will be paid with interest in the years 1944 to 1968. No communication from the trustees of the Austrian reconstruction loan of 1923 has been received in regard to the pa3^ments due January 1, 1936, the reconstruction loan having been redeemed during the year 1935 through the issue of the Austrian guaranteed conversion loan of 1934-59. The Austrian relief obligation to the United States, funded under the agreement of May 8, 1930, was one of a series of obligations of similar tenor but in different amounts and payable in different currencies which were issued by the Austrian Government in 1920 to the Governments of Denmark, France, Great Britain, Italy, the Netherlands, Norway, Sweden, Switzerland, and the United States. In these obligations the Government of Austria agreed that no payment will be made upon or in respect of any of the obligations, whether for principal or for interest, unless a similar and proportionate payment shall simultaneously be made upon all the obligations. The eight governments other than the United States, which are holders of Austrian relief obligations, are represented on the International Relief Bonds Committee which meets from time to time at "London. Under date of June 24, 1935, the Austrian Government in a communication addressed to the committee applied to the governments represented on it to grant a moratorium in respect of the relief debt installments,which fall due to these governments under existing agreements on January 1, 1936, 1937, and 1938; and stated that, should the committee agree to this moratorium, the Austrian Government would negotiate with the committee before the end of the year 1938 as to the resumption of payments under the agreements. On October 14, 1935, the chairman of the committee informed the Austrian Government that the governments represented on the committee were prepared to accept this proposal, provided that it was accepted by all the creditor governments which hold Austrian relief bonds. On October 29, 1935, the Austrian Minister at Washington informed the State Department of his Government's negotiations with the International Relief Bonds Committee, and asked for a like concession in regard to the postponement of REPORT OF THE SECRETARY OF THE TREASURY 289 payments falling due on January 1 of the years 1936, 1937, and 1938. On November 13, 1935, the Secretary of State replied that the Austrian relief debt tothe United States was regulated by legislation and that it was not possible for the executive branch to take any action which would postpone or in any way affect the status of the payment due January,1, 1936. To the Secretary of State from the Belgian Ambassador, December 14) 1935 [Translation] M R . SECRETARY OF STATE: Under date of November 26 Your Excellency informed me of the amounts due to the Government of the United States by the Belgian Government on December 15, 1935, in execution of the agreement of August 18, 1925, and of the moratorium agreement of June 10, 1932. By my note of June 14 last, I had the honor to recall to the Government of the United States the reasons why the Belgian Government found it impossible to resume on June 15, 1935, the service of its debt to America. Since the last due date, no new element has arisen which would permit Belgium to alter its attitude. I t finds itself, therefore, unable to make, on December 15, the payment contemplated by the Belgian-American agreement of August 18, 1925. I avail myself [etc.]. R. V. STRATEN. To the Secretary of State from the Belgian Ambassador, June 13, 1936 [Translation] M R . SECRETARY OF STATE: By your note of May 22 last. Your Excellency was good enough to transmit to me a statement of the payments envisaged by the Belgian-American debt agreement of August 18, 1925, and of the moratorium agreement of June 10, 1932. As I had the honor of informing the Department of State, in my note of May 23, I hastened to transmit that document to the King's Government I have been instructed to inform the American Government that the Belgian Government regrets to state that the reasons which have forced it to suspend, since December 15, 1932, the service of its debt to the United States, have lost none of their validity. No new element having arisen which would permit Belgium to modify its attitude, my country finds it impossible to effect, on June 15 next, the payment in question. I avail myself [etc.]. VAN DER STRATEN. CZECHOSLOVAKIA To the Secretary of State from the Chargi d'Affaires ad interim of Czechoslovakia, December 14, 19S5 EXCELLENCY: Acting upon the instruction of my Government I have the honor to acknowledge the receipt of Your Excellency's note of November 26, 1935, enclosing a statement showing the amounts due from the Czechoslovak Government under the provisions of the debt agreement of October 13, 1925; and the moratorium agreement of June 10, 1932. In its previous notes the Czechoslovak Government, presenting its point of view with regard to the international intergovernmental indebtedness, stressed the reasons for which it was prevented from fulfilling its duty in continuing the payments under the provisions of the mentioned agreements. Appreciating the suggestion expressed in Your Excellency's note for discussing, through diplomatic channels, the proposals for putting forward the payment of the indebtedness, the Czechoslovak Government after renewed and careful investigations of all questions connected with the problem of the obligations of the Czechoslovak Government to the Government of the United States, has been led, to its profound regrets, 93790—37 20 290 REPORT OF THE SECRETARY OF THE TREASURY to t h e conviction t h a t t h e prevailing unsettled economic a n d financial conditions existing throughout t h e world do n o t w a r r a n t convenient and successful outcome of such negotiations for t h e revision of t h e debt settlement a t t h e present time. Accept [etc.]. DR. JOSEF NEMECEK, Charge d'Affaires ad interim of Czechoslovakia. To the Secretary of State from the Minister of Czechoslovakia, J u n e 11, 1936 EXCELLENCY, I n accordance with instructions from m y Government, I have t h e honor to acknowledge t h e receipt of Your Excellency's note of M a y 22, 1936, enclosing a s t a t e m e n t showing t h e a m o u n t s due from t h e Czechoslovak Government under t h e provisions of t h e debt agreement of October 13, 1925, a n d t h e m o r a t o r i u m agreement of J u n e 10, 1932. T h e Czechoslovak Government has resumed, on this occasion, its investigation of all t h e questions involved in t h e problem of Czechoslovak intergovernmental indebtedness, with special reference to t h e suggestion expressed in Your Excellency's note for discussing, through diplomatic channels, a n y proposals which m y Government m a y have t o present relative to t h e p a y m e n t of this indebtedness. To its great regret, however, t h e Czechoslovak Government has reached t h e conclusion t h a t under prevailing conditions it can hardly perceive t h e possibility of establishing a basis conducive to t h e reopening of negotiations which would lead to a satisfactory m u t u a l a r r a n g e m e n t a t present. Accept [etc.]. FERDINAND VEVERKA, Envoy Extraordinary and Minister Plenipotentiary of Czechoslovakia. ESTONIA To the Secretary of State from the Acting Estonian Minister of Foreign Affairs, M a y 28, 1936 EXCELLENCY: 1 have t h e honor t o inform you t h a t t h e Estonian Government for reasons stated in their previous notes regret to be unable to effect, under t h e terms of t h e d e b t funding agreement of 1925 between Estonia and t h e United. States of America, t h e p a y m e n t of t h e installments falling due during t h e present financial year, i. e., on June 15, 1936, and December 15, 1936. 1 avail myself [etc.] H. LARETEI, R. Minister of Foreign Affairs. Announcing the receipt of payments due from Finland {Treasury Department press releases, December 16, 1935, and J u n e 15, 1936) D E C E M B E R 16, 1935. T h e Treasury received today t h e sum of $230,453 from t h e Government of Finland, representing a p a y m e n t of principal in t h e a m o u n t of $65,000 a n d t h e semiannual p a y m e n t of interest in t h e a m o u n t of $146,422.50 under t h e funding agreement of M a y 1, 1923, and $19,030.50 as t h e fifth semiannual annuity due under t h e m o r a t o r i u m agreement of M a y 23, 1932. This p a y m e n t represents t h e entire a m o u n t due from t h e Government of Finland and was paid in cash t h r o u g h t h e Federal Reserve Bank of New York. J U N E 15, .1936. T h e Treasury received t o d a y t h e sum of $164,315.50 from t h e Government of Finland, representing t h e semiannual p a y m e n t of interest in t h e a m o u n t of $145,285 under t h e funding agreement of M a y 1, 1923, and $19,030.50 as t h e sixth semiannual annuity due under t h e moratorium agreement of M a y 23, 1932. This p a y m e n t represents t h e entire a m o u n t due from t h e Government of Finland a n d was paid in cash through t h e Federal Reserve Bank of New York. REPORT OF THE SECRETARY OF THE TREASURY 291 To the Secretary of State from the French Ambassador, December 14, 1935 [Translation] Mr. SECRETARY OF S T A T E : I have t h e honor to acknowledge t h e receipt of Your Excellency's note of November 26, transmitting a s t a t e m e n t of t h e a m o u n t s due by France t o t h e United States December 15, 1935, under t h e terms of t h e agreements signed by t h e French Government. I n presenting this statement, you took occasion to reiterate t h a t t h e American Government is fully disposed to discuss through diplomatic channels any proposals which t h e Government of t h e Republic m a y desire to p u t forward in regard to the settlement of this indebtedness and to give t h e m careful consideration with a view to their eventual submission to t h e American Congress. The French Government t h a n k s the American Government for having been so kind as to renew these assurances. I t desires in t a r n , referring to its previous communications, to repeat t h a t it is prepared t o seek, as soon as circumstances permit, a settlement of its debt on bases acceptable to both countries. Still finding itself, however, unable to p u t forward proposals a t t h e present time, it can only hope t h a t the situation will develop sufficiently to justify, in t h e near future, undertaking negotiations with a view t o assuring t h e early att a i n m e n t of t h e understanding desired equally by t h e two Governments. Please accept [etc.]. A N D R 6 DE L A B O U L A Y E . To the Secretary of State from the French Charg6 d'Affaires, J u n e 13, 1936 [Translation] Mr. SECRETARY OF S T A T E : I have t h e honor to acknowledge t h e receipt of Your Excellency's note, d a t e d May 22, 1936, t r a n s m i t t i n g a s t a t e m e n t of t h e a m o u n t s due by France to t h e United States on J u n e 15 next, under t h e terms of t h e agreements sighed by t h e French Government. I n presenting this statement, you take occasion to reiterate t h a t t h e Governm e n t of t h e tJnited States is fully disposed to discuss t h r o u g h diplomatic channels any proposals which t h e Government of t h e Republic m a y desire to p u t forward in regard to t h e settlement of this indebtedness a n d t o give t h e m careful consideration with a view to their eventual submission t o Congress. T h e French Government t h a n k s t h e American Government for having been so kind as to renew these assurances. I t has n o t overlooked t h e difficulties involved in t h e question of debts and hopes t h a t they m a y be overcome. Accordingly, having in view t h e communications m a d e by preceding Governments, it desires on its p a r t to m a k e it absolutely plain t h a t it is prepared to seek, as soon as circumstances permit, a settlement of its debt on bases acceptable t o both countries. Still finding itself, however, unable t o p u t forward proposals a t t h e present time, it can only hope t h a t t h e situation will develop sufficiently to justify, in t h e near future, undertaking negotiations with a view to assuring t h e early a t t a i n m e n t of t h e understanding desired equally by t h e two Governments. Please accept [etc.]. JULES HENRY. GREAT BRITAIN To the Secretary of State from the British Ambassador, December 10, 1935 SIR: I have t h e honour t o acknowledge t h e receipt of your note of t h e 26th November enclosing a s t a t e m e n t of t h e a m o u n t s due on t h e 15th December, 1935, from His Majesty's Government in t h e United Kingdom under t h e debt agreem e n t of t h e 19th June, 1923, a n d t h e moratorium agreement of t h e 4 t h June, 1932. I have been instructed by His Majesty's Principal Secretary of State for Foreign Affairs t o inform you in reply t h a t His Majesty's Government note with appreciation t h e continued readiness of t h e United States Government t o discuss any proposals which His .Majesty's Government m a y desire t o p u t forward on this m a t t e r . I t does n o t appear t o m y Government however t h a t circumstances have so changed since their note of t h e 4th J u n e , 1934, as to enable proposals t o be p u t 292 REPORT OF THE SECRETARY OF THE TREASURY forward at the present time which would be acceptable to both Governments. They wish to repeat however that they will be glad to resume discussions whenever the situation warrants the hope that a satisfactory result might be reached.. I have the honour [etc.]. R. C. LINDSAY. To the Secretary of State from the British Ambassador, June 7, 1936 SIR: In accordance with instructions from His Majesty's Principal.Secretary of State for Foreign Affairs, I have the honour to acknowledge the receipt of your noteof the 22nd May enclosing a statement of the amounts due from His Majesty'sGovernment in the United Kingdom under the provisions of the debt agreement, of the 19th June, 1923, and the moratorium agreement of the 4th June, 1932. His Majesty's Government explained in their note of the 4th June, 1934, thereasons for which they were reluctantly forced to suspend payments under those agreements. Those reasons are unfortunately no less valid now than they werethen. His Majesty's Government desire me to express their appreciation of your assurance that the United States Government are ready to discuss any proposalsin regard to payment which may be put forward, and I am instructed to assureyou in return that His Majesty's Government will be glad to reopen negotiations, whenever circumstances are such as to warrant the hope that a satisfactory result might be reached. I have the honour [etc.]. R. C. LINDSAY. To the Minister of Greece from the Secretary of State, September 30, 1935 SIR: I have observed the publication in American newspapers of September 26>. 1935, of an advertisement in which the Greek Minister of Finance requests; holders of dollar bonds of the Greek Government stabilization and refugee loan^ of 1928 to present to certain American banks (who, it is stated, are effecting: payment for the account and on behalf of the Bank of Greece) coupons due August 1, 1935, for payment of 35 percent of their face value. In this connection, I have the honor to inquire when a reply may be expected to my note dated April 22, 1935, notifying your Government of the amounts due from it under part II of the debt agreement of May 10, 1929, and the moratorium, agreement of May 24, 1932, and requesting payment thereof. It will be recalled that section 2 of part XI provides in part as follows: *'The new loan provided for in this agreement shall rank with and shall sharethe same securities and all other advantages as the Greek stabilization and refugeeloan of 1928 provided for in the international loan agreement executed January 30, 1928, between representatives of Greece and Speyer and Co., the National City Co., and the National City Bank of New York, and in the international loan agreement executed January 30, 1928, between representatives of Greece and Hambros Bank Ltd., and Erlangers, which agreements were concluded in pursuance of and under the authority of the Greek stabilization and refugee loan protocol signed at Geneva on behalf of Greece by the Greek Minister of Financeon September 15, 1927, and approved by the Council of the League of Nations^ by resolution of the same date and ratified by the decree law of Greece of November 10, 1927, and signed by the President of Greece and ratified by the GreekParliament and published in the Greek Official Gazette of December 7, 1927. "In the event of there occurring in any year a default in the payment of theservice of this new loan by the United States, the ratio in which it is to share the same securities as the Greek stabilization and refugee loan of 1928 provided for in the international loan agreements dated January 30, 1928, shall be the same as that which the amount of the annual service charge due the United States-bears to the amount of the. annual service charge due the holders of the bonds issued in accordance with the above-mentioned international loan.agreements of January 30, 1928." Accept [etc.]. For the Secretary of State: WILLIAM PHILLIPS.. REPORT OF THE SECRETARY OF THE TREASURY 293 To the Secretary of State from the Minister of Greece, January SO, 1936 EXCELLENCY: Referring to the Department's letter of September 30,1935, regarding the payment of amounts due under part II of the debt agreement of May 10, 1929, and in conformity with instructions from my Government, I have the honor to inform you that the Ministry of Finance of Greece is ready to effect a payment to the Treasury of the United States of 35 percent of the interest due on May 10, 1935, and November 10, 1935, each installment amounting to $76,272. Such percentage was offered to the stockholders of the Greek stabilization and refugee loan and, despite the fact that no agreement was reached up to now, the Royal Greek Government decided to put at the disposal of the paying banks the amounts due to the stockholders. The Royal Greek Government, desiring always to scrupulously fulfill their •obligations within the limit of their capacity to pay, propose for the consideration of the American Government the immediate payment of the two installanents as above independently of the pending negotiations with the aforesaid •stockholdersMy Government wish, however, to state that this payment of interest does not (imply recognition of this debt as a private debt, but maintain their position that (regarding its final settlement it should be considered as a war debt. Accept [etc.]. D . SiClLIANOS. To the Minister of Greece from the Secretary of State, February 8, 1936 SIR: I have the honor to acknowledge the receipt of your note no. 113, dated January 30, 1936, regarding the payment of amounts due under part I I of the debt agreement of May 10, 1929. This Government will be glad to receive the installments which your Government tenders, without prejudice to the position which has been publicly taken by associations acting on behalf of holders of Greek bonds that it would be well within the capacity of Greece to make larger payments than 35 percent of the interest on its external bonds which fall due in the year beginning April 1, 1935, and without prejudice to the contractual rights of the Government of the United States under part II of the debt agreement of May 10, 1929. This last-nientioned reservation of the rights of the United States is applicable alike in regard to the .specific provision made for the event of there occurring in any year a default in the payment of the service of the new loan provided for in the agreement, and to the general provision that the new loan shall rank with and shall share the same securities and advantages as the Greek stabilization and refugee loan of 1928. As indicated in my note of October 22, 1935, payment of the amounts tendered by your Government may be made either at the Treasury in Washington or at the Federal Reserve Bank of New York. Pursuant to your request, on receipt of these payments the Treasury will apply $76,272 to the payment of 35 percent" of the -semiannual interest amounting to $217,920, due May 10, 1935, on the 4 percent loan of 1929, and $76,272 to the payment of 35 percent of the semiannual interest amounting to $217,920 due November 10, 1935, on the same loan. With regard to the last paragraph of your note under acknowledgment, I irefer to the reservation of the rights of the United States hereinabove. Accept [etc.]. CoRDELL H U L L . A.nnouncement concerning matters relating to the indebtedness of Greece to the United States {State Department press release. Mar. SO, 1936) The Treasury Department is announcing that the Greek Government transferred to the United States Treasury on March 26, 1936, the sum of $152,544 representing 35 percent of the semiannual interest amounting to $217,920 due May 10, 1935, and $217,920 due November 10, 1935, on the 4 percent loan of 1929. The agreement for the funding of the Greek indebtedness to the United States, made May 10, 1929, is in two parts. Part I provided that Greece should issue bonds in the aggregate amount of $20,330,000, payable January 1 and July 1 of each year from 1929 to 1989, in repayment for $15,000,000 cash advanced to Greece in 1919 and 1920, together with interest accrued and unpaid thereon as of January 1, 1928. 294 REPORT OF THE SECRETARY OF THE TREASURY Part II provided that the United States should loan to Greece the sum of $12,167,000, for which Greece should deliver to the United States its 20-year gold bonds, bearing interest at the rate of 4 percent, payable semiannually. The amount so loaned should be turned over in its entirety by Greece to the refugee settlement commission, to be expended by said commission for thd purpose of carrying out its settlement work. The new loan should rank with and should share the same securities and all other advantages as the Greek stabilization and refugee loan of .1928. It was further provided that: "In the event of there occurring in any year a default in the payment of the service of this new loan by the United States, the ratio in which it is to share the same securities as the Greek stabilization and refugee loan of 1928 provided for in the international loan agreements dated January 30, 1928, shall be the same as that which, the amount of the annual service charge due the United States bears to the amount of the annual service charge due the holders of the bonds issued in accordance with the above-mentioned international loan agreements of January 30, 1928." . Greece, which since 1932 has been in partial default on all its external loans, paid the United States the same percentages of interest payments due November 10, 1932, through November 10, 1934, under part II of the debt agreement that it paid on coupons of the Greek stabilization and refugee loan of 1928 (and on coupons of other external bonds) after annually negotiating agreements with bondholders' associations. The payments to the United States under part II of the agreement have been as follows: Nov. 10, 1932 M a y 10, 1933 Nov. 10, 1933 M a y 10, 1934 N o v , 10, 1934 ..-_. : ".... $65,376 59.928 59,928 76,272 76, 272 The amounts due under part II which were left unpaid are a.s follows: Principal Nov. 10, 1932. M a y 10, 1933. Nov. 10, 1933. M a y 10, 1934. Nov. 10, 1934. $227,000 231, 000 236, 000 240,000 245, 000 Interest $152, 544 157,992 157,992 141, 64» 141, 648 During this period Greece has made no payment on amounts which have fallen due under part I of the agreement or under the moratorium agreement of May 24, 1932. For the Greek fiscal year beginning April 1, 1935, Greece reached no agreement with bondholders' associations and thereupon provided funds with fiscal agents of the various Greek external loans for 35 percent payment on coupons. The first tender of this kind with reference to the Greek stabilization and refugee loan of 1928 was the subject of the State Department's note of September 30, 1935. The Greek reply of January 30, 1936, is of the same date as the publication of the Greek Government's offer to pay bondholders 35 percent of the face value of coupons maturing February 1, 1936—the coupons to be stamped *'35 percent paid" and returned to the bondholders to reattach to the bonds from which they were detached. This announcement further stated that acceptance would not prejudice the rights of the bondholders toward any further payment whatsoever which might eventually be agreed upon for the year 1935-36. The Greek legation's note of January 30 refers to pending negotiations with the bondholders of the Greek stabilization and refugee loan. These negotiations are conducted between the Greek Government and the league loans committee, which is not an organ of the League of Nations but is a bondholders protective committee of which Sir Austen Chamberlain is the chairman and Mr. Eliot Wads worth is the American member. The reservations expressed in the Department's note of February 8 are intended to protect not only the contractual rights of the United States but the negotiating position of the bondholders, including American bondholders, who share the same securities as the United States Government loan of 1929. REPORT OF THE SECRETARY OF THE TREASURY 295 Announcing the receipt of interest payments due from Greece (Treasury Department press release, M a r . 3 1 , 1936) Acting Secretary of t h e Treasury Taylor yesterday announced t h a t t h e Greek Government h a d transferred to t h e United States Treasury on March 26, 1936, t h e sum of $152,544 representing 35 percent of the semiannual interest a m o u n t ing to $217,920 due May 10, 1935, a n d $217,920 due November 10, 1935, on t h e 4 percent loan of 1929. HUNGARY To the Secretary of State from the H u n g a r i a n Minister, December 10, 1935 SIR: I have t h e honor to inform you t h a t I have been instructed by m y Government to advise t h e Government of t h e United States t h a t owing to t h e continued difficult financial situation in H u n g a r y , m y Government regrets exceedingly its inability to p a y the a m o u n t of $50,057.93, representing t h e principal a n d semia n n u a l interest due on December 15, 1935, under t h e funding agreement or t o deposit its pengo equivalent a t t h e H u n g a r i a n National Bank. However, on t h a t date m y Government will deposit to t h e Foreign Creditors Account a t t h e H u n g a r i a n National Bank a H u n g a r i a n Treasury Certificate in t h e pengo equivalent of t h e a m o u n t due bearing interest a t t h e r a t e of 2 per centum per a n n u m . Accept [etc.]. J O H N PEL]ENYI. To the Secretary of State from the H u n g a r i a n Charge d^ Affaires ad interim, J u n e 12, 1936 SIR: I have t h e honor to inform you t h a t I h a v e been instructed by m y G o v e r n m e n t to advise t h e Government of the United States t h a t owing to continued unfavorable economic conditions, t h e H u n g a r i a n Government regrets exceedingly its inability to pay the a m o u n t due on J u n e 15, 1936, under t h e funding agreement or to deposit its pengo equivalent a t the H u n g a r i a n National Bank. However, on t h a t date m y Government will deposit to t h e Foreign Creditors Account a t t h e Hungarian National Bank a Hungarian Treasury certificate in t h e pengo equivalent of the a m o u n t due bearing interest a t the r a t e of 2 per centum per a n n u m . . Accept [etc.]. \ A N T H O N Y BALXSY, ChargS d'Affaires ad interim of Hungary. To the Secretary of State from the I t a l i a n Ambassador, December 14, 1935 HONORABLE SIR: I have t h e honor to acknowledge t h e receipt of your note of November 26, 1935, enclosing a s t a t e m e n t of t h e accounts due from t h e Italian Government up to t h e 15th of December 1935, under t h e provisions of t h e debt agreement of N o v e m b e r 14, 1925, a n d t h e moratorium agreement of J u n e 3, 1932. M y Government has taken note with appreciation of t h e renewed assurance t h a t the United States Government is fully disposed to discuss, through diplomatic channels, any proposals which t h e Italian G o v e r n m e n t m a y desire t o p u t forward in regard to the p a y m e n t of its indebtedness a n d t h a t such proposals would receive careful consideration with a view to eventual submission to t h e American Congress. While t h a n k i n g 3^ou for this communication, m y Government regrets to be unable a t present to submit a n y proposals a n d wishes to refer to t h e considerations previously brought to the a t t e n t i o n of t h e Federal Government. Accept [etc.]. Rosso. :296 REPORT OF THE SECRETARY OF THE TREASURY To the Secretary of State from the Italian Ambassador, June 8, 1936 HONORABLE SIR: I have the honor to acknowledge the receipt of your note of May 22, by which you have sent me a statement of the accounts due from the Italian Government up to the 15th of June 1936, under the provisions of the debt agreement of Novem!ber 14, 1925, and the moratorium agreement of June 3, 1932. My Government has taken note with appreciation of the renewed assurance that the United States Government is fully disposed to discuss, through diplomatic channels, any proposals which the Italian Government may desire to put forward in regard to the payment of its indebtedness and that such proposals would receive careful consideration with a view to eventual submission to the American Congress. While thanking you for this communication, my Government regrets to be unable at the present time to submit any proposals and wishes to refer to the •considerations previously brought to the attention of the Federal Government. Accept [etc.]. Rosso. To the Secretary of State from the Latvian Minister, December 15, 1935 .SIR: In reply to the note of the Department of State of November 26, 1935, and referring myself to the note addressed on June 13, 1935, by the Latvian Prime Minister and Minister "for Foreign Affairs to Mr. Felix Cole, American Charge •d'Affaires in Riga, I have the honor to inform you that in the interval which has elapsed since the despatch of the note referred to above no changes have been observed in the general position and in the circumstances of a nature that •could have altered the attitude of the Latvian Government in regard to the .settlement of the Latvian indebtedness to the United States. Neither have the •discussions regarding war debts so far taken place between the two Governments. In view of the above and maintaining their present views and their attitude in rregard to the subject as expressed in the relevant correspondence, I have the honor to inform you that to their regret the Latvian Government find it impossible to effect the payment of the installment of their debt to the United .States which becomes due on December 15, 1935. I avail myself of this opportunity to draw your attention to the fact that through establishing a legation in the United States and appointing a plenipotentiary representative to Washington the Latvian Government have created a situation which affords all possibilities of direct contact between the Latvian Government and the United States Government and its competent authorities with a view to opening the discussions, mention of which first was made in the Aide-Memoire of January 26, 1933, handed •over to Mr. Lule, Latvian Consul General in Charge of Legation, by Mr. Stimson. Please accept [etc.]. D R . ALFRED BILMANIS. To the Secretary of State from the Latvian Minister, June 13, 1936 .SIR: In reply to note no. 800.51 W 89/975 of the Department of State of May 22nd .and referring to my note of December 15, 1935,,' I have the honor to inform you that in the interval which has elapsed since the despatch of the note referred to .above no changes have been observed in the general position and in the circum..stances of a nature that could have altered the attitude of the Latvian Government in regard to the settlement of the Latvian indebtedness to the United States. In view of the above and maintaining their present views and their attitude in ..regard to the subject as expressed in the relevant correspondence, I have the Tionor to inform you that to their regret the Latvian Government find it impos.;sible to effect the payment of the installment of their debt to the United States -^which becomes due on June 15th next. Accept [etc.]. ALFRED BILMANIS, Latvian Minister. REPORT OF THE SECRETARY OF THE TREASURY - 297 LITHUANIA To the Secretary of State from the Lithuanian Minister, December IS, 1935 SIR: I have t h e honor to acknowledge t h e receipt of your note, dated N o v e m b e r 26, 1935, t r a n s m i t t i n g a s t a t e m e n t showing t h e a m o u n t s due a n d payable J u n e 15, 1933, December 15, 1933, J u n e 15, 1934, December 15, 1934, J u n e 15, 1935, a n d December 15, 1935, from m y Government p u r s u a n t t o t h e t e r m s of t h e d e b t agreement of September 22, 1924, a n d t h e m o r a t o r i u m agreement of J u n e 9, 1932. T h e Lithuanian Government, while reaffirming its indebtedness to t h e G o v e r n ment' of t h e United States, regrets exceedingly t h a t , because of t h e continued adverse economic a n d financial conditions in Lithuania, it is unable to meet t h e p a y m e n t s due on December 15, 1935. T h e Lithuanian Government reiterates its assurances t h a t it will be pleased to m a k e proposals regarding t h e p a y m e n t of its indebtedness when it will a p p e a r t h a t discussions on this subject might produce mutually satisfactory results. Please accept [etc.]. P. ZADEIKIS. To the Secretary of State from the Lithuanian Minister, J u n e 9, 1936 SIR: I have t h e honor to acknowledge t h e receipt of your note of M a y 22, 1936, transmitting a s t a t e m e n t showing t h e a m o u n t s due a n d payable J u n e 15, 1933, December 15, 1933, J u n e 15, 1934, December 15, 1934, June 15, 1935, December 15, 1935, a n d J u n e 15, 1936, from m y Government p u r s u a n t t o t h e terms of t h e debt agreement of September 22, 1924, a n d t h e m o r a t o r i u m agreement of June 9, 1932. Acting upon instructions received from m y Government, I have t h e h o n o r to inform you t h a t t h e Lithuanian Government, again affirming t h e acknowledgm e n t of its indebtedness to t h e United States of America, regrets very m u c h t h a t continued unfavorable economic a n d financial conditions in Lithuania, prevent m y Government from meeting t h e p a y m e n t s due t h e United States^ Government on June 15, 1936. Also, I have t h e honor t o inform you t h a t m y Government will be glad tO' submit proposals regarding its indebtedness when it wiU be found t h a t discussions on this question will be likely t o effect mutually agreeable a n d practicable results. Please accept [etc.]. P . ZADEIKIS. POLAND To the Secretary of State from the Polish Charge d*Affaires ad interim, December 14, 1935 . [Memorandum] T h e Charge d'Affaires ad interim of Poland has been instructed b y his Gove r n m e n t to inform t h e Government of t h e United States t h a t for reasons analogous to those stated in t h e note of December 8, 1932, a n d confirmed by later declarations, they are obliged to request similarly a deferment of p a y m e n t of t h e i n stallment payable on December 15, 1935. T h e Polish Government are still n o t in a position t o resume, t o w a r d t h e UnitedStates, t h e service of t h e debt. To the Secretary of State from the Polish Ambassador, J u n e I S , 1936 [Memorandum] T h e Ambassador of Poland has been instructed b y his Government t o inform t h e Government of t h e United States t h a t , for reasons analogous t o those stated, in t h e note of December 8, 1932, a n d confirmed b y later declarations, t h e y areobliged to request similarly a deferment of p a y m e n t of t h e installment p a y a b l e on June 15, 1936. T h e Polish Goverment are still n o t in a position t o resume, t o w a r d t h e U n i t e d States, t h e service of t h e debt. 298 • REPORT OF THE SECRETARY OF THE TREASURY RUMANIA To the Secretary of State from the R u m a n i a n Minister, December 12, 1935 SIR: Referring to m y note of December 6, 1935, and in further reply to your note of November 26, 1935, I have t h e honor to inform you t h a t , in accordance with m y communications of December 20, 1934, a n d J u n e 12, 1935, t h e R u m a n i a n Government feels t h a t no changes have occurred in t h e general situation which would permit to expect a favorable result by initiating negotiations a t t h e present time. Accept [etc.]. DAVILA, Minister of Rumania. To the Secretary of State from the R u m a n i a n Minister, J u n e 10, 1936 SIR: I have "the honor to acknowledge receipt of your note of M a y 22, 1936, enclosing a s t a t e m e n t of t h e a m o u n t due from t h e Government of R u m a n i a under provisions of t h e debt agreement of December 4, 1925, and t h e moratorium agreem e n t of J u n e 11, 1932. I n reply I a m instructed to state t h a t while appreciating your assurance t h a t t h e Government of t h e United States is disposed to discuss any proposals which m y Government m a y desire to p u t forward in regard to t h e p a y m e n t of this indebtedness, t h e R u m a n i a n Government feels t h a t t h e reasons which compelled it to suspend p a y m e n t under t h e above-mentioned agreements, as set forth in my note of December 20, 1934, are still valid and t h a t , therefore, no useful purpose would be served by initiating negotiations a t the present time. Please accept [etc.]. DAVILA, Minister. YUGOSLAVIA To the Secretary of State from the Minister of Yugoslavia, J u n e 11, 1936 SIR: I have t h e honor to acknowledge t h e receipt of your letter of M a y 22, t r a n s mitting, a t t h e request of t h e Secretary of t h e Treasury, a s t a t e m e n t of t h e a m o u n t s due by Yugoslavia to t h e United States J u n e 15, 1936, under t h e terms of the debt agreement of M a y 3, 1926. I n accordance with t h e instructions which I received from m y G o v e r n m e n t I beg to inform you t h a t to their regret t h e Yugoslav Government is unable to reassume p a y m e n t s p u r s u a n t to t h e terms of t h e debt agreement. T h e reasons for which t h e Yugoslav Government was forced to discontinue t h e fulfillment of its obligations according to its agreements on war debts, have been exposed in m y predecessor's note no. 486 of J u n e 15, 1933. In t h e opinion of t h e Yugoslav Government t h e a r g u m e n t s exposed therein are still carrying full weight. A c c e p t [etc.]. CONSTANTIN FOTITCH,. Minister of Yugoslavia. O R G A N I Z A T I O N AND P R O C E D U R E Exhibit 49 Orders changing organization and procedure in the Treasury Department T R E A S U R Y D E P A R T M E N T O R D E R N O . 11, F E B R U A R Y 15, 1936 To t h e C O M M I S S I O N E R OF I N T E R N A L R E V E N U E , C O M M I S S I O N E R OF C U S T O M S , COMMANDANT OF T H E C O A S T G U A R D , AND C H I E F OF T H E S E C R E T S E R V I C E : I t is hereby ordered t h a t no officer or employee in t h e d e p a r t m e n t a l or field services of t h e Bureau of I n t e r n a l Revenue, t h e Bureau of Customs, t h e Coast REPORT OF THE SECRETARY OF THE TREASURY 299 . Guard, or the Secret Service, shall, directly or indirectly, have any interest, whether as owner or p a r t owner, stockholder or otherwise, in any business, t h e whole or any substantial p a r t of which consists of t h e production, sale or distribution commercially of distilled spirits, wine, or fermented m a l t liquor; nor shall a n y such officer or employee, directly or indirectly, with or without compensation, engage in any such business, or have any connection, whether as a p a r t n e r , officer, director, employee, agent, attorney, or in any other capacity, with any person, firm, or corporation engaged in any such business. You will bring this order immediately t o t h e a t t e n t i o n of all officers a n d emr ployees in your respective organizations. H. MORGENTHAU, Jr., Secretary of the Treasury. TREASURY DEPARTMENT ORDER NO. 12, FEBRUARY 19, 1936 Hon. Wayne C. Taylor having been appointed by t h e President as an Assistant Secretarv of t h e Treasury, is hereby designated as t h e Fiscal Assistant Secretary. Mr. T^aylor will exercise supervision over all m a t t e r s relating to United States sayings bonds, t h e m o n e t a r y stocks of gold and silver, a n d foreign exchange transactions. H. MORGENTHAU, Jr., Secretary of the Treasury. TREASURY D E P A R T M E N T ORDER NO. 13, M A R C H 4, 1936 There is hereby created in t h e Office of t h e Fiscal Assistant Secretary a Division of Savings Bonds. T h e function of this Division shall be t o promote t h e .sale of savings bonds, and t h e Chief of t h e Division shall be responsible to t h e Fiscal Assistant Secretary for t h e accomplishment of this purpose. The expenses of t h e Division shall be .paid from t h e appropriation '^Expenses of loans, act of September 24, 1917, as amended and extended." Mr. Eugene W. Sloan is designated as Chief of t h e Division and is authorized, with t h e approval of t h e administrative assistant to t h e Secretary, to employ such assistants and incur such other expenditures as m a y be required to carr}^ on t h e work of t h e Division. Mr. James W. Bryan is designated as t h e Chief of t h e Information Section of t h e Division. T h e functions of this section shall be to provide advertising a n d informational material for use in t h e sale of savings bonds. H. MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 50 Regulations governing hours of employment and overtime work {departmental and field services) [Department Circular No. 563. Chief Clerk] TREASURY DEPARTMENT, Washington, J u n e 12, 1936. 1. P u r s u a n t to sections 2 and 3 of t h e act of Congress approved March 14, 1936, '^to provide for vacations to government employees, a n d for other purposes", t h e r e are hereby prescribed (a) t h e hours of employment for t h e respective groups of employees of t h e several bureaus, divisions, and offices of t h e Treasury D e p a r t m e n t , and (b) regulations governing t h e conditions under which overt i m e work m a y be performed and recorded in excess of t h e hours specified herein as constituting a day's work for t h e respective groups of employees. HOURS OF E M P L O Y M E N T 2. Section 2 of t h e act of March 14, 1936, provides in p a r t as follows: '^Each head of a d e p a r t m e n t or independent establishment shall issue general public regulations, not inconsistent with law, setting forth t h e hours of d u t y per d a y and per week for each group of employees." 3. T h e n u m b e r of hours of employment to be required of t h e respective groups of employees are hereby prescribed as follows: 300 REPORT OF THE SECRETARY OF THE TREASURY Clerical, professional, and sub-professional employees 4. With the exceptions stated below, clerical, professional, and sub-professional employees, both field and departmental, will be required to work 7 hours (exclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday, a total of 39 hours per week. 5. (a) In the case of those clerical, professional, and sub-professional employees of the Bureau of Engraving and Printing who are assigned to the operating divisions of that Bureau, such employees will be required to work 8 hours (inclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday, a total attendance of 44 hours per week. (b) In the case of professional and sub-professional employees of the Public Health Service, such employees will be required to work an average of 56 hour» per week over each period of 90 days—an equivalent of 8 hours each day of the week. (c) In the case of clerical, professional, and sub-professional employees of the Coast Guard employed at industrial plants, the working hours may be modified to meet existing conditions, providing, however, that 39 hours shall constitute so normal week's work. (d) In the case of professional and sub-professional employees of the Mint Service who are emploj^ed on a per diem basis, such employees will be required! to work 8 hours (inclusive of the luncheon period) each weekdaj^^ except Saturday^ and 4 hours on Saturday, a total of 44 hours per week. Messengers 6. Except as stated below, messengers will be required, in both the field and the departmental services, to work 8 hours (exclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week. 7. In the case of those messengers employed in the operating divisions of the Bureau of Engraving and Printing, and in the field operating divisions of the Mint Service, such employees will be required to work 8 hours (inclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday,. a total of 44 hours per week. All other employees 8. Employees in other than the clerical, professional, sub-professional, or messenger groups shall be subject to the following schedule, as prescribed for the respective bureaus and divisions of the Department: CHIEF CLERK'S OFFICE: Carpenters, chauffeurs, electricians, engineers, elevator conductors, machinists,, mechanics, painters, plasterers, plumbers, and their respective helpers, will be required to work 44 hours per week, the prescribed hours of work being 8 hours(inclusive of the luncheon period) on each weekday except Saturday, and 4 hourson Saturday. Charwomen will be required to work 4 hours each weekday, including Saturday,, a total of 24 hours per week. Telephone and telegraph operators and operators of duplicating, addressing, and' other labor-saving devices, will be required to work the same hours above-prescribed for clerical employees. Laborers will be required to work 8 hours (exclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours; per week. Guards will normally be required to work an average of 44 hours per week,, inclusive of the luncheon period—an equivalent of 8 hours upon each weekday except Saturday and 4 hours on Saturday. BUREAU OF E N G R A V I N G AND PRINTING: All employees whose wages are fixed by a wage board or other wage fixing authority as provided by the act of March 28, 1934 (48 Stat. L. 522), will be required to work 8 hours (including the luncheon period) each weekday except Saturday, a total of 40 hours per week. If any employee of this group works on Saturday, he shall have been restricted to 4 hours work on some weekday of the .same week. REPORT OF THE SECRETARY OF THE TREASURY 301 All employees in the custodial and clerical-mechanical services, except guards, :guides, charwomen, and messengers in the administrative offices, will be re•quired to work 8 hours (including the luncheon. period) each weekday except .Saturday, and 4 hours on Saturday, a total of 44 hours per week. Cleaners (part time) will be required to work 4 hours each weekday, including ^Saturday, a total of 24 hours per week. Guards will normally be required to work an average of 44 hours per week, inclusive of the luncheon period—an equivalent of 8 hours upon each weekday •except Saturday and 4 hours on Saturday. Guides will be requii;ed to work 6 hours each weekday except Saturday, and 3 hours on Saturday, a total of 33 hours per week. •COAST G U A R D : Employees at the Coast Guard Depot, Curtis Bay, Md., and elsewhere, including master mechanics, quartermen, leading men, foremen, apprentices, auto mechanics, boat builders, blacksmiths, buffers, coppersmiths, drillers, electricians, welders, enginemen, gardeners, general helpers, skilled helpers, skilled laborers, laborers, machinists, machinists' helpers, millmen, painters, pipe coverers, pipe fitters, plunibers, riggers, riggers' helpers, sailmakers, sheet metal workers, ship fitters, ship joiners, wood calkers, metal calkers, riveters, and other artisans and laborers of any trades will be required to work 8 hours on each weekday except Saturday, a total of 40 hours per week. Marine gasoline engineers, pilots, boatmen, guards, and patrol inspectors, while normally required to perform only 44 hours of work per week, will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. Laborers, except those eiriployed at the Coast Guard Depot, will be required to work 8 hours each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week. ctJSTOMs S E R V I C E : Assistant chief samplers, assistant chief sugar samplers, assistant foremen, auto mechanics, automatic scale experts, captains of customs guards, captains of watch, carpenters, chauffeurs, chief inspectors, chief samplers, chief sugar samplers, customs guards, electricians, elevator conductors, foremen, inspectors, inspectresses, laborers, lieutenants of customs guards, lieutenants of watch, marine gasoline engineers, marine motor mechanics, mechanics, openers and packers, samplers, sergeants, ship's carpenters, staff officers, station inspectors, storekeepers, sugar samplers, supervising station inspectors, verifiers-openers-packers, and watchmen will be required to work an average of 44 hours per week, the equivalent of 8 hours on 5 days per week and 4 hours on Saturday. Customs agents, assistant customs agents. Treasury attaches, Treasury representatives, special employees, and customs patrol inspectors will be subject to duty at any time and for such hours as the circumstances of their, assignments may demand. BUREAU OF INTERNAL REVENUE: Warehousemen, auto mechanics, and laborers in the Alcohol Tax Unit wiU be required to work 8 hours (exclusive of the luncheon period) on each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week. Storekeeper-gangers in the Alcohol Tax Unit will be required to work 8 hours (inclusive of the luncheon period) on each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week. Special agents in charge and special agents of the Intelligence Unit, and supervisory officers in charge of enforcement activities, special investigators, investigators, . senior inspectors, inspectors and junior inspectors of the Alcohol Tax Unit will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. BUREAU OF T H E MINT: Blacksmiths, bricklayers, carpenters, coining, melting, and sewing department employees, die-makers and setters, electricians, elevator conductors, engineers, firemen, foremen, guards', helpers, janitors, laborers, machinists, mechanics, painters, scale supervisors, skilled laborers, skilled workmen, sweep-cellar assistants, tin and sheetmetal workers, and transfer mechanics, will be required to 302 REPORT OF THE SECRETARY OF THE TREASURY work 8 hours (inclusive of the luncheon period) on each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week. Charwomen will be required to work 5 hours on each weekday including Saturday, a total of 30 hours per week. Junior assayers employed on per diem basis will be required to work 8 hours (inclusive of the luncheon period) on each week day except Saturday, and 4 hours on Saturday, a total of 44 hours per week. BUREAU OF NARCOTICS: Agents and inspectors in the Narcotics Service will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. PROCUREMENT D I V I S I O N : C In both the departmental and field services, carpenters, carpenter-locksmiths, chauffeurs, coal handlers, coal loaders, crane operators, dispatchers, head elevator' conductors, elevator operators, foremen of laborers, skilled laborers, laborers, auto mechanics, elevator mechanics, elevator mechanic-electricians, elevator mechanic-helpers, general m.echanics, mechanics, mechanic-helpers, mechaniclaborers, electricians, electric truck operators, motor truck drivers, gardeners, janitors, lampists, marble polishers, packers, painters, stacker operators, telephone operators, window washers, a;nd wiremen will be required to work 8 hours (exclusive of the luncheon period) each weekday except Saturday, and 4 hours on Saturday, a total of 44 hours per week; chief enginemen, assistant enginemen, enginemen, engineman-janitors, coal passers, firemen, fireman-helpers, firemanlaborers, fireman-watchmen, fireman-enginemen, oilers, watchmen, and watchman-elevator conductors will normally be required to work an average of 44 hours per week, exclusive of the luncheon period—an equivalent of 8 hours upon each weekday except Saturday and 4 hours on Saturday. Head charwomen, charwomen, and charmen will be required to work 5 hours each weekday except Saturday and 4 hours on Saturday, a total of 29 hours per week. PUBLIC H E A L T H S E R V I C E : Carpenters, electricians, engineers, elevator conductors, machinists, mechanics, painters, plasterers, plumbers, steamfitters, blacksmiths, tailors, laundrymen, laborers, foremen of laborers, firemen, masons, and bricklayers in the field service (except at quarantine and immigration stations) will normally be required to work an average of 44 hours per week (exclusive of the luncheon period)—an equivalent of 8 hours each weekday except Saturday and 4 hours on Saturday. Employees in this group in the departmental service, except laborers, will be required to work 44 hours per week, the prescribed hours of work being 8 hours (inclusive of the luncheon period) on each weekday except Saturday, and 4 hours on Saturday. Laborers and chauffeurs in the departmental service will be required to work 44 hours per week, the prescribed hours of work being 8 hours (exclusive of the luncheon period) on each weekday except Saturday, and 4 hours on Saturday. Chauffeurs, auto mechanics, kitchen helpers, cooks, bakers, hospital attendants, laboratory attendants, hospital orderlies, matrons and guard attendants, supervising guardians, storekeepers, packers, and upholsterers in the field service, except at quarantine and immigration stations, will norihally be required to work an average of 48 hours per week (exclusive of the luncheon period)—an equivalent of 8 hours on 6 days of each week. Employees in this group on duty at marine hospitals, or penal and correctional institutioiis, will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. All employees on duty at quarantine and immigration stations, and all officers at so-called ''one-man" ports, will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. Farmers, poultrymen, dairymen, gardeners, swineherders, and their respective helpers, on duty at United States narcotic farms will be required to work an average of 56 hours per week (exclusive of the luncheon period)—an equivalent of 8 hours for each day in the week. REPORT OF THE SECRETARY OF THE TREASURY 303 SECRET S E R V I C E : . Secret Service operatives will be subject to duty at any time and for such hours as the circumstances of their assignments may demand. OVERTIME 9. Section 3 of the act approved March 14, 1936, provides as follows: ''Each head of a department or independent establishment shall keep a record of all work performed, in excess of the work required by departmental regulations issued in conformance with section 2 hereof, for the period commencing July 1, 1936, and ending December 31, 1936, and shall report same to the Civil Service Commission at the end of each month. The Civil Service Commission shall make a report of such record to the Congress on or before January 31, 1937." 10. Overtime work shall be construed as work performed beyond the hours of duty prescribed above in these regulations; Provided, however. That any excess less than 30 minutes in a day shall not be reported as overtime. 11. Except as specifically hereinafter authorized, overtime in the departmental service shall be permitted to be performed only upon the written approval of the Secretary of the Treasury. In the field service, overtime may, when, necessary, be directed by those supervisory officers to whom authority has been delegated by the heads of their respective activities in Washington. 12. The practice of requesting employees to volunteer their services for overtime duty shall be discouraged. All necessary overtime should be distributed as equitably as practicable among a group of employees performing the same or similar work. 13. Where the volume of work of a particular organization is subject to fluctuations of a periodic nature, such as, for example, the preparation of semimonthly pay rolls, or the clearance of checks immediately following heavy disbursing transactions, and it would be impracticable to maintain a force adequate to dispose of such peak-loads during the regular working hours, general authority for requiring overtime may be granted upon application of the bureau head to the Secretary of the Treasury. 14. If the overtime does not exceed 1 hour, and immediately precedes the regular opening hour or immediately follows the regular closing hour, no formal approval need be obtained, providing such overtime does not ocpur upon more than 5 days in any calendar month, and providing, further, that it ife recorded and reported as herein provided. 15. Where, in an emergency, the necessity for overtime in excess of 1 hour could not have been foreseen in time to obtain formal approval therefor, such overtime shall nevertheless be performed, and the report thereof shall include an explaaiation of the circumstances which precluded the obtaining of approval in advance. 16. Overtime work performed by an employee of his own volition, and not at the direction of his supervisor, if not subsequently approved by tlie supervisor, shall not be regarded as overtime within the meaning of the act of March 14, 1936. 17. No record or report for overtime will be made for time spent in travel. Method of reporting overtime 18. Immediately at the close of each month, beginning with July 31, 1936, and extending through December 31, 1936, there shall be forwarded by each bureau, office, or division, and by each division of the Secretary's office, to the Secretary of the Treasury (Division of Appointments) a consolidated report of overtime work (in hours or fractions thereof) performed by the employees of such bureau, office, or division, including field offices, in accordance with the regulations herein prescribed. 19. For the purposes of the above monthly report, and regardless of the character of work performed (whether clerical, professional, custodial, mechanical, or otherwise), employees will be classified in two groups, i. e., (1) employees whose prescribed work schedule is 39 hours per week; and (2) employees whose prescribed work schedule ranges from 40 to 44 hours per week, inclusive. In the Public Health Service, a third classification will be observed, to include professional, sub-professional, custodial, maintenance, and guard employees in hospitals, penal or correctional institutions, and the United States narcotic farms. 20. A separate report shall be made for each of the above classes of employees. Employees performing overtime will be listed alphabetically under salary groups 304 REPORT OF THE SECRETARY OF THE TREASURY (without regard to service or grade), beginning with the lowest salary. In the case of per hour, per diem, or piece-rate workers, the employees will be listed on the basis of their estimated annual earnings. 21. In the case of employees who under existing law are compensated for overtime work, separate reports, with the same classification and method of listing above-prescribed, shall be submitted, and the amount received for such overtime shall also be indicated. 22. Standard forms 2243 and 2243-A may be used for the monthly report, substituting the words "Overtime work" for "Absence", using the "Hours" and "Minutes" columns, and revising the caption "Annual leave." Overtime should be expressed in terms of hours or fractions thereof. In lieu of standard forms 2243 and 2243-A, the report may be submitted in the form suggested below: MONTHLY REPORT OF OVERTIME WORK 39-HOUR G R O U P (Uncompensated) TREASURY DEPARTMENT (Bureau or division) Month ending (Unit or sub-unit) , 1936 For field office (Location) (Certifying officer) Name Hours Minutes $1,080 salary group: Adams, T. S._. Brown, J. E Smith, Frank.. $1,260 salary group: Andrews, John. Black, F. G..-. Stephens, C. G. Amount of compensation, if any, I received for such overtime Remarks 30 30 45 23. Field offices will forward their reports to the administrative office of the bureau or division in Washington, for consolidation and submission to the Secretary of the Treasury (Division of Appointments). Offices located in the District of Columbia may obtain blank forms from the Division of Appointments. 24. AU orders, circulars, and regulations heretofore promulgated and inconsistent with the foregoing regulations are hereby revoked. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 51 An act to amend section 304 of the Revised Statutes, as amended [Public No. 530, 74th Cong., S. 3258] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That section 304 of the Revised Statutes, as amended (31 U. S. C , sec. 144), is further amended to read as foUows: "SEC. 304. The Treasurer may, in his discretion, and with the consent of the Secretary of the Treasury, authorize the Assistant Treasurer to act in the place REPORT OF THE SECRETARY OF THE TREASURY 306 and discharge any or all of the duties of the Treasurer of the United States; and the Secretary of the Treasury may appoint from among the personnel of the Treasurer's Office any person to be Acting Treasurer during the absence or illness of both the Treasurer and Assistant Treasurer; and the Secretaiy of the Treasury may at any time, on the recommendation of the Treasurer, appoint from among the clerks in the Treasurer's Office any one or more of said clerks to be a Special Assistant Treasurer, with authority to sign certificates of deposit, checks, letters, telegrams, and other official documents in connection with the business of the Treasurer's Office, and who shall serve in this capacity without additional salary: Provided, hoioever. That no appointments shall be made under the provisions of this section until the official bond given by the Treasurer shall be made in terms to cover and apply to the acts and defaults of every person appointed hereunder. Each person so appointed shall, moreover, for the time being, be subject to all the liabilities and penalties prescribed by law for the official misconduct in like cases of the Treasurer." Approved, April 24, 1936. Exhibit 52 Offers of compromise under section 194, ^ill^ 3^, United States Code [Department Circular No. 39 (revised). Accounts and Deposits] TREASURY DEPARTMENT, Washington, May 25, 1936. Treasury Department Circular No. 39, dated December 29, 1914, is hereby amended and supplemented so as to read as follows: The following rules and regulations are ]3rescribed for carrying into effect section 194, title 31, United States Code, which provides as follows: "Upon a report by a district attorney, or ^ivy special attorney or agent having charge'^of^ any claim-in favor of the United States, showing in detail the condition of such claim, and the terms upon which the same ma}^ be compromised, and recommending that it be compromised upon the terms so offered, and upon the recommendation of the General Counsel for the Department of the Treasury, the Secretary of the Treasury is authorized to compromise such claim accordingly. But the provisions of this section shall not apply to any claim arising under the postal laws." ^ 1. The report of the special attorney or agent having charge of any claim .in favor of the United States, which has not been referred to the Department of Justice for prosecution or defense in the courts, in which an offer of compromise is made, except claims arising under the postal laws, must be presented to the General Counsel for the Department of the Treasury, who will forward the report, with his recommendation, to the Secretary of the Treasury for final action. 2. No offer in compromise of any such claim in which a specific sum of money is offered under the above-quoted statute will be consid.ered until such sum shall have been deposited to the credit of the Secretary of the Treasury's special deposit account no. 5 with the Treasurer of the United States, and the original copy of the certificate of deposit issued therefor received by the Treasurer of the United States and the General Counsel notified of such receipt. 3. Moneys so offered in compromise may be deposited to the credit of such special deposit account at the United States Treasury, with any Federal Reserve bank or branch, or with any bank designated as a general depositary of Federal funds. The Federal Reserve bank or branch or bank designated as a general depositary of Federal funds will be governed in accepting such deposits by the provisions of Department Circular No. 176, amended and supplemented, dated September 2, 1930, and will issue certificate of deposit in duplicate, on form 6599, original to be transmitted to the Treasurer of the United States, and the duplicate to the depositor. The Treasurer of the United States will, upon receipt of the original copy of the certificate of deposit on form 6599, or upon the deposit direct with him of the money so offered in compronaise, issue certificate of deposit in triplicate on form 5260, the original to be transmitted to the Division of Bookkeeping and Warrants, the duplicate to the General Counsel, and the triplicate 1 By section 5 of Executive Order No. 6166 of June 10, 1933, jurisdiction under this law was, with respect to any case referred to the Department of Justice for prosecution or defense in the courts, transferred to the Department of Justice. 93790—37 21 306 REPORT OF THE SECRETARY OF THE TREASURY t o be retained in his office. If t h e offer in compromise be rejected, t h e money will be returned to t h e proponent; if accepted, it will be covered into t h e Treasury. 4. To enable a proponent, a t a distance from any of t h e above-named depositaries, to perfect his offer in compromise, t h e Secretary of t h e Treasury will receive for this purpose a check, draft, or money order for t h e a m o u n t of t h e offer, payable to t h e order of t h e Treasurer of t h e United States, t h e check, draft, or money order to be collected by t h e Treasurer a n d t h e proceeds placed t o t h e credit of t h e Secretary's aforesaid account awaiting action on t h e offer. Such remittances will not be received unless they are free of all conditions as to acceptance. 5. T h e Secretary of t h e Treasury m a y withdraw or a m e n d a t a n y t i m e or from time to time any of t h e foregoing rules a n d regulations with or without previous^ notice, a n d m a y m a k e such special orders as he m a y deem proper in a n y case. WAYNE C. TAYLOR, Acting Secretary of the Treasury. Exhibit 53 Title V of the act {Public No. 724, approved J u n e 20, 1936) to amend certain acts relating to public printing and binding and the distribution of public documents and acts amendatory thereof TITLE V M A N U S C R I P T OF A N N U A L R E P O R T S SEC. 8. T h a t chapter 209, section 3 (39 Stat. 336), of t h e Sundry Civil Appropriation Act for t h e fiscal year ending J u n e 30, 1917, approved July 1, 1916 (U. S. C , title 5, sec. 108), be, and is hereby, amended to read as follows: 108. M A N U S C R I P T OF ANNUAL R E P O R T S AND ACCOMPANYING D O C U M E N T S . — T h e appropriations m a d e for printing a n d binding shall not be used for any annual report or t h e accompanying documents unless t h e manuscript a n d proof therefor is furnished to t h e Public Printer in t h e following manner: Manuscript of t h e documents accompanying such a n n u a l reports on or before t h e 1st day of N o vember of each year; manuscript of t h e annual reports on or before t h e 15th day of November of each year; complete revised proofs of t h e accompanying documents on t h e 1st day of December of each year a n d of t h e a n n u a l reports on t h e 10th day of December of each year; and all of said annual reports and accompanying documents shall be printed, m a d e public, a n d available for distribution not later t h a n within t h e first five days after t h e assembling of each regular session of Congress. T h e provisions of this section shall not apply to t h e annual reports of t h e Smithsonian Institution, t h e Commissioner of P a t e n t s , t h e Comptroller of t h e Currency, or t h e Secretary of t h e Treasury. :. MISCELLANEOUS Exhibit 54 Amendment to Executive Order No. 6981, March 2, 1935, removing, in certain cases, restrictions imposed by Public Resolution 53, of J u n e 27, 1934, cis to payments, transfers, and deliveries of property under the