The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
ANNUAL REPORT OF THE SECRETARY OF THE TREASURY oilHE STATE OF THE FINANCES FOR FISCALYEAR ENDEDJUNE 30,1942 ANNUAL REPORT OF THE SECRETARY OF THE TREASURY ON THE STATE OF THE FINANCES FOR THE FISCAL YEAR ENDED JUNE 30 1942 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1943 For sale by the Superintendent of Documents, "Washington, D. C. - - - - Price, $1.00 (paper cover) TREASURY DEPARTMENT DOCUMENT N O . Secretary 3121 •^.^o ^ CONTENTS Budget results: . , Pas© Receipt's and expenditures, general and special accounts ' 1 Receipts in general and special accounts 2 Expenditures from general and special accounts _:.__ 11 Receipts and expenditures in trust accounts and checking accounts of Government corporations and credit agencies _14 Deficit in general and special accounts 16 Financing the net deficit and other requirements.__. •-•-: 17 The public debt --_________;__ 17 Treasury bonds, notes, and certificates of indebtedness _-__-_ 20 Treasury bills .-_- .-1 25 United States savings bonds 25 Pay-roll savings plan i___-_-^__ 27 War savings stamps 29 Redemptions of savings bonds .__ .-_J 30 Treasury tax savings notes. _I__L__ 31 Adjusted service bonds ' __-. 1 32 Depositary bonds ---_L32 Cumulative sinking fund ' -___ __ 32 Public Debt Act of 1942 ._--.______-______l 32 The guaranteed debt ^'-.i-S.:.. __i.l._ 33 Absorption of the increase in securities issued or guaranteed 'by thie Unitied States-38 General Fund . ..._.__ 39 Securities owned by the United States and proprietary interest in Government corporations and credit agencies: ; Securities owned — _ ____^ 40 Proprietary interest in Government corporations and credit agencies. 41 Monetary developments: International monetary cooperation: Stabilization agreements 42 Inter-American conferences 43 Domestic monetary events.. -.-. '44 Revenue legislation 46 Revenue Act of 1941 : 1.. 46 Public Debt Act of 1942 49 Other revenue legislation * 50 War contributions fund: Conditional gifts J. :. 51 Unconditional donations 52 Customs Service in the War 52 Special procurement activities: " Lend-lease 53 Strategic and critical materials ^ -_^-_-_--_ ^ 54 Refugee relief----55 Defense housing 55 Foreign funds control .^_.^_ 56 Changes in organization and procedure : 57 Estimates of receipts '-.._ 58 Estimates of expenditures 80 ni ^^-^^ ^sf *IV V OONTENTSv ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS Page Fiscal Service of the Treasury Department Accounts, Bureau of J Commissioner of Accounts, pffice of: Budgetary administration and financial reporting Daily Statement of the United States Treasury i-— Combined statement of assets and liabilities of Government corporations and credit agencies Surveys under Reorganization Plan No. III_.__ Annual appraisal of assets and liabilities of the Commodity Credit Corporation . Securities and funds, Philippine invasion Advances to Federal Reserve Banks for industrial loans, etc_ Appropriations and e^enditures under the Social Security Act Colorado River Dam fund. Division of Bookkeeping and Warrants Division of Disbursement Voluntary pay-roll allotment plan 1 Bonding of certifying officers _-Division of Deposits ._ Depositary functions Depositary bonds ^--__ Designation of agencies for the issuance of war savings bonds, Series E _' Federal savings and loan associations Social security _. Government Losses in Shipment Act Section of Surety Bonds : Budget Section Alien property trust fund Philippine funds in the United States Treasury Appropriation of funds to the Government of the Commonwealth of the Philippines' for national defense ._ Supplementary sinking fund for the payment of bonds of the Philippines __Foreign check control Section of Investments ---i -_ Obligations of foreign governments -i Receipts from Germany _' .. Treasury administration of alien and mixed claims Mixed Claims Commission and Private Law No. 509: Claims against Germany War Claims Arbiter Claims of German nationals. Claims of Hungarian nationals L . German special deposit account Tripartite Claims Commission: Claims against Hungary.. . . _ Claims of American nationals against Turkey Claims of American nationals against Mexico . . Railroad obligations. , Section 204, Transportation Act, 1920, as amended Section 207, Transportation Act, 1920, as amended Section 210, Transportation Act, 1920, as amended Federal control of railroads: . Administration Finances . ^ Securities, etc '-^ Clairns _..__ Compensation payments—United States railroad employees Canadian Workmen's Compensation Board .. Tax refunds and other collections 85 85 85 86 86 87 87 87 ' 89 89 90 90 91 92 92 92 93 94 94 94 94 94 96 97 97 ^ 98 99 100 101 101 101 103 104 104 106 106 107 107 108 108 109 110 110 111 111 112 112 112 113 113 113 113 OONTE-NTS Fiscal Service of the Treasury Department—Continued, Accounts, Bureau of—Continued. Section of Investments—Continued. . Federal Farm Mortgage Corporation Federal land banks: Capital stock '. Payments con account of reductions in interest rates on mortgages and subscriptions to paid-in surplus .. Federal savings and loan associations Trust and special funds invested by the Treasury Department Emergency Relief Accounting Organization Public Debt, Bureau of the Division of Loans and Currency ^. Issue and retirement of securities. -._United States savings bonds Individual registered accounts -. Claims . ., ... Safekeeping of securities Mutilated paper and redeemed currency. Register of the Treasury ... Division of Public Debt Accounts and Audit Division of Savings Bonds.. ^ Division of Paper Custody Destruction Committee Treasurer of the United States , Budget and Improvement Committee , Comptroller of the Currency, Bureau of the Changes in the condition of active national banks Summary of changes in the national banking system Customs, Bureau of: Collections . . . Volume of business :. Entries of merchandise ' Vessel, airplane, and highway traffic War activities 1 .-_ Drawback transactions ^ i-_... Protests and appeals Law enforcement activities: . ' . Seizures . I Legal proceedings ! • Fines, penalties, etc Marine and tariff administration: Marine "administration . Tariff administration Customs Agency Service Personnel investigations : Baggage investigations Cooperation with other agencies Miscellaneous: Appraisement Unit . _. Customs School of Instruction Division of Engineering and Weighing-: Division of Laboratories.. Changes in ports and stations : Cost of administration. .___ Engraving and Printing, Bureau of Foreign Funds Control . .. Internal Revenue, Bureau of: General: Internal revenue collections Refunds, drawbacks, and stamp redemptions Additional assessments Cost of administration • V P»se 114 114 115 117 117 118 121 122 122 123 126 127 127 127 128 131 132 133 133 134 139 140 140 142 143 144 145 145 146 147 148 148 151 151 152 152 153 154 154 154 155 155 155 156 156 156 156 159 160 161 162 162 VI CONTENTS Internal Revenue, Bureau of—Continued. Income Tax Unit: Page General functions 162 Returns filed . 1 •_._.-_--_ 163 Examination of income and excess profits tax returns lipon receipt by the Washington office 163 Investigation of tax returns by the field ofl&ces ..... 163 Revenue results of investigations of income and excess profits tax returns. .-_163 Stage at,which additional tax was assessed ._ 164 Refunds, abatements, and credits _._ 164 Inventory of returns on hand in the field offices 164 Miscellaneous Tax Unit • : 164 Estate Tax Division 165 Tobacco Division 165 Sales Tax Division : 165 Capital Stock Tax Division -.. 165 Miscellaneous Division -_ 166 Alcohol Tax Unit . .... . 166 Procedure Division.. ..1 167 Enforcement Division 167 Field Inspection Division : 168 Laboratory Division -_-_ 168 Audit Division 169 Basic Permit and Trade Practice Division ).69 Accounts and Collections Unit 170 Taxes under the Federal Insurance Contributions Act 171 Tax under the Federal Unemployment Tax Act 173 Carriers taxes ^ 174 Technical Staff ... 174 Office of the Chief Counsel . —176 Chief Counsel's Committee --. 176 Alcohol Tax Division .... ._ 176 Appeals Division . j_ -i, 176 Civil Division ^ . -._. 177 Claims Division 177 Interpretative Division . ^-178 Legislation and Regulations Division 178 Penal Division . ._ 178 . Review Division . . 1 179 Intelligence Unit 179 Legal Division. .. . •180 Mint, Bureau of the: Institutions of the Mint Service -_ 182 Coinage . 183 Minor coinage alloys _-_ 183 Bullion deposit transactions...... . 183 Transfers of bullion for long-term storage 183 Gold operations 184 Silver operations . . 184 Refineries . .__ 185 Stock of coin and monetary bullion in the United States 185 Domestic production of gold and silver 185 Industrial consumption of gold and silver __^ 185 Appropriations, expenses, and income . .186 General activities 186 Monetary Research, Division of 186 Narcotics, Bureau of -_ ._ 187 Personnel, Division of.. . . ^ 190 Practice, Committee on :. 190 Processing Tax Board of Review^ . _.. 191 Procurement Division 192 Research and Statistics, Division of . 197 Secret Service Division. ' 198 Tax Legislative Counsel, Office of the 201 Tax Research, Division of . 202 War Savings Staff . 203 CONTENTS VII EXHIBITS \ PUBLIC DEBT Issues and redemption of Treasury bonds and Treasury notes Page Exhibit 1. Offering of Treasury notes of Tax Series A-1943 and Tax Series B-1943 L 207 Exhibit 2. Offering of 2 ^ percent Treasury bonds of 1967-72 • 212 Exhibit 3. Subscriptions and allotments, Treasury bonds of 1967-72 214 .Exhibit 4. Offering of 1 percent Treasury notes of Series A-1946 214 Exhibit 5. Allotments, Treasury notes of Series' A-1946 216 Exhibit 6. Offering of 2>^ percent Treasury bonds of 1967-72 (additional) and 2 percent Treasury bonds of 1951-55 216 Exhibit 7. Subscriptions and allotments, Treasury bonds of 1967-72 (additional) and Treasury bonds of 1951-55 219 Exhibit 8. Offering of Treasury notes of Tax Series A-1944 and Tax Series B-1944 . .220 Exhibit 9. Offering of 2 percent Treasury bonds of 1949-51 224 Exhibit 10. Allotments, Treasury bonds of 1949-51 -227 Exhibit 11. Offering of 2% percent Treasury bonds of 1952-55-. 227 Exhibit 12. Subscriptions and allotments. Treasury bonds of 1952-55 229 Exhibit 13. Offering of 2 percent Treasury bonds of 1949-51 and 2J^ percent Treasury bonds of 1962-67.. .. ..._229 .Exhibit 14. Subscriptions and allotments, Treasury bonds of 1949-51 and Treasury bonds of 1962-67 _-._ 232 Exhibit 15. Offering of 1^ percent Treasury notes of Series. B-1946 232 Exhibit 16. Allotments, Treasury notes of Series B-1946 234 United States savings bonds Exhibit 17. Offering of United States war savings bonds of Series E and war savings stamps for installment payments Exhibit 18. Offering of United States war savings bonds of Series F and Series G . . . . ' . .... Exhibit 19. Second amendment, April 20, 1942, to Department Circular No. 530,- Fourth Revision, prescribing regulations governing United States savings bonds Exhibit 20. Fifth revision, June 1, 1942, of Department- Circular No. 530, prescribing regulations governing United States savings bonds Exhibit 21. Amendments and supplement to Department Circular No. 657, prescribing regulations governing agencies for the issue of United States savings bonds of Series E . 234 240 246 246 262 Treasury certificates of indebtedness Exhibit 22. Offering of J^ percent Treasury certificates of indebtedness of Series A-1942 Exhibit 23. Subscriptions and aUotments, Treasury certificates of indebtedness of Series A-1942 Exhibit 24. Offering of Ys percent Treasury certificates of indebtedness of Series A-1943..-Exhibit 25. Subscriptions and allotments. Treasury certificates of indebtedness of Series A-1943 263 265 265 267 Treasury bills Exhibit 26. Inviting tenders for Treasury bills dated July 2, 1941 267 Exhibit 27. Acceptance of tenders for Treasury bills dated July 2; 1941 268 Exhibit 28. Summary of information contained in press releases issued in • connection with Treasury bills offered during the fiscal year 1942 . 269 Miscellaneous Exhibit 29. An act to increase the debt limit of the United States, to further amend the Second Liberty Bond Act, and for other purposes Exhibit 30. Title IV of the Second War Powers Act, 1942, relating to the purchase by the Federal Reserve Banks of Government obligations 272 273 VIII CONTENTS Page Exhibit 31. Payment or redemption of bonds and other transferable securities of the United States at maturity, or before maturity pursuant to a call for redemption in accordance with their terms Exhibit 32. Regulations relating to full-paid interim certificates, October : 15, 1941 Exhibit 33. Regulations governing exchanges of interim certificates of 2J^ percent Treasury bonds of 1967-72 for definitive coupon bonds, December 15, 1941 . 273 280 280 SECURITIES GUARANTEED BY THE UNITED STATES Exhibit 34. Offering of 1 percent notes of Series W of the Reconstruction . Finance Corporation . Exhibit 35. Subscriptions and allotments, Reconstrujction Finance Corporation notes of Series W ' Exhibit 36. Offering of 1)^ percent notes of Series G of the Commodity Credit Corporation Exhibit 37. Subscriptions and allotments, Commodity Credit Corporation notes of Series G Exhibit 38. Partfal redemption, before maturity, of 2% percent mutual mortgage insurance fund debentures, Series B (Sixth call).. L-Exhibit 39. Partial redemption, before maturity, of 2 ^ percent mutual mortgage insurance fund debentures, Series B (Seventh call) 282 284 284 286 287 289 MONETARY DEVELOPMENTS Exhibit 40. Joint statement by the Secretary of the Treasury of the United States and the Secretary of the Treasury of Mexico, November 19, 1941, announcing the signing of a stabilization agreement and a silver purchase agreement between the United States and Mexico Exhibit 41. Announcement, February 27, 1942, of the signing of a stabilization agreement between the United States and Ecuador Exhibit 42. Announcement, May 5, 1942, of the signing of a stabilization agreement between the United States and Iceland Exhibit 43. Joint statement by the Secretary of the Treasury of the United States and the Minister of Foreign Affairs of the Republic of China, March 21, 1942, announcing the signing of an agreement for financial aid to China •. Exhibit 44. Announcement by the Secretary of the Treasury, April 8, 1942, regarding the lend-leasing of the Treasury's free silver stocks to be used as bus bars in aluminum and magnesium plants Exhibit^45. Title XII of the Second War Powers Act, 1942, relating to the coinage of 5-cent pieces 291 291 292 292 292 293 FOREIGN FUNDS, CONTROL, ETC. Exhibit 46. Executive orders relating to the control of foreign funds and foreign-owned property 294 Exhibit 47. Amendment, July 26, 1941, to regulations of the Secretary of the Treasury relative to the control of foreign funds and foreign-owned property . . 295 Exhibit 48. Proclamation, July 17, 1941, authorizing a proclaimed list of certain blocked nationals and controlling certain exports ^^. - 295 Exhibit 49. Executive Order No. 9193, July 6, 1942, amending Executive Order No. 9095 estabhshing the Office of Alien Property Custodian and defining its functions and duties and related matters 296 Exhibit 50. Sections 301, 302, and 303 of the First War Powers Act, 1941, ratifying actions, regulations, etc., of the Secretary of the Treasury under the Trading With the Enemy Act 300 Exhibit 51. Administration of the wartime financial and property controls of the United States Government -. 302 ORGANIZATION AND PROCEDURE ^ Exhibit 52. Orders relating to organization and procedure in the Treasury Department. ---^ • Exhibit 53. Order of the Secretary of the Treasury, September 30, 1941, authorizing the Procurement Division to enter into contracts on behalf of the Division of Printing ---- 335 336 CONTOEOOTS IX Page Exhibit 54. Executive Order No. 8929, November 1, 1941, directing the Coast Guard to operate as a part of the Navy Exhibit 55. An act providing for the security of United States naval vessels, and for other purposes Exhibit 56. Sections 1, 2, and 4 of Executive Order No. 9083, dated February 28, 1942, relating to functions of the Bureau of Customs 336 336 337 MISCELLANEOUS Exhibit 57. Authorization for discontinuance of functions of Treasury accounts offices in connection with the audit and accounting for funds under the various emergency relief appropriation a c t s . . Exhibit' 58. Standards and conditions prescribed with respect to bonds of certifying officers and administrative procedure relating to disbursements by Division of Disbursements, Treasury Department Exhibit 59. Executive Order No. 9084, March 3, 1942, amending Executive Order No. 8512 of August 13, 1940, prescribing regulations pertaining to budgetary administration'and financial reporting Exhibit 60. An act to authorize the Treasurer of the United States to make settlements with payees of lost or stolen checks, which have been paid on forged endorsements, in advance of reclamation, and for other purposes. _ Exhibit 61. An act to increase the earnings of the United States Government life insurance fund and the national service life insurance fund by expediting the investment of the moneys thereof, and for other purposes._ Exhibit 62. Title XI of the Second War Powers Act, relating to the war contributions fund Exhibit 63. Portions of the act to mobilize <the productive facilities of small business in the interests of successful prosecution of the war Exhibit 64. Executive Order No. 9135, April 16, 1942,-establishing the Interdepartmental Committee for the Voluntary Pay Roll Savings Plan for the Purchase of War Savings Bonds . Exhibit 65. Voluntary pay-roll savings plan for purchase of war savings bonds by employees of the United States Government Exhibit 66. Letter of the Postmaster General'to the Secretary of the Treasury, dated November 14, 1942, certifying extraordinary expenditures contributing to the deficiencies, of postal revenues for the fiscal year 1942, in pursuance of Public No. ,316, approved June 9, 1930 Exhibit 67. Address and statements of the Secretary of the Treasury on taxes, inflation, public debt limitation, etc., during 1942 TABLES Explanation of bases used in tables . Description of accounts through which Treasury operations are effected-_ 338 338 341 341 342 342 343 345 346 353 353 387 388 RECEIPTS AND EXPENDITURES Summary tables on receipts and expenditures Table 1. Summary of receipts and expenditur,es, fiscal years 1932 to 1942 and monthly July 1941 to June 1942 (daily Treasury statement, unrevised, basis) 'Table 2. Receipts and expenditures for the fiscal years 17*89 to 1942 (warrant and daily Treasury statement, unrevised, bases) 390 394 Detail tables on receipts and expenditures Table 3. Monthly receipts, fiscal year 1942, classified by major sources (daily Treasury statement, unrevised, basis) : Table 4. Monthly expenditures, fiscal year 1942, classified by accounts (daily Treasury statement, unrevised, basis) Table 5. Expenditures from general and special accounts, by major functions, fiscal years 1934 to 1942 400 406 428 Other receipts and expenditures tables Table 6. Expenditures of the several activities of the Treasury Department in each of the States and Territories, fiscal year 1942 Table 7. Comparison of detailed internal revenue collections, fiscal years 1941 and 1942 (collection basis) 430 434 X . . 'CONTENTS Page Table 8. Internal revenue receipts, by tax sources, fiscal years 1916 to 1942 (collection basis) '-Table 9. Expenses of the Internal Revenue Service, fiscal year 1942 (checksissued basis) ^ Table 10. Internal revenue receipts, by States and Territories, fiscal year 1942 (collection basis) i Table 11. Summary of customs collections and expenditures, fiscal year^ 1942.... : _-., Table 12. Expenditures by States and Territories and by fiscal years from April 8, 1935, to June 3,0, 1942, under the Emergency Rehef Appropriation Acts for the fiscal years 1935 to 1942 (checks-issued basis) Table 13. Expenditures by organizations and by fiscal years from April 8, 1935, to June 30, 1942, under the Emergency Relief Appropriation Acts for the fiscal years 1935 to 1942 (checks-issued basis) Table 14. Financial status of appropriations provided in the Emergency Relief Appropriations Acts for the fiscal years 1935 to 1942, as of June 30, 1942 .___ __•_ Table 15. Receipts and expenditures of the social security program under the Social Security, Railroad Retirement, and Railroad Unemployment Insurance Acts, fiscal years 1936 to 1940 combined, fiscal year 1941, and . monthly for the fiscal year 1942 . ... ... Table 16. Amounts appropriated and expended to June 30, 1942, under authorizations contained in the Social Security Act _, . . . Table 17. Panama Canal receipts and expenditures, fiscal years 1903 to 1942 (warrant basis) . . Table 18. Postal receipts and expenditures, fiscal years 1789 to 1942 Table 19. Selected receipts and expenditures of the Government, fiscal years 1789 to 1942 (warrant and checks-issued bases) . 437 441 446 447 448 450 452 462 471 472 474 477 WAR ACTIVITIES PROGRAM Table 20. Appropriations and net contract authorizations for the war activities program, as of June 30, 1942 L Table 21. Appropriations, contract authorizations, and expenditures under the war activities program, July 1, 1940, to June 30, 1942. ._ Table 22. Commitments, receipts, and disbursements of the Reconstruction Finance Corporation and its subsidiaries under the war activities program, July 1, 1940, to June 30, 1942 .. 479 482 485 PUBLIC DEBT Public debt Outstanding Table 23. Description of the public debt issues outstanding June 30, 1942 (daily Treasury statement, revised, basis). . 486 Table 24. Principal of the public debt outstanding at the end of each fiscal year from 1853 to 1942 (daily Treasury statement, revised, basis) 507 Table 25. Comparative statement of the pubhc debt outstanding June 30, 1935 to 1942 (daily Treasury statement, revised, basis) \ 509 Table 26. Composition of the public debt at the end of the fiscal years 1916 to 1942, and bymonths from July 1941 to June 1942 (daily Treasury statement, revised, basis).. 511 Public debt operations Table 27. Pubhc debt receipts and expenditures, monthly July 1941 to June 1942, with totals for-the fiscal years 1941 and 1942 (daily Treasury statement, unrevised, basis) Table 28. Public debt retirements chargeable against ordinary receipts during the fiscal year 1942, and cumulative totals from July 1, 1917, to June 30, 1941 and 1942, by sources and issues (daily Treasury statement, revised, basis) Table 29. Summary of transactions in interest-bearing and noninterestbearing securities, fiscal year 1942 (daily Treasury statement, revised, basis) . :. . .. Table 30. Summary of transactions in interest-bearing securities, by form of issue, fiscal year 1942 (daily Treasury statement, revised, basis) 512 520 522 524 CONTEONTS XI Page Table 31. Changes in interest-bearing debt, by issues, fiscal year 1942 (daily Treasury statement, revised, basis) Table 32. Transactions in noninterest-bearing securities, by issues, fiscal year 1942 (daily Treasury statement, revised, basis) Table 33. Issues, maturities, and redemptions of interest-bearing securities, exclusive of t r u s t account and other special issues, July 1941 through J u n e 1942 Table 34. Sources of public d e b t increase or decrease, fiscal years 1915 t o 1942 (daily Treasury statement, unrevised, basis) Table 35. Transactions on account of t h e cumulative sinking fund, fiscal year 1942 (daily Treasury statement, revised, basis) ^ Table 36. Transactions on account of t h e cumulative sinking fund, fiscal years 1921 to 1942 (daily Treasury statement, revised, basis) Table 37. Securities retired through t h e cumulative sinking fund, par a m o u n t and principal cost,' t o J u n e 30, 1942 (daily Treasury statement, revised, basis) 1_ . • 525 530 538 543 545 545 546 United States savings bonds Table 38. Sales and redemptions of United States savings bonds, by. m o n t h s fiscal year 1942 and cumulative total from March 1, 1935, to June 30, 1942 -_-_ Table 39. Sales of United States savings bonds, by m o n t h s and denominations, fiscal year 1942 Table 40. S u m m a r y of sales and redemptions of United States savings bonds, b y series, for t h e fiscal years 1935 to 1942 and monthly for t h e fiscal year 1942 . __-.____ Table 41. Sales of United States savings bonds reported by series, classified by denomination, for t h e fiscal years 1941 and 1942 and monthly for t h e . fiscal year 1942__._ Table 42. Sales of United States savings bonds reported by series, classified by t y p e of purchaser, for t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942 Table 43. Sales of United States savings bonds reported by series, classified by ^States, for the fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942 547 548 550 553 555 556 Postal savings stamps Table 44. S u m m a r y of sales and redemptions of postal savings stamps for t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942 Table 45. Gross sales of postal savings stamps, classified by denomination, for t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942 Table 46. Redemptions of postal savings stamps, classified by means of p a y m e n t , for t h e fiscal years 1941 and 1942 and monthly for the fiscal year 1942 Table 47.' Gross sales of postal. savings stamps, by States, for t h e fiscal years 1941 and 1942 and monthly for t h e fiscal year 1942 .- * 560 561 562 563 Treasury tax savings notes Table 48. Sales and redemptions of Treasury t a x savings notes, by months, fiscal year 1942 . Table 49. Summary of sales and redemptions of Treasury t a x savings notes, by series, monthly and t o t a l for t h e fiscal year 1942 Table 50. Sales of Treasury tax savings notes reported by series, classified by denomination, monthly and t o t a l for t h e fiscal year 1942 •: Table 51. Sales of Treasury t a x savings notes reported by series, classified by t y p e of purchaser, monthly and t o t a l for t h e fiscal year 1942 Table 52. Redemptions of Treasury t a x savings notes by series, classified by means of payment, monthly and total for t h e fiscal year 1942 565 566 568 570 572 Interest on the public debt Table 53. Interest on t h e public debt, payable, paid, and outstanding unpaid, fiscal year 1942 (daily Treasury statement, revised, basis) Table 54. Interest paid on t h e public debt, by issues, fiscal years 1940 t o 1942 (warrant basis)._ __, 574 575 Xn CONTENTS Page Table 55. Amount of interest-bearing debt outstanding, the computed annual. interest charge, and the computed rate of interest, for the fiscal years 1916 to 1942 and by months from July 1941 to June 1942 (daily Treasury statement, revised, basis)..^ Table 56. Interest paid on the securities issued or guaranteed by the United States Government, classified by tax status, fiscal years 1913 to 1942 Miscellaneous Table 57. Contingent liabilities of the United States, June 30, 1942 Table 58. Contingent liabilities of the United States as of June 30, 1935 to 1942 (daily Treasury statement, revised, basis). Table 59. Average yield on long-term Treasury bonds, by months, January 1919 to June 1942 Table 60. Prices and yields of public marketable securities issued or guaranteed by the United States. !^--. Table 61. Summary data from Treasury survey of the ownership of securities issued or guaranteed by the United States, analyzing the ownership of such securities by classes of holders of each issue outstanding on June 30, 1942.. .^ 577 578 580 584 585 586 588 CONDITION OF THE TREASURY EXCLUSIVE OF PUBLIC DEBT LIABILITIES Table 62. Current assets and liabilities of the Treasury at the close of the fiscal years 1941 and 1942 (daily Treasury statement, unrevised, basis). Table 63. Balance in the General Fund of the Treasury at the end of each month, fiscal year 1942 (daily Treasury statement, unrevised, basis) Table 64. Assets and liabilities of the exchange stabilization fund as of June 30, 1941 and 1942.... Table 65. Securities other than obligations of foreign governments owned by the United States Government, June 30, 1942 Table 66. 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, 1942 Table 67. Principal of the funded and unfunded indebtedness of foreign governments to the United States, the accrued and unpaid interest thereon, and payments on account of principal and interest, as of November 15 of each year from 1928 to 1942 594 595 596 598 600 601 TRUST AND SPECIAL FUNDS FOR WHICH INVESTMENTS ARE MADE BY THE TREASURY DEPARTMENT Table 68. Adjusted service certificate fund, June 30, 1942 602 Table 69. Ainsworth Library fund, Walter Reed General Hospital, June 30, 1942_______ -__-_ 603 Table 70. Alaska Railroad retirement and disability fund, June 30, 1942_ 603 Table 71. Canal Zone retirement and disabihty fund, June 30, 1942______ 604 Table 72. Civil service retirement and disability fund, June 30j 1942__1__ ^ 605 Table 73. District of Columbia teachers' retirement fund—Assets held by the Treasury Department, June 30, 1942 606 Table 74. District of Columbia water fund—Investments held by the Treasury Department, June 30, 1942 ., 608 Table 75. District of Columbia workers' compensation fund—Assets held by the Treasury Department, June 30, 1942 608 Table 76. Federal old-age and survivors insurance trust fund, June 30, 1942 . -__ 609 Table 77. Foreign service retirement and disability fund, June 30, 1942-_ 610 Table 78. Library of Congress trust fund, June 30, 1942 611 Table 79. Longshoremen's and harbor workers' compensation fund— Assets held by the Treasury Department, June 30, 1942 614 Table 80. National Cancer Institute gift fund, June 30, 1942___ 614 Table 81.. National Institute of Health gift fund, June 30, 1942 615 Table 82. National park trust fund, June 30, 1942 617 Table 83. National service life insurance fund, June 30, 1942__-_ 618 Table 84. Pershing Hall Memorial fund, June 30, 1942 ..... 618 Table 85. Railroad retirement account, June 30, 1942 619 Table 86. Unemployment trust fund, June 30, 1942 620 Table 87. United States Government life insurance fund—Investments, June 30, 1942.. : 623 CO(NTENTS XIII G O V E R N M E N T CORPORATIONS A N D CREDIT AGENCIES Page Table 88. Combined statement of asset's and liabihties of Government corporations and credit agencies, June 30, 1942.__._ — Table 89. Proprietary interest of the United States in Government corporations and credit agencies, June 30, 1930 to 1942 'Table 90. Sources of funds of certain Government corporations and credit agencies from inception of organization to June 30, 1942 Table 91. Uses of funds of certain Government corporations and credit agencies from inception of organization to June 30, 1942 . Table 92. Sources of funds of certain Government corporations and'credit agencies, fiscal year 1942 Table 93. Uses of funds of certain Government corporations and credit agencies, fiscal year 1942 i "—--•.— STOCK AND CIRCULATION OF MONEY IN THB UNITED 624 631 633 635 636 637 STATES Table 94. Stock of money, money in the Treasury, in the Federal Reserve Banks, and in circulation June 30, 1913 to 1942 Table 95. Stock of money, by kinds, at the end of each fiscal year from 1913 to 1942 Table 96. Money in circulation, by kinds, at the end of each fiscal year from 1913 to 1942.. . . Table 97. Stock of money, money in the Treasury, in the Federal Reserve Banks, and in circulation, by kinds, June 30, 1942 638 640 641 642 TAX-EXEMPT AND TAXABLE SECURITIES Table 98. Estimated amount of' interest-bearing securities issued by aU governmental units in the United States outstanding on June 30, 1942, classified by tax status and by type of issuer Table 99. Estimated amount of interest-bearing securities issued by all governmental units in the United States outstanding on June 30, 1913 to 1942, classified by tax status and by type of issuer . Table 100. Estimated ownership of all interest-bearing Government securities outstanding, classffied by issuer and by tax status, June 30, 1937 to 1942 :__ 643 646 656 MISCELLANEOUS Table 101. Net expenditures for Federal aid to States, individuals, etc. (exclusive of emergency appropriations from which grants are made to States), fiscal years 1920, 1941, and 1942, and amounts appropriated for 1943, by appropriations • Table 102. Expenditures made by the Government as direct payments to States, etc., under cooperative arrangements and expenditures within States which provided relief and other aid, fiscal year 1942 Table 103. 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, 1942 Table 104. Transactions in commodity stamps, fiscal years 1939 to 1942 and by months from July 1941 to June 1942 660 ' 664 672 674 ESTIMATES Table 105. Receipts and expenditures of general and special accounts, actual for the fiscal year 1942 and estimated for the fiscal years 1943 and 1944, in detail -Table 106. Receipts and expenditures of trust accounts, etc., actual for the fiscal year 1942 and estimated for the fiscal years 1943 and 1944, as exhibited in the Budget for 1944..j Table 107. Summary of cash operations of the United States Treasury for the fiscal year 1942 and estimated for the fiscal years 1943 and 1944, as exhibited in the Budget for 1944 ^ Index 675 697 710 711 SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES OF THE TREASURY DEPARTMENT FROM MARCH 4, 1933, TO NOVEMBER 15, 1942,1 AND THE PRESIDENT UNDER WHOM THEY SERVED Term of service. Official From- Secretary ofthe Treasury President T O - Secretaries ofthe Treasury Mar. 4.1933 Jan. 1.1934 Dec. 31,1933 May 19,1933 Nov. 17,1933 May 2,1934 Nov. 16,1933 Dec. 31,1933 Feb. 16,1936 William H. Woodin, Nevr York.... Henry Morgenthau, Jr., New York. Roosevelt. Roosevelt. Under Secretaries Jan. 29,1937 Nov. 1,1938 Jan. 18,1940 Dean G. Acheson, Maryland Henry Morgenthau, Jr., New York. Thomas Jefferson Coolidge, Massachusetts. Sept. 15,1938 Roswell Magill, New York Dec. 31,1939. John W. Hanes, North Carolina.... Daniel W. Bell, Illinois Woodin Woodin Morgenthau.. Roosevelt. Roosevelt. •Roosevelt. Morgenthau.. Morgenthau. Morgenthau.. Roosevelt. Roosevelt. Roosevelt. Woodin, Morgenthau... Woodin, Morgenthau... Woodin. Morgenthau Morgenthau Morgenthau Morgenthau i Morgenthau Roosevelt. Roosevelt. Roosevelt. Roosevelt. Roosevelt. Roosevelt. Roosevelt. Roosevelt. Assistant Secretaries Apr. June June Dec. Feb. July June Jan. 18,1933 6,1933 12,1933 1,1934 19,1936 1,1938 23,1939 18,1940 Feb. Sept. Dec. Nov. Feb. Oct. 16,1936 30,1939 12,1933 1,1937 28,1939 31,1938 Lawrence W. Robert, Jr., Georgia.. Stephen B. Gibbons, New York._. Thomas Hewes, Connecticut Josephine Roche, Colorado Wayne C. Taylor, Illinois... John W. Hanes. North Carolina Herbert E. Gaston, New York John L. Sullivan, New Hampshire. J For officials since 1789 see annual report for 1932, pp. xvii to xxi, and corresponding table in annual report for 1933. . 1 XV PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE TREASURY DEPARTMENT AS OF NOVEMBER 15, 1942 OFFICE OF T H E SECRETARY Henry Morgenthau, Jr Daniel W. Bell Herbert E. Gaston John L. Sullivan (Vacant) : Harold N . Graves Harry D. White Ferdinand Kuhn, Jr George Buffington Theodore R. Gamble Peter H. Odegard _. John W. Pehle Henrietta S. Klotz W. N. Thompson Charles S. Bell CharlesR. Schoeneman Theodore F. Wilson Elmer L. Irey.. Frank J. Wilson.. Stanley S. Surrey Eugene W. Sloan Charles Schwarz William T; Heffelfinger... Edward D. Batchelder.. Francis C. Rose F. A. Birgfeld Denzil A. Right. Gabrielle E. Forbush Secretary ofthe Treasury. Under Secretary of the Treasury. Assistant Secretary ofthe Treasury. Assistant Secretary of the Treasury. Fiscal Assistant Secretary of tho 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. Assistant to the Secretary. ' Administrative Assistant to the Secretary. Technical Assistant to the Secretary. _. Technical Assistant to the Secretary. Director of Personnel. . . Chief Coordinator, Treasury Enforcement Agencies. Chief, Secret Service Division. Tax Legislative Counsel. Executive Director, War Savings Staff. Director of Public Relations. Assistant to the Under Secretary. Executive Assistant to the Fiscal Assistant Secretary. Executive Assistant to Assistant Secretary. Chief Clerk. Superintendent of Treasury Buildings. Chief, Secretary's Correspondence Division. .1 OFFICE OF T H E GENERAL COUNSEL Randolph E. Paul Hmitington Cairns N. ~0. Tietjens...Joseph J. O'Connell, J r . Ernest R. Feidler..: Samuel Klaus.. John E. Shea 1 John P. Wenchel Robert Chambers « General Counsel. Assistant General Counsel. Assistant General Counsel. ._. Assistant General Counsel. Assistant to the General Counsel. Special Assistant to the General Counsel. Special Assistant to the General Counsel. Chief Counsel, Bureau of Internal Revenue. Chief Counsel, Bureau of Customs. , DIVISION OF RESEARCH AND STATISTICS George C. Haas Henry C. Murphy Al-F. O'Donnell.. Russell R. Reagh Anna M. Michener William M. Weir Isabella S. Diamond. Director of Research and Statistics. Assistant Director. Assistant Director. Assistant Director (Government Actuary). Assistant to the Director. Administrative Assistant to the Director. ...Librarian. 1 DIVISION OF MONETARY RESEARCBi Harry D. White _ Harold Glasser.. Edward M. Bernstein. - Director of.Monetary Research. Assistant Director. Assistant Director. DIVISION OF TAX RESEARCH Roy Blough Louis Shere L. Laszlo Ecker-Racz Director of Tax Research. - Assistant Director. Assistant Director. BUREAU OF THE PUBLIC DEBT William S. Broughton Edwin L. K i l b y . . . . . Ross A. Heffelfinger W. Spencer Thompson Edward G. Dolan Byrd Leaivell.. Marvin Wesley Melvin R. Loafman Maurice A. Emerson. _ Lemuel W. Owen .-. - Commissioner of the Public Debt. Assistant Commissioner of the Public Debt. Deputy Commissioner of the Public Debt. Deputy Commissioner in Charge, Chicago OfQce, Register of the Treasury. Assistant Register of the Treasury. Chief, Division of Loans and Currency. Chief, Division of Public Debt Accounts and Audit. Chief, Division of Paper CUvStody. Chief, Division of Savings Bo'nds. . , BUREAU OF ENGRAVING AND PRINTING Alvin W. Hall Clark R. Long Thomas F . Slattery - Director, Bureau of Engraving and Printing. Assistant Director (Administration). Assistant Director (Production). PRINCIPAL ADMINISTRATIVE AND STAFF OFFTCEIRS XVH BUREAU OF ACCOUNTS Edward F. Bartelt.. Robert W. Maxwell Joseph Greenberg Gilbert L, Cake Stephen P. Gerardi Guy F. Allen.-. L. L. Collie B.M.Mulvihill Harry R. Schwalm. Eugene P . O'Daniel Commissioner of Accounts. Assistant Commissioner of Accounts. A^^sistant Commissioner of Accounts. CHief Accountant. 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. Chief, Section of Investments. BUREAU OF THE COMPTROLLER OF THE CURRENCY Preston Delano CyrilB. Upham R. B. McCandless L. H. Sedlacek.. W. P. Folger Comptroller of the Currency. Deputy Comptroller. Deputy Comptroller. Deputy Comptroller. Chief National Bank Examiner. , OFFICE OF T H E TREASURER OF T H E U N I T E D STATES William A. Julian.. Marion Banister George O. Barnes M. E. Slindee Bernard A. Hayden__ Treasurer of the United States. Assistant Treasurer. . - . Assistant to the Treasurer. Administrative Assistant to the Treasurer. Chief, Administrative Division. BUREAU OF NARCOTICS Harry J. Anslinger Will S. Wood-... Malachi L. Harney. - . Commissioner of Narcotics. Deputy Commissioner of Narcotics. Assistant to the Commissioner. BUREAU OF INTERNAL REVENUE Guy T. Helvering Norman D. Cann..-i J. B. McNamara Leone Bruch.. Eldon P. King Timothy C. Mooney __ George J. Schoeneman D. Spencer Bliss Stewart Berkshire A. R. M a r r s . . . W. H. Woolf ' Commissioner of Internal Revenue. Assistant to the Commissioner, Executive Assistant to the Commissioner. Special Assistant. Special Deputy Commissioner. Deputy Commissioner. Deputy Commissioner. Deputy Commissioner. Deputy Commissioner.Head, Technical Staff. Acting Chief, Intelligence Unit. .BUREAU OF CUSTOMS Commissioner of Customs. Assistant Commissioner of Customs. Deputy Commissioner. Deputy Commissioner. Acting Deputy Commissioner. W. R . J o h n s o n . . . Frank Dow. Thomas J. Gorman A. S.Johnson Glenn H. Griffith ^ BUREAU OF T H E M I N T Director of the Mint. Assistant Director. P R O C U R E M E N T DIVISION Director of Procurement. Deputy Director. Assistant to the Director. Assistant to the Director. Assistant to the Director. Nellie Tayloe Ross Leland Howard Clifton E. Mack A . J . Walsh Robert LeFevre George Landick, Jr W . N . Rehlaender 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. M . E. Slindee. Guy C. Hanna, Chairman, W. W. Cook. William Schwartz, Chairman. (Vacant) Vice Chairman. John W. Edwards. Percy S. Crewe. 487543—43 2 Charles S. Bell. T. F. Wilson. George H. Jones, Secretary. C O M M I T T E E ON PRACTICE Hessel E.. Yntema. E. B. Van'Veen, Attorney for the Government. BOARD OF REVIEW (Refunds of Processing Taxes) Annabel Matthews. Temple W. Seay." Bernard D. Hathcock. , DEPARTMENT OF THE TREASURY November 15.1942 THE SECRETARY OF THE TREASURY GENERAL COUNSEL I ASSISTANT SECRETARl I N CHARGE OF INTERNALREVENUE I ASSISTANl IN CHARGE OF CUSTOMS. NARCOTICS AND SECRET SERVICE I COORDINATOR O F TREASURV . LAW ENFORCEMENT SECRETARY OFFICE O F T H E C O M P T R O L L E R OF THE CURRENCY OFFICE OF THE LEGISLATIVE COUNSEL B U R E A U OF LEGAL DIRECTOR O F F I C E OF T H E REASUHEft OF T H i UNITED STATES OCUREMENT SECRET SERVICE BUREAU OF T H E PUBLIC DEBT OF DIVISION REVENUE DIVISION OF RESEARCH I kNO STATISTICS D I V I S I O N OF PUBLIC DEBT ACCOUNTS AND AUDIT D I V I S I O N OF MONETARY RESEARCH PAPER CHART 1. ADMINISTRATIVE A S S I S T A N T T O THE SECRETARV . I CUSTODY OFFICE OF SUPERINTENDENT OF TREASURV BUIL0IN6S ANNUAL REPORT ON THE FINANCES TREASURY DEPARTMENT, WashingtoUj D, (7., January 6, 1948., SIR: I have the honor to make the followmg report on the finances of the United States for the fiscal year ended June 30, 1942. The change from a national defense to a war basis, as the result of the Pearl Harbor attack, has been reflected in every aspect of the fiscal and other operations for which the Treasury Department is responsible. Government expenditures were vastly increased to cover war requirements; financing plans had to be revised in the light of the new scale of expenditures and new revenue legislation; other activities, such as those in the field of international monetary matters and foreign funds control, procurement for the lend-lease and strategic and critical materials, and enforcement activities relating to the control of exports and the protection of vessels and harbors, likewise had to be adjusted speedily to an all-out war basis. Detailed information with respect to these adjustments appears throughout the report. BUDGET RESULTS Receipts and expenditures, general and special accounts The following table shows the receipts and expenditures for the fiscal years 1941 and 1942 and the increase or decrease in 1942 receipts and expenditures as compared with the fiscal year 1941. Receipts and expenditures, fiscal years 1941 and 1942 [In millions of dollars. On basis of daily Treasury statements (unrevised), see p. 387.1 1941 r 1942 Increase or decrease (--) Receipts: • Internal revenue: ^ Income tax._ _^._ . Miscellaneous internal revenue _ _ Social security taxes Taxes upon carriers and their employees Railroad unemployment insurance contributions Customs __ 1 _. Miscellaneous receiptsReturn of surplus funds from Government corporations Other --. _ _. Total receipts _ . . _. _ . Deduct net appropriation for Federal old-age and survivors insurance trust fund __ Net receipts Footnotes at end of table. . . _ - . _ 3,470 2,967 788 137 7 392 7,960 3,847 1,016 170 8 389 4,490 880 228 33 1 -3 319 189 8,269 22 255 -297 66 13,668 6,399 661 869 208 7,607 12,799 5,192 R E P O R T O F T H E SEiCRETARY OF THE TREASURY Receipts and expenditures, fiscal years 1941 and 1942—Continued [la millions of dollars] 1941 r 1942 Increase or decrease (-) Expenditures: I. General: Departmen tal (not otherwise classified) _.. Agriculture Department: Agricultural Conservation and Adjustment Administration. Other : .; Federal Security Agency: Civilian Conservation Corps . National Youth Administration '. Social Security Board '. Other. Federal Works Agency: Works Projects Administration Other..... Interior Department: Reclamation projects National Housing Agency.. Panama Canal Post Office Department (deficiency) Railroad Retirement Board River and harbor work and flood control Tennessee Valley Authority Treasury Department: . Interest on the public debt... _ ! Refunds of taxes and duties Veterans' Administration* Subtotal. II. War activities: War Department Navy Department '... Federal Security Agency ..._".. Federal Works Agency National Housing Agency. Selective Service (administrative expenses) I _ United States Maritime Commission War Shipping Administration Aid to China Other Subtotal.. III. Revolving funds (net): Farm Credit Administration Federal Farm Mortgage Corporation (capital stock reduction, act June 25, 1940) Public Works Administration Subtotal. 676 685 10 • 824 56 786 190 -38 135 257 90 423 66 163 473 75 -95 -2 50 1,285 347 -402 -105 17 29 30 7 219 51 91 17 38 18 10 191 127 -28 76 1,111 90 553 1,260 94 555 149 5 2 6,215 5, 986 -228 3,678 2,313 108 14,070 8, 580 152 62 297 33 929 132 200 1,556 10, 392 6,267 44 62 252 • 15 878 132 200 1,468 6,301 26,011 19, 710 <^69 67 ^100 23 100 -12 ^136 IV. Transfers to trust accounts, etc.: Adjusted service certificateifund Agricultural Marketing Administration (surplus commodity stamps) ±..: .. Federal contribution to District of Columbia (U, S. share) .. Government employees' retirement funds (U. S: share) National service life insurance fund.. Railroad retirement account .'..._ Railroad unemployment insurance administration fund transfers to unemployment trust fund (act Oct. 10,1940) Subtotal... - Total expenditures (excluding public debt retirements). Net deficit.. « Excess credits ( d e d u c t ) . -10 124 126 6 103 1 141 36 10 1 17 331 381 60 12,711 32, 397 19,686 5,103 19, 598 14, 494 •' Revised. N O T E . — F i g u r e s are r o u n d e d to nearest million a n d will n o t necessarily a d d to totals. Receipts in general and special accounts Federal revenues reached an unprecedented level in the fiscal year 1942. This was the second full year to be affected by the exertion REPORT OF T H E SEiCRETARY OF T H E TRE(ASURY 6 of a national eflFort to meet the demands of a broad defense program. The outbreak of war in December 1941 accentuated the necessity for record production. The continuing increase in industrial, activity, with its accompanying increase in employment, income, and national buying power, became one of the principal factors contributing to the , marked increase in revenues. The Eevenue Act of 1941, approved September 20, 1941, was shaped by the necessity for a tax program which would more nearly keep pace with the rapid acceleration of Federal expenditures. With reference to the individual income tax;, the act lowered personal exemptions and increased surtax rates. Corporation income and excess profits taxes were increased. Excises were increased on most of the commodities already being taxed, new excises were imposed on many commodities, and estate and gift taxes were inbreased. Receipts by major sources fiscal years 1941 and 1942 ^ [Dollars in millions] Source Internal revenue: Income and excess profits taxes: Corporation: Income tax, current * Excess profits tax . . . Declared value excess profits tax Total corporation. Individual, current Back taxes: Corporation and individual income Unjust enrichment tax Total back taxes . Total income and excess profits taxes (collection basis) Adjustment to daily Treasury statement basis, unrevised . Total income and excess profits taxes (daily Treasury statement basis, unrevised) Miscellaneous internal revenue: Capitaltax stock Estate . tax Gift tax Liquor taxes 2 . . . Tobacco and products taxes * : Stamp taxes... _.. Manufacturers' excise taxes: Gasoline... trucks, tires, tubes, and .. Automobiles, parts or accessories .. Electrical energy Lubricating oils All other 2 Total manufacturers' excise taxes Retailers* excise taxes Footnotes at end of table. 1941 $1, 649.0 164.3 28.1 1942 Increase or decrease Percent of ( - ) , 1942 over 1941 total increase in receipts from general and Amount Percent special accounts, 1942 over 1941 $2, 764.0 $1,115.0 1, 618. 2 1,453. 9 52.2 24.1 67.6 884.9 85.8 20.7 26.9 .4 1,841.4 1, 314. 3 4, 434. 4 3,108.0' 2, 593.0 1, 793. 7 140.8 136.5 48.0 33.2 306.4 9.1 460.1 4.4 153.7 -4.7 60.2 -61.6 315.4 464.5 149.1 47.3 2.9 -.1 2.8 3, 471.1 8,006.9 4,635.8 130.7 84.0 -1.5 -46. 4 -44.9 3, 469.6 7,960. 5 4, 490.9 129.4 83.2 166.7 355.2 61.9 819.9 697.7 39.1 281.9 340.3 92.2 1, 046. 9 780.8 41.7 115. 2 -14.9 40.3 227.0 83.1 2.6 69.1 -4.2. 77.6 27.7 11.9 6.6 2.1 -.3 .7 4.2 1.6 .1 343.0 369.6 26.6 7.8 .5 156.3 47.0 38.2 32.5 617.0 180. 5 50.0 46.4 121. 8 768.3 80.2 24.2 3.0 8.2 89.3 151.3 80. 2 15.5 6.4 21.6 274.8 24.5 .4 .1 .1 1.7 2.8 1.5 -.8 REPORT OF T H E SEiCRETARY OF T H E TREASURY Receipts by major sources, fiscal years 1941 and 1942—Continued [Dollars in millions] 1941 Source Internarrevenue—Continued. Miscellaneous i n t e r n a l r e v e n u e — C o n t i n u e d . Miscellaneous taxes: T e l e g r a p h , telephone, cable, a n d radio facilities, e t c . . . Local telephone service T r a n s p o r t a t i o n of oil b y p i p e line Admissions U s e of m o t o r vehicles a n d b o a t s Sugar tax 2 __ All other, including repealed taxes ^ T o t a l miscellaneous taxes T o t a l miscellaneous i n t e r n a l r e v e n u e (collection basis) _. A d j u s t m e n t to daily T r e a s u r y s t a t e m e n t basis, unrevised T o t a l miscellaneous internal r e v e n u e (daily T r e a s u r y s t a t e m e n t basis, unrevised) E m p l o y m e n t taxes: E m p l o y m e n t b y other t h a n carriers: Federal I n s u r a n c e C o n t r i b u t i o n s A c t . . Federal Unemployment T a x Act Total -. Carriers a n d t h e i r e m p l o y e e s . . . T o t a l e m p l o y m e n t taxes Total internal revenue Railroad u n e m p l o y m e n t insurance c o n t r i b u t i o n s . _ . Customs : T o t a l i n t e r n a l revem.ie taxes, railroad unei np l o y m e n t insurance, a n d c u s t o m s . . Miscellaneous receipts . - _. .. . T o t a l receipts, general a n d special a c c o u n t s . . D e d u c t : N e t a p p r o p r i a t i o n for Federal old-age a n d survivors i n s u r a n c e t r u s t fund ' 1942 Increase or decrease P e r c e n t of ( - ) , 1942 over 1941 t o t a l increase in receipts from general a n d special Amount Percent accounts, 1942 over 1941 74.8 21.5 . $48. 2 26.8 13.6 115.0 72.9 68.2 60.8 $20.9 26.8 1.0 44.0 72.9 • -6.6 39.3 -8.8 182.8 .8 1.4 -.1 .7 207.2 405.4 198. 2 95.7 3.7 2,954. 6 3,837.7 883.1 29.9 16.3 12.3 9.4 -2.9 2,966.9 3,847.1 880.2 29.7 16.3 690.6 97.7 895.6 119.9 205.0 22.2 29.7 22.7 3.8 .4 788.2 136.9 1,015.6 170.0 227.4 33.1 28.9 24.2 4.2 .6 $27.3 12.5 71.0 76.6 8.0 62.0 0.4 .5 925.2 1,185. 6 260.4 28.1 4.8 7,361. 7 12,953.1 5, 631.4 76.5 104. 3 6.8 391.9 8.5 388.9 1.7 -3.0 25.0 -.8 7, 760. 4 13,390. 5 5, 630.1 72.5 508.2 277.4 -230.8 -45.4 -4.3 8,268.5 13, 667.9 5, 399.4 65.3 100.0 661.3 868.9 207.6 31.4 N e t receipts, general a n d special a c c o u n t s . . . . •• 7,607.2 12, 799.1 5,191.9 68.2 104.3 1 The detail of income taxes and miscellaneous internal revenue taxes is on the basis of internal revenue collections with totals adjusted to daily Treasury statement basis, unrevised. Employment taxes, railroad unemployment insurance contributions, customs, and miscellaneous receipts are shown on the daily Treasury statement basis, unrevised. General and special accounts are combined. 2 Collections for credit to trust funds are not included. 8 "All other, including repealed taxes" includes tobacco floor stocks taxes (receipts under 1940 and prior acts); narcotics, including marihuana and special taxes; National Firearms Act; hydraulic mining tax; and all other repealed taxes not reinstated by the Revenue Act of 1941. NOTE.—Dollar figures are rounded to nearest tenth of a million and will not necessarily add to totals. The effect of the above legislation was not completely reflected in the fiscal year 1942 receipts because of statutory lags in collections. However, the total receipts in general and special accounts, amounting to $13,667.9 millions, were $5,399.4 millions above the record level of the preceding fiscal year. A comparison of receipts for the fiscal years 1941 and 1942 is presented in the table above. The trend in receipts by major sources REPORT OF T H E SEiCRETARY OF T H E TRElASURY 5 for the fiscal years 1935 to 1942 is shown in' the chart on page 6. A more detailed comparison of internal revenue receipts appears in table 7 on page 434 of this report.' Total receipts in general and special accounts were $13,667.9 millions, an increase of $5,399.4 millions or 65.3 percent over the total of $8,268.5 millions received in the fiscal year 1941. The bulk of receipts in the fiscal year 1942 was derived from relatively few sources. Current corporation income and excess profits taxes, current individual income taxes, employment, liquor, and tobacco taxes accounted for 76.8 percent of the total receipts. Income and excess profits taxes, which contributed 42.0 percent of total receipts in the fiscal year 1941, rose to 58.2 percent in the fiscal year-1942 as the Revenue Act of 1941 drew deeply from an increasing national income. This marked increase in receipts from income and excess profits taxes was responsible for a decrease in the ratio of receipts from other sources to total receipts. Receipts from miscellaneous internal revenue and employment taxes, though marked by increases in amounts, dropped in their proportions to total receipts from 35.9 percent and 11.2 percent, respectively, in the fiscalyear 1941 to 28.2 percent and 8.7 percent in the fiscal year 1942. Miscellaneous receipts and customs receipts decreased both in amount and in percentage. Income and excess profits tax receipts, reflecting higher income levels, higher tax rates, and the broader tax bases of the Revenue Act of 1941, rose to $7,960.5 millions in 1942, an increase of $4,490.9 millions or 129.4 percent Over the receipts in 1941. Income taxes contributed 83.2 percent of the total increment in receipts from general and special accounts in 1942. Current corporation income tax receipts in 1942, which include collections from the corporation normal tax aixd surtax imposed by the Revenue f\.ct of 1941, amounted to $2,764.0 millions. This is an increase of $1,115.0 millions or 67.6 percent over the receipts in 1941. The increase was attributable to higher income levels and increased tax rates existing in the calendar year 1941 as compared with the calendar year 193.9. Liabilities of the calendar year 1940 are reflected to approximately the same extent in each of the fiscal years 1941 and 1942. Under the Revenue Act of 1938, operative in the calendar year 1939, the single corporation income tax in effect taxed corporations with net incomes in excess of $25,000 at rates which varied from 16K percent to 19 percent, depending on the percentage of net income paid in dividends. In 1939, corporations with net incomes of $25,000 or less were taxed at 12K percent, 14 percent, and 16 percent. Under the Revenue Act of 1941, effective in the calendar year 1941, the corporation normal tax rate was 24 percent for corporations with normal-tax net incomes in excess of $25,000, and corporations with 6 REPORT OF T H E SEiCRETARY OF T H E TREASURY normal-tax net incomes of $25,000 or less were taxed at graduated rates of 15 percent, 17 percent, and 19 percent. In addition, in 1941, the RECEIPTS, 1 FISCAL YEARS 1935 TO 1942. CLASSIFIED BY MAJOR SOURCES "DOLLARS Billions DOLLARS" Billions W^ 13 12 Other Employment Taxes I Processing Tax. j Farm Products Customs iO 10 Miscellaneous I n t e r n a l Revenue j Income Taxes 1935 1936 1937 1938 1939 1940 F I S C A L V E A R S 1941 1942 CHART 2. IExcludes trust accounts and net appropriation to the Federal old-age and survivors insurance trust fund. corporation surtax imposed a levy of 6 percent on surtax net income not over $25,000 and a levy of "7 percent on surtax net income over $25,000. No such surtax was effective in the calendar year 1939. REPORT OF THE SECRETARY OF THE TREASURY 7 The effect of much greater business activity in the calendar year 1941 compared with the calendar year 1939 was offset to some extent by the allowance of the excess profits tax imposed by the Revenue Act of 1941 as a deduction in computing normal tax and surtax net income and the allowance of a 2-year operating loss carryover deduction. No such excess profits tax existed in the calendar year 1939 and no operating loss carryover was allowed in computing net income. Corporation excess profits tax receipts in the fiscal year 1942 amounted to $1,618.2 millions, an increase of $1,453.9 millions or 884.9 percent over collections of $164.3 millions in the fiscal year 1941. Receipts in the latter year represented the collection of only part of the calendar year 1940 liabilities. Fiscal year 1942 receipts, in turn, consisted of collections resulting from calendar year 1940 liabilities and, in addition, from liabilities of the calendar year 1941. Also contributing to the increase was the fact that the excess profits tax under the Revenue Act of 1941 was computed before the income tax. Previously, the income tax had been allowed as a deduction from the excess profits tax. Under the Revenue Act of 1941, corporations were taxed at rates which varied from 35 percent to 60 percent of their adjusted excess profits net income, depending on the absolute amount of such income. Declared value excess profits tax receipts in the fiscal year 1942 amounted to $52.2 millions as compared with $28.1 millions in 1941. This increase of 85.8 percent may be accounted for by the substantial rise in income levels in the calendar year 1941 as compared with 1939 and by the 10 percent higher tax rates imposed. Receipts from back taxes on both corporate and individual income amounted to $460.1 millions in the fiscal year 1942, an increase of $153.7 millions or 50.2 percent over the comparable receipts in the preceding year. ; Current individual income tax receipts in 1942 of $3,108.0 millions were $1,793.7 millions or 136.5 percent greater than receipts of $1,314.3 millions in 1941. In the comparison of the receipts from the corporation and income and excess profits taxes, the explanation of the increase in the fiscal year 1942 over the fiscal year 1941 was limited to a comparison of the income levels and tax laws existing in the calendar year 1941 as compared with the calendar year 1939. I t was possible to eliminate the calendar year common to both fiscal years, in this case calendar year 1940, because of the even distribution of receipts from that year between the two fiscal years. In the case of the individual income tax, the liabilities of a calendar year are not divided evenly between the two fiscal years affected. In discussing the relative receipts of the fiscal years 1941 and 1942, the liability year 1940 cannot be disregarded as the greater portion 8 REPORT OF THE SECRETARY OF THE TREASURY " of receipts from the tax liabilities of that year are received in the fiscal year 1941. The relative income levels and tax laws of all three calendar years 1939 through 1941 must be considered in the comparison. The Revenue Act of 1940 lowered personal exemptions of married persons and single heads of families from $2,500 to $2,000 and of single persons from $1,000 to $800, increased surtax rates on income from $6,000 to $100,000, and added a defense tax of 10 percent of the basic tax or net income after the basic tax, whichever is less. The Revenue Act of 1941 lowered personal exemptions further (from $2,000 to $1,500 in the case of married persons and single heads of families and from $800 to $750 for single persons), increased the surtax rates bn all incomes, and eliminated the former exemption of the first $4,000 of surtax net income. Changes in the act of lesser importance were the elimination of a credit of $400 for the first dependent in the case of persons who are made heads of families only because of such dependents, and the adoption of a simplified income tax form for the optional, use of-persons with gross income of $3,000 or less derived wholly from certain specified sources. The defense tax was eliminated by the Revenue Act of 1941 and was integrated into the surtax rate structure. Miscellaneous internal revenue receipts were $3,847.1 millions in the fiscal year 1942, an increase of $880.2 millions or 29.7 percent over 1941 receipts of $2,966.9 millions. Many factors affecting the various taxes included in this category contributed to the increase, the principal ones being higher income levels, increased tax rates, and the enactment of new taxes. The increase in miscellaneous internal revenue receipts accounted for 16.3 percent of the total increase in receipts from general and special accounts in 1942. Capital stock tax receipts in 1942 amounted to $281.9 millions, an increase of 69.1 percent over receipts in 1941, which amounted to $166.7 millions. Part of this difference is attributable to an increase in the tax rate from $1.10 to $1.25 per $1,000 of capital stock valuation. Since capital stock tax valuation for the fiscal year 1942 was expected to determine the basis for declared value excess profits tax purposes for the calendar years 1941 through 1943, tax receipts were affected by expectations of income for these years. Fiscal year 1941 collections were similarly dependent upon anticipated income levels for the calendar year 1940. Estate tax receipts of $340.3 millions in the fiscal year 1942 were $14.9 millions or 4.2 percent less than in the preceding year. The decrease resulted from a decline in the general level of property valuation for tax purposes during the periods in which liability was incurred and from the fact that the 1941 receipts included the taxes on two exceptionally large estates. The 15-month statutory lag permissible in the filing of estate tax returns, and the fact that estates can be given a valuation as of the date of death of the decedent or one year later REPORT OF THE SECRETARY OF THE TREASURY 9 are important factors in the valuation of estates for tax purposes, in addition to the ordinary trends and c^^clical fluctuations of property values. The amount of the decline in 1942 was reduced by the 10 percent defense tax increase of the Revenue Act of 1940, which w^as partially reflected for the first time in the 1942 receipts. However, the rate increases of the Revenue Act of 1941 do not become substantially effective until the fiscal year 1943 because of the lag permissible in the filing of returns. Gift tax receipts of $92.2 millions in the fiscal year 1942 were $40.3 millions or 77.6 percent greater than in the fiscal year 1941, which was itself a year of unusually large receipts. The increase reflected the special tax-saving incentives for making gifts in the calendar year 1941 furnished by the increased estate, gift, and individual income tax rates of the Revenue Act of 1941. Receipts from miscellaneous revenue sources other than the capital stock, estate, anjd gift taxes rose materially during 1942. The increase reflected not only tne enactment of a considerable number of new taxes under the Revenue Act of 1941, but also the general increase in con-? sumer incomes during the year. Liquor tax collections totaled $1,046.9 millions in 1942, a gain of 27.7 percent over the 1941 aggregate of $819.9 millions. Receipts from distilled spirits in 1942 amounted to $574.3 millions, an increase of 34.0 percent compared with the preceding year, while fermented malt liquor taxes were $366.2 millions as against $316.7 millions in 1941, an increase of 15.6 percent. The additional revenue in the case of distilled spirits was partly due to the increase in the tax rates, effective October 1, 1941, from $3 a gallon to $4 a gallon and on brandy from $2.75 a gallon to $4 a gallon. No change in tax rates on fermented malt liquor took place. Total tobacco taxes aggregated $780.8 millions compared with $697.7 millions in 1941. Receipts from small cigarettes, comprising the major portion of tobacco taxes, amounted to $704.9 millions in 1942 compared with $616.7 millions in 1941, a gain of 14.3 percent. The tax rate on small cigarettes remained unchanged throughout the fiscal year. Manufacturers^ excise taxes totaled $768.3 millions in 1942 compared with receipts of $617.0 millions in 1941. This increase of 24.5 percent took place despite the fact that most sources of revenue within the category were affected adversely by the conversion of production to war requirements. Gasoline taxes, which produce the largest single amount of revenue in this group, aggregated $369.6 millions as against $343.0 millions in 1941, an increase of 7.8 percent. The tax rate was not changed by the Revenue Act of 1941. However, the 1942 figure represents a full yearns collection at the present law rate of IK cents per gallon, whereas, due to the lag in collections, the 1941 yield included one month's receipts at the lower rate of 1 cent 10 REPORT OF THE SECRETARY OF THE TREASURY per gallon imposed by the Revenue Act of 1940. Receipts from excise tax on motor vehicles, tires, tubes, and accessories increased 15.5 percent to $180.5 millions in 1942, while receipts from lubricating oils rose 21.5 percent to $46.4 millions. In the case of the former, the improvement, for the most part, was caused by the higher tax rates and the more inclusive tax bases provided for by the Revenue Act of 1941. Furthermore, consumer buying in anticipation of pending shortages.in these types of goods stimulated sales during the year. In the fiscal year 1942 many manufacturers' excise taxes were introduced, including sporting goods, luggage, electric, gas and oil appliances, photographic apparatus, business and store machines, rubber articles, optical equipment, and electric light bulbs and tubes. These taxes, however, did not become effective until October 1, 1941. Thus, revenues fbr only 8 months were collected in the fiscal year 1942. Priorities on raw materials and the conversion of manufacturing facilities to war production also affected the yield from these imposts. Excise taxes were imposed by the Revenue Act of 1941 upon the ^sale at retail of jewelry, furs, and toilet preparations. Total revenues from these sources in the fiscal year 1942 amounted to $80.2 millions, but receipts comprised only 8 months' collections. Revenues obtained from miscellaneous taxes during 1942 amounted to $405.4 millions corripared with $207.2 millions in the preceding year, an increase of 95.7 percent. New taxes on local telephone service and the use of motor vehicles and boats accounted for $26.8 millions and $72.9 millions, respectively. Other new taxes, including levies on the transportation of persons and the use of coin-operated amusement and gaming devices, bowling alleys, billiard and pool tables, contributed to the increase in receipts. The admissions tax, moreover, rose 62.0 percent, from $71.0 millions in 1941 to $115.0 millions in 1942. The growth in the yield of the latter item resulted chiefly from the elimination of certain exemptions formerly allowed in determining the tax base and from the general improvement in economic conditions. Total employment taxes were $1,185.6 millions in 1942, an increase of $260.4 millions or 28.1 percent over receipts of $925.2 millions in 1941. The increase resulted from a higher level of pay rolls as there had been no change in the rates or coverage of these taxes since the Social Security Act Amendments which were approved August 10, 1939, and which are fully reflected in the receipts both of the fiscal year 1941 and the fiscal year 1942. Receipts under the Federa] Insurance Contributions Act rose from $690.6 millions in 1941 to $895.6 millions in 1942; under the Federal Unemployment Tax Act, from $97.7 millions to $119.9 millions; and under the Carriers Taxing Act of 1937, from $136.9 millions to $170.0 millions. REPORT OF T H E SEiCRETARY OF T H E TREASURY 11 Railroad unemployment insurance contributions in 1942 were $8.5 millions, an increase of 25.0 percent over the $6.8 millions received in 1941. Customs receipts were $388.9 millions in 1942, or $3.0 millions less than in 1941. Compared with receipts during, the corresponding portions of the fiscal year 1941, an increase of $45.7 millions in the first half was offsetoby a decrease of $48.7 millions in the second half of the fiscal year 1942. The fluctuation of receipts was controlled by the wartime need for materials used in defense production, the availability of shipping, the freedom of sources, trade agreements, and the control of imports. Miscellaneous receipts amounted to $277.4 millions in 1942, a decrease of $230.8 millions or 45.4 percent from 1941. The receipts in 1941 included repayment's of capital funds by certain Government corporations. Expenditures Jrom general and special accounts Total expenditures of the Federal Government from general and special accounts amounted to $32,491 millions during the fiscal year 1942. A comparison of expenditures in this fiscal year with those of the previous year is shown in the accompanying table, and a compari-' son with the six previous years is shown by major categories in the chart on page 13 and in the table on page 428. Detailed information on expenditures by agencies and accounts appears for the fiscal year 1942 in the table on page 406. Expenditures, fiscal years 1941 and 1942, classified by functions [In millions of dollars. General and special accounts] 1941' I. War activities expenditures: War Department-.--.-Navy Department United States Maritime Commission. • Miscellaneous war activities Total. Other expenditures except debt retirements: Veterans' pensions and benefits Social security program. _ Public works ..._ Aid to agriculture Relief and work relief: Work Projects Administration and National Youth Administration... -. Civilian Conservation Corps.. Interest oh the public debt 1. Other Total III. Public debt retirements IV. Total expenditures (including public debt retirements) . 1942 Net change 3,678 2,313 51 259 14,070 8,580 929 2,432 10, 392 6,267 878 2,173 6,301 26, Oil 19, 710 563 738 937 556 659 680 1,225 ~7 71 -58 288 1,374 257 1,111 840 970 163 1,260 873 -404 • -94 149 32 6,410 6,386 -24 64 31 12, 775 19, 716 ' Revised. NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. Expenditures from emergency funds for the President and lend-lease funds are reflected under the agency by which the funds were spent. 12 REPORT OF THE SECRETARY OF THE TREASURY In 1942 expenditures increased by $19,716 millions over the previous fiscal year. This tremendous increase resulted from the rapid expansion of the national defense program and our entry into the war. Expenditures had risen steadily during the fiscal year 1941, but increased at a more rapid rate during the fiscal year 1942. The expansion of the expenditures was greatest in those activities which related to the national defense program and to war activities. Increases were also noted in aid to agriculture and the social security program. Expenditures for work relief and direct relief and nondefense public works continued to decline during 1942, as the war effort increased and unemployment declined. The rate of expenditure for war activities proceeded at an accelerated pace during the year, ds shown in the table below. In June 1942, the last month of the fiscal year, the rate was in excess of $3,800 millions, which was about four times the expenditures that had occurred in July 1941, the first month of the fiscal year. Monthly expenditures, fiscal year 1942 [In millions of dollars. On basis of daily Treasury statements (unrevised), see p..387. General and special accounts] Total expenditures (including Debt retire- public ments debt re-, tirements) Debt service Month 1941—July i. August.-^.. Septernber. October. _ _ November. December. 1942—Januarys.. •February.. March. _ 1 . April May June Total.... /Other FedWar activ- eral ities pro- turesexpendiexcept gram debt service Interest 1,131 1,330 1,537 1,448 1,850 2,104 2,208 2,809 3,238 3,660 3,829 604 390 375 471 394 459 492 409 407 439 375 311 25 9 169 75 15 232 32 12 205 77 19 26, Oil 6,125 1,260 1,600 1,664 1,882 2,089 1,860 2,657 2,631 2,630 3,436 3.755 3,955 4,631 390 95 32,491 NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. In the table above and chart 3, as well as in other tables in this repbrt, the classification "war activities" includes the military expenditures of the War Department, all expenditures of the Navy Department, disbursements made from the emergency funds of the President by various Government departments and agencies, the administrative expenses of Selective Service, expenditures by the Maritime Commissiori^ and War Shipping Administration, aid under the Lend-Lease Act, tvar housing, and other expenditures of various departments and establishments. Additional expenditures attributable to war activities, payable from funds which have supple- REPORT OF THE SECRETARY OF THE TREASURY 13 EXPENDITURES.! FISCAL YEABS 1935 TO 1942. CLASSIFIED BY MAJOR FUNCTIONS 1935 1936 1937 1938 FISCAL 1939 1940 YEARS CHART 3. ' Excludes debt retirements and trust accounts. 1941 1942 14 REPORT OF THE SECRETARY OF THE TREASURY mented regular appropriations of the civil estabhshment, are excluded from the category "war activities.'^ The largest change for activities other than those connected with the war program appears in expenditures for relief and work relief activities. Such expenditures decreased by almost half a billion dollars during the fi,scal year 1942. Only $1,133 millions were spent on relief and work relief during 1942 as against $1,632 millions in 1941. RECEIPTS AND EXPENDITURES IN TRUST ACCOUNTS AND CHECKING ACCOUNTS OF GOVERNMENT CORPORATIONS AND CREDIT AGENCIES In addition to receipts and expenditures under general and special accounts, discussed on previous pages, certain receipts and expenditures of the Government are reported on the Dai^y Statement of the United States Treasury under the title of "Trust accounts, increment on gold, etc.'' There are four main cljasses of receipts and expendi-' tures reported under this title: Trust accounts, checking accounts of Government corporations and credit agencies, incremeM on gold, and, seigniorage on silver. Neither the receipts nor the expenditures of these accounts affect the Federal Budget except to the extent that appropriations are made to these accounts from the General Fund. Such appropriations appear as expenditures under general and special accounts, and as receipts under trust accounts, increment on gold, etc. Certain trust accounts dispose of the excess of their receipts over expenditures by investing such excess in Government securities, as provided by statute. The corporations and credit agencies maintaining checking accounts with the Treasurer of the United States generally apply the cash balances not needed for operations to the purchase of Government securities for investm^ent or to debt or capital stock retirement. Details of receipts and expenditures in "Trust accounts, increment on gold, etc.," annually during the fiscal years 1933 to 1942 and monthly for the fiscal year 1942 appear in the table that follows. 15 REPORT OF THE SECRETARY OF THE TRElASURY Receipts and expenditures in trust, accounts^ increment on gold, etc., fiscal years 1933 . . . . . . . . tQ 1942 and monthly for 1942 [In millions of dollars, . On basis of daily Treasury statements (unrevised), see p. 387] .• . .. ., . , TRUST " A C C O U N T S : . . .. ... Federal old-age a n d survivors insurance t r u s t fund - R a i l r o a d r e t i r e - ' ' Other trust funds" and'accounts^ m e n t account , Unemployment, t r u s t fund Fiscal year or m o n t h , Net 1933-....—...-.'..•... 1934 1935 :.. -._:-.. 1936 1937-.-_l_ 1938 • 1939. ^.. 1940. 1941. 1942 1 9 4 1 ^ J u l y . . . . . . . . . ' J . _'-.•.'. August September October November December 1942T-January February. March.. April. ._ May June ExExRe- pendReceipts itures N e t ' ceipts pend- N e t itures ExRe- pend- N e t ceipts itures • 1 1 3 10 9 45 159 -202 45 168 -207 37 135 -171 37 177 ^215 267 402 530 580 717940 •43 157 1 44 166 2 37 179 1 37 202 70 267 401 529 577 707 931 -3 -2 203 -2 -2 209 -1 44 173 ""i2' 1 1 -4 (*) -7 • 5 n-5 3 6 -8 12 -4 1 -5 2 (*) 25 285 19 19 294 294 763 751 838 837 959 957 1,114 1.118 1,244 1,243 82 89 171 176 24 24 79 74 189 192 55 60 83 75 191 203 33 29 42 43 225 220 62 64 2 2 -2 11 (*) 2 -4 1 (*) Fiscal yeS^ror •^^ m o n t h 1933' 1934-..-... 1935 . . 1936 1937 1938 1939 . . 1940-.-.-.. 1941 1942 1941—July August... September . O c t o b e r .. ,. N o v e m b e r December 1942—January.. • February. March April May 1- • J u n e I n c r e m e n t on gold T o t a l Issuall ance of Other trans- obliga- transactions tions 2 actions Net -818 (8) (') -734 811 (3) 637 -111 (3) -403 108, . (3) (3) (3) 314 -99 (») 201 -51 (3) (3) -5 768 1,106 -337 '33 288 r - 2 5 4 852 ' - 1 , 0 6 9 r-218 -3,625 -1.809 -1,815 569 .. 534 -35 :;-169 -3 -166 -93 -93 (*) -272 -^270 -1 -659 -42 „ .-617 -140 -149 -56 -681 " -9 -625 -12 -35 -23 -92 • -75 17 -176 -189 -12 -430 -428 -2 -1,417 -296 -1,120 ExRe- p e n d i ceipts tures 2,811 2 1 2 1 • 2,000 113 404 101 52 5 r) (*) (*) (*) 32 32 (*) 1' (*) 32 31 (*) (*) 32 C) (*) 1 285 - 5 ,280 233 210 24 237 64 301 34 2,053 2,019 20 837 858 327 -4 323 324 24 349 51 408 358 32 659 628 96 850 753 23 165 143 6 53 47 51 • 51 (*) 61 56 5 44 41 3 42 12 53 17 56 40 49 49 (*) 83 68 15 24 72 , 48 . 52 53 (*) 110 117 -7 2 Seigniorage on silver Net 140 176 40 90 . 90 49 20 14 2 2 ExRe- p e n d i ceipts tures - 140 176 40 90 90 49 20 14 2 2 2 2 (*) (*) . (*) (*) (*) (*) ....... (*) . 2 (*) (*) 1 (*) 1 (*) 1 (*) 1 (*) 1 (*) 1 (*) (*) (*) (*) (*) (*) (*) 146 107 125 116 144 44 4 32 OTHER ACCOUNTS Transactions in checking accounts of Governm e n t agencies, etc. 148 109 123 127 144 46 • ExReceipts p e n d itures Total trust and ^ o t h e r accounts Net -823 101 730 -85 275 255 • 884 136 -148 -3,506 599 -2 -293 -225 -484 -328 -633 114 -234 -126 -257 -1,635 : Ex-.' Re- p.endiceipts; tures 280" 3,045 443 2,249 1,461 1,727 1,917 2,119 2,638 3,191 338 389 78 212 404 117 201 432 114 185 475 246 1,103 2,944 —287 2,334 1,186 1,472 1,033 1,984 2,786 6,696 -261 390 371 436 887 It 319 348 311 732 1,881 *Less than $500,000. ' Revised to adjust classification. 1 IncMdes Government insurance and retirement funds, P. W. A. revolving fund, special deposits (net), and Agricultural Marketing Administration commodity stamp transactions; also includes, in-both recpipts and expenditures, the Federal contribution to the District of Columbia (U. S. share) beginning with the fiscal year 1941 in the amount of $6 millions. Transactions formerly shown under the caption "Miscellaneous funds and accounts" are now reflected under "Other trust funds and accounts." 2 Net receipts constitute net sales, and net expenditures constitute net redemptions of obligations. . 3 Details not available. NOTE.—Figures are rounded to. nearest million and will not necessarily add to totals. 487543—43 3 16 REiPORT OF T H E SEeRETARY OF THE TREASURY Because the Government corporations mentioned above and certain other Government corporations and credit agencies maintain only checking accounts with the Treasurer of the United States, the transactions shown in the preceding table represent only the net balance of their operations, and, therefore, do not furnish sufficient data for a detailed analysis of the financial transactions of these agmcies. Arrangements have been made with these corporations, Jtiowever, whereby certain data iare submitted to the Treasury so that the Treasury's books can refiect the operations of these corporations and agencies. These data have been combined and appear in the tables beginning on page 633, showing sources and uses of funds from the date of mcepitionof the various corporations to June 30, 1942, and for the fiscal year 1942. The figures; are not-on the basis of the daily Treasury statemient ;and,; therefore, do not agree exactly with the figures shown in other tables in this report. A summary of these data appears in the following table. Sources and uses of. funds of certain Governrnent corporations and credit agencies ' which maintdiri only checking accounts with the Treasurer of the United States-, ; fiscal year 1942 and cumulative to, June 30, 1942 Fiscal year 1942 Cumulative to June 30, 1942 SOURCES OF FUNDS Appropriations from General Fund ofthe Treasury ". Allocations,' rediscounts, and loans from other Government corporations and credit agencies ( n e t ) . . . ! . . . . . >.-;-Sale of obligations to Treasury (net) 1.1..-.. Sale ofiObligatipnsin the market (net) ., Sale ofistock to other agencies , Sale'oftother property acquired.^.---;-.... ...L .:.. Repayinent of loans ......l "..; Interest, dividends, assessments, and property income. ...'. Other receipts L . Total, sources of funds^ ^ ..^ , $32,290,888 1, 652,928, 610 3, 226,002,196 -1,004, 058,950 8,483,400 1, 388,570, 295 1,387, 423, 733 385, 872, 986 243, 998,448 $1,289,-437, 424 : 2,227, 162, 370 3, 470,918, 446 6; 264,'553, 250 610, 318,057 1, 675,899, 660 10, 529,257, 985 2, 791,058, 632 467, 342,158 7,321, 511, 604 29, 325, 947,983 53, 208, 249 27,418, 771 2, 976, 358, 575 1, 911, 285,441 ' 300, 291,050 44,736,344 506, 63i; 675 . 171, 629, 559 3, 610, 294, 957 17, 922, 890,'838 995,135, 800 ,2,073, 807, 347 1,712, ,785,938 151,597,787 146, 369,100 2, 372,133, 919 1, 210,045, 740 234, 251, 599 U S E S OF FUNDS Expenses: , ' . . ' • ' : Administrative ' Nonadministrative . Purchaise and improvement of property owned .... .; . Loans '.... ...^ . ^ ..}..i ^ Retirement of obligations issued in exchange for.mortgagesL. Investments (net) .......... ...;.. J Allocations, rediscounts, and loans to other Goyernment^ corporations and credit agencies '(net) : : .. Interest and dividends paid.^ J...., ... Other expenditures. . ...:...... Total, uses of funds...-., J.. .^.... 7,324,051, 250 29,096,821,435 NOTE.—Figuires are rounded to nearest: dollar and will not necessarily add to totals.; DEFICIT IN GENERAL AND SPECIAL ACCOUNTS In the fiscal year 1942, expenditures exceeded receipts in general and special accounts by $19,692 millions. Excluding public debt'itetirements, the net deficit was $19,598 miUions, The derivatidnoi the deficit in 1941 and 1942 appears in the table following. 17 RE:PORT OF T H E SEiCRETARY OF T H E TREASURY Deficit, i n general and special accounts, fiscal years 1941 and 1942 ; > [In millions of dollars] . , . 1941 Receipts... . 1 . -. . Deduct; net-.approp.riation to Federal-old-ageaanjd..sunvivors insur ance. trust fund -- — i - . l . - l . . - . . Net receipts ..... Expenxiitures including debt retirements. 1942 13,668.: 8,269 661^ 7,607 1-2, 775 12,799 42,-491 Gross deficit..-1.1 Deduct debt retirements. 19,692 95 Net deficits. 5,103 19, 598 NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. F I N A N C I N G T H E N E T D E F I C I T AND O T H E R R E Q U I R E M E N T S The following table shows the sources which provided the funds to finance the net deficit of $19,598 millions, the excess of expenditures in checking accounts of Government agencies, trust accounts, etc., of $3,506 millions, and the increase in the General Fund balance,of $358 niiUions. • Net deficit, excluding debt retirements^ Excess of receipts (—) or expenditures (+) in— (a) Checking accounts of Government agencies: General.... J. Sales and redemptions of obligations in market (net) (6) Trust and other accounts. ---. Increase in General Fund balance Total requirements _ Means of financing: Public debt receipts (net) from— (a) Public issues: Treasury bills , Treasury, certificates of rindebtedness (United States savings bonds (net;)-Treasury tax savings notes (net) 1... •••'• Other issues.:.CJ- j - U . . - - Amount (in millions of dollars) 19,598 ..' _ - -|-1,815 -j-l, 809 —119 -f-358 - ^ 3,863 --- 23,461 ' : • " (6)-^special issues: Unemployment trust fund.. •. Federal old-age and survivors insurance trust fund Other accounts '-.- .- 905 3,096' 5,874 3,015 8,'^807 -^'^-^^.21,696 841 753 171 1,765 Total NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. T H E PUBLIC D E B T 23,461 " The gross public debt on June 30, 1942, amounted to $72,422 millions as compared with $48,961 millions on June 30, 1941, an increase of $23,461 millions. The following statement shows the public debt; as of Jiine 30, 1941, and June 30, 1942, classified by character of issues, as between regular issues >s6ld oil the market and special issues held for account of Government trust and special funds. The table also shows the increases in the debt from July 1 to December 31, "1941 (for all practicable purposes; the pre-war period), and from' 18 REPORT OF T H E SEiCREflARY OF T H E TREASURY January 1 to June 30, 1942 (first six months of war financing). I t should be noted that of the net increase of $23,461 millions in the amount of the public debt during the year, $21,696 millions represented an increase in the amount of outstanding .public issues and $1,765 millions, an increase in special issues. Statement of the outstanding public debt on J u n e 30, 1941, and Jurie 30, 1942 ^ • [In millions of dollars] Fiscal year 1942—Increase or decrease (^) Issues 1941 1942 Total Public is.sues: • 196 Postal savings bonds, etc Treasury bonds .._—. 30, 215 United States savings bonds. .;.. 14,314 Depositary bonds ; Adjusted service bonds.. Treasury notes -J Treasury tax savings notes Certificates of indebtedness 1,603 Treasury bills 205 Matured debt on which interest has ceased.. Debt bearing no interest....-. SubtotalSpecial issues: Government life insurance fund Federal old-age and survivors insurance trust fund..i .--Railroad retirement account. Civil service retirement fund Foreign service retirement fund '. ~ -Canal Zone retirement fund '. Ala.'=ka Raihoad retirement fund Postal Savings System.. Canal Zone Postal Savings System. —. National service life insurance fund Federal Deposit Insurance Corporation Federal Savings and Loan Insurance Corporation Adjusted service certifica;te fund Unemployment trust fund— •..-. Subtotal Grand total. 42,841 196 38, 085 10,188 79 229 6,689 3.015 3,096 2,508 98 356 64, 538 7,869 6,874 79 -12 990 3,015 3,096 905 -107 -13 -T8 298 2,471 398 -80 -7 4, 717 4,048 15 -4692 644 3,096 507 -27 -6 13.581 -24 30 763 18 137 1 1 366 397 I 41 (2) (2) 531 537 3 90 3,133 92 783 5 7 1 55 1 39 95 -33 1 36 5 5' 19 2,273 5 18 3,114 -1 841 7,g 3,152 1,826 64 21, 696 2,381 ' 74 645 5 5 1 72,422 July 1, 1941, Jan. 1, 1942, to Dec. 31, to June 30, 1941 1942 17 96 1 1 • 0) (') (») -25 7 -25 -8 1 29 30 -1 459 382 («) 1.765 862 903 23,461 8,977 14,484 • 1 Current redemption value (cash receipts plus earned accruals less redemptions). .2.Increase less than $500,000. ; .8 Decrease.less than $500,000. NOTE.—Figures are rounded to nearest million and will not necessarily add to totals. " During the fiscal year the computed average rate of interest on the interest-bearing debt outstanding decreased from 2.518 to 2.285 percent. The computed annual interest charge on the debt on which this average rate is based increased' from $1,218 millions at the beginning of the year to $1,644 millions at the end of the year. Chart 4 shows the computed annual interest charge and interest rate on public debt obligations monthly from June 1934 to June 1942. The interest due and payable on the various classes of securities during 1942 and the amounts paid and outstanding unpaid are 19 REPORT OF T H E SE€REfTARY OF -THE. TREASURY COMPOSITION OF THE COMPUTED INTEREST CHARGE ON AN ANNUAL BASIS. MONTHLY, FROM JUNE 1934 TO JUNE 1942 1935 1936 1937 1938 1939 1940 1941 1942 DOLLARS 1200 800 600 400 200 1934 1935 COMPUTED INTEREST RATES ON AN ANNUAL BASIS, MONTHLY, FROM JUNE 1934i TO JUNE 1942 1934 1935 1934 1935" 1937 1936 1937 C A L E N 1938 D A R CHART 4. 1939 1940 Y E A R S 1941 1942 20 REPORT OF THE SE€REiTARY OF T H E TREASURY shown in table 53. The interest paid on the public debt, 1940 to 1942, is shown in table 54. The major public debt operations during the year are summarized in the following paragraphs. Treasury bond's^ notes, and certificates, of indebtedness The-^majoT public debt operations involving Treasury^ bondsy notes, and certificates of indebtedness weFe^carried outr.on various-dates from October 20, 1941, to June' 25, 1942. The issues of these three classes of securities aggregated $12,665 millions, of which $9,841 millions were issued for cash, and $595 millions for refunding 2 series of Treasury notes maturing during the year. The balance of $2,229 millions was issued to the holders of various securities guaranteed by the United States who presented their maturing and redeemable securities in payment of subscriptions to Treasury bonds and notes. Certificates of indebtedness, which are limited by law to a maturity . of oiie year, were used by the Treasury for the first time since 1934^ The operations concerning Treasury bonds, notes, and certificates of indebtedness are summarized in the following table. Bond, note, and certificate of indebtedness financing, fiscal year 1942 Date issued Issue Oct. 20,1941 21.12% Treasury bonds of 1967-72, due Sept. 15, 1972: For cash : In exchange for 1H% Treasury notes, Series C-1941, maturing December 15, 1941 Government investment accounts Amount $1, 307, 503, 200 188,971, 200 100,000,000 • $1,596,474,400 NOV; 1,1941 1% Treasury notes. Series A-1946, due Mar. 15, 1946: From proceeds of redemption of %% Reconstruction Finance Corporation notes. Series P, maturing Nov. 1, 1941 . From proceeds of purchase of 1% Commodity Credit Corporation notes, Series E,. maturing Nov. 15, 1941.. 299,444, 000 '203,422,000 502,866,000 Dec. 15,1941 2H% Treasury bonds of 1967-72, due Sept. 15, 1972 (additionaLissue of,bonds dated Oct. 20, 1941): For cash -.• ..• .:.•.'_•.:. Government investment accounts..^. Iv069r576, 750^ 50,000, 000 119,-670,760 Jan. 15,1942 2% Treasury bonds of 1951-55, due Dec. 16, 1956: For cash 2% Treasury bonds of 1949-61, due June 15, 1951: In exchange for 1 ^ % Treasury notes, Series A-1942, maturing Mar. 15, 1942 i From proceeds of redemption of 3% Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption Jan. 15, 1942 ,-. From proceeds of purchase of 2%% Federal Farm Mortgage' Corporation bonds of 1942-47, called for redemption Mar. 1, 1942 From proceeds of redemption of H% Reconstruction Finance Corporation notes. Series R, maturing Jan. 16, 1942.— :--- 532,687.950 406,387, 700 203, 251,900 95,829,300 308,550, 000 014,018,900 Feb. 25,1942 Apr. 15,1942 May ^ 5,1942 2 ^ % Treasury bonds of 1962-55, due June 15, 1955: For cash : ^ H% Certificates of indebtedness, Series A-1942, due Nov. 1, 1942: For cash 2M% Treasury bonds of 1962-67, due June 15, 1967: For cash Government investment accounts 610,795,300 1,607,083,000 829, 510, 000 52, 688,000 882,198,000 REPORT O F - T H E ' SECRETARY OF T H E TREASURY 21 rBond, note, and certificate of indebtedness financing, fiscal year 1942-^Contiimed , Date issued May 15,1942 June 5,1942 June 25,1942 Issue Amount, , 2% Treasury bonds of 1949-51-, due Sept. 15, 1951: For cash lH7o Treasury notes. Series B-1946, due Dec. 15, 1946: In exchange for 234% Home Owners' Loan Corporation bonds. Series G, 1942-44, called for redemption July 1, 1942 In exchange for 1% Reconstruction Finance Corporation notes, Series S, maturing J u l y l , 1942 H% Certificates of indebtedness. Series A-1943, due Feb. 1, 1943: For cash $1,292,444,100 $846,114,400 272, 272,000 . ... 1 11Q q q c Ann 1,688,495,000 12,665,019,800 RECAPITULATION Treasury bonds Treasury notes For cash In exchange for: Public debt obligations Guaranteed obligations From pfoioieC^s of purchase arid redeih'pt'iofi^viivsecurities guaranteed by the Uii1le€' States .Total. $3, 095, 678,000 $6, 745,199, 300 59'5, 358,900 Certificates of indebtedness 607,631, 200 502,866,000 1,621,252,400 $9,840, 777, 300 696, 358,900 1,118,386,400 $1,118,386,400 7, 948,189,400 Total 1,110,497,200 3,095, 578,000 12, 665, 019,800 All official circulars and statements relating to these transactions are included in the exhibits beginning on page 207. The financing on October 20, 1941, the first since the beginning of the fiscal year, was announced on October 9, 1941, and consisted of an offering to the public for cash, at par and accrued interest, of $1,200,000,000, or thereabouts, of 2}^ percent Treasury bonds of 1967-72, maturing September 15, 1972. In addition to the cash offering, the.holders of $204,425,400 outstanding l}i percent Treasury notes of Series C-1941, maturing December 15, 1941, were offered the privilege of exchanging such notes for the Treasury bonds mentioned above, the notes exchanged being accepted at par with interest adjustments as of October 20, 1941. Also, in addition to the cash offering for public subscription, $100,000,000, or thereabouts, of 2^ percent Treasury bonds of 1967-72 were made available for allotment to Government investment accounts against cash payment. The amount of Treasury bonds of 1967-72 issued on cash subscriptions, including $100,000,000 allotted to Government investment accounts, was $1,407,503,200. Of the 1% percent Treasury notes of Series C-1941, $188,971,200 were exchanged for Treasury bonds of 1967-72. On October 23, 1941, there was announced ah offering of 1 percent' Treasury notes of Series A-1946, dated November 1, 1941, and maturing March 15, 1946. The Treasury offered to accept in payment for these notes the proceeds of redemption from the holders of 22 -REPpRT: QF' T H E . SEiGREiTARY 0;i> T H E TREASURY , ''$299,739,000of'J^'percent Eeconstruction Finance Corporation riotes. of Series P, maturing November 1, 1941, and also offered to purchase at par and accrued interest $204,241,000.of 1 percent Commodity Credit Corporation notes of Series E, maturing November 15, 1941, to the extent to whicih the. holders thereof subscribed for Treasury .notes of Series A-1946. Subscriptions from others were not invited. A total of $502,866,000 of the Treasury notes of Series A-1946 was issued, in payment for which $299,444,000 of the maturing Reconstruction Finance Corporation notes of Series P and $203,422,000 of the Commodity Credit Corporation notes of Series E were tendered and accepted. ' The financing on December 15, 1941, announced December 4, 1941, consisted of an additional offering of $1,000,000,000, or thereabouts, .of 2K percent Treasury bonds of 1967-72, dated October 20, 1941, maturing September 15, 1972; and, an offering of $500,000,000, or thereabouts, of 2 percent Treasury bonds of 1951-55, dated December 15, 1941, maturing December 15, 1955; both issues being offered to the public for cash, at par and accrued interest. In addition to' the public offering, provision was made to.sell $50,000,000 of tbe Treasury bonds. of 1967-72 to Government investment accounts. For the benefit of small investors preferential allotrnent was given under each issue to , subscriptions for $5,000 and under, where delivery in registered bonds 90 days after the issue date was specified. A face amount of $1,119,570,750 of Treasury bonds of 1967-72, including $50,000,000 sold to Government investment accounts and about $26,000,000 on preferred allotments, was issued. Of tbe Treasury bonds of 1951-55 the amount issued was $532,687,9.50, which included about $13,800,000 sold oh preferred allotments. The December financing was the first occasion on which tbe Treasury announced a definite basis* for. subscriptions from all classes of subscribers. I t is felt that this action resulted in more equitable allotments for the legitimate investment ^ requirements of subscribers. Subscriptions were grouped broadly into four classes, as follows: . Banks and trust companies for .their own account—not to exceed 50.percent of capital and surplus. Mutual savings and cooperative banks. Federal savings and loan association?, trust accounts and investment corporations, . pension funds, insurance companies, and similar institutions and funds—not to exceed 10 percent of total resources. Corporations organized for profit, and dealers and brokers— . not to exceed 50 percent of net worth. Individuals—not to exceed 50 percent of net worth or 100 percent of cash deposited with subscription. (NOTE.—No preferred allotment was made on such full-paid subscriptions.) ' REPORT OF T H E SEiCRETARY OF T H E TREASURY 23 The Treasury announced on January 11,-1942, an offering of 2 percent Treasury bonds of 1949-51, dated January 15, 1942, and maturing June 15, 1951, the amount of the offering being limited to the amount of securities tendered and accepted, as follows: 1. The holders of $426,349,500 of 1% percent Treasury notes. Series ' A-1942, maturing March 15,1942, were invited to exchange such notes for Treasury bonds of 1949-51. A total of $406,387,700 of these notes was exchanged for a like amount of Treasury bonds of 194'9-51. 2. The Treasury offered to apply the proceeds of payment of $236,476,200 outstanding 3 percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on January 15,.1942, to payment for Treasury bonds of 1949-51. A total of $203,251,900 of these bonds was redeemed and the proceeds applied in payment for a like amount of Treasury bonds of 1949-51. 3. The Treasury offered to purchase, at par and accrued interest, ^ $103,147,500 of outstanding 2% percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on March 1, 1942, to the extent to which the holders thereof subscribed for Treasury bonds of 1949-51. A total of $95,829,300 of these bonds was purchased and that amount was subscribed by the holders to the purchase of Treasury bonds of 1949-51. 4. The Treasury offered to apply the proceeds of payment of $310,090,000 outstanding % percent Reconstruction Finance Corporation notes of Series R, maturing January 15, 1942, to payment for Treasury bonds of 1949-51. A total of $308,550,000 of these notes was tendered for payment and the proceeds accepted in payment cfor a like amount of Treasury bonds of 1949-51. The total aniount of Treasury bonds of 1949^51 issued under the above-mentioned provisions was $1,014,018,^00. On February 13, 1942, there was announced an offering to the public for cash, at par and accrued interest, of $1,500,000,000, or thereabouts; of 2% percent Treasury bonds of 1952-55, dated February 25, 1942, and due-June 15, 1955. Subscriptions were entertained from the various classes of subscribers on the basis inaugurated in the financing of December 1941. For the benefit of small investors, preferential allotment was given to subscriptions for $5,000 and under, where delivery in registered bonds 90 days after the. issue date was ' specified. A face amount of $1,510,795,300 of Treasury bonds of 1952-55, including about $13,132,000 on preferred allotments, was issued. The financings on April 15, 1942, announced on April 6, 1942, consisted of an offering to the public for cash, at par and accrued interest, of $1,500,000,000', or thereabouts, of ji percent Treasury certificates of indebtedness of Series A-1942, dated April 15, 1942, due November 1, 1942. Subscriptions were entertained on the same basis as under the^ 24 REPORT OF THE SE€RETARY OF THE TREASURY December 1941 and February 1942 issues of Treasury bonds. The face amount of Treasury certificates of indebtedness of Series A-1942 issued was $1,507,083,000, including about $66,000,000 of subscriptions in amounts up to and including $25,000, which were allotted infull. ' On May 4, 1942, there was announced an offering for cash, at par and accrued interest, of two series of Treasury bonds, consisting of $1,250,000,000, or thereabouts, of 2 percent Treasury bonds>Qf 19,4951, dated May 15, 1942, due September 15, 1951; and an unspecified amount of 2K percent Treasury bonds of 1962-67, dated May 5, 1942, -due June 15, 1967.^ , . The rules inaugurated in December 1941, and followed in February and April 1942, governing the basis of subscriptions to Government secmities, were not made applicable and no limitation was placed upon arnounts of subscriptions to these issues. All subscriptions up to and including $10,000 for that issue were allotted in full. The face amount issued of Treasury bonds of 1949-51 was $1,292,444,100, including about $69,000,000 of subscriptions of $10,000 and under, which were allotted in full. The announcement provided that the. 2 ^ percent TreasuryA^nds of 1962-67 would not be available for subscription, for their own account, by comm.ercial banks which accept demand deposits. I t was provided that these bonds would not.be transferable before July 6, 1942, and that they would not be transferable to commercial banks which accept demand deposits before May 5, 1952. . However, these bonds may be pledged as collateral for loans, including loans by commercial banks which accept demand deposits, but any such bank acquiring such bonds before May 5, 1952, because of the failure of such loans to be paid at maturity will be required to dispose of them in the same manner as,they dispose of other assets not eligible>to, be owned by banks. As the offering was not specific in amount, it remained open for a period longer than customary. The face am,Qunt issued of Treasury bonds of 1962-67, including $52,688,000nSpld to Government investment accounts, was $882,198,000. The Treasury announced on May 25, 1942, an issue of IK percent Treasury notes of Series B-1946, dated June 5, 1942, due December, 15, 1946, in payment of which there might be tendered only 2)i percent Home Owners' Loan Corporation bonds, Series G, 1942-44, called fox redemption on July 1, 1942, of which $875,438,625 were outstanding; or 1 percent Reconstruction Finance, Corporation notes of Series S, maturing July 1, 1942, ,of which $275,868,000 were outstanding. Exchanges were made.par for par with an adjustment of accrued interest to June 5, 1942. A face amount of $1,118,386,400 of the Treasury notes of Series B-1946 was issued, for which there were exchanged $846,114,400 of Home Owners' Loan Corporation bonds, REPORT OF T H E SEICRETARY OF THE . TREASURY 25 Series G, 1942-44, and $272,272,000 of Reconstruction Finance Corporation notes. Series S. . The financing on June 25, 1942, announced June 18, 1942, consisted of an offering for cash of $1,500,000,000, or thereabouts, of % percent Treasury certificates of indebtedness of Series A-1943, dated June 25,, 1942, and maturing February 1, 1943. There were no restriction^ as to the basis for subscribing to this issue. Subscriptions up to and includ^in^g:$25,000'were allotted infull. A face amount of'$i;588;495,000 of the certificates of indebtedness of Series A-1943 was issued, including about $61,000,000 of subscriptions in amounts up to $25,000, allotted in full. Treasury bills Offerings of Treasury bills were made each week during the year; 45 issues were for a term of 91 days, and th6 remaining 7 issues were fbr various terms of from 85 to 71 days. . The amounts of the weekly offerings varied between $100 millions at the start and $300 millions towards the close of the year. The 13 series outstanding at the beginning of the year totaled $1,603 miUions and the 11 series outstanding at the end of the year, $2,508 millions. Of the 52 series offered during the year, all were sold at a positive average rate, of discount, the highest average rate computed on a bank discount basis having been 0.368 percent for the bills dated May 13, 1942, and the lowest average rate having been 0.001 percent for the bills dated October 15, 1941. The average rate ori all bills issued during the year was 0.236 percent. On April 30, 1942, the Federal Open Market Committee directed the twelve Federal Reserve Banks to purchase for the System Open Market Account at a rate of % of 1 percent per annum all Treasury bills ..offered to them. Prevailing rates on current issues of Treasury bills had risen from about 0.20 percent in March to 0.34 percent during the latter part of April. The establishment of a posted rate of % of 1 percent at the Federal Reserve Banks prevented a further change in rate^ and in May -^nd June bill rates averaged 0.370'percent. Further^ information concerning Treasury bills will be found in exhibits 26 to 28, beginning on page 267, and in table 33 on page 538. United States savings bonds The sale of the three series of United States savings bonds, first offered on May 1, 1941, was continued during the fiscal year 1942. These bonds were designated defense savings bonds of Series E and savings bonds of Defense Series F and G. However, following the entry of the United States into the war, the designation of the bonds was changed to war savings bonds of Series E, F, and G. The new designation was confirmed through the issue, on June 1, 1942, of re 26 REPORT OF THE SECRETARY OF THE TREASURY visions of Department Circulars Nos. 653 and 654, the former governing the issue and fixing the terms of bonds of Series E, and ttie latter serving a like capacity for bonds of Series F and G. No changes were made in the terms of the bonds except to increase from $50,000 (issue price) to $100,000 (issue price), effective July 1,1942, the limitation on the amount- of either Series F or Series G bonds, or a combination of both series, of any onp yearly designation, that may be held by any one purchaser at any one tinie. An amendnient, December 12, 1941, to Department Circular 654 made available an additional $25 denomination for Series F bonds. Copies of revised circulars Nos.. 653 and 654 will be found on pages 234 and 240 of this report. Coincident with the issue of revised circulars Nos. 653 and 654, the regulations governing savings bonds were revised and reissued, as Departnient Circular No. 530, Fifth Revision, dated. June 1,, 1942. A copy of this circular will be found on page 246. The following statement summarizes the issues,and .redemptions of United States savings bonds by fiscal years from March 1, 1935, when the issue was inaugurated, to June 30, 1942. .. Issues and redemptions of United States savings bonds, by years, March 1,1936, to June 30, 1942 , lOn basis of daily Treasury statements (revised), see p. 387J Issued r Redeemed Fiscal j^^ear Maturity value 1935 ( M a r . 1 to J u n e 30) 1936 1937 1938 1939 1940 1941 • S u b t o t a l (1936-1941) 1942—Series Series Series Series ... S u b t o t a l (1942). . . . . T o t a l (1935-1942) Accruals to J u n e 30, 1942' 1 Maturity . , value R e d e m p t i o n •. value $83,422. 725 352, 277, 425 686, 739,175 650. 707, 500 916, 904, 200 1, 475,438, 350 1,873,811,175 $62,667,043.76 264, 208, 068. 76 515,054, 398. 80 488,030,611.85 687,678,136. 95 1,106, 578, 769. 01 1, 505,625,764.90 • $707,850 14, 971, 200 48, 040,125 87,,732, 250 106,708,950 148, 042.850 190,087,875 $530,887 50 11, 252,714. 75 36, 327, 912 25 66,868,862. 75 82,067, 395 00 114,488,737.34 148,028, 229. 50 6, 039, 300, 550 4,629,742,794.01 696,291,100 459,564,739.09 1, 041, 275 4,737,800,100 591,105,325 .2,037,059,300 A to D _ E F Q . G r a n d total . C a s h receipts 780,956.25 , 168,-034,800 3, 653,350,089. 74 . 81,276,425 437.417,940.50 3,864, 375 % 037,059,300. 00 11, 812, 300. 132,479,938 75 00. 964, 345.14 2,860.308.50 11,812,300 00 7, 367,006, 000 6,028,608. 286. 49 264,987, 900 208,116 892 39 13,406,306, 550 10,658, 351,080. 50 248,175, 347. 24 861, 279, 000 667, 681,631 48 13,406,306, 550 10, 906, 526,427. 74 861, 279, 000 667,681,631.48 . 1 Accruals represent the difference between the issue price and the current redemption value. For the fiscal year 1942 total sales of savings bonds amounted to approximately $6,000 millions at issue price. On the basis of reports of sales, during the first 5 months of the fiscal year—prior to the outbreak of war—sales of Series E, F , ' a n d . G bonds aniounted to approximately $1,300 millions, and for the 7 succeeding months sales amounted to $4,700 millions. Average monthly sales in the 5 REiPO'PT OF T p E 27 SECRETARY OF THE, TREASURY months from I July through November 1941 were $270 millions and for the. 7 war months were $.670 millions, an increase to about 2K times thp rate in the pre-Pearl. Harbor period. Sales of Series E, F,.and'.G bonds i o r the year represented a total of about 60 million , p i e j ^ . ...••. -,.j.v.fr The table following shows the number of pieces of Series E bonds sold by denominations for the fiscal year 1942. Further information pn ;the sales <oi savings bonds will be found in the tables beginning on page 547. Number of Series E savings bonds of each denomination sold monthly, fiscal year 1942 •Denomination Month Total $25 $50 $100 $500 $1,000 Estimated nuinber of units—in thousands 1941— July. August September. October.... November. December. 1942— January... February.. IVfarch April May. Juhe 367 580 573 764 724 2,393 166 253 237 290 261 955 269 373 337 412 ^ 359 . 1,153 56 67 57 70 67 194 56 67 63 163 3,799 2,961 3,094 4,533 4,852 8,883 1,460, 926' 789 1,054 1,093 1, 774 1,786 1,213 927 1, 203 1,170 i, 766 193 133 162 149 201 350 176 107 130 112 145 . Total-.- 33, 523 9, 257 ' 10,967 1,705 918" 1,341 1, 260 . 1,603 1,454 4,858 7,760 5,469, 5.050 7,082 7,376 12,769 56,940 Pay-roll savings plan.—In order to carry the savings bond campaign to the people of the Nation, and to make it easy and convenient for them to buy savings bonds, the Treasury sponsored the installation in the Nation's business enterprises of the pay-roll savings plan, through which deductions from pay were made by employers directly from the wages of their employees and accumulated for the purchase of savings bonds. This plan was readily accepted by employers and employees alike and by June 1942 there were some 108,000 firms, employing approximately 21 million persons, that had installed a payroll savings plan. . Some 15 million of these persons actually participated in the plan in June 1942, that is, deductions were actually made on their account during the month. Included in the 108,000 firms were nearly all of the large cornpanies in the Nation, and about 75 percent of all firms with 100 or more employees. " B y Executive Order No. 9135, dated April 16, 1942, the President established the Interdepartmental Committee for the Voluntary Payroll Savings Plaii for the purchase of war savings bonds by the civilian employees in the executive branch of the Government. A copy of Executive Order No. 9135 appears on page 545 of this report. Prior 28 REPORT OF ^THE SECRETARY OF THE TREASURY to this order, the Secretary of the Navy on August 1, 1941, offered a voluntary savings plan to the members of the Navy Department in'cluding the armed forces, and on January 15, 1942, under Department Circular No. 677, a similar arrangement was madB.in.the Treasury Departnient.for Treasury eniployees.... Pursuant to Executive Order No. 9135, .a voluntary. j)ay-rolL savings..plan .w;as,:established^ for all employees of the Goverrinent on May 13, 1942, under the provisions of Department Circular No. 677, Revised, a copy of which wiU be found on page 346 of this report. . During a campaign conducted from June 1 to 15, 1942, 95.2 percent of the employees of the Treasury Department, departmental and field services, were enrolled in the pay-roll savings plan and the employees allotted 10.8 percent of their gross compensation. A total of 60,467 Treasury employees are investing $14,898,000 of their pay annually in war savings bonds. The Treasury's procedure and plan were adopted, in general, by the Interdepartmental Committee at a meeting held on May 18, 1942. Campaigns beginning at various dates subsequent to June 30,, 1942, were ,0]rganize.d, in other, deparj:,nients and agencies. The following table presents data with respect to the firms and governmental agencies participating in pay-roll savings plans. In June 1942, the aggregate amount deducted from the pay of the workers participating in the pay-roll savings plan was $153 millions. This amount represented a 5.8 percent average deduction from pay of the workers participating. Estimated monthly deductions and extent of participation in pay-roll savings plans, December 1941 t o ' J u n e 1942 1941 1942 Decem- Janu- Febru- _ March April „ .May ber'?; ary.3 t . ary i Numbers are units I Number of firms with plans 1 9,939 II. Persons in firms and governmental agencies with plans: 3.2 a Firms b. Federal, State, and local governmental agencies 3.2 c Total III. Persons actually participating in payroll savings plans: .7. a In participating firms . . b. In participating Fed'eral, State, and local governmental agencies. —(V)— , c. In the armed forces.. .7 d. Total 17,513 34,480 50,120 71,686 Jyine 90,418 108,099 Numbers are millions 9.9 14.2 16.7 19.2 20.5 21.3 .6 10.5 .9 15.1 1.4 18.0 1.5 20.7 1.6 22.0 1.6 22.8 3.7 7.2 9.0 10.9 13.2 16 0 .1 .4 .6 .7 .7 (•) (*) 3.8 7.6 (*) 9,6 (*) ""H.e (*) 13.9 1.0 (*) 16.0 In millions of dollars . IV. Aggregate amount deducted by persons participating.. 5 -. V. Percentage of pay deducted by persons narticinatinE .. . 4.-1 58 28 • 4.5 • 78 1 96 126 153 4.9 5.3 5.8 Percentage '' i 8 4.9 1 . 1 Excludes governmental agencies, *Not available. NOTE.—Figures in milhons are rounded to the nearest milhon and will not necessarily add to totals. REIPORT OF T H E .SEiCRETARY OF T H E TREASURY 29 In March 1935, when savings bonds were first issued, over-thecounter sales for cash were conducted at 14,000 post offices including those of the first, second, and third classes, and selected post offices of the fourth class. I n 1936 this number was increased to about 15,000 post offices, and provision was made for mail order sales through t h e Treasurer of the United States and the Federal Reserve Banks. At the close of the fiscal year 1941 there were, in addition to about 16,000 post offices selling bonds, about 11,000 agencies which had qualified with the Federal Reserve Banks as issuing agents, including over 9,500 commercial and mutual savings banks, 1,300 building and loaii and savings and loan associations, and nearly 200 credit unions and others. During the fiscal year 1942, the number of sales agents was further increased to facilitate the issuance of savings bonds. On December 27,-1941, the Federal Reserve Banks were authorized to designate as issffifig agents for Series E bonds any incorporated organization which would be likely to issue a number, of bonds sufficiently large to justify the designation. By June 30, 1942, there were approximately 42,000 different agencies authorized to issue United States war savings bonds of Series E , including 19,000 post offices, 14,500 commercial and mutual savings banks, 2,900 credit unions, and 2,500 other corporate organizations. Sayings bonds of Series F and G were issued only at the Federal Reserve Banks and the Treasury Department, Washington. Commercial banks, however, generally handled applieations for their v customers. War savings stamps.—As a part of the savings program inaugurated May 1, '1941, a special series of postal savings stamps, designated defense savings'stamps, had been made available as a convenient means for accumulating funds for the purchase of savings bonds. At the time the designation of the defense savings bonds was (Changed to war savings bonds, the designation of the defense savings stamps was changed to war savings stamps. The sale of these stamps, through the Postal Service, continued in increasing volume throughout the year, as shown by the following statement, supplied by the Post Ofiice Department. . Cash receipts from sales of war savings stamps, by months, fiscal years 1941 and 1942 Month Fiscal year 1941 July August . September.. October November.. December.January Fiscal year 1942 $3, 520.103. 35 4, 372, 302.80 5,191, 628. 65 5, 985. 398. 40 6, 354, 295. 25 25. 657,101. 55 41,168, 755. 05 Month February.. March April May June Total.. Fiscal year 1941 Fiscal year 1.942 _, $3, 349,346. 90 2, 737, 678.75 $38,649,177.30 40, 598, 956. 50 40,172, 833. 25 47, 990, 254. 30 48, 960,496. 50 6,086, 925.''65 308,621,302.90 30 REPORT OF T H E . SEiGRETARY OF THE^ TREASURY , Although the: cash receipts, from the sale of these stamps weie deposited in the Treasury, the outstanding stamps were obligations of the Postal Saving^-System, and the obligation was transferred to the Treasury only through excjhange of the stamps, in appropriate amounts, for war sayings bonds. Because of the increasing importance of the receipts from the sale, of war savings starnps it was cphcluded to replace the Postal Savings issue with a Treasury issue of savings stamps and in order to avoid a duplication of effort it was concluded t h a t , the Postal Savings issue should be discontinued. The matter was presented to the Congress jointly by the Treasury •and the Post Office Departments and, in the Public Debt Act of 1942, approved March 28, 1942, the transfer of the liability of the outstanding stamps .from the Postal Savings System to the Treasury Department was authorized,-the stamps thereafter to be publicdebt obligations of- the United,States. -Preparations were in progress and , transfer was about, to.be made at the.close of the fiscal year.' The change in the designation of the stamps and the pending transfer of liability from the Postal Savings System to the Treasury will in no way affect the character of the stamps, 'and no distinction •is to be made between any such stamps, whether issued as defense or as war savings stamps. The stamps of either issue may be used interchangeably to accumulate credits for the purchase of war savings bonds. Redemptions oj savings bonds.—The following table shows the pro-, portion of all savings bonds redeemed from 1935 to 1942. Additional information on the redemptions of savings bonds will be found in the tables beginning on page 547. Proportion of number of savings bonds of each denomination redeemed by the end of various yearly periods to J u n e 30, 1942 :, ..., • ^ R e d e e m e d b y t h e e n d of— 1 year (1941 series) Denomination 1 year (1935-41 series) 2 years (1935-40 series) Series F and G Percent $25.. $50... $100 $500 ... . : $i,ono.. $5.000 $10,000 All d e n o m i n a t i o n s . . . -. 3 years . 4 years (1935-39 (1935-38 series) series) 6 years (1935-37 series) 6 years (1935-36 series) Series A to E Percent Percent Percent . Percent 7 19 ,26 32 6 16 23 29 615 1 27 215 12 23 18 4 8 16 12 ' 6 14 21 26 7 years (.1935 series) '^" Percent 38 35 32 27. 20 Percent 41 38 35 29 23 JPercent 40 38 35 30 25 31 34 34 . NoTE.^The yearly periods and perceiitages shown in the above table are approximate for the reason that June 30th was taken as the average issue date of all bonds issued during each calendar year and for each series the number of bonds which l^ad been redeemed at the end of each year from the average date of issuance was expressed as a percentage of the total number of bonds issued. The percentages for Series A to E and for Series F and G for similar periods were then averaged. REPORT OF THE SECRETARY OF THE TREASURY . . -- Treasury tax savings notes 31 ' \ Because of the greatly increased Federal taxes occasioned by the war, the Treasury announced on July 3, 1941, a plan by which taxpayers could set aside regularly the funds which would be necessary to pay their taxes due the following year. Beginning on August 1, 1941, two series of 2-year nontransferable Treasury notes, designated Tax Series A-1943 and Tax Series B-1943, were offered for sale through the Federal Reserve Banks. These notes were acceptable at par and accrued interest in payment of Federal income taxes. The notes of Series A, issued in denominations of $25, $50, and $100, were designed to be attractive to the small and rno der ate. taxpayers; while the notes of Series B, issued in denominations of $100, $500, $1,000, $10,000 and $100,000, were intended for the larger taxpayers. Interest on notes of Series A accrued at the rate of 16 cent3 per month per $100, or at an annual rate of 1.92 percent; and interest on notes of Series B accrued at the rate of 4 cents per month per $100, or at an annual rate of 0.48 percent. The acceptability of Series A notes was limited to $1,200 principal amount and the accrued interest thereon on account of a taxpayer's liability for the taxable period. Full details regarding the terms of the notes will be found in Department Circular No. 667, dated July 22, 1941, printed on page 207 of this report. , On December 24, 1941, announcement was made that two new series of tax savings notes would be offered in continuation of the tax savings plan. The sale of the early series terminated on December 31, 1941, and the sale of the new notes immediately followed on Jantiary 1, 1942. The new notes, under the designations Tax Series A-1944 and Tax Series B-1944, were dated January 1, 1942, and will mature January 1, 1944. Their terms were identical in all respects with those of prior Series A and B, respectively, except that their acceptability in payment of Federal taxes was broadened to include estate and gift as well as income taxes, and Series A notes were made available in the additional denominations of $500 and $1,000. The prior notes also were made acceptable in payment of estate and gift taxes. The notes of Tax Series A-1944 and B-1944 are governed by Department Circular No. 674, dated December 15, 1941, which will be found on page 220 of this report. The following table shows the sales of Treasury tax savings notes between August 1, 1941, and June 30, 1942. Sales of Treasury tax savings notes Aug. 1 to Dec. 31, 1941: Tax.;Series A-1943Tax Series B-1943...1 •Jan. 1 to June 30, 1942: Tax Series A-1944. Tax Series B-1944 Total 487543—43 ._ . .^ 1 4 Amou7it $44,088,000 2,435,287,900 28,088.875 "... 1,631.449,700 4,138,914,476 32 REPORT OF THE SECRETARY OF THE TREASURY Redemptions of tax savings notes during the fiscal year amounted to $1,124 millions of which $20 millions were redeemed for cash and $1,104 millions were received for taxes. Further details on sales and redemptions appear in the tables beginning on page 565 of this report. Adjust&di^iservice^homls >^ Adjusted service bonds of 1945 amounting to $1 million were issued during the year, making a total of $1,840 millions of such bonds issued since June 15, 1936, in payment of amounts due on adjusted service certificates. Redemptions of $13 millions of these bonds during the year brought the total redemptions since June 15, 1936, to $1,612 millions, leaving $229 millions outstanding on June 30, 1942. Further data on adjusted service bonds appear in the table on page 493. , De])ositary bonds During the^^^year^ depositary ''bonds, = authorized by Department Circular No. 660, dated May 23, 1941, were issued to various depositaries and financial agents, which had executed a depositary, financial agency, and collateral agreement satisfactory to the Secretary of the Treasury, in amounts not exceeding the amount for which the depositary and financial agent had qualified. The total issued during the year amounted to approximately $78,958,000, of which $5,000 were redeemed, leaving $78,953,000 outstanding. • ' • Cumulative sinking jund Credits accruing to the cumulative sinking fund during the year amounted to $587 millions which,- added to the unexpended balance of ;$2,^66/ miJ/lioigs ^brought, .forward iijom^Athev^previous :year, made^ available $3,253 millions for the year. Of this amount $75 millions were applied to the retirement of various issues of bonds and notes which matured or were called during the fiscal years 1941 arid 1942. The unexpended balance of $3,178 millions was carried forward to the fiscal year 1943. Tables presenting the transactions on account of the fund for 1942 and since its inception on July 1, 1920, will be found on pages 545 and 546 of this report. Public Debt Act oj 19^2 The Public Debt Act of 1942, approved March 28, 1942, further amended section 21 of the Second Liberty Bond Act so as to limit tjie obligations issued under authority of the act to an aniount not to exceed $125 billions in the aggregate outstanding at any one time, the prior hmitation in siich respect having been $65 billions, as fixed by the Public Debt Act of 1941, approved February 19, 1941. The REPORT OF THE SECRETARY OF THE TREASURY 33 act' of March 28, 1942, further amended sections 19 and 20 of the Second Liberty Bond Act to broaden the authority of the Secretary of the Treasury in fixing the terms and characteristics of the obligations^ authorized to be issued and provide greater flexibility in the management of the debt. Asy^of June 30, 1942, the unused borrowing>, autlSuoriza^ion underJithe limitation i n effec^^t oh this date was neairly $51 billions, as shown by the following statement. Face amount of obligations outstanding and the face amount which can still be issued ^ under the lirnitation in effect on June 30, 1942 Total face amount that may be outstanding at any one time $125,000,000,000 Outstanding as of June 30, 1942: . Interest-bearing: Bonds: Treasury $38,084,533,250 Savings (maturity value) L. 12,482,909,100 ° Depositary . 78,953,000 • Adjusted service.. 728,665,857 — $61,375,061; 207 Treasury notes...: 1. 13,955, 776,350 Certificates of indebtedness 6,228,013,000 Treasury bills (maturity value) 2, 508, 298,000 22, 692,087, 350 Matured^obligations'on which interest has ceased... 74,067,1.48,'*557 87,309,050 .. 74,154,457,607 Face amount of obligations issuable under above authority 50.845,542,393 1 Approximate maturity value. Principal amount (current redemption value) according to preliminary ' public debt statement $10,188,188,461.^ Reconcilement with Daily Statement of the United States Treasury, June 30, 1942 Total face amount of outstanding public debt obligations issued under authority of the Second Liberty Bond Act, as amended $74,164,457,607 •Deduct unearned discount on savings bonds (difference between current redemption value and maturity value) .. 2,294,720,639 Add other public debt obligations outstanding but not subject to the statutory limitation: Interest-bearing (postal savings bonds, etc.) $195,990,180 Matured obligations on which interest has ceased. 10,990,680 Bearing no interest...^ .-... 355,727,288 To^lr^^oss;debtputstaIidib^ asiaf June 30, 1942:-:- 71,859,736,968 562,708,148 72,422y 445,'116 , The act also authorized the transfer of the liability for Postal Savings stamps from the Board of Trustees of the Postal Savings System to the Treasury Department, and on such transfer established the outstanding stairips as public debt obligations of the United States. However, this transfer had not yet been made at the end of the fiscal year 1942. In addition, the act carried an amendment to section 4 of the Public Debt Act of 1941 relating to taxes on income of obligations of the United States and the agencies or instrumentalities thereof. The full text of tjie Public Debt Act of 1942 appears on page 272 of this report. THE GUARANTEED DEBT The Treasury has made available to certain Government corporations and credit agencies, authorized to issue obligations guaranteed as to principal and interest by the United States, all of its facilities 34 REPORT OF T H E SEIGRETARY OF T H E TREASURY for the issuance,- redemption, etc., of public debt obligations, so that those corporations desiring to do so could arrange to have their .obligations serviced through Treasury facilities. . On October 16, 1941, the Secretary of the Treasury announced that thereafter the Treasury would provide the funds needed by Government corporations and credit agencies and that the previous practice whereby such agencies and corporations sold their guaranteed obligations in the market would be discontinued. Due to this policy 'there was very little activity during the year with respect to the sale of new guaranteed issues. However, the facilities of the Treasury were availed of, as usual, to handle the maturing and redeemable securities. The following table shows the issues, maturities, and redemptions of guaranteed issues during the year. Major financing, .operations conducted by the Treasury during the fiscal year 1942 , for agencies issuing securities guaranteed by the United States Issue Date N E W OFFERINGS July 3,1941 July 21,1941 1% Reconstruction Finance Corporation notes. Series W, due Apr. 15, 1944: For cash : 1 •' In exchange for ]4% Reconstruction Finance Corporation notes. Series N, maturing July 20, 1941 .----„1H% Commodity Credit Corporation notes,. Series G, due Feb. 15, 1945: For cash In exchange for %% Commodity Credit Corporation notes. Series D, maturing Aug. 1, 1941.... $362, 695, 000 208, 668, 000 $571,363,000 210,7817 000 200,815,000 411,596,000 Total - — 982,(959,000 ' MATURITIES AND R E D E M P T I O N S July 20,1941 Aug. 1,1941 J^ov. 1,1941 Nov.. 1,1941 Nov. 15,1941 Jan. 16,1942 Jan. 15,1942 Mar. 1,1942 June 5,1942 June 6,1942 K% Reconstruction Finance Corporation notes, Series N, maturing July 20, 1941 H% Commodity Credit Corporatiori notes. Series D, maturing Aug. 1, 1941 _ 14% Reconstruction Finance Corporation notes. Series P, maturing N o v . l . 1941.'..•..•..'. • }4% Federal Public Housing Authority • notes. Series E, maturing Nov.-1, 1941 1% Commodity Credit Corporation notes. Series E, maturing Nov. 15, 1941.. 14% Reconstruction Finance Corporation notes, Series R, maturing Jan. 15, 1942 3% Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption Jan. 15. 1942 2M% Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption Mar. 1, 1942 2}4% Home Owners' Loan Corporation bonds. Series G, 194244, called for redemption July 1, 1942 1% Reconstruction Finance Corporation notes, Series S, maturing July 1, 1942 : Total .-..-.. Decrease in outstanding issues 1 Formerly U. S. Housing Authority. . • 211,460,000 202, 553, 000 -299, 739, 000 112,099,000 204, 241, 000 . 310, 090, 000 236,476, 200 103,147, 500 . 846,114,400 272, 272.; 000 2, 798,192,100 1,815, 233,100 * The preceding table does not include small amounts of 2% percent mutual mortgage insurance fund debentures. Series B, called on -March 25, 1941, and September 27, 1941, for redemption on July 1, 1941, and January 1, 1942, respectively. The instructions issued by the Secretary of the Treasury for the redemption of the sixth-called 35 REPORT OF THE SECRETARY OF THE TREASURY and seventh-called debentures will be found as exhibits beginning oh page 287. Copies of the offering circulars and announcements of subscriptions and allotments are included in the exhibits beginning on page 282. Of the $2,798 millions of securities which maitured or were redeemable during the year, $2;22i9 millions were presented in payment of subscriptions to Treasury bonds and notes, the details of which are shown in the table on page 20. As a result of the adoption of the policy of financing Goyernment corporations and credit agencies through the Treasury, the contingent liabilities of the Goyernment on account of outstanding unmatured market issues of obligations of Government corporations and credit agencies,, guaranteed as to principal and interest, decreased froni $6,360 millions on June 30, 1941, to $4,548 millions on June 30, 1942, a decrease of $1,811 millions. During this period the securities-of Government corporations and credit agencies held directly by the Treasury increased from $302 millions to $4,079 millions, an increase of $3,777 millions.. The net changes during the year of the various classes of securities guaranteed by the United States are shown in the table that follows. A detailed, statement of these obligations and of certain other contingent liabilities of the United States as of June 30, 1942, will be found on page 580. Comparison of obligations guaranteed by the United States outstanding June 30, 1941 and 1942, by agencies ^ [In millions of dollars] Corporation or. agency Unmatured market issues: Commodity Credit Corporation Federal Farm Mortgage Corporation. Federal Housing Administration: Mutual mortgage insurance fund. Housing insurance fund ..... Homeowners' Loan Corporation..... . Reconstruction Finance Corporation.. Federal Public Housing Authority 2;. Total unmatured obligationsMatured obligations, all agencies Matured interest, all agencies. Total, based on guarantees.. , June 30, 1941 June 30, 1942 . • Increase or decrease (—) 696 1,269 701 930 5' -340 2, 409 1, 741 226 13 1, 563. 1, 220 114 ^ 4 -846 -522 -112 3 6, 360 11 3 3 4, 548 20 3 -1,811 9 6,373 i (*) . • -1,802 *Less than $500,000. 1 Does not include obligations held by the Treasury and reflected in the public debt. 2 Formerly United States Housing Authority; changed by Executive Order No. 9070, dated February 24,1942. 3 Docs not include $8 millions of obligations issued on the credit of the United States by the Tennessee Valley Authority and held by the Reconstruction Finance Corporation. NOTE.—Figures are rounded to nearest million and .will not necessarily add to totals. During the, fiscal year the borrowing power of the Commodity Credit Corporation, Federal Housing Administration, and the Eeconstruction Finance Corporation was extended by the enactrnent of further legislation. The Commodity Credit Corporation, under the 36 REIPORT O F T H E SEICRETARY OF T H E TREASURY act of July 1, 1941 (Public Law 147), was authorized to increase by $1,250,000,000 the amount of obligations which it might issue arid have outstanding. Under the acts of September 2, 1941, and M a y 26, 1942 (Public Laws 248 and 559), the authority of the Federal Housing Administration to insure the principal amount of mortgages .was increased by $200,000,000 and $500,000,000, respectively. The aggregate amount of principal- obligations of all mortgages insured b y ^ e ^ F e d e M Housing A:driliriist^'ation is:nowi^ except that with the approval of the President such aggregate amount may be increased to not exceed $5,800,000,000. The borrowing power of the Reconstruction Finance Corporation was increased several times during the fiscal year so that the amount of obligations which it was authorized to issue as of June 30, 1942, amounted to $17,232,0,62,231, including amounts outstanding issued under indefinite authorizations, or a net increase of $10,090,248,183 since June 30, 1941. This net increase resulted from the following changes: INCREASES Statutory authorizations with definite limitations: I. For .eeneral purposes: Act of October 23. 1941—Public Law 278 (55 Stat. 744) Act of March 27, 1942—.Public.Law 506 (56 Stat. 174) Act^df June 5, 1942—Public Law 592 (56 Stat: 326)........ $1,500,000,000 . . 2,.500.000,000 ....".'•'5;''b(30,^0O,.O0O , Total for general purposes.. II. 9,000,000.000 For loans, purchases of stock, securities, etc.: Act of July 1, 1941—Public Law 144 (55 Stat. 408): For loans in accordance with Title I of "The Bankhead-Jones Farm Tenant Act," approved July 22, .1937 (50 Stat. 522) 50,000,000 For additional funds for the purpose of making rural rehabilitation loans to needy farmers in accordance with Title II of "The Bankhead-Jones Farm Tenant Act" approved July 22, 1937 (50 Stat. 524) : 120,000,000 For loans and the purchase of property in accordance with section 7 of the Rural Electrification Act of May 20, 1936, as amended (7 U. S. C. 901-914) 100,000,000 To provide for the financing of the War Damage Corporation-act of March 27, 1942—Public Law 506 (56 Stat. 174) 1,000,000.000 Total loans, purchases of stock, securities, etc '. 1,270,000,000 Total statutory authorizations with definite limitations 10, 270,000,000 Statutory authorizations'with-indefinite limitations: , , . . III. For subscriptions to preferred'stock in nationalbanking-associatidns. State banks, or trust companies (48 Stat. 6: 12 U. S. C. .51-d). . IV. For loans to the Federal Housing Administrator (48 Stat. 1247; 12 U. S. C. 1705)... Total statutory authorizations with indefinite limitations . . ' • Total increases.. -179,331,263 5, 000,000 —174,331,263 l . . ' _ . - . : . . l . : l il0,.095^l668;737 DECREASES V. Obligations of the Reconstruction Finance Corporation canceled by the Secretary of the Treasury pursuant to act of February 24,1938 (52 Stat. 79), on account of expenditures for— Federal Housing Administrator (section 4 of National Housing Act) Expenditures of the regional agricultural credit corporations (section 201 (e) of Emergency Relief and Construction Act of 1932; section 33 of Farm Credit Act of 1937).. Total decreases VI. Net increase in borrowing power 5,000,000 420, 554 6,420,554 10,090,248,183 The provisions of law authorizing agencies to issue obligations guaranteed by the United States have placed certain limits with respect to the total amounts that can be issued. This legislation with respect to the limitations established may be placed in three groups as follows: REPORT •or,,,.THE ;SECRETAR,Y OF T H E 37 TKEASXJRY (1) Definite limitation:—Provisions' stating a specific amount of obligations which may be (a) issued, or (b) issued and outstanding at any specified time. When the legislative authority provides only for the issue of obligations, the agency may issue obligations in a definite amount but after they have been retired may not issue new obligations in an equal amount. Under the second provision, the agency may reissue obligations provided the total amount outstanding does ndt exceed,the authorizedflimit. ^ . (2) Indirect limitation.—FiOYisioiis not stating a specific amount of obligations that may b e issued and outstanding at any time, but the amount issued and outstanding is contingent upon other specific limiting factors. As a result there is an indirect limit upon the amount which may be issued and outstanding at any one time. (3) No specific limitation.—Provisions not stating a specific amount of obligations which may be issue,d or issued and outstanding at any one time, but the amount is contingent upon other specific factors, the amount of such factors also being indefinite. The table that follows shows, by agencies, the amounts of obliga.ti0nS:.4a.'Uthorized to..be outstanding as of June 30, 1942, and the amounts, actually outstanding on that date. Borrowing power and outstanding issues of Government corporations and credit . agencies whose obligations are guaranteed by the United States, J u n e 30, 1942 ^ [In millions of dollars] O u t s t a n d i n g obligations Borrowing. power H e l d b y others > Held b y Treasury Total Unmatured I. Agencies issuing obligations for cash or in exchange for mortgages: C o m m o d i t y Credit Corporation Federal F a r m Mortgage C o r p o r a t i o n . . H o m e Owners' Loan Corporation.... Reconstruction Finance Corporation. . Termessee Valley A u t h o r i t y ',.-E^e^eril'Piiblic rB(o.iisingtAuthori;ty.. i . . Subtotal I I . Agencies issuing obligations only in p a y m e n t of defaulted a n d foreclosed insured mortgages: Fedp.ral H o n s i n ? A d m i n i s t r a t i o n U n i t e d States M a r i t i m e C o m m i s s i o n . Matured 2 • 2,650 2,000 3 4, 750 17, 232 70 ..•• 3; 8,0.0 . 1,101 1,207 2,119 3,754 65 , v.;^388. 27, 5 0 2 8, 634 5 4,800 6 200 21 Subtotal • 5,000 21 G r a n d total . . 32, 502 8,655 400 263 551 2,534 57 274, 701 930 1,563 1,220 48 . 114 4,079 4,535 4,079 (*) (*) (*) 20 . 21 (*) 21 (*) 4,557 14 5 20 * Less than $500,000. » Excludes matured interest, all agencies, in amount of $3 millions. 2 Funds have been deposited with the Treasurer of the United States for payment of all obligations guaranteed by the United States, representing outstanding matured principal of $20 millions and interest of $3 millions. : , • 3 This amount may be increased only by the amount of issues for refunding purposes. * Issued on the credit of the United States and held by the Reconstruction Finance Corporation. 6 Limit of authority to insure mortgages. This amount may be increased by $1,000 millions upon approval by the President. Debentures may be issued and tendered only in exchange for insured property acquired through foreclosure. 6 Limit which may be outstanding at any one time with respect to the insuring of mortgages. 3,8 REPORT OF T H E SEieREfTARY OF T H E TREASURY ABSORPTION OF THE INCREASE IN SECURITIES ISSUED OR GUARANTEED BY THE UNITED STATES The total volume of direct interest-bearing public debt securities outstanding on June,30, 1942, amounted to $72.0 billions, an increase of $23.6 billions during the year; and the total volume of securities guaranteed by the United States outstanding was $4.5 billions, a decrease of $1.8 bilhons during the year. Of the net increase of $21.8 billions in the securities issued or guaranteed by the United States, $6.2 billions, or 28 percent, was acquired by commercial banks; $0.5 billion, or 2 percent, by mutual savings banks; $2.0 billions, or 9 percent, by insurance companies; $0.5 billion, or 2 percent by the Federal Reserve Banks; $2.1 billions, or 10 percent, by Government agencies and trust funds; and the remaining $10.5 billions, or 48 percent, by all other investors—tax-exempt institutions other than mutual savings banl^s; individuals,- partnerships, and personal trust accounts; and corporations other than commercial banks and insurance companies. The absorption of almost one-half of the increase in the debt by ''all other investors!' was due in large part to the purchases by individuals of considerable amounts of Uhited States savings bonds offered during the year. The following table shows the absorption of the increase in the debt by the principal types of investors during the fiscal year 1942. Estimated absorption of the increase in the interest-bearing United States Government debt ^during the fiscal year 1942 and each half of the fiscal year, classified by type of investor . ' A m o u n t absorbed (in billions of dollars) Full year I. T o t a l debt:2 6.2 Commercial b a n k s s. .5 M u t u a l savings b a n k s .... Insurance companies ...:. . . . . . 2.0 Federal Reserve B a n k s . . .5 Government agencies a n d t r u s t f u n d s . . 2.1 All other investors 10.5 Total • 2L8 11.-Marketable d e b t : 6.1 Commercial b a n k s M u t u a l savings b a n k s " .5 L9 Insurance companies Federal Reserve B a n k s .6 .4 Government agencies a n d t r u s t f u n d s . . 1.8 All other investors 11.1 Total.H I . N o n m a r k e t a b l e debt:« Commercial b a n k s . . _. M u t u a l savings b a n k s .!.--.... Insurance companies . . . Government agencies a n d t r u s t f u n d s . . All other investors Total L8 8.8 10.7 P e r c e n t absorbed J a n . 1, 1942J u n e 30, 1942 J a n . 1, 1942J u n e 30, 1942 J u l y 1, 1941Dec. 31, 1941 4.6 .2 .9 .4 .1.1 •5.5 12.7 1.6 .3 LO .1 LO 6.0 9.0 28 2 9 2 10 48 100 36 2 7 3 8 43 100 17 3 11 1 12 55 100 4.6 .2 .9 L6 .3 1.0 .1 .2 .8 3.8 56 4 17 4 3 16 100 64 3 12 5 2 14 100 38 8 27 2 5, 20 100 :l LO 7.2 .9 4.5 5.5 (*) .(*) Full year .1 .9 4.2 5.2 1 (*) (*) (*) (*) (*) 16 82 ' 100' 16 82 100 J u l y 1, 1941D e c . 31, 1941 2 (*) (*) 17 81 100 , *Less than $50 millions or 0.5 percent. , ' . . . 1 Includes securities issued or guaranteed by the United States. 2 Includes United States savings bonds at current redemption values, except for Series Q which is at par value. • NOTE.—Figures are rounded and will not necessarily add to totals. SouiiCE.—Estimates based on Treasury Survey of Ownership of Gdvernment-Securities. 39 REPORT OP THE SECRETARY OF THE TREASURY The distribution of the" ownership of the direct and guaranteed secu?rities at the beginning and end of the fiscal year 1942 is estimated as follows: Estimated distribution of the ownership of the interest-bearing United States Government debt ^ as of June 30, 1941, and June 30, 1942, classified by type of investor J u n e 30, 1941 P e r c e n t of . total Amoimt held (in bilhons of dollars) " '19.9 3.4 '7.0 2.2 ^ , 8.-5 '13.8 36 6 13 4 15 25 26.1 3.9 8.9 2.6 10.6 •24.4 34 . 6 12 3 14 32 54.7 100 76.5 100 19.6 3.3 6.9 2.2 2.4 9.6 44 8 16 .5 5 22 25.7 3.8 8.8 2.C 2.7 11.4 47 7 16 6 6 21 44.1 100 55.1 100 ' A m o u n t held (in billions of dollars) I. T o t a l d e b t : 2 Commercial b a n k s M u t u a l savings b a n k s - . Insurance companies Federal Reserve B a n k s . G o v e r n m e n t agencies a n d t r u s t funds All other investors > TotaL.. ;II. M a r k e t a b l e d e b t : Commercial b a n k s . . : _ M u t u a l savings b a n k s _ Insurance companies. Federal Reserve B a n k s . _• G o v e r n m e n t agencies a n d t r u s t funds All other i n v e s t o r s . . ' Total.. III. Nonmarketable debt: 2 Commercial b a n k s . M u t u a l savings b a n k s I n s u r a n c e companies G o v e r n m e n t agencies a n d t r u s t funds All other investors Total... (*) ( * ) J u n e 30, 1942 , .3 • 6.1 4.2 10.7 3 (*) • (*) ; (*) P e r c e n t of total 2 .4 57 39 .1 7.9 13.0 100 2L4 (*) * 37 61 100 •Less than $50 millions or 0.5 percent. . »Reyised. . , »includes securities issued or guaranteed by the United States. 2 Includes United States savings b'onds at current redemption values, except for Series G which is at par value. , NOTE.—Figures are rounded and^will not necessarily add to totals. SOURCE.—Estimates based on Treasury Survey of Ownership of Government Securities. GENERAL FUND ^ The Greneral Fund includes all moneys of the Government deposited with and held by the Treasurer of the United States, including the moneys covered into the Treasury which can be/withdrawn only in pursuance of an appropriation by Congress. ' Every receipt of the Treasury, from whatever source, and every expenditure, of whatever nature, affect either the assets or liabilities, or both, of the General Fund shown in the daily statement of the Treasury. The total amount of the assets over and above the total amount of the liabilities represents the balance in the General Fund available to meet Government expenditures for general, special, and trust accounts, etc. The assets in the General Fund consist 'of gold, silver, currency, coin, unclassified collection items, etc., and deposits to* the credit of the Treasurer of the United, States and other Government officers, 40 REPORT OF 'THE SEiCRETARY OF THE TREASURY in Federal Reserve Banks, special depositaries account of sales of Government securities, national and other bank depositaries, foreign depositaries, and the treasury of the Philippine Islands. The liabilities of the General Fund consist of outstanding Treasurer's checks, deposits of certain Government ofRcers composed of balances to the credit of the Post Office Department, the Board of Trustees of the Postal Savings System, and postmasters, clerks of courts, disbursing officers, etc., and uncollected items, exchanges, etc. The balance in the General Fund is classified accoiding to increment on gold, seigniorage, and working balance. The net change in the balance of the General Fund from the beginning to the close of the fiscal year is accounted for as follows: Analysis of the change in the General Fund balance between June 30, 194U o>nd June 30, 1942 [On basis of daily Treasury statements (unrevised), see p. 387. For a description of accounts through which Treasury transactions are effected, see p. 3881 Balance June 30,1941. -. ..-. ! $2,633,174,062.11 Add: Ordinary receipts, n e t » . . 12„799,'061,-62JL-..Q2 Trustc acGoun1;s^,'*inGr6ment on(^olid, etcr:..-... i .; 2 •3,''i90,88^;' 099'' 71 Net increase in gross publicdebt ^.. .'. .:.. 23, 461, OOL 580.61 42,084,121,363.35 Deduct: Expenditures chargeable against ordinary, receipts: General and special accounts. $32,491, 307, 397.69 Less public debt retirements . 94,722,300.00 ' $32, 396, 585, 097. 69 Trust accounts, increment on gold, etc 2 6,696,389,049.89 . 39,092,974,147. 68 Balance June 30,1942...... 2,991,147,215.77. . 1 Exclusive of employment taxes collected and deposited, as provided under sec. 201 (a) of the Social Security Act Amendments of 1939 less reimbursements to the General Fund for administrative expenses. Such net amount is included in "Trust accounts, increment on gold, etc." on the following line. 2 On basis of classifications in eftect after June 30, 1942. A comparative analysis of the assets and liabilities and the balance of the General Fund is shown for the beginning and close of the fiscal year in the table on page 594 of this report. SECURITIES OWNED BY THE UNITED STATES AND PROPRIETARY INTEREST IN GOVERNMENT CORI^ORATIONS ANI) CR:EI)lT AGENCIES *. Securities owned On Jmie 30, 1942, the United States owned securities consisting of capital stock, bonds, etc., of Government corporations and agencies and indebtedness to the Government by railroads, farmers, .shipowners, and others, in the face amount of $6,468 millions; and obligations of foreign governments in the principal amount of $12,661 millions. A statement of the securities owned, exclusive of foreign obligations, at the end of the fiscal year 1942 is shown'in the table on page 598. A summary of the holdings of securities at the end of the last 2 fiscal years is shown in the following table. REPORT OF THE SECRETARY OP THE TREASURY 41 Summary of securities owned by the United States Government, exclusive of foreign obligations, June 30, 1941 and 1942 Security June 30, 1941 June 30, 1942 Capital stock of Government corporations.... $L 296,986, 311.11 $1,368,650,580.88 Paid-in surplus of Goveriiment corpjorations and 146,861,238.02 • agencies-.r... J 1 . . . . ^ ... "..1... 145, 724, 985. 79 Bonds and notes of Government corporations and agencies . 301, 688, 750.00 4,078, 690, 945.91 971, 748r894.15 874; 669,*305. 25 Other^secuinties L Tt)taii>^. . .. 2,716,148,941.06 -6r467;:872,p7(J.0§> Increase or de* crease (—; $71, 664, 269. 77 136, 252. 23 3, 777, 002,195.91 -97,079,588.90 3,751,723^129:01 ' Includes loans and advances by Farm Security Administration, Rural Electrification Administration, and Public Works Administration. ^ ' A n appropriation of $150 millions was approved July 25, 1942 (Public Law 678), to effectuate the subscription to the capital stock of the Smaller War Plants Corporation by the Secretary of the Treasury, as authorized by an act of June 11, 1942. (See exhibit 63, page 343.) In accordance with the acts approved February 24, 1938 (52 Stat. 79), and March 28, 1941 (55 Stat. 55), the Secretary of the Treasury caihceled bBligatibns of the Eeconstruction Finance Corporation during 1942 amounting to $5 millions, representing expenditures previously made by the Corporation. This brought the total of the obligations of the Reconstruction Finance Corporation canceled to $2,740 millions, as shown in the following table. Reconstruction Finance Corporation: Amount Obligations canceled to June 30, 1941 ...:... $2,734,475,131.00 Obligations canceled during 1942 pursuant to the act of Feb. 24, 1938, on account of expenditures for— ' Federal Housing Administrator (sec. 4 of National Housing Act).. $5,000,000.00 . Expenses of regional agricultural credit corporations (sec. 201 (e) of Emergency Relief and Construction Act of 1932; sec. 33 of Farm Credit Act of 1937) . . 420,554.09 ", • 5,420,654.09 Total to June 30, 1942. . . 2,739,895,685.09 Proprietary interest in Government corporations and credit agencies In, order. tOr>reflect the, amount .of the Governments interest in Government corporations and credit agencies, the Treasury compiles from reports received from such agencies a '^Combined statement of assets and liabilities of Government corporations and credit agencies of the United States,'' which is published in the daily Treasury statement at the end of each month. This statement shows the amount and classification of the assets and liabilities of the various agencies, the privately owned proprietary interest in' such agencies, and the proprietary interest of the United States. The statement as of Jime 30, 1942, appears as table 88 beginning on page 624, and a summary table of the Government's proprietary interest in such agencies as of June 30, 1930 to 1942, appears as table 89 on page 631 of this report. 42 REPORT GF T H E SEIGRETARY OF T H E . .TREASURY •MONETARY D E V E L O P M E N T S , •.- •-..,,.,•••. International monetary cooperation Stabilization agreements.—Continuing its policy of aiding friendly foreign governments' in the stabilization of their currencies, the Treasury, during the fiscal year. 1942, entered into stabilization agreements with the Governments of Mexico, Ecuador, and I c e l a n d . , i ^ On November 19, 1941, a stabilization agreement was entered into by the Secretary of the Treasury, the Government of the Republic of Mexico, and the Banco de Mexico providing that up to $40 millions of the United States stabilization fund would be used for the purpose of stabilizing the United States dollar-Mexican peso rate of exchange. (See exhibit 40, p . 291.) On February 27, 1942, the Secretary of the Treasury and the Government of the Republic of Ecuador signed a stabilization agreement providing that up to $5 millions of the United States stabilization fund would be used for the purpose of stabilizing the United States dollar-Ecuadoran sucre rate of exchange. (See exhibit 41, p. 291.) ' As a further link in the closer relations between the Governments of the. United States and Iceland, the Secretary of the Treasury, the Government of Iceland, and the National.Bank of Iceland signed a stabilization agreement on May by 1942. This agreement provided that up to $2 millions of the United States stabilization fund would be used for the purpose of stabilizing the United States dollar-Icelandic krona rate of exchange. (See exhibit 42, p. 292.) ;; j In the stabilization agreements described above provision was also made for periodic conferences among representative^ of the signatories to discuss monetary, financial, and economic problems bf mutual interest. . At the time the stabilization agreement between Mexico and the United States was signed, a silver purchase agreement was also entered into. This agreement was a month-to-month arrangement between the United States and Mexico under wliich the UnitedStates Treasury undertook to purchase montlily up to 6 million ounces of newly mined Mexican silver. Actually no silver was purchased imder this agreement during the fiscal year'1942, as all silver imported from Mexico since the agreement was sold on the commercial market./ (See exhibit 40, p.. 291.) . During the year three gold purchase agreements were made with the Union of Soviet Socialist Republics. The agreements called for future delivery of the gold purchased by the Treasury. The first purchase, amounting to $10.5 millions, was made on August 15, 1941, on a 90-day delivery basis, and delivery was completed by October 20, 1941. The second agreement, made on October 10, 1941, was for the purchase of $31.6 millions of gold, and called for its delivery within REPORT OF THE SECRETARY OF THE TREASURY 43 180 days, by April 8, 1942. The delivery date was extended because of transportation difficulties, but by ,April 20, 1942, delivery had been completed. On January 3, 1942,-a third agreement was entered into, the Treasury purchasing an additional $21.1 milhons of gold from the U. S. S. R., to be delivered within 180 days. By June 30, 1942, a substantial part of the gold had been delivered. Dollar assets made available by these gold transactions were used by the U. S. S. R. to purchase in the United States goods and services in addition to materials being obtained under the terms of the lendlease arrangement. One of the most important international agreements during 1942 was that between the United States and China, on March 21, 1942, providing financial aid to China. By the terms df 'the agreement the Secretary of the Treasury established on the books of the United States Treasury a credit in the name of the Republic of .China for $500 millions. The Secretary of tbe Treasury agreed to make transfers, from this credit to accounts of the Government of the Republic, of China in the Federal Reserve Bank of New York at such times and in such amounts as the.Government of the Republic of China should request. This agreement was signed by the Secretary of the Treasury on behalf of the United States under the authority granted to him by Public Law No. 442, approved February 7, 1942. In a joint statement, Secretar}^ of the Treasury Morgenthau and His Excellency T. V. Soong, Minister of Foreign Aft'airs of the Republic of China, said that the purpose of the agreement was to ^^contribute substantially towards facilitating the great efforts of .the Chinese people and their Government to meet the financial and economic burdens which have been imposed upon them by almost 5 years of continuous attack by Japan." (See exhibit 43, p. 292). . A significant provision in the agreement defers the final determination of the terms upon which the financial aid is given, including the benefits to be rendered the United States in return, ^*until the progress of events after the war makes clearer the final terms and benefits which will be in the mutual interest of the United States and China and will promote the establishment of lasting world peace and security." Inter-American conjerences.—As a further step in the cooperation of the American Governments in the establisbment of hemispheric solidarity and in accordance with agreements adopted at previous interAmerican conferences, a conference of the Ministers of Foreign Affairs of the American Republics was held in Rio de Janeho from January 15 to January 28, 1942. Tliree of the 41 resolutions adopted at the Rio (3i)nference have particular significance from the point of view of interAmerican financial and monetary cooperation: 44 R E I P O R T OF T H E SEICRETARY OF T H E TREASURY . 1. Resolution No. V recommends the adoption of measures by the American Republics necessary, among other things, to: (a) Cut off all commercial and financial intercourse with the Axis powers; ' . > (b) Prevent transactions within the Western Hemisphere which might benefit the Axis;-and, .,. -^ .•: ..... •:...'• (c) Control the,operation of Axis properties within Am-ericaujjurisdictions. In accordance with this resolution many of the American Republics instituted measures which strengthened the United States Foreign Funds Control regulations with respect to transactions involving the properties of enemy nationals. Further effect to the resolution was given by the Inter-American Conference on Systems of Economic and Financial Control which was held in Washington, D. C , from June 30 to July 10, 1942. At this conference resolutions were adopted recommending more specific economic and financial measures against aggressor nations. 2. Resolution No. X recommended that the American Republics which had not already adhered to the convention for the establishment of an inter-American bank study the proposal as soon as possible. 3. Resolution No. XV recommended that the American Republics participate in a conference of Ministers of Finance to consider the establishment of an international stabilization fund. , Among the' purposes of the fund would be stabilization of exchange rates, encouragement of the international movement of productive capital, correction of the maldistribution of gold and the strengthening of monetary systems. Domestic monetary events The Treasury's principal, problem during the fiscal year jt9#-^^ift'ed from that of financing the defense program to that of financing the .war program ^of- the United .States. To finance the huge war expenditures which grew steadily during the fiscal.year the Treasury presented to Congress a tax program and instituted a war savings bond program which were designed to help raise necessary war funds and to combat inflation. These programs are discussed elsewhere in this report. (See pp. 27, 46, and 353.) ' . . Among other measures taken to combat inflation,, the Board of Governors of the Federal Reserve System, after consultation with the Secretary of the Treasury, on September 23, 1941, increased reserve requirements of the member banks to their statutory: limits: on demand'deposits, 26 percent fqr central reserve city banks, 20 percent for reserve city banks, and 14 percent for other banks; on time deposits, 6 percent for all classes of banks. REPORT OF T H E SEiCRETARY OF T H E TREASURY 45. In connection with this action, the Secretary of the Treasury and the Chairman of the Board of Governors issued the following statement, in which the Board of Governors concurred: ' ' T h e Treasury and the Board of Governors will continue to watch the economic situation and to cooperate with other agencies of the Government in their efforts, through priorities, allocations, price regulation, • and otherwise, to "fight iiiflation. Recomrnendations oh the question of what additional powers, if any, over bank reserves the Board should have during the present emergency and what form these powers should take will be made whenever the Treasury and the Board, after further consultation, determine that such action is necessary to help in combating infliationary developments." Title IV of the Second War Powers Act, approved March 27, 1942, amended subsection (b), section 14 of the Federal Reserve Act, as amended, by authorizing the Federal Reserve Banks to acquire directly from the Unite,d States bonds, notes, or other obligations of the,: United. States, direct or. guaran)beed, provided that the aggregate amount acquired directly from the United States and held at any one time by the twelve Federal Reserve Banks shall not exceed $5 billions. (See exhibit 30, p. 273.) Because of the growing scarcity of strategic metals, the Treasury took steps to conserve copper, tin, and nickel for the war effort. To release copper for essential war uses, the Secretary of the Treasury, entered into an agreement on May 6, 1942, with the Defense Plant Corporation to lend-lease silver from the Treasury's free silver stocks to be used by plants engaged in war production, particularly aluminum and magnesium plants. The silver lend-leased under this agreement will hot be consumed in production, and title to the silver remains in the Treasury. Transfers under this arrangement were, begun on June 29, 1942. The utilization of free silver in this manner will release more than 40,000 tons of copper for urgent war purposes. (See, exhibit44, p. 292.) A measure designed to save annually almost a million pounds of nickel and up to a million pounds of copper was provided for in Title X I I of the Second War Powers Act relating to the coinage of 5-cent pieces. (See exhibit 45, p. 293.) This section of the Second War Powers Act provided that until December 31, 1946, the metallic content of all 5-cent pieces coined should be one-half silver and one-half copper, but the Director of the Mint with the approval of the Secretary of the Treasury and the Chairman of the War Production Board was authorized to vary the proportions of silver and copper and to add other metals if such action was in the public interest. A third of the copper and all the nickel formerly going into the 5-cent piece would be eliminated by changing its composition to half silver and half copper. 46 REPORT OF THE SEICRETARY OF THE TREASURY. The Bureau of the Mint announced that it also expects to save 100,000 pounds of tin a year through a change, under existing laws, in the content of the cent* In addition, 40,000 pounds of tin on hand were turned over to defense industries. ' The outbreak of war in the Pacific area and the consequent possibility that the enemy would at?tempt an invasion of Hawaii led to action designed to prevent the enemy's seizure of United States currency should an invasion attempt succeed. Regulations issued on June 25, 1942, by the Governor of Hawaii provided that persons holding ordinary United States currency in the Territory of Hawaii exchange such currency by July 15, 1942, for United States currency of. a special series to be used only in the Territory. The new series for Hawaii diff'ers from other series of United States currency in that it bears the distinctive overprint ''Hawaii" in bold-face type on each end of the face and the word "Hawaii" across the reverse side. Since this currency circulates in Hawaii only, it ,would not be difficult to eliminate its value to any invaders w h c might seize it. The Hawaiian currency replacement program resulted from the careful study of Hawaiian currency problems by the Treasury, War, Navy, and Interior Departments in collaboration with Hawaiian civil and military authorities. , As the international crisis deepened, foreign funds control developed into a very important weapon of economic warfare. A discussion of foreign funds control developments is contained on p. 56. y REVENUE LEGISLATION Revenue legislation enacted in the fiscal year 1942 included the Revenue Act of 1941, the Public Debt Act of 1942, and other acts enumerated below. : . Revenue Act oj 194i The Revenue Act of 1941, approved September 20, 1941, imposed . the largest tax burden in the history of the United States. This was accomplished chiefly by a general increase in^the rates of most of the forms of taxation imposed by the Federal Government and, the addition of new excise taxes to articles heretofore untaxed. In the case of the individual income tax, while the normal tax rate was not changed, surtax rates were increased, and the surtax was applied to the first dollar of surtax net income. The 10 percent defense tax was integrated into the income tax structure, as it was integrated into other Federal taxes. Surtax rates ranged from 6 percent on the first $2,000 of surtax net income to 77 percent on the portion of the surtax net income in excess of $5 millions. This increase in the rates of the individual income tax was accompanied by a reduction of the personal exemptions from $2,000 to $1,500 in the case of married persons and heads of families, and from $800 to $750 in the case of single persons. The credit of $400 for the | |: | 1 REPORT OF THE SECRETARY OF THE TREASURY 47 first dependent was eliminated for the head of a family who claimed a deduction as head of a family by reason of there being one or more dependents. The rate applicable to a nonresident alien individual not engaged in business within the United States, and not having an office or place of business therein, was raised from 15 percent plus the' defense tax, or a total of 16K percent to 27K percent. ^ In the .case of domestic corporations with a normal-tax net income of over $25,000, and in the case of resident foreign corporations, the tax on normal-tax net income was fixed at 24 percent. Domestic corporations with a normal-tax net income of not more than $25,OQO were taxed at the rate of 15 percent on such income not in excess of $5,000, plus 17 percent of any excess over $5,000 up to $20,000, and plus 19 percent of any excess over $20,000. The act imposed on domestic and resident foreign corporations for the first time a surtax of 6 percent on the. first $25,000 of corporation surtax net income, plus 7 percent ori corporation surtax n^t income over $25,000. The rate of tax on foreign corporations not engaged in business within the United States and not having an office or place of business therein was increased from 16K percent to 27K percent. Excess profits tax rates were increased by 10 percentage points in each bracket so that the rates ranged from 35 percent on the first $20,000 of adjusted excess profits net income to 60 percent on such 'income over $500,000. In the case of corporations using the invested capital method, the credit was changed from 8 percent of invested ' capital to 8 percent of invested capital not in excess pf $5 millions, and 7 percent of the invested capital in excess of that amount. The capital stock tax rate, including the defense tax, was increased from $1.10 to $1.25 per thousand of adjusted declared value. Estate and gift tax rates were also increased under the 1941 act. Estate tax rates ranged from 3 percent on the portion of thp net estate not. in excess of $5,00.0 to 77 percen.t op. the portion in excess of $10,000,000. Under prior law, the rates (excluding the defense tax) ranged from 2 percent on the portion pf the net estate, in excess of $10,000 to 70 percent on the portion in ex.cess of $50,00O,Q00. The Revenue Act of 1941 made no alteration in the estat.e tax exemption of $40,000 for additional estate tax purposes nor in the $40,000 exemption for insurance. The new gift tax ratps ^ere in each pase, a§ under the present law, three-fourths of the corresppncjing estate tax fate. Defense tax rates inippseid in connection with varipus excise taxes were made perm^inpnt. Incr.eased taxes were leyipd pn playing card^, safe deposit boxes, dis|:illed spirits, infipprte.d perfume, wines, tires jand tubes, radio sets and parts, mechanical refrigerators, and telephone, telegraph, cable, and radio messages. Floor stopks •taxes providing for a levy on stocks of goods held by persons other 487543—43——5 . __. 48 REPORT OF T H E SEICRETARY OF THE^ TREASURY than a manufacturer, producer, or importer were imposed on tires and tubes and alcoholic beverages. New manufacturers' excise taxes were levied on phonographs, phonograph records, musical instruments, matches (except fancy wooden), sporting goods, luggage, electric, gas and oU appliances, photographic apparatus, electric signs, business and store machines, rubber articles, washing machines, optica! equipment,, aidd electric light bulbs. New retailers'^ excise taxes were levied on jewelry, furs, and toilet goods. New taxes were also imposed on the transportation of persons, on coin-operated amusement and gaming devices, bowling alleys, billiard and pool tables, and on the use of motor vehicles and boats. The^ act amended the tax on admissions to provide that a tax of 1 cent should be imposed for each 10 cents or fraction thereof paid for admission, except that no tax was payable by children under 12 where the admission charge for such children was less than 10 cents. Exemptions previously allowed in the case of admissions to enter-* tainments held by religious, educational, or charitable organizations were eliminated. On the other hand) the special tax rate for certain persons on reduced or free admissions were extended to members of the armed forces of the United States and the Civilian Conservation Corps when in uniform. For such persons, the tax was based upon the amount actually paid and not upon the established price. The cabaret tax w,as increased from 2 cents for each 10 cents of the, admission charge, which was deemed to be 20 percent of the total amount paid for refreshments, services, and merchandise, to 5 percent of the to tal charge. In addition to the increases in rates, certain changes in the manner in which the taxes were imposed, computed, and collected should be noted. One of the foremost of these changes was a simplified tax schedule for individuals with gross incomes of $3,000 or less derived solely from salaries, wages, compensation for personahservices, dividends, interest; rent, annuities, and royalties. The schedule fixed an income tax for each $25 of gross income from $750 to $3,000 in the case of a single person and $1,500 to $3,000 in the case of a married person o r t h e h e a d of a family. The use of this schedule, which was optional with the taxpayer, permitted a taxpayer to determine the amount of his income tax merely by locating his gross income, diminished by $400 for each dependent, on the schedule. In preparing the schedule, allowance was made for the average amount of deductions taken by persons in the lower-income brackets in computing their taxes in the regular manner. The taxpayer by using the form was relieved of the necessity of determining his deductions, of computing net income, and of calculating both normal tax and surtax. The schedule was designed tp facilitate the filing of returns by persons with smaller incomes, particularly REPORT OF THE SECRETARY GF THE TREASURY 49 those added to the list of taxpayers by the reduction of the personal exemptions. Administrative problems in reviewing such returns were likewise diminished. For taxpayers on a cash basis, income from noninterest-bearing securities sold at a discount was, under prior law, taxable in full upon redemption of the bond. Taxpayers reporting on the accrual basis were allowed to report and pay tax bn the income as it accrued. The Revenue Act of 1941 extended to taxpayers on the cash basis the privilege of electing to report income from these securities as it accrued. The discount on obligations of the United States, States, Territories, political subdivisions, or the District of Columbia, issued on a discount basis after March 1, 1941, and payable without interest at a fixed maturity date not exceeding one year from the date of issue, was not" deemed to accrue until such obligation was paid at maturity, sold or otherwise disposed of. Such obligations were not to be treated as capital assets. Under the excess profits law, the income tax had heretofore been allowed as a deduction ih computing the excess profits tax. The 1941 act provided instead that the excess profits tax was to be allowed as a deduction in computing the income tsx. To encourage the investment of new capital in corporate enterprise, a special inducement was offered in the form of a more liberal allowance for new capital in computing the excess profits credit under the invested capital method for new capital. New capital in the form of money or property paid in for stock during taxable years beginning after December 31, 1940, and of taxable stock dividends made during the same period was counted at 125 percent of its value in computing equity invested capital. The Revenue Act of 1941 established a committee to study all expenditures of the Federal Government with a view to recommending the eliminatipn or reduction of aU such expenditures deemed to be nonessential. The Committee is composed of three members of the Senate Committee on Finance and three members of the Senate Committee on Appropriations, three members of the House Committee pn Ways and Means and three members of the House Committee on Appropriations, the Secretary of the Treasury, and the Director of'the Bureau of the Budget. Suggestions of tbe Secretary of the Treasury for reductions in nondefense expenditures are contained in the exhibit on page 379. Public Debt Act oj 1 H 2 Under the Public Debt Act of 1942, approved March 28, 1942, the provisions of the Public Deb.t Act of 1941 removing the exemption from Federal income taxation previously given to obligations of the United States and its instrumentalities, were extended to shares, 50 \ REPORT OF T H E SEICRETARY OF T H E TREASURY certificates of stock, and other evidences of ownership issued by agencies and instrumentalities of the United States. Obligations issued under the Second Liberty Loan Act and redeemable upon demand were made acceptable in payment of taxes imposed by the United States. Other revenue legislation Other laws affecting the revenue are as follows: • Public Law 187, July 22, 1941, amending sections 3341, 3351, ^nd 3361 of the Internal Revenue Code, to extend the allowance of drawback of internal revenue tax on articles exported from the United States upon which an internal revenue tax has been paid to like articles when shipped from the United States to the Philippine Islands, Virgin Islands, Puerto Rico, Gpam, and American Samoa, and repealing section 2907 of the Internal Revenue Code, the qollection pf internal revenue tax if export cases of distilled spirits are tampered with. Public Law 285, O.ctober 30, 1941, amending section 124 of the Internal Revenue Code by extending the time fpr applications, and changing the procedure, for certification of national defeiise facilities and contracts for amortization purposes. Public Law 386, December 26, 1941, amending sectiofi 3508 of the Internal Revenue Code to fix the date of termination of the taxes on sugar as of June 30, 1945. Public Law 412, January 24, 1942, amending section 2883 of the Internal Revenue Code relating tp the production of alcohol. Public Law 436, February p, 1942, amending section 124 of the Internal Revenue Code to simplify the procedure in connection with the amortization of national defense facilities. Public Law 490, March 7, 1942. Sections 13 and 14 pf this act prpyide for the postppnement pf the filing of income tax returns and the payment of Federal in.com..e taxes in the case of members of the armed fprcps of the United States and also in the' case of Federal Governhient employees who are prisoners pf war. Public Law 497, March 13, 1942, suspending during the existing national emergency thp tariff duties and import taxes on scrap iron, scrap steel, and non-ferrous mptal scrap, payablp under the Tij^riff Acf of 1930, as amended, or under .seption 3425 of the Internal ReYen^ue Cpde. Public Law 508, March 27, 1942, amending section 2883 of the Internal Revenue Code relating to the production of alcohol. Pubhc Law 519, April 8, 1942, amending section 2901 of the Internal Revenue Code, by setting new maximum limits on allowances for losses of distilled spirits by leakage or evaporation while in internal revenue bonded warehouses. Public Law 526, April'20, 1942, amending sections 2825, 3030, 3031, 3032, 3036, 3038, and 3045 of the Internal Revenue Code, 51 REPORT OF THE SECRETARY OF THE TREASURY. relating to the withdrawal of brandy for the fortification of wines and production of wines, brandy, and fruit spirits so as to remove therefrom certain unnecessary restrictions. Public Law 635, June 27, 1942, to accord privileges of free importation to members of the armed forces of other United Nations, to enemy prisoners of war and civilian-internees and detainees. * , WAR CONTRIBUTIONS FUND Conditional gijts Under the provisions of Title X I of the Second War Powers Act, 1942, approved March 27, 1942, the Secretary cf the Treasury is authorized to accept or reject on behalf of the United States any gift of money or other property, real or personal, or services, made on condition that it be used for a particular war puipose. He may convert into money, at the best terms available, any such gift of property. The act further provides that there shall be established on the books of the Treasury a special deposit account to be designated as the " W a r Contributions Fund," into which shall be deposited all money received as a result of such gifts. I n order to effectuate the purposes for which gifts are accepted, the Secretary pf the Treasury is required to allocate the money in the special deposit account to such appropriations available for the purchase of war material and. the/furtherance of the war program as will best effectuate the intent of the donors. (See exhibit 62, page 342.) From March 27 to June 30, 1942, there were accepted 105 donations of money aggregating $1,409,124.42, of which $985,127.19 had been covered into the Treasury by warrants as of June 30, 1942, and $423,997.23 subsequent to that date. The latter amount represents checks " which must be cleared through banks before the funds are available for covering into the Treasury. These donations are, summarized as follows: Gifts of money to the war contributions fund, March 27 io June 30, 1942 .Accepted through June 30, 1942 Purpose of gift Aircraft (representing bombers, pursuit planes, balloons, etc.) Vessels-='-(representing battleships, cruisers, destroyers, submarines, etc.) Guns and ammunition (representing rifles, cannon, mortars, machine guns, bullets, torpedoes, bombs, shells, etc.) Welfare and recreation Buildings and appurtenances. ,u _. Medical supplies ' Vehicles (representing trucks, ambulances, tanks, tractors, etc.) ; TotaL..1 1.. '. ;_.. Covered by warrant through June 30, 1942 Covered by warrant after Junfe 30, 1942 $1, 302, 995. 06 $886, 683. 69 20, 456. 00 20,456.00 12, 707. 65 4, 601. 00 62, 932. 85 10. 00 11,197. 65 4; 601. 00 62,188. 85 1, 510. 00 985,127.19 423, 997. 23 5, 421.; 1, 409,124. 42, $416, 311. 37 744. 00 10.00 5, 421.86 52 REPORT lOF THE SEICRETARY OF THE TREASURY Donations of property accepted included the following: Naval airplane, ofl&ce space for use of Office of Scientific Research and Development, band music for use of Naval Training Station, Great Lakes, 111., and Cadillac station wagon and trailer. Unconditional donations From December 7, 1941, the day on which Pearl Harbor was attacked, to June 30, 1942, 10,751 unconditional donations amounting to $650,404.49 were received. The 10,751 donations do not represent the total number of donors inasmuch as the donations of approximately 16,000 individuals were grouped and treated as single donations; for example, 7,000 employees of an aeronautical corporation sent in individual checks which were recorded as one donation. Checks and money orders, some of which were made payable to Uncle Sam, My Country, Bomber Tund, United States of America, and President of the United States, came from individuals, schools, fraternal organizations, labor organizations, groups of citizens, and employees in various corporations. In many cases employees donated one day's pay which was m.atched by the management. The largest donation by an individual amounted to $25,000 and the smallest was one cent. ' Besides checks, money orders, cash, war savings stamps and bonds, there were donations of wedding rings, gold watches, diamonds, old coins and medals, and other miscellaneous articles. CUSTOMS SERVICE IN THE WAR In addition to its normal functions, the Customs Service is charged with the physical control of exports, vessels, vehicles, and persons to insure that no articles are taken from the United States except under, license or similar authorization; with the physical enforcement of the provisions of tJie freezing order and the rulings and regulations issued pursuant thereto insofar as they relate to the exportation and importation of currency, negotiable instruments, securities, and other evidences of indebtedness; with the control of American citizens leaving the United States to insure that they hold valid passports; with the enforcement of the Trading With the Enemy Act in the censorship of tangible communications brought into or taken from the United States otherwise than in the regular course of the mails; and with the enforcement features of the import activities of the War Production Board. Active cooperation is given by the Customs Service to the Army and Navy intelligence services and to the Federal Bureau of Investigation. The Customs Service is also furnishing substantial assistance to the Coast Guard in protection of vessels, harbors, ports, and waterfront facilities from sabotage. REPORT GF THE SECRETARY OF THE. TREASURY 53 SPECIAL PROCUREMENT ACTIVITIES j Lend-lease After the enactment of the Lend-Lease Act on March 11, 1941, the Procurement Division was designated to purchase agricultural, industrial, and other commodities, automotive equipment, and miscellaneous items. This is its most important task in the present war effort, :and is by far its largest activity at the present time. Purchases were •comparatively small during ithe fiscal year 1941, amounting to only $21,037,555, but have, however, greatly accelerated during the past year, during which they totaled $1,126,438,327. I t is anticipated that purchases under this program will be at the rate of approximately $200,000,000 per month during the first 6 months of the fiscal year 1943. i Purchases during the latter part of the fiscal year 1942 were made in ^accordance with Directive No. 2 of the War Production Board, dated March 3, 1942, and the regulations of the Secretary of the Treasury •designating and authorizing the Director of Procurement and certain other ofl&cers of the Procurement Division to perform and exercise the functions and powers vested in and granted to the Treasury Department by Executive Ordeif No. 9023 of January 14, 1942, extending the provisions of Executive Order No. 9001 of December 27, 1941, to Treasury Departnient contracts, issued under Title I I of the First War Powers Act, approved December 18, 1941. During the past year the increased lend-lease activities of the Procurement Division have required, in addition to the expansion of the purchase groups, a field expediting and inspection force covering all the industrial areas in the! country. The fast delivery of finished .and raw products, called for!under contracts, has brought about the necessity of arranging for warehouse facilities whereby materials may be assembled for shipment preliminary^ to availability of vessels for forwarding. Following allocation of funds by the Office of Lend-Lease Administration for storage facilities the Procurement Division coordinated its storage requiremenj:-s with the storage program of the War Department and will have iii operation at nine points by November 15 a total of 2/^ million square feet of covered storage space and 2 million square feet of uncovered space. The inspection pffices throughout the coimtry have teletype installations and the same service ;will be available in storage depots to eliminate as much delay as i possible in the transmission of orders <jovering the niovement of materials into storage and from storage to seaboard. . i In cooperation with the Office of Defense Transportation, Federal Emergency Warehouse Associations have been set up in three cities 54 REPORT OF THE SECRETARY OF THE TREASURY and others are in the process of being established. Agreements are in force with these associations to make a definite amount of storage space available to all Government activities in their operating area and to man and operate other buildings leased by the Government that can be quickly converted into warehouse space. , The movement of the many tons of material purchased under lend-lease contracts has made it necessary to increase largely the force handling the movement of traffic. The statistical group in the Procurement Division has been enlarged to take care of the greatly Increased statistical work necessary to keep current records and make reports on purchases aggregating $1,147,321,230 during the 16 months of lend-lease purchasing. Strategic and critical materials Strategic and critical materials were contracted for during the fiscal year 1942, through the medium of the Procurement Division, in the amount of $6,544,303, under authority of the act of June 7, 1939 (Public No. 117), an act to provide for the common defense by acquiring stocks of strategic and critical materials essential to the needs of industry for the manufacture of supplies for the armed forces and civilian population in time of a national emergency, and to encourage further development of the materials within the United States. During the .fiscal year 1942, the sum of $2,220,232 was returned to the fund due to canceled contracts and unexpended balances of encumbrances. This brought to $46,281,051 the amount obligated since the inception of the program. Acquisitions under the acts were made at the direction of the Secretary of War and the Secretary, of the Navy in accordance with specifications prepared by the Procurement Division and approved by the Secretary of War and the Secretary of the Navy. The materials acquired under this program are stored by the Division, in accordance with the act, on military and naval reservations or in other locations approved by the Secretary of War and the Secretary of the Navy. In addition to purchasing materials, the Division arranged for the inspection and handling of the materials. Rotation of the materials in order to prevent deterioration, as provided for in,the act, thus far has been unnecessary. The act of May 28, 1941 (Public Law 76), amended section 6 of the act of June 7, 1939, to provide that ^'Any funds heretofore or hereafter received on account of sales or other dispositions of materials under the provisions of this act shall be deposited to the credit, and be available for expenditure for the purposes, of any appropriation available at the time of such deposit, for carrying out the provisions of sections 1 to 6, inclusive, of this act." Since May 28, 1941, the sum REPORT OF THE iSECRETARY OF ^HE TREASURY 55 of $82,797 has been re-deppsited to the credit of the strategic and critical materials appropriation due to this amendment. Executive Order No. 9123, dated April 7, 1942, authorized and directed the Procurement Division of the Treasury Departinent *^to make use of such quartz crystals suitable for piezo-electric use by sale OT' other disposition for war production purposes to such buyers or users and in such amounts as may be requested from time tP time by the Chairman of the War Production Board." In order to provide for all expenses for the acquisition, transportation, maintenance, storage, and rotation of strategic and critical materials selected for stockpiling by the Army and Navy Munitions Board, Congress authorized an appropriation of $100,000,000 to be made by June 30, 1943, of which $70,000,000 has been appropriated as of June 30, 1942. All funds are available lintil expended. Rejugee reliej During the fiscal year 1942, the refugee relief program was continued by the Congress a n d augmented by the ''Foreign War Relief Program." Under this program, the Procurement Division proceeded with the purchase of clothing, medical supplies, textiles, and hospital app.aratus as in the past. i Approximately 46,000,000 units costing $17,053,849 were purchased for delivery to the American Red Cross for export shiprnpnt .and distribution abroad. Included in this program were purchases of 23,049,435 yards of fabricicosting $5,923,109 and 1,406,077 pounds of worsted yarns costing $2,097,921. These textiles and yarns were distributed to the Red Cross chapters in continental United States and possessions for fabrication into finished garments which, on completion, were collected b[y the American Red Cross and shipped to refugees abroad. Dejense housing During the early part of the year, defense housing purchases were made by the Procurement Division for the account of the Public Buildings Administration and more recently purchases of similar items have been made for thb Federal Public Housing Authority. A total of 226 orders, amounting to $15,433,708 were placed with various contractors for kitchen, Ikundry, and bathroom fittings and other household equipment. During the preceding year defense housing purchases totaled $5,360,572] This program is expanding and during the current year there is every reason to believe the activity will be increased b y further p u r chases of similar items, plus certain items of household furniture and furnishings, restaurant and cafeteria equipment, and textiles. 56 REPORT OF THE SECRETARY OF THE TREASURY FOREIGN FUNDS CONTROL During the fiscal year 1942, Foreign Funds Control extended its^ prpgram of economic warfare against the Axis. During 1940 and 1941 its efforts had been chiefly fiduciary—protecting the Americanassets of invaded peoples. But in 1942 it moved into a program of aggressive economic attack. Six months before the.United States entered the war. Foreign F u n d s Control froze all Axis assets in this country and stopped trade with the Axis countries. At the. same time, in cooperation with other agencies, it began the/'blacklist!' program to squeeze out fascist fronts in South America. As of Jane 30, 1942, the Control regulatedassets of $8.6 biUions owned or controlled by nationals of 36 blocked nations.^ Licensing of transactions continued to be the main method of control over blocked assets. During the year the Control considered 330,747 applications to effect specific transactions involving amounts of nearly $6 billions. About 18 percent of them were denied. In addition, hundreds of thousands more transactions took place under "general licenses" promulgated, to facilitate economic activity in safe areas. Some of the highlights of the licensing control were as follows: (a) MUlions of dollars worth of strategic materials owned by foreign interests were disclosed and channeled into the war effort through a directive license program. Directives also helped to clear congested port and rail facilities of materials which had been stranded at the outbreak of the war. (b) By a rigid control of importations into this country the enemy was prevented from realizing on securities, currency, and valuable gems looted from invaded areas. (c) Before the war over 500 enterprises owned pr dominated by German, Italian, and Japanese interests were controlled under license. They ranged in size from the General Aniline and Film Corporation down to small stores. On the night of Pearl Harbor, Treasury agents moved in. Since then most of the firms have been liquidated. Some have been purged of subversive infiuence and continued under license.. Some have been vested by the Alien Property Custodian. (d) At the request of the Office of Censorship, Foreign Funds Control has undertaken the licensing of communications with the enemy which involve financial or commercial transactions. Continued Axis efforts to gain and use economic resources in the Americas required strenuous counter measures of investigation and enforcement i o make the licensing control effective. Foreign F u n d s Control used measures such as the following:. 1 Analyses of the amounts of blocked property and tbe licenses granted by Foreign Funds Control appear on page 159. Copies of Executive orders, a proclamation; and an act relating to foreign funds control will be found as exhibits beginning on page 294. The publication "Administration of the Wartime Financial! and Property Controls of the United States Government" is reproduced as exhibit 51 on page 302, REPGRT GF THE SECRETARY OF| THE TREASURY i , 57 ' • • • (a) Detailed information on American holdings of foreign nationals was secured in the census of foreign-owned property taken by the Older of the President. The census, the first of its kind ever undertaken, laid the groundwork for effective cohtrol. (6) The "scorched earth" program in the'"Philippines which kept gold, currency, and securities from fallingi into Japanese hands was carried out by the Control in cooperation with the High Commissioner's Office. To guard against a possible invasion of Hawaii, currency and securities there were marked I to prevent conversion. (c) When Japanese residents were evacuated from the West Coast, F6reign Funds Control was called in by the Army to supervise the protection and liquidation of the evacuees' property. The Control acted through the Federal Reserve Bank o|f San Francisco. (d) Investigations and special studies byl the Control uncovered instances of evasions and violations of the freezing order. These included secretion of alien holdings, failure tp secure licenses, violation of the terms of licenses, trading with blacklisted firms through "cloaks," and the like. (e) To curb these abuses sanctions were actively applied. Some violators were blocked on an " a d hoc" basis. Treasury men supervised or liquidated questionable firms. Prosecutions in the courts were begun in other, cases. , The combination of licensing control, supervision, investigation, and enforcement hit the enemy hard on the economic front. CHANGES IN ORGANIZATION AND PROCEDURE I • • The United States Coast Guard was directed by Executive Order No. 8929, November 1, 1941, to operate from the date of the Order as a part of the United States Navy, subject to the orders of the Secretary of the Navy. The powers of the Secretary of the Treasury in connection with the control of the movements of foreign and domestic vessels in United States harbors and waters under Section 1 of Title I I of the so-called Espionage Act, approved June 15, 1917, were transferred by Public Law 292, 77th Congress, approved November 15, 1941, to the Secretary of the Navy to be exercised by hiin while the Coast Guard operates as a part of the Navy. Certain functions under the navigation laws, performed by the field officers of the Bureau of Customs on ibehalf of the Secretary of Commerce and the Bureau of Marine Inspection and Navigation of the Department of Commerce, and the power with respect to the remission and mitigation of fines, penalties;, and forfeitures incurred under these laws were transferred by Executive Order No. 9083, February 28, 1942, to the Commissioner of Customs to be exercised 58 REPORT OF THE SECRETARY GF THE TREASURY by him und,er the direction of the Secretary of the Treasm-y. For a discussion of these activities s.ee page 152. Certain functions relating to the numbering of undocumented vessels formerly performed by the Bureau of Customs were transferred to the United States Coast Guard by the same Executive Order. . The former Division of Printing of the Treasury Departnient b,ecgtme a part of the Procurement Division under the Secretary's Ord.er Np. 42, of September 30, 1941. Copies of Treasury' orders issued during the, year and of the act and Executive orders referred to above will be found as exhibits 52 to 56 beginning on page 335. ESTIMATES OF RECEIPTS The Secretary of the Treasury is required each year to prepare and submit in his annual report to Congress estimates of the public revenue for the current fiscal year and for the fiscal year next ensuing (Public No. ^129, February 26,1907). These estimates are now-made in December of each year. In its present forecast of revenues, the Treasury recognizes a situation different in many important respects from any heretofore encountered. The conversion of factories to an all-out war vcffort has curtailed, and will further curtail, the sources of revenue from many important excise taxes. On the other hand, industrial production, employment, and pay rolls will continue upward to new record levels under the huge increases in Government expenditures scheduled for the 1943 and 1944 fiscal years. This will further expand the bases for the corporation and individual income taxes. I t is recognized that the present revenue forecasts may need to be revised from tinae tq time as changes occur in the general outlook. The estimates of revenue from most sources are dependent in varying degrees upon prevailing business conditions, hence it is necessary for the Treasury to forecast the general busmess situation, in terms of its various components, for approximately a year and a half ahead. These forecasts are based upon the analysis of a wide variety of financial and other economic data. They involve forecasts of a number of important economic series which strongly affect the various sources of Federal revenue, such as the volume of industrial production, the trends of commodity prices, security prices, employment, pay rolls, etc. From these, in turn, forecasts are made of corporation incomes, individual incomes, and the volume of consumption of various commodities upon which taxes are levied. The fluctuations in the various indices of business activity and consumer incomes may not be reflected immediately, or ih direct proportion, in the various sources of revenue. This results to some extent from the relative stability of certain of the tax bases. However, because of greater emphasis on taxes based on income and profits, the REPGRT GF THE SECRETARY GF THE TREASURY 59 receipts of the Federal Government have become, except for the statutory lag in collections, more sensitive to clianges in business conditions. This is particularly true of the present period, in which the requirements of war expenditures have resulted not only in much higher individual income tax rate schedules but also in the reintroduction into the corpPrate income tax systenii of an excess profits tax. The variation in the length of the interval between the creation of the tax liability and the receipt by the Goyernment of the tax payment-based on that liability is also importajnt. The tax on the sale of certain commodities or services is collected in advance of the sale or use of these commodities. Tbe most important of the taxes collected in this manner are the taxes on cigarettes, distilled spirits aiid fermented malt liquors, and the use tax on,motor vehicles. On the other hand, the payment of an estate tax may be deferred as long as 15 months after the date of death. Because of the magnitude of the, income | tax receipts the lag between the time income is received by the taxpayer and the time of payment of taxes based on such incomes is of particular sigiiificance. Thus, in general, the changes in incoiiies iii the calendar year 1942 Avill not be reflected in income tax receipts juntil the income tax returns in respect of calendar year 1942 inconies are filed on or before March 15, 1943. Because of the privilege bf making quarterly installrnent payments of these tax liabilities, i the receipts will be received throughout the calendar year 1943, thus falling into the receipts of the fiscal years 1943 and 1944. Hence, the estimated current income tax receipts, both corporation and indiyidual, for the fiscal year 1943 are made up partly of payments on calendar year 1941 incomes and partly of payments on calendar year 1942 incomes. Similarly, fiscal year 1944 estimates of income tax receipts include payments based upon the incomes of each of the calendar years 1942 and 1943. Receipts during the fiscal year from the collection at the source of the 5 percent tax bn salaries and wages in excess of an annual rate of $624, however, are derived principally from incomes during the calendar year ending 6 months before the close of the fiscal year. The tax is to be collected by the witholding agents currently and paid over to the Treasury quarterly at the end of the month following the close of the quarter. Consequently 3 months' (January-March) withholdings in respect of the calendar year 1943 salaries and wages will be received by the Government in the fiscal year 1943 but the Pther 9 months' withholdings in respect of the calendar year 1943 salaries and wages plus 3 months' witliholdings of the calendar year 1944. will be received in the fiscal year 1944. , | The estimates are presented to show both total receipts and net receipts. Total receipts cover all taxes and nontax revenues coming into the Treasury which are credited to general and special accounts, 60 REPORT OF THE SECRETARY OF THE TREASURY while net receipts represent total receipts less -a deduction for the amount of the net appropriation to the Federal old-age and survivors insurance trust fund. The appropriation to this fund represents an amount equivalent to 100 percent of the taxes received under the Federal Insurance Contributions Act less reimbursement to the General Fund for administrative expenses as provided in the law. In this discussion of estimated receipts, the term "Total receipts" means "Total receipts, general and special accounts, on the basis of daily Treasury statements, unrevised." The term " N e t receipts", which allows for the deduction for the appropriation to the Federal old-age and survivors insurance trust fund, means " N e t receipts, general and special accounts, on the basis of daily Treasury statements, unrevised". Total receipts, general and special accounts, are estimated (on the daily Treasury statement basis, unrevised) in the amounts of $24,552 millions in the fiscal year 1943 and $35,407 millions in the fiscal year 1944. The estimated total receipts in the fiscal year 1943 exceed by $10,884 millions the actual tptal receipts of $13,668 millions in the fiscal year 1942, while estimated total receipts in the fiscal year 1944 represent an increase of $10,854 millions over the estimated total receipts in the fiscal year 1943. The percentage distribution of total receipts in the fiscal years 1943 and 1944, as compared with actual receipts in the fiscal year 1942, is shown in the following table: Percentage distribution of total receipts in the fiscal years 1942, 1943, and 1944 Estimated, Estimated, 1944 1943 General and special accounts Internal revenue: Income taxes . : Miscellaneous internal revenue Employment taxes . Total internal revenue •_..Eailroad unemployment insurance contributions Customs Miscellaneous receipts Total receipts _ __ . : . - _ _ _ Actual, 1942 78.08 13.94 6.57 71.57 18.39 5.95 68 24 28 15 8 67 97.59 .03 .58 1.80 95.91 .04 1.03 3.02 95 06 06 2 85 2.03 100.00 lOO: 00 100 00 Estimated receipts in the fiscal years 1943 and 1944 and actual receipts in the fiscal year 1942 are presented in summary form in the table on page.61. A more detailed tabulation of receipts and estimates is shown in table 105 beginning on page 675. AU year-to-year differences and percentages appearing in the text are based on this detailed table. 61 REPOKT OF THE SECRETARY OF THE TREASURY Actual receipts iri the fiscal year 1942 and estimated receipts in the fiscal years 1943 and 1944 [In millions of dollars]; General and special accounts j • 1." Internal revenue: (1) Income and excess profits taxes: Corporation: Income Excess profits tax _ ._ Declared value excess profits tax. Total corporation Individual: Income Victory tax _ _ _._ _ 3. 870.0 10, 270. 0 90.0 3, 750.0 5; 670. 0 8.5.0 • 2, 764.0 1, 618. 2 52 2 ' 14,. 230. 0 9,505.0 4, 434. 4 '. J 10, 111. 3 2, 800. 5 7,127. 5 ' 534.6 3,108. 0 12.911.8 7, 662.1 3,108. 0 500.0 3.0 400.0 . 4.0 460 1 44 Total back taxes _ , . j ' _ . - . L -—- Total income taxes (collection basis) ' Adjustment to daily Treasury statement basis, unrevised _ J... Total income taxes (daily Treasury statement basis, unrevised). ._"'.' 404.0 464.5 17, 571.1 8, 006. 9 —46 4 . 17,571.1 . 7,960. 5 360.0 609.3 54.5 1, 486. 5 948.2 42.0 395.8 137.0 902.9 300.0 500.0 41.4 1, 376. 2 919.8 40.8 468.4 143.4 725.5 281 9 340 3 92 2 1, 046. 9 780 8 41 7 768 3 80 2 405 4 Total miscellaneous internal revenue (collection basis) --J Adjustment to daily Treasury statement basis, unrevised '-._. 4,936. 2 4,615.5 3, 837. 7 Total miscellaneous internal revenue (daily Treasury statement basis, unrevised). --_ ' 4, 936. 2 4, 515. 5 3, 847.1 1, 555. 8 170. 6 1,105.0 147.9 895 6 119 9 1, 726.4 1, 252. 9 1,015.6 244.5 209.2 170 0 1, 970.9 1,462.1 1,186.6 34, 651. 9 23, 548. 7 12,993.1 11.3 204.3 10. 2 252.6 8.5 388 9 639.2 740.7 277.4 _ _. _ .- . . (3) Employment taxes: Taxes on employment by other than carriers: Federal Insurance Contributions Act • • Federal Unemployment Tax Act ' ;_ ; .. ' .1 ' i i L... i Total L-Taxes on carriers and their employees (Chap.' 9, Subchap. B of Internal Revenue Code) . I... Total employraent taxes (daily Treaisiiry statement basis, unrevised) _ o 503.0 27, 644. 8 27, 644.8 (2) Miscellaneous internal revenue: Capital stock tax Estate tax . .. _ . _ Gift tax . . . . Liquor taxes . . . . . _ . Tobacco taxes stamp taxes Manufacturers' excise taxes Retailers' excise taxes . .. Miscellaneous taxes :2. • •3 4. Actual, . 1942 1 | i ! L. ^ Total individual Back taxes: Corporation and individual income Unjust enrichment tax . JEstimated, Estimated, 1944 1943 . Total internal revenue (daily Treasury state' ment basis, unrevised) •.... Railroad unemployment insurance contributions (daily Treas• ury'statement basis." unrevised) i... Customs (daily Treasury statement basis, unrevised) Miscellaneous receipts (daily Treasury statement basis, unrevised) -- +9.4 Total receipts, general and special accounts (daily Treasury statement basis, unrevised). .' '....i... 35,406. 7 24,552.3" 13,667.9 Deduct: Net appropriation for Federal old-age and survivors insurance trust fund representing an amount equal to taxes collected and deposited under the Federal Insurance Conti*ibutions Act, less reimbursement to General Fund for administrative expenses J-... 1... 1,625.5 1,076. 2 868.9 33,881.2 23,476.1 12, 799.1 Net receipts, general and special accounts (daily Treasury statement basis, unrevised)__ _ ^ NOTE.—Figm-es are rounded to nearest tenth of a million and will not necessarily add to totals. 62 REiEORT OF T H E SEiORETARY OF T H E TREASURY Fiscal year 194S Total receipts in general and special accounts in the fiscal year 1943 are estimated at $24,552 millions, an increase of $10,884 millions over the actual total receipts of $13,668 millions in the fiscal year 1942. Net receipts—total receipts less the net appropriation for the Federal old-age and survivors insurance trust fund—are estimated at $23,476 millioris. This is an increase of $10,677 millions or 83.4 percent over actual net receipts in the previous fiscal year. Tremendous expansion of business activity consequent upon the entry of the United States into the war has raised incomes to higher levels among practically all classes of income recipients. New tax legislation has broadened considerably the tax base by lowering the exemptions. The tax rates are much higher than under previous tax laws. The combined infiuence of these factors is responsible for the large increase of the'estimated receipts in the fiscal year 1943 over the fiscal year 19.42. Receipts in the fiscal year 1943 are affected by the Revenue Acts of 1941 and 1942 as well as by certain ininor tax legislation. Because of the statutory lag in receipts, the receipts in the fiscal year 1943 do not represent the full eff'ect of the legislation in the calendar years 1941 and 1942. This is particularly true of income taxes. Income taxes.—Total incom.e and excess profits tax receipts, including back incom.e tax collections, in the fiscal year 1943 are estimated at $17,571 millions, more than double the receipts in any previous fiscal year. This represents an increase of $9,611 m.illions or 120.7 percent over the receipts from this source in the fiscal year 1942. Total current income and excess profits tax receipts are estimated at $17,167 millions, an increase of $9,625 millions or 127.6 percent over actual receipts in the preceding fiscal year. This increase in,current, receipts is divided almost evenly between receipts frorri corporation taxes and receipts from individual taxes. Total corporation current income and excess profits tax receipts are estimated to be $9,505 millions in the fiscal year 1943. This is an increase of $5,071 millions or 114.3 percent over actual receipts in the fiscal year 1942. The excess profits tax receipts provide 79.9 percent of the total increase in receipts from corporation current income and excess profits taxes. Current corporation income tax receipts, normal tax and surtax, are estimated at $3,750 millions in the fiscal year 1943 and represent an uicrease of $986 miUions or 35.7 percent over actual fiscal year 1942 receipts of $2,764 millions from this source. Receipts in the fiscal year 1943 represent the collection of income tax liabilities iiicurred in respect of the incomes of the calendar years 1941 aiid 1942, whereas REPORT OF THE SECRETARY OF THE TREASURY 63 the fiscal year 1942 receipts reflect liabilities for the calendar years 1940 and 1941 incomes. While receipts of calendar year liabilities are not divided evenly between the two fiscal years affected, the proportions are such that, for the purpose of simplifying the explanation of results, the calendar year common to both may be eliminated in comparing receipts for two fiscal years. Thus, in comparing the fiscal years 1943 and 1942, the calendar year 1941 may be disregarded and theincr-ease in receipts in the fiscal year 19,43 over those in the fiscal year 1942 may be attributed almost entirely to the change in income levels and methods of taxation in the calendar year 1942 as compared with the calendar year 1940. However, only part of the full calendar year 1942 increase in liabilities, roughly 50 percent, is reflected in the fiscal year 1943 receipts. ! In rdspect of the calendar year 1940 incomes only one income tax, the normal tax, was imposed on corporations. Corporations with normal-tax net income of $25,000 or less were taxed at bracket rates of 13K percent, 15 percent, and 17 percent. The addition of the defense tax equal to 10 percent of the regular tax raised the effective rates to 14.85 percent, 16.5 percent, and 18:.7 percent. Corporations with normal-tax net income in excess of $25,000 were taxed at a rate of 22.1 percent, which was raised to 24 percent; by the defense tax. This rate applied to total normal-tax net inqome. Corporations with normal-tax net income in excess of $25,000 were allowed an alternative to the above method of computing the tax.; The alternative method was to tax the portion of normal-tax net incpome under $25,000 at the bracket rates that are applicable to corporations with normal-tax net income under $25,000, and to tax the portion in excess of $25,000 at a 35 perc.ent rate. This alternative method resulted in a lower tax if normal-tax net income did not exceed $38,565.89. Above that net income it was advantageous to the corporation to compute the normal tax. at therfiat rate of 24 percent applicable to its entire normal-tax net income. ° i These tax rates were changed only slightly by the Revenue Acts of 1941 and 1942. In 1942 corporations with normal-tax net income of $25,000 or less were taxed at bracket rates of 15 percent, 17 percent, and 19 percent. Those with net income in excess of $25,000 were taxed at 24 percent. Corporations with normal-tax net income in' excess of $25,000 but not over $50,000 w^ere allowed an alternative to the above method of computing the norhial tax. The alternative method was to tax the first $25,000 of normal-tax net income at the bracket rates applicable to corporations having not more than $25,000 of normal-tax net income, and to tax the portion of normal-tax net income in exeess^,of $25,000 ativa-rate.of 31 percent. In addition to this normal tax, corporations were subject to a surtax on 1942 incomes. Corporations with surtax net income of $25,'000 487543—43 6 64 REIPORT OF T H E SEiORETARY OF T H E TREASURY or less were subject to a tax of 10 percent. Those with surtax net income in excess of $25,000 but not over $50,000 were subject to rates of 10 percent on the first $25,000 of surtax net income and 22 percent on the excess over $25,000. Corporations with surtax net income in excess of $50,000 were subject to a flat rate of 16 percent applicable to their entire surtax net income. Surtax net income is greater than normal-tax net .income by the amount of interest received from pertain United States obligations issued prior to March 1, 1941. The potential effect of the slight increase in normal tax rates and the addition of the corporation surtax was reduced by the allowance in 1942 of the adjusted excess profits net. income as a deduction in computing normal and surtax net income. In 1940 the normal tax was computed first and allowed as a deduction in computing the excess profits tax. The income tax base was further decreased in 1942 by the allowance of a two-year carry-forward of operating losses. In 1940 only one year of the carry-forward was effective. Excess profits tax receipts in the fiscal year 1943 are estimated at $5,670 millions, an increase of $4,052 millions or 250.4 percent over actual receipts of $1,618 millions from this tax in the fiscal year 1942. As excess profits tax receipts are collected in the same manner as corporation income taxes, a comparison of the calendar years 1942 and 1940 explains in the main the increase in the fiscal year 1943 over the fiscal year 1942. In respect of the calendar year 1942 incomes the base of the excess profits tax computation was net income before deduction of normal tax and surtax. In computing the calendar year 1940 tax liabilities the corporation normal tax was allowed as a deduction in computing excess profits net income. In 1940 corporations using the invested capital method in computing their excess profits credit were allowed a credit of 8 percent of invested capital. In 1942 the credit was reduced to 8 percent on the first $5 millions of invested capital, 7 percent on the amount in excess of $5 millions but not over $10 millions, 6 percent on the amount in excess of $10 miUions but not in excess of $200 millions, and 5 percent on invested capital in excess of $200 millions. On the other hand, corporations using the average earnings method could have a greater excess profits credit in 1942 than in 1940. In 1940 base period net income was an average of the net income of the years 1936 to 1939, inclusive, with an allowance of one deficit year as zero. Under the Revenue Act of 1942, which first applied to calendar year 1942 incomes, the net income of the lowest year of the base period could be counted at a minimum of 75 percent of the average net income of the remaining three years in.the base period. The excess, profits tax rate applicable in 1942, was substantiaUy higher than the eff'ective rate in 1940. In 1940 excess profits rates varied from 25 percent to 50 percent depending upon the absolute REPORT OF THE SEORETARY OF THE TREASURY 65 size of adjusted excess profits net income. In 1942 a flat rate of 90 percent applies except where the combined income and excess profits tax exceeds 80 percent of sm'tax net uicome before deduction of the adjusted excess profits net income, in which case the excess profits tax is reduced by the amount necessary t|o reduce the combined rate to 80 percent. Corporations are allowed |a post-war credit of 10 percent of the excess profits tax in the form cif noninterest-bearing bonds maturing at specified periods after the cessation of hostilities in the present war. A current credit against the; excess profits tax is allowed for debt retirement equal to 40 percent I of debt retired during the taxable year. The debt retirement credit cannot exceed the post-war excess profits tax credit and is deducted in computing the amount of the post-war excess profits tax refund du^ t h e corporation. , The Revenue Act of 1942 made many other changes in corporation income and excess profits taxes, most of which decreased the yield of. these taxes. The privilege of consolidated returns was extended to permit the fUing of consolidated returns for normal tax and surtax purposes as well as for excess profits tax calculation. If the corporation elects to file consolidated returns it must pay an additional tax of 2 percent of surtax net income. The method of computing depletion based on a percentage of gross income was extended to fiuorspar,^ ball and sagger clay, and rock asphalt. A credit, allowed against the corporation surtax only, equal to the aniount of dividends paid on preferred stock is allowed to public utilities furnishing telephone service or selling electric energy, gas, or water." Income derived from the excess output of corporations.engaged in the extraction of certain minerals was made nontaxable for excess profits tax purposes. The amount of excess output is based on the relation of production in the taxable year as compared with production in the base period 1936-1939, inclusive. | Certain changes were made which do not affect receipts immediately. A two-year carry-back of net operating lolsses is allowed in computing net income. In the calculation of the exc;ess profits credit, a two-year carry-back of unused excess profits credit is permitted. Both of these are in addition to the two-year carry-forward of net operating losses and unused excess profits credit aheady permitted. Provision is made to alleviate the problems of corporations whose basic inventories are depleted because of war shortages. When these inventories are replaced, the corporation may recalculate! its tax using an inventory valuation based on replacement cost in the year of replacement. The full effect of these changes will never be reflected in Goyernment receipts, since part of the effect will result in an increase in Government expenditures as refunds are made to taxpayers. _ Receipts from the declared value excess profits tax are estimated at $85 miUions in the fiscal year 1943 and represent an increase of $33 66 REPORT OF THE SECRETARY OF THE TREASURY iriillions or 62.8 percent over actual receipts in the fiscal year 1942. This increase is attributable to the substantially higher income levelsin the calendar year 1942 as compared with the calendar year 1940. Individual income tax receipts in the fiscal year 1943 are estimated at $7,662 millions or 146.5 percent more than actual receipts of $3,108 millions in the fiscal year 1942. Of the increase of $4,554 millions, the amount withheld at the source on salaries and wages in excess of an annual rate of $624 accounts for $535 millions. Apart from the withholdings, the increase is caused by the rise in income levels, the increase in tax rates, and the broadening of the income tax base determining fiscal year 1943 receipts as compared with fiscal year 1942 receipts. The amounts withheld at the source on sal^aries and wages paid during the first quarter oi the calendar year 1943, computed at 5 percent oil the excess over an exemption fixed at the annual rate of $624 per recipient, are included in the tabular presentation of estimates as Victory tax receipts since the amounts withheld apply first in liquidating the Victory tax liability. The more important exemptions from cpllecitioii at the source on salaries' and wages (but not from ultimate liability for Victory tax) consist of the great bulk of remuneration for s'ervices iii the armed forces, for agricultural labor, for domestic service, and for casual labor. As is true for corporation income tax receipts, individual income tax receipts, excluding the Victory tax, in the fiscal year 1943 are composed of receipts from liabilities of the calendar years 1941 and 1942 while receipts in £he fiscal year 1942 are derived from liabilities of the calendar years 1940 and 1941. Of the total individual income tax receipts of $7,128 millions estimated for the fiscal year 1943, $1,360 millions refiect partial collections of liabilities for the calendar year 1941 and $5,768 millions arise from liabilities of the calendar year 1942. Of total actual receipts of $3,108 millions in the fiscal year 1942, $544 millions are receipts of collections based on liabilities, of the calendar year 1940 and $2,564 millions'" refl'e'ct recei|)ts of • liabilities of the calendar year 1941. ^ In the case of the corporation income taxes, the explanation of relative fiscal year receipts could be simplified by the elimination of the calendar year common to both fiscal years, because of the equal distribution of calendar year liabilities as receipts in fiscal years. However, as may.be seen from examination of the ahove figures relating to the individual incipine tax, the receipts from the liabhities of the calendar year 1941 are not distributed evenly between the fiscal years 1942 and 1943; consequently, the simplified discussion used for corporation taxes cannot be^ employe'd for the individual income tax. ^ > The 1941-act personalexenip tions of $1,500 fbr,,inarrie4, couples and heads of faiiiilies and $750 for single persons were reduced to $1,200 arid $500, respectively, in the 1942 act. The base w4s further broad REPORT OF THE SEORETARY OF THE TREASURY 67 cned by reducing the dependent credit from $400 to $350. However, for members of the armed forces belo\y |the grade of commissioned officer an additional allowance of $300 for married couples and heads of families and $250 for single persons was granted as an exclusion from gr.Qss income of salary received by,such personnel for active service. Surtax rates were increased throughout the entire schedule, ranging from an increase of more than double on the first $2,000 of surtax net income (from 6 percent to 13 percent) to ah increase of 1/15 on surtax net income over $5 mUlions (from 77 percent to 82 percent). The normal tax rate was increased from 4 percent to 6 percent. On the other hand, the base is reduced by the allowance of deductions for certain medical expenses and certain State retail sales taxes. Snaall reductions of tax yield result from additions of certain minerals entitled to 15 percent depletion aUowance, a;two-year carry-back of net operating losses, a change in the computation of the tax liability of taxpayers whose fiscal years do not coincide with the calendar year, and an additional exclusion from gross income of pensions, annuities, etc., for disability resulting from military service. Collections of back corporation and individual income taxes are estimated at $400 mUlions, a decrease of ^60 miUions or 13.1 percent as compared, with actual receipts in the prjevious fiscal year. Miscellaneous internal revenue.—Miscellaneous internal revenue receipts in the fiscal year 1943 are estimated at $4,516 millions, an increase of $6.68 mUlions or 17.4 p.ercent over actual receipts in the fiscal year 1942. The bulk of miscellaneous internal revenue is derived from levies incident to the sale of goods or seryices. The exceptions to this are capital stock, estate, and gift taxes, the revenues from which are estimated at $841 millions in the fiscal year 1943. The basic index of variation in the excise tax receipts is consumer purchases. The impact of war on the,economy has caused an increase in the consumption of certain commodities and a decline in that of others. Restrictions upon production account for the latter. Increases in the tax rate are also of prime importance in the case of receipts from certain of these taxes. The resulting estimated collections from miscellaneous internal reveriue taxes, excluding those from capital stock," estate, and gift taxes, iare $3,674 miUions in the fiscal year 1943, an increase of $551 millions or 17.6 percent over the estimated receipts" in the fiscal year 1942. | Receipts from^ the capital stock tax are estimated at $300 millions in the fiscal year 1943 as compared with actual receipts of $282 millions in the previous fiscal year. Receipts in both years reflect a tax rate of $1.25 per thousand dollars of j declared valuation. The capital stock valuation reflected in receipts iri the fiscal year 1943 is the basis for determining excess profits for declared value excess profits tax calculation in respect of earnings in: the calendar year 1942. 68 REPORT OF T H E SEiORETARY OF T H E TREASURY Receipts in the fiscal year 1942 would represent the valuation of capital stock for declared value excess profits tax computation in the calendar year 1941. However, the difference in receipts does not reflect the' relative income levels in the two calendar years. Receipts in the fiscal year 1942 represent a valuation which, under the law in effect at that time, would serve as the basic valuation not only for the calendar year 1942 but also for the succeeding two years. The Revenue Act of 1942 revised this three-year valuation method so as to allow corpora-tions a completely new valuation every year instead of every three years. Estate tax receipts are estimated to be $500 millions in the fiscal year 1943. This is an increase of $160 millions or 46.9 percent over actual receipts of $340 millions in the fiscal year 1942. The estimated increase is a result primarily of the higher rates of the Revenue Act of 1941 applicable to approximately 50 percent of the returns filed in the fiscal year 1943. A lag of approximately 15 months between the date of death and the date of filing the return is responsible for the fact that only a part of the returns filed in the fiscal year 1943 will be subject to the higher rates of the Revenue Act of 1941. Gift tax receipts in the fiscal year 1943 are estimated at $41 millions. This is a decrease of $51 millions or 55.1 percent, as compared with actual receipts of $92 miUions in the fiscal year 1942. The receipts in the fiscal year 1942 were the result of a large volume of gifts made in the calendar year 1941 caused in large measure by the increased estate, income, and gift tax rates contained in the Revenue Act of 1941. The estimated receipts in the fiscal year 1943,. however, represent gift taxes based on a normal year of gifts made without comparable special incentives and following a year in which an abnormal volume of gifts had been made. The estimated receipts represent a large decrease from the fiscal year 1942 even though the increased rates of the Revenue Act of 1941 are applicable to the giftsupon which the fiscal year 1943 receipts will be based. Total receipts from the liquor taxes are estimated at $1,376 millions,, an increase of $329 millions or 31.5 percent over receipts in the previous .fiscal year. Receipts from taxes on distilled spirits and fermented malt liquors account for $1,238 millions of 89.9 percent of the estimated total receipts from this group. Receipts from the excise tax on distilled spirits are estimated to increase $228 millions or 39.7 percent, to a total of $802 millions in the current fiscal year. The higher yield is almost entirely the result of an increase in the tax rate from $4 to $6 a gallon imposed by the Revenue Act of 1942, effective November 1, 1942. Receipts from the excise tax on fermented malt liquors are estimated to increase $69 millions or 18.9 percent to a total of $435 millions. An increase in the tax rate from $6 to $7 a barrel imposed by the Revenue Act of 1942, effective November 1, REPORT OF THE SEORETARY OFJ THE TREASURY 69 1942, is largely responsible for the estiniated increase in receipts. Receipts from the excise tax on wines are :estimated at $33 millions, an increase of 36.7 percent over ihq receipts in the previous fiscal year. This gain is expected to be caused primarily by the higher tax rates now in effect. Floor stocks taxes, a nonrecurring item, on distilled spirits, wines; and fermented malt liquors are estimated to yield $69 miUions. I Receipts from the tobacco taxes are expected to total $920 millions, an increase of $139 millions or 17.8 percent over the yield of these taxes in the previous fiscal year. Of this total, the receipts from the tax on cigarettes will cons tribute $832 millions. This item will represent the largest single source of reveriue from the excise taxes. An increase of 18.1 percent in estimated receipts from the cigarette tax is accounted for by an increase in the tax rate from $3.25 to $3.50 per thousand cigarettes, effective November 1, 1942, and by a further uicrease in consumption. The yield from'the tax on chewing and smoking tobacco is estimated at $51 millions, a decline of 3.1 percent. Higher tax rates on cigars and a reclassification by tax groups, together with a growth in consumption, are expected to increase receipts from the cigar tax to $22 millions, a gain ofi55.8 percent. Receipts from stamp taxes on issues of securities, bond and stock transfers, etc., and on playing cards and silver bullion sales are estimated at $41 millions, a decrease^of 2.21 percent.. No changes in' tax rates were made in this group by the Revenue Act of 1942. The manufacturers' excise taxes, imposM on many consumers' goods which have been affected by the conversion of factories to war material production and by restrictions on civilian use of gasoline and rubber, are expected to yield $468 milliohs in the fiscal year 1943. This represents a decline of $300 millions or ^9.0 percent. The tax on gasoline, with receipts estimated at $256 miUions, will continue as the most important source of revenue in this group. However, this yield represents a decline of $113 millions or 30.7 percent cornpared with receipts in the preceding fiscal year. The! decrease is expected to result from the adoption on December 1, 1942, of a program of rubber conservation which has necessitated the Nation-wide rationing of gasoline. Receipts from the tax on lubricating oils are estimated at $48 millions, an increase of 2.9 percent. While the use of lubricating oils by automobiles is* expected to be curtailed, the effect of this on revenues will be more than offset by an increase in industrial use and by an increase in the tax rate from 4}^ cents to '6 cents a gallon, effective November 1, 1942. The tax on electrical energy for household and commercial use is estimated to yield $51 millions. The increase of 2.4 percent is expected to be caused by a further moderate expansion in consumption. i 70 REPORT OF T H E SEIORETARY OF T H E TREASURY Estimated receipts from many taxes in this group show large declines from comparable receipts of the previous fiscal year. Because of automobile rationing and the cessation of production for civilian us.e, receipts from the tax on passenger automobiles are expected to.drop from $77 millions to $2 millions, or 97.4 percent. The curtailment in production of tires and inner tubes for taxable uses is respbhsible for a decline of $40 millions (70.8 percent) in the estimated receipts from the tax on these items. Receipts from the taxes on such articles as autoinobile parts and accessories, electric, gas, and oil appliances, radios, phonographs, and musical instruments, refrigerators, business and store machines, and firearms and shells all show substantial declines because of the conversion of these industries to the production of war goods. Certain taxes in this group were repealed by the Revenue Act of 1942. These include the excise taxes on articles made of rubber, on electric signs, on commercial washing machines, arid on optical equipment. Receipts from the taxes on these items were received during part only of the fiscal year 1942, since the taxes became effective on October 1, 1941. The base for the tax on refrigerators and refrigerating equipment \yas changed by the Revenue Act of 1942 to cover only household refrigerators, parts, and self-contained air-conditioning units. Substantial increases are shown in the fiscal year 1943 in estimated receipts from the taxes on matches, luggage, and sporting goods because these taxes were in effect during part only of the fiscal year 1942. Declines would he indicated in each case if comparisons were made between receipts for two years throughout each of whiph the taxes were in effect. The retailers' excise taxes on jewelry, etc., on furs, and on tqilet preparations are estimated to yield $143 millions in the fispal 37 ear 1943, an increase of $63 millions or 78.9 percent over the receipts in the previous fiscal year. For each of these three taxes the relatively large increase in estimated revenues results from the fact that the tax was in effect during part only of the previous fiscal year. Increased retail sales in response to higher consumer incomes also contributed to the increase. The miscellaneous tax group is estimated to jield $726 m.U]ioris, an increase of $320 millions or 79.0 percent over the receipts in the fiscal year 1942. The increase is caused principally by rate increases on certain taxes made by the Revenue Act of 1942, and by the fact that other important taxes were in effect during part only of the fiscal year 1942. Receipts from the tax on telephorie, telegraph, radio, and cable facUities, etc., are estimated at $85 mUlions, an increase of $36 mUlions over receipts in the preceding year. An advance in the tax rates, eft'ective November 1, 1942, from a differential rate plan approximating an average of 14.6 percent to a'flat rate of 20 percent on tele REPORT OF THE SEORETARY OF! THE TREASURY 71 I . phone messages and from 10 percent to: 15 percent on telegraph messages, and some further expansion in the use of these facilities account for the estimated increase in revenues. The tax on local telephone service is estim.ated to yield $741 mallioris in the fiscal year 1943, an increase of $48 mUlions over receipts in the previous year. A charige in the tax rate from 6 percent to lOj percent, eff'ective November 1, 1942, an expected further increase in local telephone service, and the fact that the tax was in effect during part only of the previous year account for the large increase in estimated revenues. The tax rate on the transportation of persons was increased from 5 percent to 10 percent by the Revenue Act of 1942. The higher tax rate, combined with an expected further increase in civilian travel, raises the estimated receipts from this tax to $84 millions in the fispal year 1943. This yield compares with receipts of $21 millions in the previous fiscal year, during which the taxi was not in effect for the entire period. The Revenue Act of 1942 imposed a tax of 3 percent on the transportation of property with certain exceptions. In the Case of coal, the act substituted a levy of 4 cents a short ton. Receipts from the new tax are estimated at $77 millions in the fiscal year 1943. Receipts,from the tax on admissions are Estimated at $155 milhons., a^ri increase of $40 millions, or 34.6 percent.!. Not only are rising consumer incomes expected to stimulate attendance at theaters, etc., but an extension of the tax base to include admissions under 21 cents was not in effect for the entire fiscal year 1942, the period with which comparison is made. i The use tax on motor vehicles and boats is estimated to yield $150 millions, an, increase Pf $78 miUiPns over the receipts in the previous fiscal year. The tax was in effect during 5 mionths only of the previous fiscal year. Gasoline rationing, tire shortages, and other factors are expected to reduce the number of motor vehicles and boats subject to the tax in the fiscal year 1943 as compared with the preceding year. Receipts from the tax on manufacture pf sugar are estimated at $48 millions, a decline of $20 millions or 29.8' percent from the receipts in the previous fiscal year. The decrease follows the expected reduction in the quantity of sugar to be manufactured in the United States during the fiscal year 1943. Employment taxes.—Total employment taxes included in internal revenue are estimated at $1,462 millions, ani increase of $277 millioris or 23.3 percent over actual receipts of $1,186 millions in the fiscal year 1942. ^ \ • The estimated increase in receipts is attributable alinost entirely to a higher level of pay rolls. The increase in the Federal Insurance Contributions Act tax rate from 1 percent to 2 percent on employer and employee (total 4 percent) which was to become effective ori January 1, 1943, under the Social Security Act Amendm^ents of 1939, 72 REPORT OF T H E SEiORETARY OF T H E TREASURY was postponed until January 1, 1944, by the provisions of the Revenue Actof 1942. Receipts under the Federal Insurance Contributions Act are estimated at $1,105 millions. This amount exceeds the actual receipts of $896 miUions in the fiscafyear 1942 by $209 miUions or 23.4 percent. Receipts under the Federal Unemployment Tax Act are estimated ~ at $148 millions. As compared with actual receipts of $120 millions in the fiscal year 1942; this represents an increase of $28 mUlions or 23.3 percent. Receipts under the Carriers Taxing Act of 1937 are estimated at $209 millions. This is a 23.1 percent increase over actual receipts of $170 millions in the fiscal year 1942. The increase is the result of an increase in taxable compensation, reflecting the effect of an increase in work hours and a higher wage rate level resulting from the wage rate increase for railway labor, effective in its entirety beginning December 1, 1941, ^as-approved by the President's Emergency Board under the Railway Labor Act. A portion of the increase is the result of an increase in tax rate, effective in January 1943 from 3 percent to 3}^ percent on both employers and employees (total 6)2 percent). Total internal revenue.—Total internal revenue, which is the sumniation of the estimated receipts discussed in detail above, is estimated at $23,549 millions in the fiscal year 1943 compared with actual receipts of $12,993 millions in the fiscal year 1942, an increase of $10,556 millions or 81.2 percent. A detailed tabulation of the foregoing estimates is in the table on page 675. Railroad unemployment insurance contributions.—Railroad unemploj'^ment insurance contributions are estimated at $10 millions, an increase of $2 millions over the actual receipts of $8 millions in the fiscal year 1942. Customs.—Customs receipts, including import taxes collected and paid in the same manner as duties imposed by the Tariff Act of 1930, are estimated at $253 millions. This is a decrease of $136 millions or 35.1 percent from the actual receipts of $389 millions in the fiscal year 1942. ° . The decrease results from a decline in the volume of imports, consequent upon Government import restrictions to conserve available cargo space, shipping difficulties, and the diversipn pf shipping space to war needs. The free entry of strategic materials, as provided for in • Executive Order No. 9177, will also cdntribute to a decrease in customs receipts. Miscellaneous receipts.—Miscellaneous receipts in the fiscal year 1943 are estimated at $741 millions, an increase of $463 millions or 167.1 percent over the receipts in the fiscal year 1942. Of this increase, $350 millions represent estimated excessive profits from renegotiation of contracts,, as provided in section 403 of the Sixth Supplemental REPORT OF THE SEORETARY 'Ot THE TREASURY National Defense Appropriation Act April 28, 1942), as amended. 73 (Public No. 528, approved I . , Fiscal year 1944 Total receiptS'in general and special accounts in the fiscal year 1944 are estimated at $35,407 millions, an increase of $10,854 mUlions over -estimated total receipts in the fiscal year |l943. Net receipts^total receipts less the net appropriation for the Federal old-age and survivors insurance trust fund—are estimated at $3;3,881 mUlions. This is an increase of $10,405 millions or 44.3 percent over estimated net receipts of $23,476 millions for the fiscal year 1943. Each major source of revenue contributes to the increase with the exception of manufacturers' and retailers' excise taxes and customs. Of the increase of $10,854 millions in estimated total receipts in the fiscal year 1944, $10,074 millions or 92.8 percent of the total increase comes from income taxes. j Income taxes.—Estimated income and excess profits tax receipts reach a new all-time high of $27,645 millions, an increase over the fiscal year 1943 of $10,074 millions or 57.3 percent. About 52 percent of the increase is in individual income taxes (including the net effect of the Victory tax). ! Total corporation income and excess profits taxes, excluding collections of back income taxes, are estimated at $14,230 millions, an increase of $4,725 miUions or 49.7 percent'over estimated receipts in the. fiscal year 1943. Practically all of this| increase is reflected in the increase of $4,600 millions in collections ;of the excess proflts tax. Current receipts of the individual income tax including the Victory tax are estunated at $12,912 millions in the fiscal year 1944, an increase of $5,250 mUlions or 68.5 percent over estimated receipts in the fiscal year 1943. Corporation income tax receipts in the fiscal year 1944 are estimated at $3,870 Iriillions, an increase of $120 mijilions or 3.2 percent over estimated receipts in the previous fiscal year. In the comparison of receipts in the fiscal years 1942 and 1943, l^he difference was ascribed to the relative income levels of the calendar years 1942 and 1940 as collections of the liability year 1941 are distributed evenly between the two fiscal years. In a comparison of receipts in the fiscal years 1943 and 1944, the explanation of results may be limited to a comparison of the tax liabilities in respect of the incomes for the calendar years 1943 and 1941. This applies not only I to the corporation income tax but to the excess profits and declared ;value excess profits taxes as well. In both the calendar years 1941 and 1943! corporations were subject to a normal tax and a surtax. In both years the normal tax rates were 74 REPORT OF THE SfcORETARY OF THE TREASURY substantially the same. For corporations with normal-tax net income of-$25,000 or less the rates were 15 percent on the first $5,000, 17 percent on the amount in excess of $5,000 but not over $20,000, and 19 percent on the excess over $20,000. I n 1941 and 1943, corporations with norm.al-tax net incomes in excess of $25,000 were subject to a flat rate of 24 percent on the entire normal-tax net income. An alternative method of computing the tax was allowed which permitted corporations to compute the tax on the first $25,000 of normal-tax net income at the bracket rates applicable to corporations with normaltax net income of less than $25,000. Under this alternative method normal-tax net income in excess of $25,000 was subject to a rate of 37 percent. Corporations with normal-tax net income of less than $38,461.54 could use the alternative method with advantage. Under the 1942 Revenue Act in effect in the calendar year 1943, the rate on norm;al-tax net incom.e in excess of $25,000 was reduced to 31 percent. This raised to net incom.e of $50,000 the point at which the alternative method of com.puting the tax resulted in a tax saving to the corporation. This-was the only change in normal tax rates. In 1941 the corporation surtax rate was 6 percent on corporation surtax net income not in excess of $25,000 and 7 percent on surtax net income in excess of $25,000. These bracket rates of tax applied to the surtax net income of all corporations. In 1943 corporations with surtax net income of less than $25,000 are taxed at 10 percent. Corporations with surtax net income in excess of $25,000 but not over $50,000 are taxed at 10 percent on the first $25,000 of surtax net income and at 22 percent on the excess over $25,000. .Corporations with surtax net income over $50,000 are-subject to a'flat rate of 16 percentapplicable to their: entire surtax net income. Despite the effect of higher surtax rates and substantially increased income levels in the calendar year 1943, as compared with those in the calendar year 1941, estimated regular corporation income tax receipts in. the fiscal year 1944 are not much higher than estimated receipts in the fiscal year 1943. This situation results from the decrease in the tax base caused by the allowance of the deduction of adjusted excess profits net incom.e in computing incom.e tax net incom.e for the calendar year 1943, as compared with the allowance of the excess profits tax as a deduction in com.puting liabilities on incom.es in the calendar year 1941, when the maximum excess profits tax rate'was 60 percent. Under existing law, and with rising corporate incom.es, the base of the income tax will rem.ain relatively stable as a considerable portion of increased profits is subject to excess profits tax. CorpPration excess profits tax receipts in the fiscal year 1944 are estimated at $10,270 millions, an increase of 81.1 percent over estimated receipts of $5,670 millions in the fiscal year 1943. The increase results from the substantially higher income levels and increased tax rates in REPORT OF THE SECRETARY OF THE' TREASURY . 75 the calendar year 1943 as compared with those in the calendar year 1941. In the calendar year 1941 corporations were subject to excess profits tax rates varying from 35 percent to 60 percent, depending on the absolute amount of excess profits, the highest rate applicable to adjusted excess profits net income in excess of $500,000. With respect to their calendar year 1943 incomes, corporations are subject to a flat rate of 90 percent on adjusted excess profits net income. Thi^ is reduced where the combined income and excess profits tax exceeds 80 percent of surtax net income computed without the deduction pf adjusted excess profits net income, so that the combined income and excess profits taxes will equal 80 percent. Corporations are allowed a credit o f l O percent pf the excess profits tax as a ppst-war refund. A current credit is allowed equal to 40 p.ercent of debt retired but npt to exceed the post-war credit. In each year corporations may determine their excess profits tax liability by c'omputing their excess prpfits credit under either the average earnings method or the invested capital methqd. Corporations using the average earnings method receive more favorable treatment in 1943 than they did in 1941 since in 1943 the lowest year of the base period is counted at a minimum of 75 percent of the other three years in computing base period net income. This 75 percent minimum was not allowed i n the calendar year 1941. However, some corporations using the invested capital method will have a smaller excess profits .credit in 1943. I n 1941 cprporations were allowed a credit equal to 8 percent on the first $5 miUions of invested capital and 7 percent on the excess. The 1942 Revenue Act reduced this credit to 8 percent on the first $5 millions of invested capital, 7 percent on the next $5 millions, 6 percent on the next $190 millions, and 5 percent on the excess over $20.0 millions. Other legislative changes made by the Revenue;Act of 1942 ajBFecting the corporation income and excess profits taxes were indicated in the explanation of comparative receipts in the fiscal years 1942 and 1943. Declared value excess profits tax receipts in the fiscal year 1944 are estimated at $90 millions, an increase of $5 millions or 5.9 percent over estimated receipts in the fiscal year 1943. Estimated calendar y^ar ' 1943 income levels are substantially higher than those of the calendar year 1941 but the effept of relative income levels is pffset to some extent by the substantial change in economic conditions during 1941, making it difficult for cprporations to provide against declared value excess prpfits tax liabilities by accurate capital stock valuations. I t is b,elieyed that this condition will not exist in the calendar year 1Q43 to the same extent as in the calendar year 1941. Total individual income tax receipts in th^ fi^c.al year 1944 arp estimatgjd at $12,912 millioris, ^n increase of $5,250 millipns f)j: 68.5 percerif over estiiria^te^d total individual income tax receipts in 1.943 of 76 REPORT OF THE SECRETARY OF THE TREASURY $7,662 millions. The income tax which is estimated to increase $2,984 millions or 41.9 percent provides $10,111 millions of the fiscal year 1944 total. Net Victory tax payments plus receipts from withholdings at source are estimated at $2,801 millions in the fiscal year 1944. I t is estimated that the post-war credit allowed under the Victory tax will be taken almost entirely as a current credit in the fiscal year 1944. The collection at the source in any calendar year is a. prepayment on the tax liability of that calendar year which is ultim.ately due in March of the succeeding year. If the amount collected at the source exceeds the Victory tax liability, the excess is applied against the incom.e tax liability. The gross Victory tax liability is computed =at 5 percent on the Victory tax net income during the calendar year of every individual, after allowance of a fixed exemption of $624, but is limited to the difference between 90 percent of net income for regular income tax purposes and the regular net income tax liability. Victory tax net income is gross income in the case of wages, salaries, interest, and dividends, but is net income after allowable deductions in the case of rent and business, professional, and farm income. A post-war credit is provided of 40 percent of the gross Victory tax for married couples or heads of families not to exceed $1,000, 25 percent for single persons not to exceed $500, and 2 percent for each dependent not to exceed $100 each. Subject to certain limitations, the entire credit may be absorbed currently to the extent of specified payment of premiums on life insurance, net repayment of debts, and net purchases of eligible United States obligations. Collections of back income taxes are estimated at $500 mUlions in the fiscal year 1944, an increase of $100 millions or 25.0 percent over estimated receipts in the previous fiscal year. Miscellaneous internal revenue.—Toteil miscellaneous internal revenue receipts in the fiscal year 1944 are estimated at $4,936 millions. This is an increase of $421 millions or 9.3 percent over receipts from this spurce in the fiscal year 1943. About 70 percent of the increase comes from miscellaneous taxes and the taxes on liquors. The estimated yield from manufacturers' excise taxes dropped $73 millions below the fiscal year 1943 figure. This decline is due almost entirely to the restrictions upon the manufacture of consumers' durable goods. Capital stock tax receipts in the fiscal year 1944 are estimated at $360 millions,"an increase of $60 millions or 20.0 percent over estimated receipts in the preceding fiscal year. This increase results from the estimated increase in income levels in the calendar year 1943 as compared with the calendar year 1942. Estate tax receipts are estim.ated at $6.09 millipns in the fiscal year 1944, an increase of $109 millions or 21.9 percent over estimated receipts in the fiscal year 1943. The increase is accounted for prin REPORT OF THE SECRETARY OF THE TREASURY 77 cipally by the fact that for the first time the 1941 act rates will apply to practically all returns filed. The changes made by the 1942 act apply to part only of the returns filed in the fiscal year 1944 but will result in some increase of revenue. Thus, it is estimated that the change which substitutes one $60,000 specific exemption for the former specific exemption and insurance exclusion of $40,000 each, resulting in some loss of revenue,'will be more than offset by a gain from certain changes in the powers of appointment and in the treatment of community property as jointly owned property. Gift tax receipts in the fiscal year 1944 are estimated to be $55 rnillions. This represents an increase of $13 millions or 31.6 percent over the estimated receipts in the fiscal year 1943. The increase ds caused by the reduction of the annual exclusion from $4,000 to $3,000 for each donee and of the specific exemption from $40,000 to $30,000, made by the 1942 act, as well as by an increase in the estimated total value of gifts. Receipts from the liquor taxes are estimated at $1,487 millions in the fiscal year 1944, an increase of $110 millions or 8.0 percent over the estimated receipts in the previous fiscal year. Of the estimated total receipts, 62.7 percent is accounted for by the tax on distilled spirits, which in this year supplants the cigarette tax as the largest single source of excise tax revenue, and 31.3 percent is accounted for by the tax on fermented malt liquors. The increase in receipts for this group reflects a full year's collections at the higher tax rates on distilled spirits, wines, and fermented malt liquors provided in the Revenue Act of 1942, as compared with a partial year's collections at these rates in the previous flscal year. Actual withdrawals of distilled spirits are expected to decline in the fiscal year 1944 because of a reduced quantity of these products available for consumption under the program for diversion of alcohol to war uses. Withdrawals of wine are expected to be reduced somewhat because of reduced production, and withdrawals of fermented malt liquors are expected to remain unchanged. Total tobacco tax receipts are estimated at $948 millions in the fiscal year 1944, representing an increase of $28 mUlions or 3.1 percent over estimated receipts in the fiscal year 1943. Of this group, the largest single source of revenue is from the tax on cigarettes. This tax is estimated to yield $30 millions or 3.6 percent more than in the previous fiscal year. This increase is ascribed principaUy to increased consumer income making possible the purchase of more cigarettes and to some shift from the use of manufactured ^obacco to the smoking of cigarettes. The tax showing the largest percentage increase in receipts is that on large cigars, estimated to yield $28 millions in the fiscal year 1944, an increase of $6 mUlions or 27.1 percent. The greatest part of this estimated increase in yield results from the fact that 78 REPORT OF THE SEORETARY OF THE TREASURY the higher tax rates imposed by the Revenue Act of 1942 are refiected in only 8 months of the fiscal year 1943 receipts. Total stamp tax receipts in the fiscal year 1944 are estimated to yield $42 millions, an increase of $1 million or 2.8 percent over the fiscal year 1943. The manufacturers' excise taxes are estimated to yield $396 millipns, a decrease of $73 millions or 15.5 percent. This decline is caused by production curtailments, shortages of materials, rationing of autp-. mobiles, etc. The largest single source of revenue in this group is from the tax on gasoline, which is estimated to yield $219 millions, a decrease of $37 rnUlions or 14.4 percent from the previpus year. The estimates assume that the Nation-wide rationing of m.otor fuel will extend throughout the fiscal year 1944, whereas rationing on a comparable scale extended through six months only in the fiscal year 1943The orily rnanufacturers' excise taxes showing increased yiel,ds pyer the fiscal year 1943 are those on lubricating oUs and on tires and tubes. Receipts from the tax on lubricating oils are expected to reach $58 miUions, an increase of $10 millipns or 21.3 percent over the preyiojiis year. This is "caused by increased consumption for industrial^ uses, although a further decline in its use for automotive purposes is anticipated. The tax on tires and tubes is estimated to yield $23 millions, an increase of $7 mUhons or 41.0 percent. This gain is largely attributable to some rise in tire production under the reclainied rubb.er program, and to the necessity for maintaining truck tires for essential uses. .. • . Receipts from other taxes in the manufacturers' excise group are expected to decrease. The tax on electrical energy is estimated to yield $51 millions, a decrease of $1 million from estimated receip|bs in the previous fiscal year. Receipts from the tax on parts and accessories for automobiles are estimated at $12 millions, a decrease .of $6 millions or 32.2 percent, hkewise the result of an expected purtailment of production for civilian use. The tax on photographic apparatus is expected to yield $4 millions, a decrease of $4 mUlions or 45.0 p.ercent from the -previous fiscal year. The amount of decrease, in taxable sales as compared with those of the previous fiscal year is actually greater, inasmuch as receipts in the fiscal year 1943 reflect pnly 7 months' taxation at the increased rate. The retaUers' excise taxes are estimated to yield $137 millions, a decrease of $6 mUlions or 4.5 percent. This decline is claused,chiefly by shortages of metals, etc., for jewelry, arid of alcphol, glycerin, ,etp.., for toilet preparations. . The miscellaneous t.ax group is estimated to yield $903 milhons, an increase of $177 millions or 24.5 percenjb pyer theTeceipts in the fispal year 1943. This increase cpmps principally from the tsixes pn-telephone, telegraph, etc.. local telephnne service, and transpprtp;t=i,ori pf REPORT OF THE SECRETARY OF THE TREASURY 79 property. The communication taxes are expected to yield $204 millions, an increase of $45 millions or 28.4 percent. This results from some further increase in the taxable use of telephone and telegraph facilities, and to the fact that the increased rates will be in effect for the entire year, whereas they were reflected in pnly 7 months of receipts in the fiscal year 1943. The tax most responsible for the increase in the miscellaneous group is that on the transportation of property. The higher receipts are caused by an expected further increase in business activity, and to the fact that the fiscal year 1943 estimate of receipts reflects less than a half-ye.ar's receipts, whereas those of the fiscal year 1944 reflect a full year's receipts. The receipts from the tax on admissions are estimated at $161 millions, an increase of $6 millions or 3.7 percent. The use tax on motor vehicles and boats is estimated to yield $125 mUlions, a decrease of $25 millions or 16.6 percent from the previous year. This decline is the result of a smaller number of taxable vehicles and boats expected to be in use because of the rationing of tires and gasohne. Employment taxes.—Total employment taxes included in internal revenue receipts are estimated to be $1,971 millions, an increase of $509 millions or 34.8 percent over the estimated receipts in the flscal year 1943. The increase results partly from a higher level of taxable compensation and partly from increased tax rates affecting contributions under the Federal Insurance Contributions Act and the Carriers Taxing Act of 1937. Receipts under the Federal Insurance Contributions Act are estimated at $1,556 mUlions. This is an increase of $451 millions or 40.8 percent oyer estimated receipts in the preceding fiscal year. The change in rate, effective January 1, 1944, raises the tax on both employees and employers from 1 percent to 2 percent (total 4 percent). The,increase in contributions will affect the receipts of only the last three months of the fiscal year 1944 (since there is a lag of one calendar quarter between the period of liability and the period of receipts) but will ampunt to 71 percent of the estimated increase in receipts under this act. Receipts under the Federal Unemployment Tax Act are estimated at $171 millions, an increase of $23 millions or 15.3 percent over the estimated receipts in the fiscal year 1943. The increase is the reflection of a higher pay-roll level. Receipts under the Carriers Taxing Act of 1937 are estimated, at $245, millions, an increase over the estimated receipts in the fiscal year 1943 of $35 millions or 16.9 percent. The increase is the result of higher railroad pay rolls and an increase in the tax rate. • The higher rate (3K percent on both employees and employers as compared with the previous rate of 3 percent on each) will affect contributions throughout the fiscal year 1944. 487543—43—7 80 REPORT OF THE SECRETARY OF THE TREASURY Total internal revenue.—Total internal revenue, which is the summation of the estimated receipts discussed in detail above, is estimated at $34,552'millions,in the fiscal year 1944 compared with $23,549 millions in the fiscal year 1943, an increase of $11,003 millions or 46.7 percent. A detailed tabulation of the foregoing estimates is in the table on page 675. Railroad unemployment insurance contributions.—Railroad unemployment insurance contributions are estimated to be $11 millions, an increase of $1 million over the estimate for the fiscal year 1943. These receipts represent 10 percent of the 3 percent tax on covered pay rolls, the other 90 percent being deposited to the credit of the Railroad Unemployment Insurance Account iri the Unemployment Trust Fund. Customs.-^Customs receipts in the fiscal year 1944 are expected to decline to $204 millions from estimated receipts of $253 millions iri the fiscal year 1943. Wartime activity is expected to increase the need for concentrating all available shipping space into the movement of strategic materials and supplies. Receipts from duties on stocks which will be withdrawn from storage are expected partially to offset the estimated decline in receipts from duties on many current imports. Miscellaneous recei^^s.^Miscellaneous receipts in the fiscal year 1944 are estimated at $639 millions. This is a decrease of $102 millions as compared with 1943, a declirie of 13.7 percent. Of the $639 millions, it is estimated that only $250 millions will be received in the fiscal year 1944 from renegotiated contracts, whereas $350 millions were estimated from this source in the fiscal year 1943. ESTIMATES OF EXPENDITURES Actual expenditures for the fiscal year 1942 and estimates for the fiscal years 1943 and 1944 are summarized in the following table. Further details willbe found in table 105, beginning on page 675. The estimates are based upon figures submitted to the Congress in the Budget for 1944. Actual expenditures for the fiscal year 1942 and estirnaied expenditures for the fiscal years 1943 and 1944} <^s exhibited in the Budget for 1944 ' [In,millions of dollars] General and special accounts . War activities Interest on tbe public debt... All other . . . Estimated, Estimated, 1944 1943 ^ __1 -._. . . '.. • . Total expenditures, general and special accounts Treasury statement basis, unrevised). (daily Actual, 1942 74, 000.0 97, 000. 0 • 3, 000. 0 . 1, 850. 0 4,128.9 4, 587.3 104,128. 9 80,,437.3 NOTE.—Figures are rounded to nearest tenth of a million and will not,necessarily add to totals. 26,011.1 1, 260.1 5 220.2 32, 491. 3 REPORT OF THE SECRETARY OF THE TREASURY 81 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. ADMINISTRATIVE REPORTS OF BUREAUS AND DIVISIONS 83 (^ F I S C A L SERVICE OF THE TREASURY DEPARTMENT The Fiscal Service of the Treasury Department, at the head of which is the Fiscal Assistant Secretary, comprises the Bureau of Accounts, the Bureau of the Public Debt, and the Office of the Treasurer of the United States. Under an order of the Secretary of the Treasury, the Under Secretary, in the event of a vacancy in the office of the Fiscal Assistant Secretary, acts as Fiscal Assistant Secretary and performs all duties and functions assigned to that office. The activities of the Fiscal Service are discussed in the following pages. BUREAU OF ACCOUNTS T h e supervision of the administration of the accounting functions and activities in the Treasury Department and all its.bureaus, divisions, and offices are exercised under the direction of the Secretary of the Treasury by the Fiscal Assistant Secretary through the Commissioner of Accounts. The function of authorizing the installation,° maintenance, revision, and elimination of accounting records, reports, and procedures in the Treasury Department are exercised by the Fiscal Assistant Secretary through the Commissioner of Accounts. The Commissioner of Accounts, at the head of the Bureau of Accounts, has supervision over the activities and functions of the Division of Bookkeeping and Warrants, Division of Disbursement, Division of Deposits, Section of Surety Bonds, Budget Section, vSection of Investments, and the Emergency Relief Accounting Organization, the latter to be liquidated by December 31, 1942. - The duties and functions of the units under the Bureau of Accounts are discussed in the following pages. The Commissioner, in collaboration with the Bureau of the Budget and General Accounting Office, also supervises work'in the Treasury Department in connection with the development of standards, terminology, classifications, a system of financial reporting, and summary accounts required by Executive Order No. 8512. OfiUce oj Commissioner oj Accounts Budgetary administration and jinancial reporting.—Under Executive Order No. 8512, dated August 13, 1940, prescribing regulations for the purpose of improving budgetary administration and financial reporting, the Secretary of the Treasury, with the approval of the Director of the Bureau of the Budget, was directed to establish (a) uniform accounting terminology, (b) uniform classifications of assets and liabilities, and revenues and expenditures, and (c) uniform standards for the valuation of assets and the determination of liabilities and the treatment of revenues and expenditures in relation thereto; and to maintain a complete system of summary accounts through which the financial data of the various agencies will be cPordinated and integrated. 85 86 REPORT OF THE SECRETARY OF THE TREASURY On March 3, 1942, the order was amended by>Executive Order No. 9084, which provides that prior to establishing uniform terminology, classifications, principles and standards, they be referred to the Comptroller General of the United States for consideration and determination as to whether they are in conflict with the forms, systems, and procedures prescribed by the Comptroller General as required by section 309 of the Budget and Accounting Act. (See exhibit 59, p. 341.) I n pursuance of Budget-Treasury Regulation No. 1, agencies of the Government are submitting requests for quarterly apportionments of their appropriations to be made by the Director of the Bureau of the Budget. They also are submitting monthly reports on the financial status of their appropriations. These reports will provide the basis for production by the Treasury Department of summary financial statements to reflect a composite picture of the Government's appropriations, obligations, and expenditures and special statements on war appropriations, emergency funds of the President, and similar statements. Budget-Treasury Regulation No. 2 deals with financial reporting by corporations and credit agencies of the Government and requests annual financial statements beginning with a report covering the fiscal years 1941 and 1942. Daily Statement oj the United States Treasury.—During the fiscal year 1942, there were several changes in classifications shown on the daily Treasury statement. Beginning with the statement for September 30, 1941, receipts, transfers from the General Fund, and expenditures in connection with the sale and redemption of surplus commodity stamps^ formerly shown on a net basis, were shown on a gross basis under the classification ''Trust accounts, increment on gold, etc.'' On the statement for May 1, 1942, the classification ''National defense" was changed to "War activities" and the expenditures ihade by several agencies previously shown as "General" were changed to "War activities." Changes in classification also arose under Executive Order No. 8929, transferring the Coast Guard to the Navy Department, and under Executive Orders Nos. 9054, 9069, and 9071, issued by the President under Title I of the First War Powers Act, approved December. 18, 1941. The tables for the Social Security, RaUroad Retirement, and Railroad Unemployment Insurance Acts, previously published in the daily Treasury statement on the 10th of each month, were included in the statement for the 15th of each month, beginning November 15, 1941. The preliminary public debt statement shown on the daUy Treasury statement for the last day of each month has been expanded, beginning with the statement for July 1942, so as to include'the detaUs with respect to the public debt and also the contingent liabilities of the United States, previously published on the monthly Statement of the Public Debt of the United States. Since this detaUed information wUl be shown in the daily Treasury statement, the Public Debt Statement will not be published after June 30, 1942, as a separate statement. Combined statement oj assets and liabilities oj Government corporations and credit agencies.—The combined statement of assets and liabUities of Government corporations and credit agencies, commenced in 1934 under the provisions of Executive Order No. 6869, dated October 10, 1934, superseded by Executive Order No. 8512, is published in the DaUy Statement of the United States Treasury, for the last day of REPORT OF THE SECRETARY OF THE TREASURY 87 each month. This statement as of June 30, 1942, will be found as table 88 beginning on page 624 of this report. Surveys under Reorganization Plan No. III.—Several important surveys and studies were made during the fiscal year 1942 to improve the accounting and reporting activities of the Department in connection with section 1 (b) of-Reorganization Plan No. I l l , which places the supervision of the administration of accounting functions and activities in the Treasury Department under the Fiscal Assistant Secretary to be exercised through the Commissioner of Accounts. These surveys included a study in cooperation with representatives of the General Accounting Office of transactions affecting the settlement of the account of the Treasurer of the United States. A joint study resulted in a recommendation for a new procedure for the monthly settlement of this account. Other surveys included a stud}^ of the accounting for nonexpendable items in the various offices of the Department, and a study of the accounting for pay-roll allotment deductions for the purchase of war savings bonds with the issuance of appropriate instructions thereon. Annual appraisal oj assets and liabilities oj the Commodity Credit Corporation.—Under the act approved March 8, 1938 (52 Stat. 107), as amended by Public Law 147, approved July 1, 1941, the Secretary of the Treasury is required to make an appraisal as of March 31 of each year of the assets and liabilities of the Commodity Credit Corporation for the purpose of determining the net worth of the Corporation. In the event that any such appraisal shaU estabhsh that the net worth of the Corporation is less than $100,000,000, the Secretary of the^ Treasury is required to restore the amount of the capital impairment, funds for which are appropriated by the Congress. In the event any appraisal shall establish that the net worth of the Corporation is in excess of $100;000,000, such excess must be deposited by the Corporation in the Treasury as miscellaneous receipts. The appraisal as of March 31, 1942, resulted in the return to the Treasury of $27,815,513.68, of which $18,000,000 was deposited in the fiscal year 1942 and .the balance in the succeeding fiscal year. The following statement shows the results of all such appraisals: Appropriations for restoration of capital impairment: Act of June 25, 1938 (appraisal as of Mar. 31, 1938, H. Doc. 670, 75th Cong.) Act of Aug. 9, 1939 (appraisal as of Mar. 31, 1939, H. Doc. 317, 76th Cong.) Act of July 3, 1941 (appraisal as of Max. 31,1941, H. Doc. 248, 77th Cong.).... Amount $94, 285, 404. 73 119,599,918.05 1, 637, 445.51 Total appropriations... T»ess amount returned to Treasury: Appraisal as of Mar. 31, 1940.. Appraisalas of Mar. 31, 1942.. 215,522,768.29 Net payments to corporation to June 30,1942 _ _ $43, 756, 731.01 27,815, 513. 68/ __ 71,572,244.69 143, 950, 523. 60 Securities and junds, Philippine invasion.—On December 19, 1941, pursuant to directions from the President, the Secretary of the Interior cabled the United States High Commissioner to the Philippine Islands to safeguard the rightful ow^ners or holders of United States securities,' checks, and currency in the Philippine Islands by accepting these valuables for safekeeping. In the event of the destruction of the securities, checks, and cmTency so deposited, the High Commissioner was advised that substitute securities, checks, or currency would be issued by the Treasury Department, provided the evidence was satis* factory and acceptable to the Secretary of the Treasury, and subject to all applicable law. 88, REPORT OF THE SECRETARY OF THE TREASURY Accordingly, the High Commissioner annouriced a safekeeping program under which individuals or corporations depositing valuables for safekeeping were required to execute affidavits identifying the affiant and any other persons having an interest in the property, describing fully the valuables deposited, requesting they be accepted for safekeeping, and specifying the disposition to be made of substitute issues in case of destruction of the originals. Later, the safekeeping program was expanded to include gold and silver biUlion, coins, Philippine currency, jewelry, all types of securities including stocks, and any other valuables which might be offered for safekeeping. The valuables"^ deposited under this safekeeping program were removed to Corregidor Island. Included among them were numerous securities, papers, and records of Manila banks and their clients, bars of gold bullion produced at mines in the Philippine Islands, and packages of United States and PhUippine currencies. Also included were over 18,000 checks drawn on the Treasurer of the United States which were deposited with the High Commissionei by the Treasurer of the Philippine Commonwealth. These checks had been paid by the Philippine Treasury, but the Treasurer of the United States had not yet made reimbursement. During February 1942, all valuables deposited with the High Commissioner for safekeeping except currencies, paid checks drawn on the Treasurer of the United States and some miscellaneous items v(eYe released to the custody of the U. S. Navy for transfer to the continental United States. Also, gold bullion and a portion of the coined silver belonging to the Commonwealth of the PhUippines which had not been deposited \vith the High Commissioner for safekeeping were shipped to the continental United States by the U. S. Navy. Three counterparts of affidavits, correspondence, and related documents, including a listing of the 18,000 paid checks, were similarly released for transmission, each counterpart by separate means, to the Treasury Department in Washington. The gold, silver, and all other valuables were transported to the United States and are held by the Secretary of the Treasury. All three counterparts of the related affidavits, correspondence, and other documents have been received in Washington, and aie now being examined and catalogued in the Bureau of Accounts, where records are being established to provide control over the valuables held in custody and to record the items due each depositor. Numerous inquiries are being received in regard to esta,blishing claims to assets believed to have been removed from the Philippine Islands. Claims presented by persons in the United States who state they are authorized to accept delivery of the gold bullion and other valuables are being investigated. The Treasury Department is endeavoring to carry out instructions of depositors who specified the disposition to be made of outstanding United States Government checks and securities delivered into custody. The currencies, paid checks, and other valuables which could not be shipped were destroyed at Corregidor by incineration or other means, in the presence of a committee of officials who have certified to the Secretary of the Treasury the destruction of these items. Representatives of the Treasury Department and the General Accounting Office are reviewing and correlating the available data relating to the account of the Treasurer of the United States with the Treasury of the Philippines. REPORT OF THE SECRETARY OF THE TREASURY 89 Advances to Federal Reserve Banks jor industrial loans, etc,—Advances to Federal Reserve Banks for industrial loans, etc., were authorized by the act approved June 19, 1934 (48 Stat. 1105), which amended the Federal Reserve Act, as amended, by adding section 13 (b). The provisions under which the Secretary of the Treasury makes these advances were described on pages 184 arid 185 of the annual report for 1940. No advances were made to the banks during the fiscal years-1939; 1940, 1941, and 1942, the last advance having been made on October 14, 1937. Payments received by the Treasury during the year aggregated $141,241.11, from the following banks: Boston, $3,133.55; Chicago, $27,214.83; Cleveland, $15,233.71; Philadelphia, $81,360.36; Richmond, $13,808.52; and Minneapolis, $490.14. The following statement is a summary of the transactions in connection with these advances to Federal Reserve Banks. Advances to Federal Reserve Banks for industrial loans, and payments received by the Treasury to June 30, 1942 Federal Reserve Bank Advances to Payments reMaximum Reserve ceived by the advances author- Federal Banks to June Treasury to June ized 30, 1942 30, 1942 Atlanta.Boston. Chicago Cleveland Dallas. Kansas City.. Minneapolis.. New York Philadelphia.. Richmond St. Louis San Francisco. $5, 272;03i: 55 10,230, 236. 88 19,748, 616. 70 14,146, 863. 66 4, 359,338.10 4,131,276. 30 3, 509,467. 65 42, 529,210. 65 14, 620, 1.52 5,808, 291.43 5,093, 112. 25 9, 850,328. 30 Total.-_ 139,299, 556.99 $756, 934:44 2,875,115. 98 1,417, 701. 33 1,015, 571. 33 1, 251, 788.08 1,145, 717. 73 1,007, 746. 96 7, 752,044. 63 4,198, 400. 60 3,420, 662.05 547,832.83 2,156, 795. 01 27, 646, 310. 97 1 $23; 875. 56 94, 899.03 138,317.80 67,434.12 1 74,116. 50 135,204.38 34,808.60 1 82,987.08 431,345.65 80, 522. 78 1 5,947.94 1,069,459.44 1 No payments received by the Treasury from these banks during the fiscal year 1942. Appropriations and expenditures under the Social Security Act.—The Social Security Act, approved August 14,1935, as amended (42 U. S. C , Ch. 7), provides for the establishment of a system of Federalold-age and survivors benefits, and for grants to the several States to enable them to make adequate provision for aged and blind persons, needy, dependent, and crippled chUdren; rriaterrial and chUd welfare; public health services; and the administration of State unemployment compensation laws. Section 201 (a) of the Social Security Act Amendments of 1939, approved August 10, 1939, makes permanent appropriations %o the Federal old-age and survivors insurance trust fund for the fiscal year 1941 and each year thereafter equal to 100 per centum of the employment taxes received under the Federal Insurance Contributions Act and covered into the General Fund of the Treasury. The amounts appropriated to June 30, 1942, under the various authorizations contained in the Social Security Act, as amended, and total expenditures from such appropriations to Jurie 30, 1942, are shown in table 16 on page 471, Receipts, expenditures, and investments of the Federal old-age and survivors insurance trust fund and the unemplovment trust fund are shown in tables 76 and 86 on pages 609 and 620. 90 REPORT OF THE SECRETARY OF THE. TREASURY Colorado River Dam fund.—The Colorado River D a m fund was estabhshed under the act of December 21, 1928, which provided for the construction of works commonly referred to as the Boulder Canyon project. All revenues and expenditures pertaining to the fund are under the direction of the Secretary of the Interior. Under an act of Congress approved July 19, 1940 (54 Stat. 774), the Secretary of the Interior was authorized to promulgate and to p u t into effect charges for electrical energy generated a t the dam site. The act further provides that the receipts from these charges be used to meet costs of operation and maintenance; to repay to the Treasury, with interest, the advances made to the fund for the project; to provide $300,000 annually to each ol the States wherein the project is located, namely, Arizona and Nevada, beginning with the year of operation ending May 31, 1938; and to transfer $500,000 annually to the Colorado River development fund beginning with t h e year of operation ended M a y 31, 1938. The act states that the first $25,000,000 of advances made by the Treasury to the Colorado River D a m fund is an allocation for flood control, and repayment may be deferred for 50 years after date of receipt by the fund of such advances, that is, to June 1, 1987, and repayments shall be made a t that time in the manner Congress shall determine. For this reason, this sum of $25,OQO,000 is not included under the caption ^'Advances" in the statement below. The act further stipulates t h a t interest charges for purposes of advances and reimbursements shall be computed at the rate of 3 percent, in lieu of the 4 percent rate specified in previous legislation. The statement which foUows is on an operating year basis and has taken into account the necessary revisions required under the act approved July 19, 1940. Status of Colorado River Dam fund as of close of each operating year, 1933 to 1942 Operating year ending M a y 31 . 1933 1934 1935 1936 1937 1938 1939 1940.. 1941.. 1942 Total... Advances i Interest on advances I n t e r e s t on •amount Advances a n d interest . o u t s t a n d on a d v a n c e s ing preceding y e a r Reimbursements 2 • $11,890. 632.62 $101, 529. 95 $11,992,062. 67 18,424, 397; 70 249,674.11 18, 674,071. 87 $359, 761. 88 23, 607, 621. 44 399. 464. 48 24,006,985. 92 930, 776. 89 19,976, 009. 81 319, 761. 45 20, 295, 771. 26 1, 678,909. 77 7,410, 641. 30 147,073. 83 7, 557, 715.13 2, 338.160. 21 5, 685,000.00 88,848.90 5, 773,848. 90 2, 635.026.17 $i.'ioo,'6o6.'oo 5, 690, 265. 49 74,926.12 6,665,191.61 2,863, 386. 76 4, 600, 000. 00 4,050, 000.00 67, 278. 68 4,117, 278. 68 2,968,930.04 3, 600,000.00 4, 800,000.00 87, 876. 34 -4,887,875.34 3,074,824.99 7,000,000.00 3, 550, 000.00 66,182.17 3, 606,182.17 3,100, 892. 68 2,000,000. 00 Interest on reim- T o t a l a n i o u n t bursedue ments $30,'22i."9i 67,101.-35 66, 377.05 93, 780.80 41, 763. 42 $11, 992,062. 67 19,033, 833. 75 24 937 762 81 •21,974, 681. 03 9, 896, 865. 34 7, 278, 653.16 3, 851,476.02 3, 529,831. 67 868. 919. 53 4,665,321.33 104,984,368.42 1,592,616.03 106, 676, 983.45 19,940,658.29 18, 200, boo. 00 289, 234. 63 3108,028,407.21 * Excludes $25,000,000 of advances allocated to flood control, repayment of which is deferred to June 1,1987. 2 Reimbursements have been applied toward reduction of "interest on advances." 8 Includes $3,044,038.79 representing unpaid interest. Division oj Bookkeeping and Warrants T h e 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 (5 U. S. C. 255), maintains the oflBcial accounts relating to the receipt, appropriation, and expenditure of the public moneys, covering all REPORT OF T H E SEICRETARY OF T H E TREASURY 91 departments and establishments of the Government. The Division makes analyses of acts of Congress carrying appropriations and maintains the necessary appropriation accounts on its ledgers; it issues warrants for placing disbursing funds to the credit of disbursing officers, for the payment by the Treasury of claims settled by the General Accounting Office, and for covering into the Treasury the revenues and receipts of the Government. I t handles the work involved in coimection with the approval of the issuance of duplicate checks (sec. 9 of the Government Losses in Shipment Act). The Division compiles and publishes an annual digest of the appropriations made by Congress, and also an annual combined statement of the receipts, expenditures, and unexpended balances under each appropriation account. The combined statement is submitted to Congress in accordance with the act of July 31, 1894 ( 5 U . S . C . 264). In addition to the foregoing pubhcations there are prepared various financial statements which appear in the Annual Report of the Secretary of the Treasury, in the monthly Bulletin of the Treasury Department, and monthly in the Congressional Record. Also numerous statements and reports covering receipts and expenditures and other data on war activities are prepared at various intervals. Division oj Disbursement The Division of Disbursement exercises the disbursing functions, in Washington and in the field, for all departments and establishments of the Government with the exception of the Post Office Department, United States marshals, the Panama Canal, special disbursing agents of the War and Navy Departments, and certain Government corporations. During the year operations in the Philippine Islands were suspended; the 37 emergency relief offices were consolidated with regional offices, and one additional regional office was established. On June 30, 1942, the Division riiaintained the Central Office in Washington, D. C , 20 regional offices, and 5 territorial offices in Alaska, Puerto Rico, Hawaii, the Virgin Islands, and Panama. The transfer of certain Federal activities from Washington, D . C , to other locations ia the United States has resulted in the transfer of over one million payments per month from the Central Office of the Division of Disbursement in Washington to regional offices of the Division. . The total personnel of the Division on June 30, 1942, iacluding regular, temporary, and emergency' employees, was 2,189, and in addition there were 11 employees paid from the allotment for Foreign Funds Control assigned to the Washington office to assist in the work incident to the control of foreign funds. During 1942, the Division made 81,286,289 payments by check, issued 73,182 United States war savings bonds. Series E, and made cash payments in 689,535 instances. These payments were supported in the disbursing accounts by 8,790,247 vouchers. The Division also received, deposited, and accounted for 8,955,669 collection items. The Division has handled this fiscal year 3,541,630 items of paym.ents and collections for agencies which have been established in connection with the war effort. In the month of June 1942 approximately 500,000 such items were handled and this amount is increasing each month. 92 REPORT OF THE SECRETARY. OF THE. TREASURY Voluntary pay-roll allotment plan.—In connection with the inauguration on February 8, 1942, of the voluntary pay-roll allotm.ent plan for the purchase of war savings bonds, the Chief Disbursing Officer (Division of Disbursem.ent) was designated by the Secretary of the Treasury as the Bond Issuing Officer for departments and agencies served by the Division of Disbursement. (See exhibit 65, p. 346.) On. the basis of 90 percent participation by the employees of these' departments and agencies, it is estimated that the Division of Disbursement wUl issue during the ensuing fiscal year, through its central and regional offices, approximately 3,000,000 war savings bonds. Bonding oj certifying ofiicers.—In order more clearly to define the respective responsibUities of disbursing officers and those officers and employees of the various agencies who are authorized to certify vouchers for payment. Public Law 389 was enacted on December 29, 1941. (See exhibit 58, p. 338.) This law, effective April 1,1942, provides that disbursing officers in the Executive Branch shall disburse money only upon vouchers certified to them by the head of a department or agency, or by an officer or employee thereof authorized in writing by such head to certify vouchers. Disbursing officers are required to make only such examination of vouchers as may be necessary to ascertain that they are in proper form, duly certified and approved, and correctly computed on thp basis of the facts certified. However, the provision for proof of computation' was eliminated by Public Law 528, approved April 28, 1942, which imposed the responsibUity for correct computation on the certifying officer. ^Public Law 389 further provided that certifying officers shall be responsible for correctness of facts and legality of proposed payments; shall be required to give bond with surety approved by the Secretary of the Treasury in amounts to be fixed by the head of the department or agency in which employed, pursuant to standards and conditions prescribed by the Secretary of the Treasury; and-.shall be held accountable and required to make good the amount of any illegal, improper, or incorrect payment. The law specifically excepted disbursing functions of the War and Navy Departments, except for departmental salaries. Pursuant to Public Law 389, the Secretary of the Treasury, ia Department Circular No. 680, dated February 16, 1,942, prescribed the standards and conditions with respect to bonds of certifying officers and also the administrative procedure relating to disbursements under the Division of Disbursement. To June 30, 1942, about 7,000 officers and employees have been designated by the heads of their agencies for certifying duties, and a bond in each case has been submitted tq the Treasury Department for approval. The penal surds of these bonds have been determined by the heads of their agencies, in accordance with the standards laid down by the Secretary of the Treasury. In gerieral, $5,000 has been deemed to be adequate, but the penal sums range froiri $1,000 to $50,000. Division oj Deposits The Division of Deposits is charged with the administration of matters pertaining to the designation ai-nd supervision of Governrnent depositaries and the deposit of Government funds in such depositaries, as prescribed by the regulations^-incorporated in Department Circulars Nos. 92 and 176, as amended; the qualification of Federal 93 REPORT OF T H E SEiCRETARY OF THE TREASURY savings and loan associations as fiscal agents of the United States under Chcular No. 568; the maintenance of a record of cash collateral pledged in lieu of securities by issuing agents designated under Circular No. 657 for the sale and issuance of war savings bonds. Series E ; and the execution of the duties devolving upon the Secretary of the Treasury as a result of the enactment of the Government Losses in Shipment Act, as amended. Depositary junctions.—The following statement shows the number and classes of depositaries maintained by the Treasury and the Government deposits held by such depositaries as of June 30, 1942. Number of depositaries and aniount of Government deposits held on J u n e 30, 1942, by class of depositaries Depositaries Amount Federal Reserve Banks (including branches) _ Federal Reserve member bank depositaries: To credit of Treasurer of United States To credit of other Government officers Insular and territorial depositaries (including Philippine treasury) To credit of Treasurer of United States.. To credit of other Government officers Foreign depositaries: To credit of Treasurer of United States To credit of other Government officers. 'Special depositariies i . Total - $602,946,068.77 60, 667, 626. 88 86,133,953. 37 8,709,668.87 29, 204,469. 76 62, 640,000.00 2, 247, 403. 39 1, 678, 698, 000.00 .- 2, 621,136, 980. 03 1 Includes 1,564 national banks and 1,260 State banks and trust companies, of which 2,136 held deposits on June 30, 1942. During the fiscal year'1942 there were 3,168 changes and adjustments effected in the depositary system of the Treasury. These changes and adjustments are summarized in the following table: Adjustments Design ated Discontinued . Amoun'tsfor which qualified: Increased Decreased . . Miscellariebiis changesTotal Member bank depositaries . . . ..-.-• Special depositaries 551 474 672 52 607 96 237 579 1,965 1,203 The number of changes and adjustments in the depositary system during the year greatly exceeded those of any preceding year and are the result of the increased need for local depositary facilities by officers of the Governinent, particularly those connected with the military branches of the service who utilize such depositaries in obtaining payroll cash, the desire of banl^s designated as special depositaries under Department Circular No. 92 to make payment for issues of Government securities, by credit through war loan accounts, and the continued eff'ort to modernize the depositary system. ^ Existing depositaries were utilized and numerous new depositaries were required in the territories, insular possessions, and foreign countries. Prior .to the approval of Public Law 603 on June 11, 1942, pnly banks which were members of the Federal Reserve System were eligible for designation, as depositaries of public moneys and financial 94 REPORT OF THE SECRETARY OF THE TREASURY agents of the Government. Under section 10 of the act, all banks which are inembers of the Federal Deposit Insurance Corporation are eligible for designation. (See exhibit 63, p. 343.) Tbis wUI permit the Treasury to establish essential depositary facilities at points where there previously were no eligible banks, and it is anticipated that thi^ and other portions of the act will have a decided effect upon the depositary system of the Treasury. Depositary bonds.—The details outlining the reason and purposes covering the issuance of the 2 percent depositary bonds are contained in the annual report of the Secretary for 1941, on page 100. As of June 30, 1942, 2 percent depositary bonds in the face amount of $78,958,000 had been issued, and $5,000 had been redeemed, leaving $78,953,000 outstanding on June 30, 1942. Designation oj agencies jor the issuance oj vjar savings bonds, Series £'.^-All the functions performed by the Division., of Deposits in connection with the designation and qualification of issuing agents for the sale and issuance of United States war savings bonds, Series E^ were, during February .1942, transferred to the Bureau of the Public Debt, with the exception of the collateral record of cash pledged by designated issuing agents in lieu of securities as specified in Department Circular No. 657, and referred to in the annual report of the Secretary for 1941. At the inception of the plan of pledging cash coUateral, orily the twelve Federal Reserve Banks were authorized to accept cash for this purpose. However, in order to create further outlet^ and to expedite the issuance of the war savings bonds, Series E, branch Federal Reserve Banks, in January 1942, were authorized to furnish unissued bond stock and accept cash collateral tendered by designated issuing agents. Of the total number of fiscal agents designated as of the close of business June 30, 1942, 651 qualified by the pledge of cash collateral in'the total amount of $3,114, 289.25. Federal savings and loan associations .—On June 30,1942, the Federal Home Loan Bank System reported to the Treasury that 1,464 Federal savings and loan associations were eligible to qualify as fiscal agents under Department Circular No. 568, dated September 15, 1936, for the purpose of collecting delinquent accounts arising out of insurance and loan transactions of the Federal Housing Commissioner, and of this number 101 had qualified for this purpose either by the pledge of collateral security or the filing of an acceptable surety bond. Social security.—Under arrangements entered into between the Treasury and the Social Security Board, various depositaries of public moneySj designated by the Secretary of the Treasury, were authorized to carry balances of Treasury funds as a basis for servicing State unemployment compensation benefit payment accounts and clearing accounts. As of June 30, 1942, 65 banks were designated for this purpose with authority to maintain Treasury balances totaling $41,690,000. Government^ Losses in Shipment Act.—The Government Ijosses in Shipment Act, approved eTuly 8, 1937 (50 Stat, 479), as am.e.nded by an act approved August 10, 1939 (53 Stat. 1358), was designed to provide within the Government an adequate means of prompt replacement of losses resulting from the shipment by the executive departments, independent establishments, agencies, wholly owned corporations, officers and employees of the United States, of certain articles, 95 REPORT OF T H E SEiCRETARY OF THE TREASURY things,' or representatives of value, thus eliminating the necessity of purchasing insurance from private companies for such replacements. The articles, things, or representatives of value declared to be ''valuables'' by the Secretary of the Treasury, within the meaning of that term in section 7a of the act, include money of the United States and foreign countries, securities and other instruments or documents, precious metals and stones, and works or collections of artistic, .historical, scientific, or educational value. The shipment of ''Valuables'' is governed by regulations designed to minimize the risks of loss, destruction, or damage, and to facilitate replacement under the provisions of the act, in the event such procedure becomes necessary. The m^onetary value of shipments reported to have been made under the act during 1942, of classes of valuables which were covered by the Treasury's contracts with insurance companies prior to the enactment of the Government Losses in Shipment Act, aniounted to $41,378,204,236. This represents an increase of approximately $3,100,000,000 over shipments made during 1941. The table foUowing indicates the estimated premium savings in connection with shipments for 1942 to be over $860,000, and savings since the inception of the act to be over $2,780,000, under each of the three alternate bases upon which the estimates are made. - . Estimated premium savings during the fiscal years 1941 and 1942 and the total estimated savings to J u n e 30, 1942 Fiscal year 1941 On basis of premium rates for- Fiscal year 1938 i Fiscal year 1937 2 Fiscal years 1936-38 3, $798,000 1,145, 000 1,098,000 Fiscal year 1942 Aug. 15, 1937, to June 30, 1942 $863, 000 1, 239, 000 1,188, 000 $2, 782, 000 3, 674, 000 3, 518, 000 * Lowest rates under insurance contract system. » Rates in effect at time estimates of premium savings were presented to Congress. « Average based on rates effective in last 3 years of Government insurance contract system. Other classes of valuables covered under the provisions of the Governinent Losses in Shipment Act were shipped during the year having an aggregate value of $65,935,048,845; however, these have not been included in the calculation of estimated premium savings in the above, table because, as a general practice, the Government did not insure them prior to the effective date of the act. Following is a table of the loss experience resulting from shipments of valuables, and other functions under the act during the fiscal vear 1942. Number and value of items reported lost, settled, and unadjusted, fiscal year 1942 Items reported lost Unadjusted July 1,1941 . Reported lost during year ._ Total to be settled , '. Settled by replacement out of fund Settled without replacement or credit °... ._. Total settled Unadjusted June30,1942 487543—43- Number 1... Value 6 45 $3.021.13 15, 621. 52 50 18, 642. 65 9 8 17 2, 874.42 3,121.13 5 995 55 33 12, 647.10 96 REPORT OF T H E SEiCRETARY OF T H E TREASURY Section 3a of the act provides for payment of losses arising from agency functions performed by the Post Office Department for the Treasury, irrespective of the manner in which losses occurred. Such losses may result from fire, theft, robbery of a post office, embezzlement, or similar contingencies. The increase in the number of losses reported, from 8 in 1941 to 45 in 1942, may be attributed chiefly to loss or destruction of motor-vehicle tax stamps, the sale of which was instituted on a Nation->vide basis during the year by the Post Office Department, acting in the capacity of agent for the Treasury. Pursuant to section 3b of the act, as amended, there were executed during 1942 five agreements of indemnity in the aggregate amount of $61,003.93, in connection with which no payments have been required. The total number of agreements executed up to and including June 30, 1942, was eleven, amounting to $76,722.99. F u n d for payment of Government losses in shipment {revolving fund), J u n e 30, 1942 I. RECEIPTS AND EXPENDITURES Cumulative to June 30,1941 Receipts: Appropriations _.^ Transferred from the securities trust fund (9/21/39)i Recoveries of payinents for losses Total receipts Expenditures: Payment of losses Balance in fund $602,000.00 91,803.13 •. Cumulative to June 30, 1942 $262.50 $602,000.00 91,803.13 262. 50 693, 803.13 262. 60 694, 066. 63 2 1,137.29 2,874.42 2 4,011.71 -2,611.92 690, 053.92 692,665.84 ._• Increase or decrease ( - ) , fiscal year 1942 * II. FUND ASSETS June 30, 1941 Unexpended balances: s To credit of disbursing officer On books of the Division of Bookkeeping and Warrants Total fund assets Increase or decrease (—) June 30, 1942 $303.25 $3,125.58 $3 428 83 692,362.59 -6,737.60 686,626.09 692, 665.84 -2,611.92 690, 053.92 1 The act bf Aug. 10,1939 (53 Stat. 1358). amended the Government Losses in Shipment Act, and in section 1 the Secretary of the Treasury was authorized and directed to transfer the amount standing to the credit of the securities trust fund to this fund. 2 Includes payment in the amount of $64.44 representing an excess recovery previously paid into the fund from the securities trust fund. Section oj Surety Bonds The Secretary of the Treasury, under the act of Congress approved August 13, 1894 (28 Stat. 279), as amended by the act approved March 23, 1910 (36 Stat. 241), issues certificates of authority to corporate surety companies to qualify as acceptable sureties on bonds and other obligations in favor of the United States. On June 30, 1942, there were 79 domestic companies holding cer^tificates of authority from the Secretary of the Treasury, 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 7 branches of foreign companies holding certificates of authority authorizing them to act only as reinsurers on bonds in favor of the United States. REPORT OF THB SECRETARY OF THE TREASURY 97 The Section of Surety Bonds checks the financial condition of surety companies authorized to transact business with the United States; determines their underwriting limitations; reviews their quarterly financial statements; makes examinations into their financial condition at their home offices, when necessary; and performs other duties to determine whether the companies observe the requirements of the law and the regulations of the Secretary of the Treasury issued pursuant thereto. The Section of Surety Bonds has custody of all fidelity bonds' in favor of the United States, except those filed with the Post Office Department and the Federal courts, and notifies the accounting officers of the receipt and filing,of such bonds. I t examines and approves as to corporate surety all fidelity and surety bonds with a few exceptions as referred to above. During the year 151,015 bonds and consent agreements cleared through the Section of Surety Bonds for approval as to corporate surety; this number is an increase of more than 44 percent over the preceding year. Only a small part of this increase was a result of the bonding of certifying officers under the act of December 29, 1941, mentioned on page 92, under the Division of Disbursement. The increase was due largely to expanded war activities. Bonds for the War and Navy Departments increased 55 percent over the preceding fiscal year. " Budget Section The Budget Section, in part, constitutes the operating staff of the Budget Officer of the Department, coordinating departmental estimates of appropriations, justifications, and reports and performing related duties in accordance with the requirements of the Budget Officer, Treasury Department. The Budget Section also performs simUar duties for the Commissioner of Accounts and has administration of special deposit accounts of the Secretary of the Treasury, which cover alien property trust funds in the Treasury, offers in compromise under the provisions of section 3469 of the Revised Statutes, Philippine trust funds held in interest-bearing accounts, cash collateral furnished by issuing agents for the sale of war savings ' bonds. Series E, and accounts pertaining to withheld foreign check payments. Alien property trust jund.—Vnder the act of October 6, 1917, as amended, and the Settlement of War Claims Act of 1928, approved March 10, 1928 (45 Stat. 254), as amended, securities previously held by the Secretary of the Treasury for account of the Attorney General, Alien Property Bureau, were all sold prior to the fiscal year 1942. A statement of the alien property trust fund as of June 30, 1942, follows: . Alien property trust fund, June 30, 1942 Credits (net): Trusts :. . Earnings on investments, etc $38,752,906.05. 30,279,242.29 .•. Total '. Assets: Investments: • Participating certificates issued under sec. 25 (e) of the Trading With the Enemy Act: Noninterest-bearing $20,856,446.75 5% interest-bearing 34,347,476.76 •Cash balance with the Treasurer of the United States Total fund assets June 30, 1942..., '. 69,032,148.34 55,203,923.51 13,828, 224.83 69,032,148.34 98 REPORT OF THE SECRETARY OF THE TREASURY Checks, issued by the Treasury Department during the year to the Attorney General, Alien Property Bureau, and to the Alien Property Custodian on account of the alien property trust fund included certain expenditures for administrative expenses of the Alien Property Custodian appointed pursuant to the act of October 6, 1917, as amended by the First War Powers Act, approved December 18, 1941. The amounts of expenditures were as follows: ' Distribution of income,.: Administrative expenses Total. _ $80, 000.00 370.000.00 450,000.00 ._. ._.-.'.„..- Philippine junds in the United States Treasury.—Under the act of March 8, 1902 (32 Stat. 54), reenacted in section 3343 (b) of the Internal Revenue Code, approved February 10, 1939, it was provided that all duties and taxes collected m the United States upon articles coming from the Philippine Archipelago and upon foreign vessels coming therefrom, were to be held as a separate fund and paid into the treasury of the Philippine Islands to be expended for the government and benefit of the Islands. A summary follows showing custom.s duties, tonnage taxes, and internal revenue taxes, exclusive of taxes with respect to coconut oil, appropriated to Philippine accounts and payments therefrom during the fiscal years 1933 to 1942. . Receipts ^ appropriated Fiscal year 1933 1934 1936 1936 1937 1938 1939 1940 1941 1942 . : .. . • _ * • ' . $381. 600. 46 527.426.40 491, 468. 60 645. 890. 13 755.866. 76 813.862.30 669. 468.06 703.874. 28 538.089. 63 420.293.47 P a v m e n t s to Philippine Government 2 $59. 67 813. 371. 78 502, 551. 53 746.967.75 891, 726. 93 934.689. 47 626.347. 68 482,106.02 2.987. 84 78.32 U n p a i d balance 3 $864. 598. 97 568, 653. 69 667, 560. 56 467, 492.94 321 632 77 200. 795. 60 143 915 98 365. 684. 24 900 7«fi 03 1. 321, OOl. 18 • Reduced by amounts carried to surplus f'md as follows: 1936, $17,640.28; 1937, $9,783.75; 1939, $15,151.70,* 1940, $957.78; 1941, .$36,822.72; and 1942, $747.68. 2 Includes certain refunds and adjustments. 3 Includes balances of $473,158.18 in Philippine accounts as of July 1, 1932. Under the act of June 11, 1934 (48 Stat. 929; 48 U. S, C. 1157), the Secretary of the Treasury was authorized.to accept, upon such conditions as he might prescribe, deposits of public moneys of the Philippine Governm.ent. The act provided an indefinite appropriation for the payment of interest on such deposits other than demand deposits at such rates not in excess of 2 percent per annum as the Secretary might prescribe. Thereafter, the Secretary of the Treasury agreed to accept not to exceed $55,000,000 of Philippine m.oneys in a tim.e deposit account, amounts deposited with the Treasury by the Philippine Government in excess of that sum to be maintained in a dem.and deposit account. Since Decem.ber 10, 1934, the balance in the time deposit account has been m.aintained at $55,000,000. The balance in the demand deposit account as of June 30, 1942, was $88,720,214.56. Section 602J^ of the act of May 10, 1934 (48 Stat. 763), provided that taxes collected with respect to coconut oil wholly of Philippine production or produced from materials wholly of PhUippine growth REPORT OF THE SECRETARY OF THE TREASURY 99 or production should be paid to the treasury of the PhUippine Islands subject .tp certain conditions. An agreement was consummated between the Secretary of the Treasury and the Philippine Governmentunder which coconut oil moneys payable to the Philippine treasury would be transferred on periodic settlements of the General Accounting Office to a special deposit account in the name of the Secretary of the Treasury subject to withdrawal by the Philippine Government on ninety days'^ notice in writing. Interest at the rate of 2 percent per annum is paid on the daily balances in this account. A summary of transactions in the account from the time of its estabhshment to date follows. . Fiscal year 1938. 1939 1940.. 1941 1942 Deposits .:. .... $56,864. 779.06 20, 355, 455. 66 4, 559,016. 46 72,850.96 J Withdrawals Balance a t e n d of year $56,854,779.06 45, 210, 234. 71 32, 205. 234. 76 32,278.085. 72 27, 278.085. 72 $32,000,000.00 1 17, 564.016.41 5,000,000. 00 Includes $7,564,016.41 transferred to new account established under act of August 7,1939; Section 6 of the act of August 7, 1939 (53 Stat. 1232), provided t h a t collections on or after January 1, 1939, on account of the excise taxes imposed by section 2470 of the Internal Revenue Code, and the import taxes im.posed by sections 2490 and 2491 of the Internal Revenue Code and any moneys hereafter appropriated in accordance with the authorization contained in section 503 of the Sugar Act of 1937 (50 Stat. 915) shall be held as separate funds and paid into .the treasury of the Philippines to be used for the purpose of meeting new or additional expenditures which will be necessary m adjusting Philippine economy to a position independent of trade preferences in the United States and in preparing the Philippines for the assumption of the responsibilities of an independent state. A new account was established for the deposit of the funds referred to in section 6 of the act of August 7, 1939. Withdrawals by the Philippine Governm.ent from this account are subject to ninety days' notice in writing. Interest a t the rate of 1 percent is paid on the daUy balances in this account. A summary of transactions. in the account from the time of its establishment to date follows. Fiscal year 1940 1941 1942 Deposits $17, 274,092. 01 15, 258,938.13 25, 666, 399.12 Withdrawals $20,000,000.00 9,000,000.00 Balance at e n d of year $17, 274,092. 01 12, 633,030.14 29,099, 429. 26 Appropriation oj junds to the Government oj the Commonwealth oj the Philippines jor national dejense.—Public Law 371, approved December 23, 1941, appropriated, in accordance with the provisions of section 503 of the Sugar Act of 1937 (50 Stat. 915) such moneys as had been collected prior to the passage of the act of December 23, 1941, for the purpose of enabling the Secretary of War to meet expenses for each and every purpose necessary to provide for public relief and civilian defense in the Philippine Islands. 100 REPORT OF THE SECRETARY O'B! THE TREASURY On January 1, 1942, there had been established upon the books of the Treasury Department approxim.ately $36,609,000 which was avaUable for appropriation to the Government of the Commonwealth of the Philippines. In accorclance with provisions of Public Law 371, $35,000,000 was appropriated for this purpose. Supplementally sinking jund jor the payment oj bonds oj the Philippines.—Under section 6 of the act of March 24, 1934; entitled ^'An Act to provide for the complete independence of the Philippine Islands, to provide for the adoption of a constitution and a form of government for the PhUippine Islands, and for other purposes,'- as amended by the act of August 7, 1939, it was provided that on and after January 1, 1941, the Philippine Government shall impose and collect an export ^ tax on every Philippine article shipped from the Philippines to the United States,, except as otherwise specifically provided. I t was further provided that the Philippine Government shall pay to the Secretary of the Treasury of the United States, at the end of each calendar quarter, all of the moneys received during such quarter from export taxes (less refunds), imposed and collected in accordance with the provisions of this section, and said moneys shall be deposited in an account with the Treasurer of the United States and shall constitute a supplementary sinking fund for the payment of bonds of the Philippines, its provinces, cities,, and municipalities, issued prior to May 1, 1934, under authority of acts of Congress. Accordingly, there was established with the Treasurer of the United States a special deposit account in the name of the Secretary of the Treasury entitled ^'The Secretary of the Treasury for Account of the Philippine Government—Supplementary Sinking Fund for the Payment of Bonds of the Philippines, its Provinces, Cities, and Municipalities, Issued Prior to May 1, 1934, under Authority of Acts of Congress (Symbol 891-855).'' ^ * The foUowing statement shows the cumulative transactions since the inception of the fund and its status as of June 30, 1942. Supplementary sinking fund for the payment of bonds, issued prior to May 1, 1934t of the Philippines, its provinces, cities, and municipalities, June 30, 1942 I. RECEIPTS AND EXPENDITURES Receints' Taxes on exports. . Interest on mvestments Total receipts Expenditures Balance in fund. Investments:.. Philippine Government bonds: 4% due Dec. 1, 1946. 4H% due Dec. 1, 1950. 5% due Feb. 1, 1952 4H%dueJuly 1, 1962 4>^% due July 15, 1952.. 6% due Apr. 1, 1965 4M% due May 1, 1957. 43^%due July 1, 1967 43^% due Mar. 1, 1958 43^% due Apr. 1, 1968 4M%due Apr. 1, 1959.. 4M% due Sept. 16, 1969 4M% due Oct. 1, 1969. 4M%dueOct. 15, 1959. " . ~ $1,586,135.92 8,259.99 l, 694,395.91 7. l, 694, 395.91 II. FUND ASSETS Accrued interest paid on investments Cash balance with Treasurer of the United States Total > Face amount Principal cost $207,000 $205,242.50 33,000 36,872.46 32.000 36,437.17 258,000 272,929.81 373,000 406,463.06 ^ 20,000 18,875.00 6,000 6, 894.68 64,000 76,168.01 43,000 61,113.51 36,000 42,784.42 70,000 77,511.60 41,000 49,286.04 19,000 22,822.99 6,000 6,967.66 . ....- . . 1,207,000. 1 $1,308,368.91. 678. 50 285,348.50 1,594, 395.91 REPORT OF THE SECRETARY OF THE TREASURY 101 Foreign check control.-^In accordance with the provisions of the Executive Order No. 8389, of April 10, 1940, as amended, and Public No. 828, approved October 9, 1940 (see annual report for 1941, p. 106), disbursing officers had withheld as of June 30; 1942, from delivery to payees residing in occupied territories 243,895 checks aggregating $9,949,318.29, of which the proceeds of 147,821 checks aggregating $5,956,156.57 were deposited in the special deposit account entitled, '^Secretary of the Treasury, Proceeds of Withheld Foreign Checks"; 6,749 checks aggregating $377,858.30 were released to payees; and 2,059 checks aggregating $91,974.39 were canceled on advice of administrative agencies who authorized the issue of such checks to the payees. On June 30, 1942, a balance of 87,266 checks aggregating $3,523,329.03, the proceeds of which were subject to deposit in the special deposit account, were held by disbursing officers pending disposition. • Of the $5,956,156.57 deposited in the special deposit account, $14,906.16 has been paid to individual claimants; $4,379.35.has been returned to the appropriations from which payments were made; and $276,724.58 has been covered into the Treasury as miscellaneous receipts on account of the $1,000 limitation on veterans' payments. On June 30, 1942, the proceeds of 143,276 checks aggregating $5,660,146.48 remained in the special deposit account to the credit of approximately 17,500 individuals. Section oj Investments The Section of Investments supervises the collections of principal and interest on foreign obligations and on raUroad obligations owned by the United States and held by the Treasury; collects on other obligations owned by the United States, which have been turned over to the Treasury by other departments for coUection; handles matters relating to the investments and securities held in the custody of 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; and makes payments on awards under the Settlement of War Claims Act of 1928, under the claims agreement of October 25, 1934, between the United States and Turkey, and under the act of April 10, 1935, covering claims against the Republic of Mexico. In connection with these activities, accounts are kept and various related matters are handled by the Section. t • Obligations of foreign governments The United States received during the year a payment from the Government of Hungary in the amount of $19,656.32 on account of its indebtedness, which applied on interest due. The following statement shows the payments due during the periods July 1 to December 31, 1941, and January 1 to June 30, 1942. 102 REPORT OF THE SECRETARY OF THE TREASURY Amounts due and payable, July 1 to Dec. 31, 1941, and Jan. 1 to June 30^ 1942 F u n d i n g agreements Moratorium agreements Country Principal Total Interest J u l y 1 to D e c . 31.1941 Belgium Czechoslovakia Estonia Finland France Great Britain Greece Hungary Italy --Latvia Lithuania ^' Poland -. --Rumania Yugoslavia . . ._ Total $4,158,000.00 $1, 500,000.00 161, 000.00 79,000.00 _ .. '. . 42,000,000.00 499,000.00 16,.866.00 - 1,720,000.00 . 62, 500.00 - 46,027, 365.00 286.266.00 139,037. 50 38, 622, 865.00 . 75. 950, 000. 00 217, 920.00 33,185.08 2,490, 875.00 119, 609. 00 107, 783. 67 3, 582.810.00 907, 559.81 154,062. 50 126, 669,972. 56 $484, 453.88 182,812.78 36, 585. 29 32, 725. 56 3,046, 879. 72 9, 720, 765.05 67,137. 38 4. 225. 58 896,165.88 15, 274. 26 13, 683. 26 456, 229. 71 48, 750.08 $4, 642, 453.88 1, 682, 812. 78 473 850. 29 1 260, 763.06 41, 569, 744. 72 127, 670, 765. 05 784, 057. 38 • 53,275. 66 3, 387, 030. 88 197, 383. 26 121, 466.93 5, 759,039. 71 956, 309.89 154,062. 50 15,006, 678.43 187, 703,015.99 J a n . 1 to J u n e 30, 1942 Belgium . Czechoslovakia ' Estonia F i n l a n d -. . France _. .. G e r m a n y (Austrian indebtedness)^ Great Britain .Greece Hungary Italy Latvia . . Lithuania _ _ . Poland -. .Rumania . -._ Yugoslavia Total -' $4,900,000.00 1, 500,000.00 •. 57, 763, 450.02 460,093.00 $4,158,000.00 286, 265. 00 137, 655.00 38, 522, 866.00 462. 000.00 562,000.00 75,950,000.00 217, 920.00 33,185.08 •2,490, 875.00 119, 609.00 107, 783. 67 3,682,810.00 907, 559.81 164,062. 50 83, 207,058.02 120,668,690.06 505,660.66 1. 17,000,000.00 64, 516.00 $484, 453.88 182, 812. 78 36, 585. 29 32, 726. 66 3,046,879. 72 34, 767. 23 9, 720, 765.05 67,137. 38 4, 226. 68 896,156.88 15, 274. 26 13, 683. 26 456,229. 71 48,760.08 15,040,445. 66 $9, 542,453.88 1,682,812.78 322, 850. 29 1 170, 380. 66 99, 333,194. 74 494, 860. 23 85, 670, 765.05 790,057. 38 37, 410. 66' 20, 387,030. 88 134,883. 26 175,981.93 4,039,039. 71 1, 418, 309.89 716,062. 50 224, 9i6,093.74 1 Postponed under authority of Public Law 110, approved June 12,1941. / 2 The German Government has been notified that the Government of the United States will look to the German Government for the discharge of this indebtedness of the Government of Austria to the Government of the United States. 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, 1942, appears as table 66 on page 600. 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, 1942^ according to contract terms, are shown in the following statement. REPORT OF THE SECRETARY OF THE TREASURY 103 Total amounts due and not paid, as of November 15, 1942 F u n d i n g agreements Country Interest Principal Belgium Czechoslovakia '. Estonia .. . France G e r m a n y (Austrian i n d e b t e d ness) 1 Great Britain Greece Hungary 2 Italy Latvia • Lithuania -... Poland Rumania 3 .._.-. Yugoslavia... TotaL $72, 462, 000. 00 $45,800,000.00 28,170, 085.83 1, 297, 000. 00 548, 222,451. 39 5, 684,405. 00 462, 274, 380. 00 3, 220, 651. 00 323, 000,000. 00 9,184, 000. 00 139, 250. 00 144, 600, 000. 00 526, 200. 00 471,100.00 15, 352, 000. 00 12, 537, 560.43 4, 299, 000. 00 1, 425, 549,481. 58 3, 585,187. 50 561, 025. 97 26, 645, 041. 74 2,257,040.84 1, 984, 706. 38 71,144, 370. 00 5, 445, 358.86 847, 343. 78 1,136,819, 298. 65 2, 078, 440,341. 65 Moratorium agreements annuities Total $8, 720,169. 84 3, 290, 630. 04 658, 535. 22 64,843, 834. 96 $126, 982,169.84 31, 460, 715.87 7, 639, 940. 22 1,065,340,666.35- .243,370. 61 174, 973, 770. 90 1, 275, 610. 22 76,060.44 16,130,805.84 274,936.68 246, 298. 68 8,212,134. 78 877, 501.44 3,464,021.61. 1,923, 523, 252.48 14, 044, 797. 72 77'6, 336.41 ^187,375,847.58 3,058,177.62 2, 702,105. 06 • 94, 708, 504. 78 18, 860,420. 73 5,146.343.78 269,823,659. 65 3,485,083,299.95 1 T h e G e r m a n ^ G o v e r n m e n t has been notified t h a t t h e G o v e r n m e n t o f t h e U n i t e d States will look to t h e G e r m a n G o v e r n m e n t for t h e discharge of t h i s i n d e b t e d n e s s of t h e G o v e r n m e n t of A u s t r i a to t h e Governm e n t of t h e U n i t e d States. 2 T h e H u n g a r i a n G o v e r n m e n t has deposited w i t h t h e foreign creditors' account at t h e H u n g a r i a n N a t i o n a l B a n k an a m o u n t of H u n g a r i a n c u r r e n c y e q u i v a l e n t to t h e interest p a y m e n t s d u e from D e c . 15, 1932, to J u n e 15,1937. T h e d e b t f u n d i n g a n d m o r a t o r i u m a g r e e m e n t s w i t h H u n g a r y p r o v i d e for p a y m e n t in dollars in t h e U n i t e d States. 3 E x c l u d e s t h e a m o u n t of $100,000 which t h e R u m a n i a n G o v e r n m e n t paid to t h e U n i t e d States T r e a s u r y on J u n e 15, 1940, as " a t o k e n of its good faith a n d of its real desire to reach a n e w a g r e e m e n t " covering R u m a n i a n i n d e b t e d n e s s to t h e . U n i t e d S t a t e s . Receipts from Germany^ During the fiscal year 1942 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. The status of.the indebtedness of Germany to the United States as of June 30, 1942, under the funding and moratorium agreements is.summarized in the following tables. Amount of indebtedness of Germany to the United States, June 30, 1942 Class A r m y costs (reichsmarks) M i x e d claims (reichsmarks) T o t a l (reichsmarks) T o t a l (in dollars, at 40.33 cents to t h e reichsmark) Indebtedness as funded Total indebtedness, J u n e 30, 1942 Principal I n t e r e s t accrued a n d unpaid 1,048,100.000 2,121, 600,000 1, 035, 543, 026. 21 2,152, 200,000. 00 3,169,700,000 2 3,187, 743, 026. 21 3,037, 500,000 150, 243,026. 21 $1, 278, 340,010 $1, 285, 616, 762.47 $1, 226,023, 750 $60, 593,012.47 997, 500.000 2, 040,000, 000 1 38,043,026. 21 112, 200,000. 00 » I n c l u d e s i n t e r e s t accrued u n d e r u n p a i d m o r a t o r i u m a g r e e m e n t a n n u i t i e s . 2 I n c l u d e s 4,027,611.95 r e i c h s m a r k s deposited b y t h e G e r m a n G o v e r n m e n t in thie Konversionskasse fiir D e u t s c h e A u s l a n d s s c h u l d e n a n d n o t p a i d to t h e U n i t e d S t a t e s in dollars as r e q u i r e d b y t h e d e b t a n d m o r a torium agreements. ' . • . 104 REPORT OF THE SECRETARY OF THE TREASURY Payments received from Germany to June 30, 1942 Total payments received to June 30, 1942 Class Payments of principal Payments of interest Army costs (reichsmarks)... Mixed,claims (reichsmarks) 61, 466, 406. 25 87, 210,000. 00 50, 600,000. 00 81, 600,000. 00 856, 406. 25 6, 610,000.00 Total (reichsmarks)... Total (in dollars) 138,666, 406. 25 $33, 687, 809. 69 132, 200.000.00 $31, 539, 595. 84 6.466.406.25 $2.048, 213. 85 Amounts not paid by Germany according to contract term,s, June 30, 1942 Funding agreement ' Date due Principal Sept. 30,1933... Mar. 31, 1934.. Sept. 30, 1934 Mar. 31,1935-Sept. 30.1935 Mar. 31, 1936.. Sept. 30, 1936 Mar. 31, 1937 Sept. 30, 1937 Mar. 31, 1938. Sept. 30, 1938 Mar. 31, 1939 Sept. 30, 1939 Mar. 31. 1940 Sept. 30, 1940 Mar. 31, 1941... Sept. 30, 1941 Mar. 31, 1942 .reichsmarks.. do.... do.... do.... :..-do.... do.... .....do.... do.... do.... do.... do.... do.... do.... ...do.... .do.... do.... .do.... ...do.... : . 2,498, 662. 50 122,400,000 20.400,000 82, 900,000 29, 700.000 29, 700,000 29, 700,000 29, 700, 000 28. 600,000 28,600,000 28, 600,000 28,600.000 29, 700,000 29, 700,000 29, 700,000 29, 700,000 33, 050, 000 33, 050,000 Total..... . . . d o . . . . 643, 800,000 Total (in dollars, at 40.33 cents to the reichsmark) $259, 644, 540 Moratorium agreement Total Interest 3, 855.687. 50 4, 634,250.00 6,212. 812. 60 5, 891,375.00 6, 569;937.60 7, 248,500.00 7, 927.062. 60 8, 685.687. 50 9, 244.312. 50 9,902, 937. 50 10. 561,562. 50 11. 240,125.00 11.918, 687. 60 12. 697.250. 00 13; 276,812. 50 14,015. 093. 75 145,079, 666. 26 $58, 610, 626. 37 1 4.027,611.95 1, 629,0.49.46 1, 629,049. 45 123, 929.049. 45 25, 784,736. 95 1, 529.049. 45 1, 529,049. 45'. 88,963, 299. 45 1. 529,049. 45 36. 441.861. 95 1, 529,049. 45 37.120, 424. 45 1, 629.049. 45 37. 798,986..95 1, 529,049. 45 38. 477,649. 45 1, 529, 049. 45 38,0.56, 111.95 1, 529.049.-45 38. 714,736. 95 1. .529.049.45 39,373, 361. 95 1, 629,049. 45 40.031, 986. 96 1, 529,049. 45 41.790. 611. 95 1, 529,049. 46 42, 469,174. 45 1, 629.049. 45 43,147, 736. 95 1, 529. 049. 45 43, 826.299. 45 1, 629,049. 45 47, 854,861. 95 1, 529. 049. 45 48, 594.143. 20 27, 522. 890.10 816,402, 646. 35 $11,099,981. 68 $329. 265,146. 94 1 Includes 4,027,611.95 reichsmarks deposited by the 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 ad,ministration fif alien and mixed 'claims The Settlement o t War Claims Act of 1928 (45 Stat. 254) 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 pf Austria and Hungary. For a more detailed discussion of these awards and payments see pages 123 to 128 of the annual report for 1941. Mixed Claims Commission and Private Law No. 509: Claims against Germany.—During the fiscal year 1942 additional payments aggregating $1,553.28 were made on account of the Class 2 awards on the so-called sabotage claims against Germany. One Class 2 award,has not yet been paid, as satisfactory evidence as to the persons entitled to receive payment has no,t yet been received. This award plus interest to January 1, 1928, amounts to $3,850.68. The Class 3 claimants received payments aggregating $21,763,576.77, placing them on the same basis as the Class 3 claimants who received awards prior to October 31, 1939. 105 REPORT OF T H E SECRETARY OF THE TREASURY Total payments made on the additional sabotage awards to September 30, 1942, are as follows: Payments Class 1 2 3 Total Awards (plus interest to Jan. 1, 1928) .. Awards (plus Interest from interest to Jan. 1, 1928, to Jan. 1, 1928) date of payment Total $72,501.37 1,058,005. 23 30, 598,657. 59 $72, 501.37 2 1,054,154. 55 21, 763, 576.77 $47,394.01 688, 239.04 1 $119,895.38 1, 742, 393. 59 3 21, 763, 576. 77 31,729,164.19 22,890, 232.69 735, 633.05 23, 625,865.74 1 Payments completed prior to Sept. 30,1941. 2 One award (plus interest to Jan. 1, 1928), amounting to $3,850.( , not yet paid. 3 Payments completed during 1942. After the Class 3 additional sabotage claims were satisfied by payment of the same percentage payments made on this class of awards certified for payment prior to October 31, 1939, they shared in the distributions of 5 percent and 4.4358855 percent authorized on March 19, 1941, and September 17, 1941, respectively, to be paid to all Class 3 claimants. No segregation of these payments has been made as the sabotage claimants and the claimants whose awards were certified prior to October 31, 1939, are receiving payments on an equal basis. The payments to American and German nationals on account of the awards of the Mixed Claims Commission and the War Claims Arbiter are made put of the German special deposit account established under the provisions of section 4 of the Settlement of War Claims Act of 1928. The priorities established iii the act and the status as of September 30, 1942, of such priorities up to the seventh priority are jis follows: Priority No. l.._ 2 3 4 5 6 7 On account of— Nationals ' Administrative expenses American Class 1 awards . . do Class 2 awards do Payment $100,000 a/c Class 3 awards do Payment of 80 percent of (2), (3), and (4) and interest to Jan. 1, 1928. German Tentative awards. War Claims Arbiter . . . do .. 50 percent of ship and patent claims Amount due Sept. . 30, 1942 Held in reserve. Completed. $49,520.47.' Completed. $57,793.64.1 . Completed. Do. 1 Applications for payment of these amounts to claimants were not received or approved as of Mar. 11, 1940, or Sept. 30, 1942. Up to September 30, 1942, the Treasury has made payments in the aggregate amount of $163,536,276.22 on account of awards of the Mixed Claims Commission, from which there has been deducted $817,879.69 representing one-half of 1 percent authorized by the Settlement of War Claims Act of 1928, making net payments to claimants of $162,718,396.53. Of the deductions $770,233.47 has been covered into the Treasury as miscellaneous receipts in accordance with the provisions of the act as reimbursement to the United States for expenses incurred, and $9,029.18 of the deductions have been withheld and not yet covered; and the balance of $38,617.04 is payable 106 REPORT OF T H E SEiCRETARY OF T H E TREASURY to the German Governrnxcnt for defraying such expenses as may be incurred by that government for the adjudication of claims. The following summary shows the number and amount of awardscertified to the Treasury by the Secretary of State, the amount, paid ^on account, and the balance due thereon as of September 30, 1942. Further details by classes of awards may be found in table 103, page 672. Mixed Claims Commission, United States and Germany—Number and amount of awards, amounts paid, and balance due, certified to the Secretary of the Treasury by the Secretary of State, as of September 30, 1942 ^ Total number of awards Awards certified Total amount $181, 698, 235.30 187, 226.85 7,026 1. Amount due on account: Principal of awards . . . . . Less amounts paid by Alien Property Custodian and others 181,511,008.45 81,466,086.36 Interest to Jan. 1, 1928. at rates specified in awards . Interest thereon to date of payment or, if unpaid Sept. 30, 1942, at 5 percent per annum as specified in the Settlement of War Claims Act of 1928 - ... .. Total due claimants. _ 102,583, 293.69 365, 569,388. 50 __ 2. Payment made on account to Sept. 30, 1942: Principal bf awards. :.. Interest to Jan. 1,1928, at rates specified in awards Interest at 5 percent per annum from Jan. 1, 1928, to date of payment as directed by the Settlement of War Claims Act of 1928 . . . Total payments to Sept. 30,1942.... Less one-half of 1 percent deduction from each payment - 2. 278, 521.14 163, 536, 276.22 817,879.69 _. , 162,718,396.63 Net payments made to claimants to Sept. 30,1942 8. Balance due on account; Principal of awards ___ Interest to Jan. 1,1928, at rates specified in awards Accrued interest at 5 percent per annum from Jan. 1, 1928, on total amount payable as of Jan. 1, 1928, to Sept. 30, 1942 Balance due claimants as of Sept. 30,1942 2152.320.280.79 8,937, 474. 29 6,670 ._ 356 101,709,444.91 8,894.82 100, 304,772.65 202,023,112.28 1 Includes payments on account of Private Law No. 609, approved July 19,1940. 2 Includes payments on account of interest to Jan. 1, 1928, on Class 3 awards and Private Law No. 609. Payments on this class of awards are first applied on account ofthe total amount payable as of Jan. 1, 1928 (which is treated as a principal payment for this purpose), as directed by the Settlement of War Claims Act of 1928 until total of all payments on the three classes equals 80 percent of the amount payable Jan. 1,1928. Payment of accrued interest since Jan. 1,1928, on this class of claims has been deferred in accordance with the act. 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 Uhited States, and a radio station sold tP the United States. War Claims Arbiter: Claims oj German nationals.—The Treasury completed up to June 30, 1935, paynient 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 subsequent to that date. < 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, 1942. REPORT O'P THB SECRETARY OF THE TREASURY 107 War Claims Arbiter—Number of awards, amounts paid, and balance due, on account of claims of German nationals for ships, patents, and a radio station, as of September 30, 1942 Total (315 awards) Awards certified Ships (27 awards) ]. Amount due on account:. Principal of awards including interest to Jan. 1, $86,738,320.83 1 $74, 262,933.00 1929 Interest at 6 percent per annum from Jan. 1.1929, on total amount payable as of Jan. 1, 1929, or on the principal amount remaining unpaid to Sept. 30,1942 34, 500, 217.83 29,384,345. 08 Total due claimants 2 . Payments made on account to Sept. 30, 1942: Principal of awards . Interest at 5 percent per annum from Jan. 1,1929, on total amount payable as of Jan. 1, 1929, or . on the principal amount remaining unpaid to Sept. 30, 1942 1 Total payments to Sept. 30,1942 3. Balance due on account: Principal of awards .. Interest accrued at 5 percent per annum from Jan. 1, 1929, on total amount payable as of Jan. 1, 1929, or on the principal amount remaining unpaid to Sept. 30, 1942 Balance due claimants Patents and radio station (288 awards) $12,485,387.83 5,115 872.76 121,238,638.66 103, 637. 278. 08 17, 601, 260.58 43,368,899.24 37,126, 205. 21 6.242. 694 03 43,368,899. 24 37,126, 205. 21 6, 242,694.03 43,369,421.59 37,126, 727. 79 6 242,693 80 34, 500, 217.83 29,384,345.08 5,115,872.75 77,869,639.42 66,511,072.87 11, 358,566 55 vl Includes awards amounting to $622.58 to members of the former ruling family of Germany (sec. 3 (j), Settlement of War Claims Act of 1928, as amended). War Claims Arbiter: Claims oj 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 thereouvat the rate of 5 percent per annum from December 31, 1928. No payments were made during the year on these awards. 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, 1942, and the balance held in the account. Funds deposited in the German special deposit account and payments made therefrom to September 30, 1942 RECEIPTS From investments by Alien Property Custodian under Trading With the Enemy Act, as amended: Unallocated interest fund __ Less refunds 20 percent German property retained. _ _ Earnings on 20 percent German property retained $25,000,000.00 4,143,663.25 20,856,446.75 ^ 34,347,476.76 6,564,469.10 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 $60,768,392.61 53,396,763.57 108 REPORT OF THE SECRETARY OF THE TREASURY Funds deposited in the German special deposit account and payments 'made therefrom to September 30, i^4^—Continued RECEIPTS—C ontinued Appropriation for ships, patents, and radio station $86,738,320.83 Expenses of administration. War Claims Arbiter, on account German nationals ' 113,624.20 $86,861,945.03 Deposits by Attorney General of the United States (Alien Property Bureau) under section 25 (d) of Trading With the Enemy Act, as amended: German Government German nationals _ ...-. 137,268.13 435,847.69 Earnings and profits on investments by Secretary of the Treasury Total receipts ' " 573,115.82. 5,632,094. 28 .'.. $207,222,311.31 PAYMENTS ON ACCOXJNT Awards of the Mixed Claims Comndssion: Under agreement of Aug. 10, 1922 Under agreement of Dec. 31, 1928.Private Law No. 609. : Awards of War Claims Arbiter: For ships For patents and one radio station. ._ . $154,914,854.31 7,684,835.94 118,706.28 : $162,718,396.63 . 37,126,205.21 6, 242,694.03 One-half of 1 percent deducted from Mixed Claims payments covered into Treasury ($9,029'. 18 withheld but not paid) . One-half 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 ($14,466.95 withheld but not paid) One-half of 1 percent deducted on account of Private Law No. 509 withheld and covered into the Treasury Advances to special fund, expenses of administration of the Settlement of War Claims Act of 1928 (Office of the Secretary ofthe Treasury) Expenses of administration. War Claims Arbiter account of German nationals Total payments. 43, 368,899. 24 769,438.12 24,150.09 795.35 65,175.00 113^624.20 .-.- Cash balance in German special deposit account.. .._ 207,050,478.53 171,832.78 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 1942 nP payments were made on account of such awards. As of June 30, 1942, awards aggregating $7,257.35 had not been paid because claimants had not filed applications as required by law. Claims of American nationals against Turkey The Special Claims Commission, United States and Turkey, established under the agreement of December 24, 1923 (see page 196 of the annual report for 1940 for further details of this agreement), made awards in 33 cases aggregating $899,338.09, which were reduced by $70,891.06 on account of expenses incurred by the United States, leaving net awards amounting to $828,447.03 payable frpm funds received from the Republic of Turkey. Under the provisions of the act of February 27, 1896 (29 Stat. 32), these awards were certified on August 19, 1937, by the Secretary of State to the Secretary of the Treasury for payment. During the fiscal year 1942 a pro rata payment was authorized to be made to the claimants by the Treasury from funds amounting to $100,000, available for that purpose. An additional sum of $100,000 was received June 22, 1942, but too late to enable the Treasury to make payments to claimants in the fiscal year 1942. . REPORT OF THE SECRETARY OF THE TREASURY 109 Statements of awards made by Special' Claims Commission, United States and Turkey, as of June 30, 1942 Amount awarded to claimants" Amount of claims Interest allowed. -. . _ - $539,844.13 359,493.96 . Total 899,338.09 Less deductions on account of expenses incurred by the United States 70,891.06 Amount of awards $828,447.03 Amount received from Republic of Turkey: To June 30, 1941. During fiscal year 1942 . Total Less reimbursement for expenses by the United States Available for payment to claimants Amount oaid to claimants: To June30, 1941... During fiscal year 1942 Total i - ...-. ^... 600,000.00 100,000.00. 700,000.00 _. 70,891.06 , 629,108.94 428,557.26 90,895.84 1..J _..- 519,453.10 Balance due claimants for which vouchers have not been received. ^ 109,655.84 Claims of American nationals against Mexico . Under the convention between the United States and Mexico dated AprU 24, 1934, covering the settlement of the claim.s presented by the Government of the United States to the Commission established by the Special Claims Convention concluded September 10, 1923, the amount to be ^aid by the Government of Mexico to the Government of the United States was fixed at $5,448,020.14. (See page 129 of the annual report for 1941 for further details.) On June 20', 1938, the Secretary of State certified to the Secretary of the Treasury for payment a list of awards entered by the Special Mexican Claim.s Commission aggregating $9,137,341.79, subsequently adjusted to $9,140,541.89, which were subject to reduction on a percentage basis as provided in section 4 of the act approved April 10, 1935. The final awards as adjusted aggregated $5,210,108.92. The expenses of the Com.mission were determ.ined to be $241,549.31, and this am.ount was transferred to miscellaneous receipts on December 4, 1940. As of June 30, 1942, there had been received and m.ade available for distribution to claimants the sum of $3,930,591.79. Amounts aggregating 75.44 percent of the final aw'ards of $5,210,108.92 have been authorized to be distributed to the claimants. Statement of awards mfide by Special Mexican Claims Commission, United States and Mexico, as of June 30, 1942 Amount of final awards to claimants after application of sec. 4 of the act approved Apr. 10, 1935 , $5,210,108.92 Amount received from Government of Mexico: To .Tune 30, 1941, .$3,500,000 principal and $152,660.90 interest . . $3,652,660.90 Jan. 3, 1942, $500,000 principal and $19,480.20 interest .' 519,480. 20 Totabto June 30, 1942. ...'. 4,172,141.10 Less amount transferred to miscellaneous receipts to cover the expenses of the Commission 241,549.31 Available for payment to claimants Amount paid to claimants: Fiscal year 1939 . Fiscalyear 1940 Fiscal year 1941 . Fiscalyear 1942 _ -._. 3,930,691.79 ......... Total to June 30, 1942. Balance due claimants: For which vouchers have not been received For subsequent distribution 2,087,193.47. 678,717.90 537,124.56 • 616,380.29 - , -._. • -.. 111,089.96 85.61 3,819,416.22 111,175.57 no REPORT OF THE SECRETARY OF THE TREASURY Railroad obligations Total receipts during the fiscal year on account of realization on railroad securities acquired under section 210 of the Transportation Act, 1920, as amended, were $368,287.28. The following statement shows,the total amount of railroad obligations, by classes, originally held by.the United States Government (exclusive of certain miscellaneous obligations acquired by the Director General of Railroads), the amount held on June 30, 1942, and payments received on account. Summary of railroad obligations held by the Government as of June 30,1942, by classes Class T r a n s p o r t a t i o n Act: Sec. 207 Sec. 210 Federal Control Act: Equipment trust notes. . Sec. 7 Sec. 12 Total... Principal amount originally held Principal amount held on J u n e 30, 1942 Principal $282, 712,837. 36 290,800,667.00 $6,007,000. 00 2 24,691,177.88 1 $277, 695,167. 90 3 265,673,986.03 $54,360,339. 70 91,-537, 272 47 346, 656,750. 00 98,401, 756. 00 62,103,453. 28 45,338, 918. 25 ' 23,100, 662. 27 4,248,171 96 1,050,431,112.21- 218, 585, 264.65 346, 566,750. 00 98,401,756. 00 62,103,453.28 1, 080, 575,462. 64 29, 698,177.88 T o t a l pa^'-ments received Interest 1 Stock of the Kansas, Oklahoma & Gulf Ry. Co. in the face ainount of $212,500 was sold on the market for $201,830.54, resulting in a difference of $10,669.46 between the receipts and the principal originally held. 2 Includes loans aggregating $4,485,600 to four carriers, the assets of which have been completely liquidated and were insufficient to meet such claims. , 3 Notes of Wichita Northwestern Ry. Co. and Virginia Blue Ridge Ry. were sold pursuant to the provisions of act of Aug. 13, 1940, for $52,246.91, resulting in a difference of $436,603.09 between the receipts and the principal originally held. Section 204, Transportation Act, 1920, as amended.—On January 7, 1941,. section 204 was amended by Public No. 893, to permit the reopening by certain short-line rail carriers of claims against the United States before the Interstate Commerce Commission. Under the act the Commission is authorized to ascertain and certify to the Secretary oi the Treasury the amounts payable to carriers under this section as amended. The act provides that no claim certified shall be for an amount in excess of $150,000. No payments were made during the fiscalyear as no appropriation was available for payment of any amounts certified for payment. Under section 204 (g) of the Transportation Act, 1920 (approved February 28, 1920), an indefinite appropriation was made to pay claims of this character. The amount previously paid under section 204 was $10,967,801.80, as reported in the Secretary's annual report for the fiscal year 1937, page 83. The Permanent Appropriation Repeal Act of 1934 repealed the indefinite appropriation made for the payment of this class of claims. However, a specific appropriation of $800,000, available for the fiscal year 1942, was made in the Second Deficiency Appropriation^ Act, 1941, approved'July 3, 1941 (Public Law 150). The Interstate Commerce Commission certified to the Secretary of the Treasury for payment claims aggregating $184,602.58, of which claims aggregating $167,529.85 were paid during the fiscal year, leaving an unexpended balance of $632,470.15 at the end of the fiscal year. In the Treasury and Post Office Departments Appropriation Act, 1943, approved March 10, 1942 (Public Law 495), $600,000 of the unexpended balance was made available uiitil June 30, 1943. The total payments under this section aggregate $11,135,331.65.as of the end of the fiscal year. One claim amounting REPORT OF THB SECRETARY OF THE TREASURY 111 to $17,072.73 has not been paid because satisfactory evidence as to who is entitled to receive payment has not been received. Section 207, Transportation Act, 1920, as amende^.—The following statement shows the amount of obligations of carriers acquired under section 207 and held on June 30, 1942. Obligations acquired under the provisions of section 207 of the Transportation Act, 1920, and held as of June 30, 1942 Principal amount of promissory Collateral, note or of face directly amount held security Carrier Class of collateral or of • Principal directly held security in default Interest in default Chicago. Milwaukee, St. $3, 207,000 (0 Paul k Pacific R. R. Co. Minneapolis •& St. Louis 1,250, boo $1, 500,000 R. R. Co. Washington, Brandywine Si Point Lookout R. R. Co. M^aterloo. Cedar Falls & Northern Ry. Co: 50,000 . 600, 000 5, 007, 000 Total...1. 1 Securities directly held. 6% noncumulative preferred • stock of carrier. Refunding and extension $1,250,-000 $1, 350,000.00 mortgage, 5% bonds of carrier. 76, 000 First mortgage, 6% bonds 60,000 28,408.98 of carrier. 625, 000 •Temporary general mort" gage, 7% bonds of carrier. - • 500,000 604,931.50 1, 800,000 1.983.340>48 Section 210, Transportation Act, 1920, as amended.-—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. No expenditures under this section were made during the fiscal year. The net expenditures on this account amounted to $33,640,740.24^ to June 30, 1942. Total loans (including renewal loans and repayments thereof aggregating $59,800,000). to June 30, .1942, amounted to $350,600,667; repayments amounted to $325,473,986.03; and losses on sales under t h e act of August 13, 1940, aggregating $435,503.09'reduced the loans outstanding as.of that date to $24,691,177.88.The following statement shows the amount of obligations held on June 30V 1942, on account of loans to carriers under section 210, and the amount of principal and interest in default. Obligations held on June,30, 1942, on account of loans to carriers under sec. 210 of the Transportation Act, 1920, as amended, andj. the amount of principal and interest m default Carrier Loans outstanding Alabama, Tennessee & Northern R. R. Corporation — * $151, 500.00 Des Moine,s„&..Central Iowa R. R.. Co. (formerly the Inter633, 500.00 Urban Ry." Co.)'-.^--.-...: ........ .. 200, 000.00 Fort Dodge, Des Moines & Southern R. R. Co '. 1 75,000.00 Oainesville & Northwestern R. R. Co 792, 000.00 Georgia & Florida Ry. (receiver).... . 1, 382,000.00 Minneapolis & St. Louis R. R. Co 13, 500, 000. 00 Mis.souri & North Arkansas Ry. Co 1872, 600. 00 Salt Lake & Utah R. R. Co... 14, 440, 577.88 Seaboard Air Line R^''. Co 1, 256, 000.00 Seaboard-Bay Line Co. '. 138, 000. 00 Virginia Southern R. R. Co 1, 260,000.00 Waterloo, Cedar Falls & Northern Ry. Co 90, 000. 00 Wilmington, Brunswick & Southern R. R. Co :. Principal in t default Interest in . default $151,500.00 $77, 265. 00 •633,\500.'00' 200, 000. 00 520,651.34 133,164.91 792, 000. 00 1, 382, 000. 00 594, 000. 00 1, 538,129. 73 14,440, 577.88 1, 256,000. 00 9, 498, 349. 09 291, 746. 96 1, 260, 000. 00 90. 000. 00 1, 496, 983. 29 64, 800.00 Total 1 . .:..|24.691,177. 20. 205. 577. SR- 14.21.5.090.32 I Assets of these carriers have been completely liquidated, and were insufficient to meet these clainis. 487543—43 9 , 112 REPORT OF THE SECRETARY OF THE TREASURY Federal control of railroads Administration.—The Treasury continued during the fiscal year 1942 the liquidation of matters growing out of the control of the American transportation system, which was exercised through the United States Railroad Administration during the period from December 28, 1917, to February 29, 1920. , i^^?^a7^ces.—"Total receipts-on account of the Federal control of railroads for the fiscal year 1942 were $292,786.30, and expenditures were $2,671.03, resulting in net receipts of $290,115.27, as compared withnetreceipts.of $180,616.02 for 1941. . . At the close of business on June 30, 1942, the cash and appropriation balance aggregated $415,377.98 as compared with $525,262.71 at the close of 1941. ; A statement of receipts and expenditures follows. ' ' Receipts and ^expenditures in connection with Federal control of railroads, fiscal years . ,' 1941 and 1942 . • - • Balances a t beginning of year: Secretarj^ of t h e T r e a s u r y , special deposit a c c o u n t : U n r e q u i s i t i o n e d a p p r o p r i a t i o n balances: • Federal control of t r a n s p o r t a t i o n s y s t e m s : L o a n s to railroads after tei-mination of Federal control .1...... '--. Total balances. . Receipts: Collections of principal on- obligations of c a r r i e r s . . Collections of interest on obligations of c a r r i e r s . . . I n c o m e taxes of Federal carriers repaid b y T r e a s m-y 1 ...... Collection oi miscellaneous claims referred to W a s h i n g t o n J r o m field, including t r a n s p o r t a tion charges, undercharges, etc ' T o t a l receipts.' . ' $72, 849. 47 268,413,68 452, 413. 24 $344,646^69 Total expenditures. ..i .. Transfers from a p p r o p r i a t i o n a c c o u n t to s u r p l u s fund. Balances a t end of year: Secretary of t h e T r e a s u r y , special deposit.account. F e d e r a l control of t r a n s p o r t a t i o n s y s t e m s . . . ' . 1 Total expenditures and balances....' .-... 287, 986. 34 181, 373. 37 1. 475. 54 _• Expenditures: E m p l o y e e s ' compensation liability a w a r d s .,... Deposit) w i t h t h e W o r k m e n ' s C o m p e n s a t i o n B o a r d of Ontario, account of compensation liability....... .. : C l a i m s for u n p a i d w a g e s , ' b a c k - p a y a w a r d s , a n d L i b e r t y b o n d subscription r e f u n d s . . . Admini'strative expenses (pay r o l l s ) . . $525,262.71 253.09 ' 1, 023. 67 .. T o t a l balances a n d receipts T o t a l balances. $76, 233.01 .... I 184,125. 67 4, 799.96 • ... 528,772.36 292,786.30 !, 049. 01 767.13 215. 75 1, 747,50 138. 90 1, 765. 00 3, 509. 65 72, 849. 47 452, 413. 24 .. 2.671.03 400, 000. 00 30. 236. 44 385,141^54 525,262.71 415, 377. 98 528, 772. 36 818,049. 01 Pursuant to the provisicns of section 12 of the Federal Control-Act and with the approval of the President $40,000 derived from operating revenues of railroads was transferred from the special deposit account to the appropriation account ^^Federal Control of Railroads,'^ and $400,000 of the appropriation balance was transferred to the surplus fund. .' Securities, etc.—'^o collections were made since November 24, 1936, on account of the obligations of carriers acquired under section 207 REPORT OF THE SEiCRETARY OF THE TREASURY 113 of the Transportation Act, 1920, as amended, which are listed on page 111. The miscella.neous securities acquired under section 202 of the Transportation Act, 1920, as amended, were obtained ' from nonFederal controlled railroads and others for indebtedness, such as interline balances, freight charges, undercharges, etc. No collections were made from this source during the fiscal year. A statement of the amounts carried on June 30, 1941, and June 30, 1942, follows. Indebtedness June 30, 1941. Carrier E. F. Drew and Co., Inc. (stock).-. Virginia Blue Ridge Ry. Co. (loans and bills receivable). 'Total ...^ Indebtedness June 30, 1942 $4, 065. 00 16, 592. 36 $4,065.00 16, 692. 36 20, 657. 36 20, 657. 36 Ciams.—The principal claims'presented during the period were on account of refunds of installments paid on subscriptions for Liberty Loan bonds by employees of carriers during Federal control. Total payments on account of allowed claims of this character amounted to $138.90 during the year. Compensation payments—TJnited States railroad employees.—Expenditures on account of the compensation award of a railroad employee residing in the United States, amoimted to $767.13 during the year. < Canadian Workmen^s Compensation Board.,—The Canadian Workmen's Compensation. Board, located at Toronto, Canada, has jurisdiction over certain cases of disability resulting from accidents during the period of Federal control on those railroads having lines extending into Canada. Payments under Canadian conipensation awards, made from funds so deposited with the Board, amounted to $2,706.00 during the calendar year 1941. Interest amoimting to $1,352.25 was added to the fund, leaving a balance of $25,928.91 to cover awards as of December 31, 1941. The figures showing the balance as of June 30, 1942, are not available inasmuch as the Board's reports are on a calendar year basis. However, the status of the fund as of December 3.1, 1941, was as follows: Balance Dec. 31, 1940 Payments from Treasury Interest Jan. 1,1941, through Dec. 31, 1941 Total Payments of awards by Board during 1941 Balance Dec. 31, 1941 $26,518.39 764. 27 1,352.25 . .'... ..... :... ....'. . • 28,634:91 2, 706.00 25,928.91 Tax rejunds and other collections.—XJndei the terms of the Federal Control Act and the standard contract with the carriers, the Director General paid 2 percent of all Federal income taxes assessed against carriers formerly under Federal control. Subsequently, the United States Board of Tax Appeals held that such taxes should not have been assessed against either the carriers or the Director General. As a result of further tax adjustments, there was received during the year $287,986.34 on account cf these items. Further clainis for such paid taxes arnounting to $438,770:84 are.still pending before the.Board of Tax Appeals and it is anticipated that substantial sums will be received when such cases are finally adjusted by the Bureau of Internal Revenue. 114 REPORT OF THE SECRETARY OF THE TREASURY ' ' All unpaid judgments which have not .expired by reason of t h e statute of limitations, and other claims are being reviewed from time to time to determine whether any amounts can be collected thereon. Collections from this source amounted to $14 during 1941 and $58 during 1942. Federal Farm Mortgage Corporation Under section 32 of the Emergency Farm Mortgage Act of 1933, approved May 12, 1933 (49 Stat. 43), as amended, the Secretary of the Treasury is authorized to pay to the Federal Farm Mortgage Corporation such amount as the Governor of the Farm Credit Administration certifies to the Secretary of the Treasury is equal to the amount by which interest payments on mortgages held by such Corporation have been reduced. Public Law 629, approved June 27, 1942 „ (56 Stat. 391), extended to June 30, 1944, the period for which payments are to be made to the Federal Farm Mortgage Corporation on account of reductions in interest,, and made this provision applicable to interest on purchase-money mortgages and on real estate sales contracts taken by the Federal Farm Mortgage Corporation which is payable on installment dates on or after July 1, 1942, and prior to July 1, 1944. A statement ,of the amoimts appropriated and payments to t h e Federal Farm Mortgage Corporation follows. Appropriations on account of reductions in interest rate on mortgages, and payments to the Federal Farm Mortgage Corporation for this purpose, fiscal years 1938 to 1942 1. Amounts appropriated: ' To Oct. 9. 1940 1 : Treasury Department Appropriation Act, 1942, May 31, 1941 Total to June 30, 1942 2. Pa^-ments to Federal Farm Mortgage Corporation: i To June 30, 1941.... .Fiscal year 1942 Total to June 30, 1942 1 3. Unexpended appropriations, June 30, 1942 1 On basis of daily Treasury statements (unrevised). '. _ .' Amount $33,125,000.00 9,600,000.00 42,725,000.00 $30,010,422.22 i. 9,607,575.24 39,617,997.46 3,107,002.64 Federal land banks' Capital stock.—ViideT the act of January 23, 1932 (12 U. S. C. 698), amending the Federal Farm Loan Act, it is the duty of the Secretary of the Treasury on behalf of the United States, upon the request of t h e 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. The act further provides that such stock may at any time, in the discretion of the directors and with the approval of this Farm Credit Administration, be paid off at par and retired in whole or in part and t h a t the Farm Creciit Administration may at any time require such stock to be paid off at par and retired in whole or m part if m its opinion the bank has resources avaUable for. such purpose. The proceeds of all repayments on account of stock subscribed for by the Secretary of the Treasury are held in the Treasury and are avaUable for the purpose of paying for other stock thereafter issued pursuant to said act. . REPORT OF T H E SEiCRETARY OF T H E TREASURY 115 To enable the Secretary of the Treasury to pay for said stock, $125,000,000 was appropriated under the ac:fc approved February 2, 1932. The following statements show the transactions in connection with subscriptions to stock of Federal land banks during 1942. Subscriptions by the Secretary of the Treasury to stock of Federal land banks and repayments thereon, fiscal year 194-2 [Par value of shares] Shares held June 30, 1941 Federal land bank Baltimore Columbia St. Paul.. Wichita Omaha Spokane Total - Shares repaid fiscal year 1942 1 Shares held June 30,1942« - $3,182,165 4,949,430 40,061,040 5, 504, 620 5, 693,030 8,126,400 $208,800 • $24,230 30, 225 49, 320 65, 680 141,085 42, 980 $3,157,935 4, 919, 205 40, 220, 520 5,438, 940 5, 551,945 - 8,083,420 - 67,516,685 208,800 353, 520 67, 371,965 . - Shares subscribed fiscal year 1942 i 1 On basis of daily Treasury statements (unrevised). « The Federal land banks of Springfield, Louisville, New Orleans, St. Louis, Houston, and Berkeley had no outstanding capital stock held by the Secretary of the Treasury as of June 30,1942. Payments ori account oj reductions in interest rates on mortgages and subscriptions to paid-in surplus.—The Secretary of the Treasury is directed, under certain conditions, to make payments to Federal land banks equal to the amount by which interest payments on mortgages held by such banks have been reduced pursuant to the Federal Farm Loan Act, as amended, and he also subscribes, under specified con-' ditions and in the manner prescribed by the Federal Farm Loan Act, as amended, to the paid-in surplus of each Federal land bank an amount equal to the amount of all extensions and deferments of any obligation that may be or may beconie unpaid under the terms of any mortgage. Amendments to the law under which subscriptions are made to the paid-in surplus of the Federal land banks are contained in the Farm Credit Act of 1937, approved August 19, 1937. The period for which payments to Federal land banks on account of reductions in interest rates may be made was extended to June 30, 1944, pursuant to Public Law 629, approved June 27, 1942 (56 Stat. 391). ' This law also made the provisions relating to the reduction of interest applicable to interest on real estate sales contracts taken by Federal land banks which is payable on installment dates after June 30, 1942. ^ A statement as of June 30, 1942, of the amounts appropriated on account of reductions in interest rates on mortgages and of payH]i.ents to Federal land banks for this purpose is here set forth. 116 REPORT OF T H E SEiCRETARY OF T H E TRiEASURY A p p r o p r i a t i o n s on account of reductions i n interest rates on mortgages a n d - p a y ments to Federal land'banks-for this purpose to J u n e 30, 1942 1. Amounts appropriated: To June 30, 1942 Treasury Department Appropriation Act, 1942, May 31, 1941 $209,267,000 26,800,000 • Total to June 30, 1942 2. Payments to Federal land banks: .: A m o u n t paid A n i o u n t paid A m o u n t paid to J u n e 30,1941 fiscal year 19421 to J u n e 30,1942 Federal land b a n k Springfield Baltimore Columbia Louisville N e w Orleans S t . Louis St. P a u l Wichita...". Houston. Berkeley , ^ Omaha Spokane _. '. ....... ... . . ,. Total*. 236,067,000 _ $7, 389, 515. 22 •8,'862, 617. 69 8, 307, 455. 53 20, 357, 972. 37 10, 690, 879. 49 17, 715, 857. 43 28,807, 656. 29 16, 309, 089. 91 22, 977, 860. 37 11,873,990.80 35, 066, 496. 31 12,426,008. 33 $973, 751. 34 1,104, 503. 66 1, 063, 268. 45 2, 582, 209. 47 1, 335, 844. 96 2, 421, 372. 41 3, 934, 001. 70 2,108,876. 20 • 2,950,122.19 1, 615, 217. 45 4, 845, 620. 46 1, 566, 714:82 $8, 363, 266. 56 9, 967,121. 35 9, 370, 723. 98 22, 940,181. 84 12, 026, 724. 45 20,137, 229.84 32, 741, 657. 99 18,417,966.11 25,927, 982. 56 13, 489,208 25 39, 912,116. 77 13, 992, 723.15 200, 785, 399. 74 26, 501, 503.11 227, 286,902. 85 3. Unexpended appropriations, June 30, 1942 1,780,097.15 1 On basis of daily Treasury statements (unrevised). Appropriations for subscriptions to paid-in surplus to June 30, 1937, amounted to $189,000,000. No appropriation .for this purpose has been made since that date.. A statement as of June 30, 1942, of the amounts appropriated for subscriptions to the paid-in surplus of Federal land banks on account of extensions and deferments, and net repayments by the Federal land banks follows. A p p r o p r i a t i o n s for subscriptions to the p a i d - i n s u r p l u s of Federal land banks on account of extensions and deferments, and payments for this purpose to J u n e 30, 1942 1. Amounts appropriated: To June 30, 1941 • Total to June 30, 1942 .1 v . ' $189,000,000.00 189,-000,000.00 2. Payments to Federal land banks: A m o u n t pai<i t o J u n e 30, 1941 Federal l a n d b a n k Springfield Baltimore Columbia N e w Orleans S t . Louis St. P a u l . . Wichita Berkeley Omaha Spokane Total . $8, 317," 138. 66 ' 4,190,251.29 9, 386, 953. 42 11, 675, 585. 41 11, 413, 256. 57 33,128,017.71 16,850,213.90 4, 550, 946. 55 30, 740, 238. 50 15,472,384.78 2 1, 250, 000. 00 .... 146, 724, 986. 79 136, 252. 23 . . : _. . , . ... • 3. Unexpended appropriations, June 30, 1942. 1 Onvbasis of dajiy Treasury statements (unrevised). 2 Excess of repa;yments'(deduct) :"'-'^ •'"•", N e t a m o u n t p a i d A m o u n t paid t o fiscal year 1942 i J u n e 30, 1942 2 $250,000.00 1, 636, 252. 23 $8, 317,138. 66 4,190, 251. 29 9,136, 953. 42 11, 675, 585. 41 11,413,256.57 , 34,764,269.94 16, 850, 213. 90 4, 550, 945. 55 30, 740, 238. 50 14, 222, 384. 78 145,861,238.02 $43,138, 761. € . REPORT O'F T H E SEiCRETARY OF T H E TREASURY . 117 Federal savings and loan associations . Under the act of June 13, 1933 (48 Stat. 133), as amended April 27, 1934 (48 Stat. 645), the Secretary of the Treasury was authorized oh behalf of the United States to subscribe for preferred shares aiid" fullpaid income shares in Federal savings and loan associations upon request of the Federal Home Loan Bank Board. Ah appropriation of $50,000,000 to enable the Secretary of the Treasury to purchase such shares was reduced by an allocation of $700,000 to the Federal Home Loan Bank Board. The details concerning the provisions of law under which these subscriptions were made and the appropriations are contained in the annual report for 1940, pages 176 and 177.. The Home Owners' Loan Corporation also was authorized to purchase full-paid income shares of Federal savings and loan associations after the funds 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. During the fiscal year. 1942 the sum of $i,228,300 was received on' account of shares repaid, making the total shares repaid to June 30/ 1942, $29,857,400. . • The following statement shows the transactions in connection with the subscriptions by the Secretary of the Treasury to preferred and full-paid income shares in these associations during the fiscal year 1942. ' Preferred and full-paid income shares of Federal savings and loan associations .subscribed by the Secretary of the Treasury to J u n e 30, 1942, and dividends received [Par value of shares] • Preferred shai-es $637,800 T o t a l shares subscribed and paid S h a r e s held on J u n e 30, 1 9 4 1 . . . 1 Less shares repaid during 1942. Shai-es held on J u n e 30, 1942 ....-.•. . . .i Full-paid income shares $48, 662; 200 $49,300,000.00 '.-23,670,900 4, 228, 300 23,670,900.00 4,228,300.00 19, 442, 600 19,442,600.00 D i v i d e n d s received on preferred a n d full-paid income shares: T o J u n e 30, 1941 : D u r i n g 1942 T o J u n e 30, 1942 . Total 8, 883, 741.01 697, 205. 86 -. 9, 680, 946.87 Trust and special funds invested by the Treasury Department Under various provisions of law creating trust and special funds,' the Secretary of the Treasury or the Treasurer of the United States, is authorized to invest such portions of the funds as are not required to meet cuTrent withdrawals. The following statement shows the amount of Government and other securities held in these funds at the clo^evof the fiscal year. Further details on each of these fuiids. are shown in the tables beginning on page 602.. 118 REPORT OF T H E SECRETARY OF THE TREASURY Securities held as investrnents in trust arid special funds, at par value, June 30, 1942 . [000 omitted] Fund Adjusted service certificate fund... Ainsworth Library fund, Walter Reed General Hospital. Alaska Railroad retirement and disability fund .... Canal Zone retirement and disability fund. Civil service retirement and disability fund. District of Columbia teachers' retirement fund District of Columbia water fund ." . District of Columbia workers' compensation fund Federal old-age and survivors insurance trust fund. Foreign service retirement and disability fund... Library of Congress trust fund: Longshoremen's and harbor workers' compensation fund. National Cancer Institute gift fund National Institute of Health gift fund. Nation al park trust fund 'National service life insurance fund , Pershing Hall Memorial fund Railroad retirement account Unemployment trust fund U. S. Government life insurance fund. Total __ 1 Government securities Government Other guaranteed secmities $18,435 10 1,300 6,678 782, 650 8,264 1,773 32 , 201, 634 5,442 4 Total $18,435 , $95 10 1,300 6, 678 782,650 9.615 $1, 257 1, 773: 43 11 3, 201, 634 5,442 191 "i87" 199 251 79 17 38, 775 191 91, 500 3,139,000 905, 468 8, 201, 449 70 17 38,775 191 91, 50O . 3,139, 000 947,467 43, 497 ;, 246, 051 NOTE.—Figures have been rounded to nearest thousand dollars and will'not necessarily add to totals. During the fiscal year 1942, a change was made in the investment procedure for t h e national service life insurance fund and the United States Government life insurance fund. In order to expedite the investment of monies in these two funds, there was established with the Treasurer of the United States, pursuant to Public Law 448, approved February 10, 1942, a special deposit account in the name of the Chief Disbursing Officer, Division of Disbursement, for each of these trustfunds. (See Exhibit 61, p. 342.) Into these special deposit accounts were deposited the cash balances to the credit of these two funds on the books of the Division of Bookkeeping and Warrants and also balances with disbursing offices. Under this arrangement, investments can be made by means of a voucher paid by the Chief Disbursing Officer, thereby permitting investments to be completed more rapidly than under the prior warrant procedure. Emergency Reliej Accounting Organization \ Under authority of section I I (a) of Executive Order No. 7034, dated May 6, 1935, and Department Circular No. 543, approved by the President, the Commissioner of Accounts continued during the year to maintain accounting and disbursing facilities for handling appropriations made by the Congress for the emergency relief program. The provisions of this Executive Order w-ere extended by Executive Orders Nos. 7396 and 7649 and the provisions of Department Circular No. 543 were extended by Department Circulars Nos. 592 and 616, approved by the President to apply to funds Appropriated in the Emergency Kelief Appropriation Acts for the fiscal years 1935 to 1942. , During the yeay the 52 Treasury State accounts oflBlces were regionalized and the number reduced to 19 Treasury regional accounts offices; and the 37 Treasury State disbursing ofiices were consolidated with REPORT OF THE SEiCRETARY OF THE TREASURY 119. t h e Treasury regional ofiices handling disbursement of other than . emergency relief funds. The Treasury accounts and disbursing ofl&ces had 853 employees on June 30, 1942, which was a reduction of 1,609 employees, or 65 percent, since June 30, 1941. ^^" In a letter to the President dated April 9, 1942,. the Secretary of the Treasury recommended that, effective July 1, 1942, the emergency Treasury accounts offices discontinue (1) the maintenance of accounts, (2) the preparation of financial reports (except for a final financial report similar to those previously transmitted annually to the Congress), (3) the examination of disbursing officers' accounts, and (4) all other functions performed by the emergency Treasury accounts offices pursuant to Executive Order No. 7034 as recommended and extended. The letter further proposed that a small staff of employees be maintained during the fiscal year 1943 to wind up the affairs of these offices. (See exhibit 57, p. 338.) These recommendations, which were approved by the President on April 14, 1942,-were in line with the policy of reducing nondefense expenditm'es and making available the maximum trained personnel for war activities. Appropriation was made by the Congress to cover the liquidation expenses of the emergency Treasury accounts offices to December 31, 1942. I n view of the provisions of Public Law 389, approved December 29, 1941, providing for the bonding of officers and employees authorized to certify vouchers for payment by disbursing officers in the executive branch of the Government, the Secretary of the Treasury also recommended:in his letter dated April 9, 1942, that the executive preaudit by the emergency Treasury accounts oflBces of all vouchers and pay rolls relating to the emergency work-relief program be discontinued effective May 1, 1942. This recommendation was also approved by the President. Prior to this date, all pay rolls and vouchers were . examined before payment tb insure that the expenditure was made within the purview of Federal laws and regulations. The Treasury emergency organization from April 8, 1935, to June 30*, 1942, transmitted to the General Accounting Office accounts covering expenditures totaling $13,586,817,322.07. Against this amount, the General Accoimting Office has issued formal certificates of settlement of account for approximately $11,213,661,937.00, or 82.5 percent of the expenditures. . . The Treasury State and regional accounts offices have handled since their inception more than 300,000 emergency relief project accounts for approximately 80 administrative agencies. There were about 13,000 accounts, including project accounts, which, were active on June 30, 1942. The disbursing offices during the fiscal year 1942 issued approximately 30,000,000 checks payable from emergency relief funds, which were verified for accuracy in the accounts offices. Reports of operations, obligations,, and expenditures, as required by law, were submitted by the President to the Congress before January 30 of each calendar year, Such repoits set forth the status of funds as of the close of the previous calendar year. The foUowing comparative financial statement shows summary information relative to expenditures under the emergency relief and work relief program from its inception to June 30, 1942. Additional tables showing the status of emergency relief appropriation funds by organizations and by States may be found on pages 448 to 461 of this report. ; 120 REPORT OF T H E SEiCRETARY OF T H E TREASURY Expenditures {checks issued) under the emergency relief program, April 8, 1935, to .. • ^ J u n e '30, 1 9 4 2 y I. B Y T Y P E OF W O R K Fiscal years 1935tol938 2 T y p e of w o r k Fiscal year 1940 Fiscal year 1939 . . • Fiscal year 1941 Fiscal year 1942 Cumulative to J u n e 30, ^ 1942 Highways, roads, $1, 988, 741, 711 $916, 225,-557 $580.101,448 $466,811,644 $251, 778,987 $4, 203, 659, 347 streets, etc 631, 771,129 218, 240, 793 145, 967, 559 . .140,097,604 96,086, 535 1, 232,163, 620 Public buildings:. 111, 708, 332 . 7,590,536 1,691,082 2,146, 721 808,697 H o u s i n g projects 123,945,368 Public recreational . 633,194, 739 189, 937,965 64,016, 769 30, 535, 528 1; 014,657,491 96,972, 490 facilities.. - . . . 1,005,424, 721 128.194,981 C o n s e r v a t i o n work 80,107, 267 . 45," 258,840 20, 276, 491 1, 279, 262, 300 Electric utilities, \vater a n d sewage systems, 501,767, 475 200, 612,028 144, 277, 531 126,653,385 80, 806, 563 1,054,016, 982 etc '.T r a n s p o r t a t i o n facili221, 819, 347 61, 245,093 . 27,530,131 59,453,113 70, 707, 342 430, 755,026 ties .'. E d u c a t i o n a l , profes. sional, a n d clerical projects ..•- .785,'783,130 359,680,885 • 336, 503, 098 261, 241, 547 219, 631, 890 1,962, 840, 550 631, 086, 722 259,144,153 176,225,420 140,134, 677 92,605,982 1, 299,196,954 Miscellaneous. . . . . . . . . A d m i n i s t r a t i v e ex441,606,407 129,336,701 110,909, 466 -98,788,525 45, 593,071 826, 234,170 penses.. . Rural rehabilitation, s u b u r b a n projects, 27,114, 43.1 4, 544,106 loans, relief . . . . • 411,066,915 157,766, 679 134, 546, 636 735,038,766 G r a n t s t o States for 2, 732 922, 343,199 ,99,397 31, 869 . 1.693 continuing relief 922,478,890 8, 286, 313, 827 2, 617,974,768 1,836, 290,498 1,431, 293, 486 913, 376, 885 15,084, 249, 464 Total...'. II. Object of expenditure Fiscal years 1935 to 1.938 2 B Y OBJECT OF E X P E N D I T U R E Fiscal y e a r 1939 Fiscal year 1940 Personal services (Federal p a y roll $4, 921, 064, 257 $2.. 139,113,369 $1, only) Supplies a n d m a t e 599,472,024 140, 568, 540 rials ... 65, 354, 382 251, 820,064 . Rent Construction, maintenance, a n d re16, 858,149 236, 408, 910 pair c o n t r a c t s : 1, 709, 693,915 68, 739, 705 Grants C o n t r a c t u a l . ' services: 12, 760,859 3,190,964 Communications. T r a v e l , including 17,275,359 70, 536, 5681 subsistence Printing and 8, 525, 473 2, 468,47i binding Other contractual 54, 481, 3781 6,973, 287 services .. E q u i p m e n t pur16,659,697 80, 943, 248 chased ... 75, 208,181 10, 738, 782| L a n d acquisition 253, 245, 6621 122,401,135 Loans Employees' (accid e n t ) compensa7, 632,9381 12,153, 288 tion. Total...... Fiscal year 1941 Fiscal year 1942 Cunmlative to J u n e 30, 1942 523,498, 795 $1, 240, 561, 617 $770,642,706 $10,594,880,744 87,149, 310 29, 753, 511 84, 691, 313 31, 435, 217 7, 570, ( 43, 506, 5921 5, 744, 518 28, 424, 676 76, 040, 730 31,174,837 987,921,917 409,538, Oil 1, 698, 440 268,280;v6§B:' 5,181, 796 1,855, 546, 684 2, 405, 266 1,982,181 1,478,005 21,817, 266 16, 669, 538 16, 235,148 9,158,020 129,864,633 1,830,181 1, 576,988 936, 637 15, 336, 750 •5,640,843 4, 249,137 5, 679,946 76,924, 591 11,123,309 284, 366 97, 528, 234 7,022, 647 476, 519 1, 719, 300 5, 088, 570 147,150 1, 323, 823 i'20,837, 371 86,- 854,998 ' 476, 218,154 8, 339,884 7,175, 325 4, 926, 225 40, 227, 660 ;, 286, 313, 827 2, 617, 974, 768 1,835, 290, 498 1,431, 293, 486 913, 376, 885 15,084, 249,464 F o o t n o t e s at end of t a b l e . 121 REPORT OP THE SECRETARY OF THE TREASURY Expenditures (checks issued) under the ernergency relief program, April 8, 1935, to June.30, iP4:^—Continued III. A M O U N T OF E X P E N D I T U R E S A N D N U M B E R OF P A Y M E N T S , B Y M O N T H S Fiscal years 1935 to. 1938 2 Month Fiscal year 1939 Fiscal year 1940 Fiscal year 1941 Fiscal year 1942 .Amoimt of expenditures July August September October November December January February March April May June $544, 985, 212 574, 304,485 576, 206, 518 599, 016, 423 606, 733, 661 709, 952, 659 643, 384, 835 • 589,005,343 743, 431, 577 847, 065, 722 857, 486, 677 994, 740, 715 .... ... ^ .1.. $200, 501, 723 224, 398,400 228, 548, 380 229, 881, 972 218, 820, 722 243, 806, 203 211, 720, 732 194, 921, 450 252, 689, 052 207,154, 675 199,075,346 206,456.113 8, 286, 313, 827 2,617,974,768 T o t a l expenditm-es $155, 842, 701 156, 267, 880 123, 634,080 135, 993, 389 142, 722, 271 157, 752, 654 148, 328, 283 150, 327, 963 . 183,834,339 173, 854, 722 161, 474,123 145, 258, 093 $122, 728,121 $94, 454,105 80,102,115 127, 327, 366 79, 967, 505 113,447, 400 84, 382, 823 124,488,081 78, 782, 251 116,279,017 81,450, 770 122, 745, 254 79,514,436 124, 912, 524 69,823,149 114, 523, 585 71, 612, 563 121, 403, 855 69, 847, 929 119, 742, 482 . 114, 350, 853 63,858,199 59, 601, 040 109, 344, 948 1, 835, 290,498 1, 431, 293, 486 913, 376, 885 N u m b e r of p a y m e n t s . July: . August September... October November December January. February.. March April May June - ....:..... i. T o t a l n u m b e r of p a y m e n t s . C u m u l a t i v e total n u m b e r of payments 12,033, 710 12, 248, 514 12, 920, 967 14, 986, 613 15, 840, 922 20, 560, 450 19, 736, 407 19,032,436 23, 537,029 21, 548,145 20,926,449 21, 499, 806 6, 976, 666 7, 687, 508 7, 601, 271 8, 214, 831 8,195, 920 8, 934,048 7, 810, 869 6, 915, 252 8, 663, 956 7, 080, 200 6,792,201 6, 665, 297 5, 751, 752 5, 378, 951 4, 480, 420 4, 913, 273 5,112, 827 5, 870, 892 5, 843,135 5, 710, 956 6, 521, 372 5, 990, 224 5, 719,132 5,171, 977 4, 446, 437 4, 351, 894 3, 960, 436 4, 358, 831 4,198, 533 4, 451, 373 4, 694, 416 4,168, 851 4, 451, 626 4,121, 959 3, 870, 648 3, 582, 690 214,871,448 91, 538, 019 66, 464, 911 50,657,694 214, 871, 448 306, 409, 467 372, 874, 378 423, 532, 072 3,095, 376 2, 522, 706 2, 523, 915 2, 630,137 2, 419, 013 • 2, 668,156 2, 660, 364 2, 301, 528 2, 440,'562 2,252,354. 2, 021, 451 1, 866, 802 29, 402, 364 452,934,436 1 Does n o t reflect items in transit as of J u n e 30, 1942, a m o u n t i n g to $170. 2 Includes $525,848,046 for fiscal year 1935 (Apr. 8 to J u n e 30, 1935), $2,898,716,470 for 1936, $2,860,508,932 for 1937, a n d $2,001,240,379 for 1938. N O T E . — O n t h e basis of a m o u n t s r e p o r t e d on t h e daily T r e a s u r y s t a t e m e n t of J u l y 15, 1942. BUREAU OF THE PUBLIC D E B T The Bureau of, the Public Debt, in the Fiscal Service, is charged with the conduct of transactions in the public debt securities of the United States, and in securities of the insular governments and of Government-owned corporations, for which the Treasury Department acts as agent. The Bureau is also' charged with the verification of United States currency redeemed by the Treasurer of the United States and of imperfect securities deliveied by the Bureau of Engraving and Printing, the destruction of redeemed currency and other securities authorized to be destroyed, and the procurement of distinctive paper for cmTency and public debt securities. In January 1942, all matters relating'to the designation and qualification of agents for the sale and issue of United States war savings bonds of Series E were transferred from the Bureau of Accounts and have since been administered by the Bureau of the Public Debt. The Bureau organization includes the Office of the Commissioner of the Public Debt, the Division of Loans and Currency, the Ofiice of the Register of the Treasury, the Division of Public Debt Accounts and Audit, the Division of Savings Bonds, and the Division of Paper 122 REPORT OF THE SECRETARY OF THE TREASURY Custody. Transactions in public debt issues are conducted by the Federal Reserve Banks as fiscal agents of the United States. The Postal Service acts as agent for the sale of United States savings bonds and stamps, and other branches of the Government service have been designated as agencies for the sale of war savings bonds. In order to provide for the greatly expanded organization requhed for the savings bond program., for which =an appreciable amount of additional space was required which it was not possible to obtain in Washington, all the activities of the Bureau of the Public Debt concerned with war savings bonds, after their issue, were moved to Chicago late in the fiscal year. The Chicago office of the Bureau of the Public Debt was established, and includes the Division of Savings Bonds in its entirety and branches of the Office of the Commissioner, of the Division of Loans and Currency, of the Office of the Register of the Treasury, and of the Division of Public Debt Accounts and Audit. The following statements, subrnitted by units of the Bureau, generally indicate their functions and summarize the transactions conducted during the year. Division oj Loans and Currency The Division of Loans and Currency is the active agent of the Secretary of the Treasury for the issue of alP public debt obligations of the United States 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 agent, and of the securities of various Government corporations and credit agencies. The Division undertakes the safekeeping of these securities for certain Government offices. 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' oj securities.—The following is a summary of the issue and retirement of securities conducted through this Division during the fiscal ^Tiear 1942, Detailed accounts of all transactions in public debt securities of the United States are presented in formal statements elsewhere in the report. EEPORT OF THE SECRETARY. OF THE TREAStTRY 123 Transactions in United States and insular securities and in securities of various • Government corporations' and credit agencies, fiscal year 1942 [Principal amount] Transaction P u b l i c d e b t securities: i O n h a n d J u n e 30,1941 U n i s s u e d stock r e t u r n e d to Division Spoiled u n i s s u e d stock r e t u r n e d to D i v i s i o n . R e c e i v e d from 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 . T o t a l to be accounted f o r . . _ i... Stock s h i p m e n t s to F e d e r a l Reserve B a n k s a n d p o s t offices^ .'Issued b y Division' — U n i s s u e d stock delivered to Register o f t h e T r e a s u r y . Spoiled unissued stock delivered t o Register of t h e Treasury T o t a l disposals O n h a n d J u n e 30,1942.. Retired and redeemed.. I n s u l a r securities a n d securities of G o v e r n m e n t corporations a n d credit agencies: On h a n d J u n e 30,1941 i Received from 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 . . T o t a l to b e a c c o u n t e d for._ Stock s h i p m e n t s to Federal Reserve B a n k s and post oflices Issued b y D i v i s i o n . . . U n i s s u e d stock delivered to Register of t h e T r e a s u r y . T o t a l disposals •On h a n d J u n e 30,1942.. Retired and redeemed.. Bearer Registered $29,035,044,800 31,798,440, 000 $6,081,169, 550 226,473,100 308, 255,855 33, 307, 209, 640 $36,116, 204,350 226,473,100 308, 255,855 65,105,649, 540 60, 833,484, 800 39, 923,098,045 100, 756,582,845 30,964,324, 200 174,029,450 832,964,450 17,102, 527, 250 8,012;449,115 644,381,675 48,066, 851,450 8,186; 478, 565 1,377,346,125 252,846,130 252,846,130 31,971, 318,100 25,912,204,170 67,883, 522, 270 28, 862,166, 700 862, 423,490 14,010,893,875 2 6, 015,040,330 42,873,060, 675 2 6, 877, 463,820 6, 763, 815,800 1,084,068. 999 1, 256,014,650 838,022, 500 7,019,830,450 1,922,091,499 6,847,884,799 2,094,037,150 8,941,921,94S 665, 260, 900 369,027,450 863,068, 000 667,348. 075 1,152, 769, U50 1, 748, 886, 775 934,288,350 2,683,175,125 5,098, 998, 024 6, 398, 575 1,159,748,800 163, 426, 850 863,068,000' 102, 087,175 783, 731, 600 1 I n c l u d e s adjusted service b o n d s a n d U n i t e d States savings b o n d s . » I n c l u d e s $251,991,000 ( m a t u r i t y value) U n i t e d States savings b o n d s . p e n d i n g completion of a u d i t . Total 6,.258, 746, 824 169, 825, 425, Figures subject to verification United States savings 6onc?s.—Original registration stubs from United States savings bonds sold which were received and audited, savings bonds redeemed prior to maturity which were received and registration discharged before payment, and savings bonds redeemed prior to maturity which were received and registration discharged after payment, during the fiscal year 1942, are shown in the following table. Transactions concerning United States savings bonds; fiscal year 1942 to i4^ N u m b e r of pieces Series Sales price $50 $25 $100 $500 , $1,000 $5,000 $10,000 Total M a t u r i t y .value • Original registration s t u b s from savings b o n d s sold—received a n d a u d i t e d i C-1937 C-1938 D-1939 D-1940 D-1941 E-1941 E-.1942 F-1941 . . . F-1942 G-1941. G-1942 . .. 24 6 14 76,905 . . . 6,866, 311 . . . . : . . . - 17,350, 664 16 52,360 ....... '. 4 ^ 1 1 58, 610 2, 767, 575 4,376, 543 24, 346, 300 7,202, 734 . . . T o t a l registration s t u b s . . ^ A-1935 B-1936 C-1937 C-1938 D-1939 D-1940 D-1941 E-1941 E-1942 r-1941 F-1942 G-1941 G-1942 . Total ... . .. 5 3 11 24, 013 646, 275 885, 933 25, 945 41,894 85, 802 122,908 9, 875,633 1,832, 789 2,192. 275 10, 323 12, 753 39, 692 38,487 101, 25'5 o 4 47 22 67 291,032 14, 603,186 28,821.074 10,185 • 188, 224 12,461370,856 44, 549 618, 762 44, 521 769,428 $3,000 7, 576 • 5,560 26, 400 50, 391,093 1, 216, 712, 344 1, 846,159,162 178, 581, 610 232,420, 310 968,961,100 1.013,019,400 $4;.000 10 100 7,400 35, 200 67,188; 125 1,622, 283^; 125 2, 461, 545, 550 241,326,500 314,081, 500 968,961,100 1.013,019.400 45, 662,702 5, 506,287, 545 6,688,462,000 111,716 , o o S3 Savings b o n d s redeemed prior to m a t u r i t y — r e c e i v e d a n d registration discharged before p a y m e n t - . 8 7 13 90,195 3. 704, 351 5, 379, 943 74, 296 164,375 185,121 277,324 4 6 6 28 41, 309 618, 674 827, 991 67,459 87,013 263, 698 286,188. ... ...... . 559 777 1,001 1,401 2,316 2,162 509 4,576 1, 930 / • 521 742 849 1,177 2,301 1,766 457 2, 230 742 3 . ._.._ 15,234 10, 785 1,672 2, 219 2,609 3,178 6,782 5,378 1.218 5,152 1.441 561 27 2,054 38 655 805 844 ,1,003 1,503 - 1,702 381 1,518 406 243 14 914 14 816 . '1,396 1,801 2,367 7,002 12, 597 • 1, 369 2,441 616 839 •28 2, 870 59 113 9 471 19^ 207 12 547 31 4, 223 5,939 7,104 o 9,126 18,904 23, 605 3,934 15,917 5,135 1,963 " 93 6,856 161 . 31,329 10,002 34, 201 612 797 102, 960 • ^ $1, 360, 725 2,076, 925 2, 651, 375 3, 280,175 8,504 650 14,128,150 1, 716, 875 3, 941,100 1,048,450 3, 651. 600 202, 775 11,357,400 474, 800 54, 285, 000 o > d SI Ki Savings bonds redeemed prior to maturity—received and registration discharged after payment A-1935' B-1936 C-1937 C-1938 D-1939 D-1940 D-1941 "^ E-1941 . . ......:.. . - . - . . - . 3,434 7, 284 14, 591 24, 529 45, 932 . 67,796 38, 772 74,157 2,684 7,114 11, 797 17, 533 28,460 38, 260 , 17,716 23,040 6, 370 12, 643. 19,148 25, 806 • 44,198 60, 624 28,013 36,429 2,162 3,839 5,149 6,393 10, 329 14,039 7,344 6,946 2,072 5,284 7,361 10„492 • 18, 698 24, 946 12, 531 6,228 Total 276,495 146,604 233, 231 66, 201 87, 612 Grand total savings bo'nds 291, 729 157,389 264, 560 66,203 121,813 16, 722 36,164 58, 046 ^ 84, 753 147, 617 205, 665 104,376 146,800 800,143 612 797 903,103 $4, 010,050 9,005, 600 12,804,925 17, 758, 975 30, 853, 600 41, 635, 800 20, 859, 400 16,349, 825 ' O S3 153,278,175 207, 563,175 O 1 Includes an aggregate of 1,425,168 pieces, $209,762,700 maturity value, representing sales of United States savings bonds made prior to June 30,1941, and adjustments of amounts previously reported. . . . m Q S3. SI Kl o S) > d S3 to Ol 126 REPORT OF. THE SECRETARY OF THE TREASURY Individual registered accounts.—Individual accounts are maintained in connection with registered issues of the United States and of securities oi various Government corporations and credit agencies; and interest is paid periodically in the form of checks on the interestbearing debt. The accounts open on June 30, 1942, were as foUows: Registered issues Number of accounts Public debt: Interest-bearing loans i -^ ... Matured loans (Liberty, Victory, Treasury bonds, e t c ) . Total public debt issues .- Others: ^ Interest-bearing loans: Home Owners' Loan Corporation bonds! Federal Farm Maftgage Corporation bonds.Consolidated Federal farm loan b o n d s . . . . . . . . F,ederal Housing Administration debentures.. Matured loans: Home Owners' Loan Corporation bonds Federal Farm Mortgage Corporation bonds.. Federal Housing Administration debentures.. Total other issues Grand total. Principal 401,977 $12,252,061,116.40 11,142 6,476,810.00 413,119 12, 258, 537,926.40 2,836 11, 239 6,561 720 631, 827,000.00 , 124i703,300.00 . 34, 791„900.'00 21, 463,605.28 37 361 4 128,000.00 737,900.00 12, 700.00 21, 738 434,867 813, 664; 405. 28 13,072,202,331.1 * Does not include United States savings bonds and adjusted service bonds. There were 42,628 individual accounts closed for registered Liberty bonds. Victory notes, special Treasury notes, postal savings issues. Treasury bonds, etc.; and 6,597 accounts were decreased, representing retirements of securi^ties in the amount of $3,700,643,630 par value. I n connection with the same loans, 39,234 new accounts, involving $6,004,878,090 of principal, were opened. During the year 18,930 changes of address for mailing of interest checks were made. Interest on registered Treasury bonds was paid on due dates in the form of 733,835 checks amounting to $86,778,939.44; on registered securities of the postal'savings loans, etc., 61,600 checks for $4,227,510.75 were issued; and on registered Treasury notes and certificates of indebtedness, interest payable by 11 checks amounting to $34,570,019.40 were issued. Also 1 check was issued in payment of interest amounting to $22,507,108.04 on the 4)^ percent adjusted service bonds—United States Government life insurance fund series, .and 960 checks were issued in payment of interest amounting to' $1,115,498.64 on the 2 percent depositary bonds. There were received from the Bureau of Engraving and Printing 867,600 checks as stock. 127 REPORT OF T H E SEICRETARY OF T H E TREASURY Claims.—Claims for relief on account of lost, stolen, destroyed, and mutilated securities handled by the Division of Loans and Ctirrency within the fiscal year were as follows: Number Number Par amount of of of claims securities securities Claims - Public debt issues i On hand June 30, 1941 Received .' Total to be accounted for • .. 35,913 $6,' 148, 316. 50 • 16,523 ..•2, 379,145. 75 20, 256 52, 436 8, 527, 462. 25 ^.. 1,953 1,642 176 89 4,945 3,829 1,315 , 247 1, 047, 942. 50 •742, 050. 00 192, 990. 00 969. 00 10, 336 1, 983, 951. 50 --. 16, 396 _ Settled by: Reissue or redemption of securities Recovery of securities . Disallowance of claims and credit allowed Other disjpositions . .. Total disposals 11, 221 • 9,035 - 3,860 . On hand June 30, 1942 42,100 , 6,543,510.75 Home Owners' Loan Corporation, Federal Farm Mortgage Corporation, and consolidated Federal farrn loan bonds 275 42 1, 216 150 $434, 650; 00 57, 252. 50 Total to be accounted for Settled by reissue, redemption, recovery, or no relief 317 35 1,366 132 491, 902. 50 45, 052. 50 On hand June 30, 1942" 282 1, 234 446 850 00 On hand June 30,1941 Received - 1 Includes adjusted service bonds. Sajekeeping oj securities.—During the fiscal year transactions in securities held in safekeeping were as follows: On hand June 30, 1941 Issues Received and receipts issued Released . Onhand June 30, 1942 $5,986, 958, 206. 40 $6, 242,850, 700. 00 $4,321,734,000.00 $7, 908, 074, 906. 40 •Public debt issues 2, 050. 00 750. 00 Adjusted service bonds ..'. 2,800. 00 Insular securities.' 6, 601, 500. 00 403, 000. 00 550,000.00 6, 454, 500. 00 Home Owners' Loan Corpora551, 000,100. 00 50.00 551, 000, 050. 00 tion bonds Total 5, 993, 561, 756.40 1 6, 794, 254, 550. 00 4, 322, 284, 050. 00 8.465, 532, 256. 40 Mutilated paper and redeemed currency.—MMiW^teA. paper verified and delivered to the Destruction Committee consisted of 65,877,197 sheets and coupons, of which 64,245,029 sheets and coupons were received fi-om the Bureau of Engraving and Printing and 1,632,168 sheets from the Division of Paper Custody. 487543—43- -10 128 REPORT OF THE SECRETARY OF THE TREASURY . Redeemed currency, unfit for circulation, counted and delivered to the Destruction Committee during the year amounted to 992,593,281 pieces, representing $1,728,725,657.83, detailed .as follows: • U n i t e d States notes . Silver certificates '-...^.^ Gold certificates T r e a s u r y notes T r a c t i o i i a l currency . . . Currency ' :.. * , ._•. ...... . Pieces . ...... ... ' Total Face V a l u e 50; 087, 629 942, 337, 833 162, 904 492 ^ 4,423 ' $199,692,830.00 1,525,122, 622. 00 3,^906, 310. 00 2, 900. 00 .995. 83 ' 992, 593, 281 1, 728, 725, 657. 83 In addition to the securities which were delivered to the Register of the'Treasury, the ;Division. canceled ,arid delivered to the/Register l,92r;463 coupons amounting to'$270,181,345^;82:''^'t)f these, •i;b&i;057 were public debt coupons amounting to $229,089,269.87 and 290,406 amounting to $41,092,075.95 were coupons from securities* of Government corporations and credit agencies. 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, Federal Farm Mortgage ' Corporation, Federal Housing..Administration, Reconstruction Finance ^Corporation, Federal ^ National Mortgage Association,"" .Commodity Credit Corporation, Federal Public Housing Authority, and the consolidated obligations of the Federal^ home loan banks and 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 Comptroller General of all 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 trans;actions during the fiscalyear 1942. 129 REPORT O'P T H E SECRETARY OF THE TREAStJRY of the Treasury on account of transact year. 1942 S u m m a r y of securities received by-the '-• tions, Bearer Security Pieces Registered Amount Pieces Amount Redeemed Public debt securities: $5, 900. 00 Postal savings bonds, etc ^ 11,322 2, 954, 900. 00 Liberty loans... -• .. 64,051 89,900, 750. 00 Treasury bonds •44, 821 644, 293, 950. 00 Treasury notes °.... Treasury notes—tax series United States savings bonds Depositary bonds... Adjusted service bonds - 128 961,050.00 Certificates of indebtedne'ss 119,-519 7,183,891,000.00 Treasurj^- bills..:.... ...... 74, .995 71»; 601. 00 Treasury .(war) savings securities; 11, 282, 986 853, 669, 668. 88 Interest coupons Other securities: Home Owners' Loan Corporation: 74, 5,62 843,324, 300. 00 Bonds — 1, 363,024 51, 749, 573.,65 Interest coupons Interest checks Federal Farm Mortgage Corporation: 317, 623,400. 00 120,937 Bonds '. 1, 227, 496 32, 697, 286. 07 Interest coupons Interest checks .. Consolidated Federal farm loans of the Federal land banks: Interest coupons ,. 913,985 31,144,! Interest checks . Federal Housing Administration: Debentures Interest checks Federal home loan banks: 67, 329,000. 00 6,263 " Consolidated debentures 30,319 860,419.60 Interest coupons 1 . Reconstruction Finance Corporation: 45, 459 1,093, 260,000. 00 Notes 16,777,650.41 227,459 Interest coupons ' Commodity Credit Corporation: 21,171 406,752,000.00 Notes . . 74, 694 4, 815, 287. 25 ' Interest coupons .. Federal National Mortgage Association 1,495,710.82 24, 615 interest coupons Federal Public Housing Authority:« 112,094,000. 00 8,396 Notes — 41, 766 1, 710, 359. 21 Interest coupons Total. 16, 777,996 11, 757, 382, 699. 77 140 $287, 280.00 1,633 764,100.00 6,689 7, 492, 600. 00 303 887, 362,000. 00 314,486 1,124, 833,125., 00 538, 079 I 88,561,618.50 1 6,000.00 269, 386 13, 469, 300.00 177 3,526,965^000.00 1,948 329 25,235.00 7, 935,000. 00 • '2,'687,'850.'66 11, 249 8,196,-100.00 '26,'493' '3,'963,'658,'98 14, 324 1,156, 389. 48 4,637 3,101 3, 221,150.00 • 704, 544. 99 1,198,881 5, 677, 629, 951. 95. Retired on account of exchanges for other securities, etc.3 Public debt securities: Postal savings bonds, etc Liberty-loans .•-. Treasury bonds . • Treasury notes ' Treasury notes—tax series .... ^ United States savings bonds ...... Depositary bonds Adjusted service bonds Certificates of indebtedness . Treasury bills .' -. First 3H% Liberty loan interirh 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, b o n d s . . . . . Federal Housing Administration debentm-es Footnotes a t end of table. 1,159 $354, 640.00 . 1,234 . 97,200.00 . 910, 512 4,717,828,850.00 91,192 1,283,534,300.00 7,-085 12,982 209,257,000.00 1,106,857,000.00 8, 674 $4, 794, 700.00 83, 054 26 4, 473 115, 003 3 670 3 258, 319,000.00 363,,:357,000.00 150,094,025.00 46, 606, 325.00 20,000.00 33, 500.00 2,060,000.00 1,000.00 61, 545 103,849,000.00 302. 2,151 : 739,000.00 130,994, 000.00 36, 550 32,128, 400.00 4,902 • 6,828,900.00 21, 273 51,895, 400.00 4,727 4, 393, 600.00 1,182 896,100.00 130 REiPORT OF THE SEiCRETARY OF THE TREASURY Summary of securities received by the, Register of the Treasury on account oftransac-tions, fiscat year 1942—Continued Bearer Registered Security Pieces Amount Pieces Amount • R e t i r e d on account of exchanges for o t h e r securities, etc.—Con. O t h e r securities—Continued. Federal h o m e loan b a n k s , consolidated debentures R e c o n s t r u c t i o n F i n a n c e Corporation oUotes . . . . C o m m o d i t y Credit Corporation n o t e s . . ' F e d e r a l N a t i o n a l M o r t g a g e Association notes - -.-F e d e r a l P u b l i c Housing Authority jiotes ^ Total .614 $2,605, dOO. 00 14,083 7,383. 111,469,000.00 42,146,000.00 675 1,187 3, 490,000.00 4, 679,000. 00 1,167,281 7,670,191, 790.00 225,170 $969.126,150.00 U n i s s u e d stock retired P u b l i c d e b t securities: Postal savings bonds, etc. _ Treasury bonds . . T r e a s u r y notes ^ T r e a s u r y notes—tax s e r i e s . . . U n i t e d s t a t e s savings 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. . S t a n d a r d full-paid i n t e r i m certificates . Interest coupons. ^ O t h e r securities: H o m e O w n e r s ' L o a n Corporation: Bonds . Interest c o u p o n s : F e d e r a l F a r m M o r t g a g e Corporation: Bonds ... Interest c o u p o n s . . ^ Consolidated Federal farm loans of t h e Federal land b a n k s : Bonds -I n t e r e s t coupons Federal Housing A d m i n i s t r a t i o n debentures Federal h o m e loan b a n k s : Consolidated debentm'es Interest coupons Reconstruction F i n a n c e C o r p o r a t i o n : Notes . Interest coupons C o m m o d i t y C r e d i t Corporation: Notes . . Interest coupons F e d e r a l N a t i o n a l M o r t g a g e Association: Notes Interest coupons Federal Public Housing Authority: 2 Notes Interest coupons . Total - 145,642 90, 510 $722,857,060.00 781, 669,800.00 3 40, 509 $2,000. oa 183, 218 650.00 17,022 3,117, 452 14 81 78,096, 725.00 1,135, 514,000.00 700.00 No value 11, 354 . 24,488 2, 966, 546 780, 436,000. 00 N o . value 335, 297, 521. 78 32,354 229,679 148, 576,300.00 35, 721, 945.89 3 21,000.00 208,170 170,480 362,937. 000. 00 8,616, 997. 98 10, 922 .368, 947,000.00 1 143, 702 5,000.00 7,158, 438.24 2 600.00 66 58,850.00 6,117v 14, 542 34, 920,000.00 749,498. 75 31,213 63, 521 599,884,000.00 3,260, 766.19 11,133 24,843 107, 961.000.00 .- 1,460,271. 54 9,930 79,197 39,151,000. 00 2,469, 457. 27 4,228 9,167 32, 965,000.00 811, 957. 20 4, 276, 817 4,006, 909,004.84 3,186,074 1,765,859.525.00 Recapitulation , P u b l i c d e b t securities: . 1,187 Postal savings b o n d s , e t c . 12,556, L i b e r t y loans ..•1,120,205 • TreasmT bonds 226, 523 T r e a s u r y notes T r e a s u r y notes—tax series United Statessavings bonds Depositary bonds . . Adjusted service b o n d s 7, 213 Certificates of i n d e b t e d n e s s 143, 855 T r e a s u r y bills ^.1 F i r s t S H % L i b e r t y loan i n t e r i m certifi7 cates 24, 488 S t a n d a r d full-paid i n t e r i m certificates... 74, 995 T r e a s u r y (war) savings securities 14, 249,632 Interest c o u p o n s . . . Footnotes at .end of table; $360, 640.00 3,052,100.00 5, 530, 586, 650. 00 2, 709, 498, 050. 00 210, 218,050. 00 9,071,184, 000. 00 1,000.00 N o value 71,601.00 1,188,967,190.66 8,817 1,633 130, 252 329 335, 981 3, 770, 534 4 270,070 261 1,948 $5,083,980.00 764,100.00 449 030 250 00 1, 250, 719,000.00 1 353 023 875 00 1,270, 681, 943. 50 25 000 0013, 503! 500. 00 3, 529,015,000.00 25,235.00 131 REPORT OF T H E SEiCRETARY OP T H E TREASURY Summary of securities received by the Register of the Treasury on account of transactions, fiscal year i ^4^—Continued Bearer Registered Security Pieces Amount Pieces Amount Recapitulation—Continued Other securities: Insular possessions loans Home Owners' Loan Corporation: , Bonds.. Interest coupons ... Interest checks . Federal Farm Mortgage Corporation: Bonds Interest coupons Interest checks Consolidated Federal farm loans of the Federal land banks: , Bond s . . Interest coupons .... Interest checks Federal Housing Administration: Debentures Interest checks . . Federal home loan banks: Consolidated debentures Interest coupons Reconstruction Finance Coirporation: Notes • . . . . Interest coupons Commodity Credit Corporation: Notes Interest coupons Federal National Mortgage Association: . Notes Interest coupons .. Federal Public Housing Authority: 2 Notes . . ' Interest coupons 168,461 $1,095, 749, 600.00 1,592,703 87,471, 519. 54 365,657 1,397,976 712,688,800.00 41, 314, 284. 05 21, 274 1,057,687 51, 900,400.00 38, 303, 331.12 12,894 44, 861 $739,000.00 138,950,000.00 5,906 2,687,856. m 27,073 383, 972,000.00 26, 493 3, 963, 658.98 4, 729 4,394,200.00 14,324 1,156, 389.48 5,885 3,101 4,176,100.00 704, 544.99 104,854,000.00 1, 609, 918. 35 90, 755 1,804, 613,000. 00 290, 980 20, 038,416.60 39,687 99,537 , 556,859, 000.00 6, 275, 558. 79 ^ .10,605 103,812 42, 641,000.00 3, 965,168.09 13,811 50, 933 149, 738,000.00 2; 522, 316.41 21,222,094 23,434,483,494.61 Total.. I " 302 2,483 ^ 4, 610,125 8,412,615, 626.95 ' Represents audited figures through December 1941 settlement. Receipts for January through June . 1942 settlements incomplete., 2 Formerly U. S. Housing Authority. • 3 Figures on United States savings bonds are incomplete. Division of Public Debt Accounts and Audit This Division maintains 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. Also included in the administrative control accounts of the Division are transactions in bonds of the Home Owners' Loan Corporation and the Federal Farm Mortgage Corporation, in consolidated Federal farm loan bonds of the Federal land banks, in notes of the Commodity Credit Corporation, Reconstruction Finance Corporation, and the Federal Pubhc Housing Authority, and in debentures of the Federal home loan banks and the Federal Housing Administration, conducted by the Treasury and Federal Reserve Banks, similar to those in public debt securities. Numerous administrative audit functions are performed in connection with the foregoing. The Division maintains control accounts for various classes of unissued currency in reserve stocks of the Treasurer 132 REPORT. OF. THE SECRETARY OF THE TREASURY of the United States, and conducts administrative examinations and physical audits of such unissuecl stocks of ourrency 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, 98 audits were conducted, involving physical counts of securities, currency, distinctive and nondistinctive paper,, interest checks, etc., amounting to about $1,017,000,000 in face value and 104,538,000 in number of pieces; an examination and audit of 17,200,000 individual accounts of holders of registered bonds;:and an audit of the numerical registers involving an examination of 48,000' spaces representing bonds retired or outstanding. Other special audits un^er instructions of the Secretary of the Treasury were also conducted. The increase in the number of individual accounts of holders of registered bonds from 5,500,000 in 1941 to 17,200,0,00 in 1942 was due to greater activity in transactions involving United States savings bonds and resulted in a corresponding decrease in other audits usually made. The Division determined and.certified credits to the cumulative sinking fund and aniounts in the'sinking fund available for expenditure from time to time, interest on all classes of public debt securities and securities of, various Government corporations and credit agencies which became due and payable on their respective interest-payment dates, and the amount of each form of such securities and unpaid interest outstanding each month: I t prepared estimates of interest to become payable on public debt securities in future fiscal years, and 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 and other securities for the use of Federal Reserve Board examiners in their periodical examinations of those banks. Numerous data pertaining to public debt and other transactions for various interested offices and individuals were also com.piled. Division of Savings Bonds The Division of Saving Bonds is charged with the distribution of publicity literature in connection with the sale of United Statessavings bonds. During the year the Division maintained a plate file of about 12,500,000 active and prospective purchasers to whom savings bond literature was sent at given intervals. The Division also maintained a file of purchasers under the Regular Purchase Plan, consisting of approximately 110,000 names of those to whom memorandum statements were sent in advance of the purchase periods designated by the purchasers, and approximately 8,000 names of persons in the Navy, Coast Guard, Marine Corps, etc., whose purchases were made from salary allotments. , Approximately 600,000,000 pieces of mail were handled during 1942. A large volume of correspondence was carried on in reply.to requests for information concerning savings bonds and the regular purchase plan. REPORT OF T H E . ' SEICRETARY OF T H E 133 TREASURY Division of Paper Custody The Division of Paper Custody receives from the contractors.'all distinctive paper used in printing public debt obligations and paper currency of the United States, Cuba, and the Philippine Islands; and issues such paper to the Bureau of Engraving and Printing against orders to print. The Division also maintains records of all receipts and issues of Federal Reserve notes stored in the FederalReserve vault. The following tables summarize the operations of this Division during the fiscal year 1942. Receipts and issues of distinctive and nondistinctive paper, fiscal year 1942 [In sheets] On h a n d Julyl, 1941 Kind Received Issued On h a n d J u n e 30p • 1942 DISTINCTIVE United States currency and Federal Reserve notes United States bonds ...:. Cuban currency ' .. Philippine currency , Total 19,438,687 124,042,036 130,300,020 2, 766,159 39, 214,634 34, 300,902 22,203 2,168,051 1,100,016 655, 393 471, 300 13,180,703 7,679, 891 1,090, 238 184,093 22,882, 442 165,424, 721 166,172, 238 22,134, 925 NONDISTINCTIVE Parchment; artificial parchment, and parchment deed.. Philippine Islands postal card. . . Miscellaneous. .. Total _ 207, 520 • 9,189 1,.849, 886 471,151 49,611 1, 842,155 286, 336 9,195 1, 688, 480 392,335 49, 605 2, 003, 561 2,066, 595 2, 362, 917 1, 984, Oil 2,445, 501 Federal Reserve notes, series 1934, received and issued, fiscal year 1942 Onhand July 1, 1941 Received.... .•...'. Total.. Issued On hand June 30, 1942 ...."...._... •. •. - $2,414,600,000 .•_... 4,088,420,000 6,503,020,000 4,31'4,320,000 2,188,700,000 During the year 163,420,026 sheets of paper were counted prior to issue to the Bureau of Engraving and Printing for authorized work. There were no transactions during the yea<r in Federal Reserve notes, Series 1928, or in Federal Reserve Bank notes. Series 1929, Of which $2,813,100,000 and $450,800,000, respectively, were on hand. Destruction Committee . The following table surnmarizes the securities (including redeemed canceled currency) and miscellaneous items received from^the various offices and destroyed -by the Destruction Committee during the year. 134 EEPORT OF THE SECRETARY OF THE TRJEASURY Number and face amount of securities and miscellaneous items destroyed by the Destruction Committee, fiscal year 1942 > Ofltice making delivery, and items N u m b e r of pieces Division of Loans and Currency and Treasurer of the United States: , United States notes .. ^ __..... Silver certificates/ . '_ Gold certificates Treasury notes . . __ Fractional currency ^ 60,195,599 944, 466, 583 162, 904 492. 4,423 $200,232,230.00 1, 529, 665, 472. 00 3,906,310. 00 2,900. 00 995.83 994,830,001 1,733,807,907.83 828,016 621,055 107,884,421 11,-582,632.00 8,948,160.00 1,373,982, 210.00 109, 333,492 1,394, 513, 002. 00 8,032, 504 2, 648,492 4,089,153, 537. 42 325, 734, 934. 36 10, 680,996 4,414,888 471.78 44,903 3,742,071 46,889,100.00 98 060 301.67 Total ___ _ Comptroller of the Currency, national banks, and Federal Reserve Bank agents: " ' National bank notes. _ Federal Reserve Bank notes _. Federal Reserve notes.__ Total- • _.' Register of the Treasury: Principal pieces Coupons - .__ _ ._._ _.. Total Farm Credit Administration: Principal pieces Coupons. - - _ - -- . Total '3, 786,974 Bureau of Internal Revenue, miscellaneous stamps Grand total...! . __ _ _._ Bureau of Engraving and Printing, registered proof sheets Division of Loans and Currency: For Bureau of Engraving and Printing—mutilated work (sheets)... 'For Division of Paper Custody—paper (sheets) Void coupons. I . . . . Nondistinctive coupons --Checks... Treasury Archivist—Forms T. F. E. L. 2 Total , „ : ^ Face value 144,949,401. 57 780,906,413. 43 1,118, 631,463 8,469,065,196. 61 20, 281 36,027,823^ 1, 632,168 28, 217,050 N 156 32,799 10, 240 66,940, 517% TREASURER OF THE UNITED STATES Public moneys are received and disbursed through the accounts of the Treasurer of the United States. Depositary accounts are carried with several hundred designated Goverimaent depositaries. Checking 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 against such accounts. The Tre'asurer is the official custodian of the public rhoney; he is also fiscal agent for the payment of the principal of and interest on the public 'debt^, for the issue and redemption of United States paper currency, for the redemption of Federal Reserve notes, Federal Reserve Bank notes, and national banli notes,* and is treasurer of the Board of Trustees of the Postah Savings wSystem and trustee and custodian of miscellaneous securities and trust funds. He acts as special agent for the payment of the principal of and interest on bonds and other obligations of the insular governments and of Governrnent corporations and agencies. » Funds for the retirement of Federal Reserve Bank notes and national bank notes have been deposited ' in the Treasury. REPORT OF T H E SEICRETARY OF T H E TREASURY 135 The figures in tliis report of the Treasurer (pp. 135 to 139) are.on the basis of daily Treasury statements (unrevised).^ ; A comparison of the receipts and expenditures of the Government for the fiscal years 1941 and 1942, exclusive of postal revenues and payments payable therefrom, is shown in the following tables: Summary of receipts and expenditures, general and special accounts, fiscal years 1941 and 1942 1941 Receipts Deduct: N e t a p p r o p r i a t i o n s to F e d e r a l old-age a n d survivors insurance t r u s t fund N e t receipts Expenditures: . . General i W a r activities R e v o l v i n g funds (net) .Transfers to t r u s t accounts, e t c . . Subtotal Public debt retirements Total Gross deficit. Deduct: Public debt retirements N e t deficit $8, 268, 512, 585. 50 1942 $13, 667,914, 823. 84 Increase or decrease (—) $5, 399, 402, 238. 34 661, 300, 733. 42 868, 853, 202. 82 207, 552, 469. 40 7, 607, 211, 852. 08 12, 799, 061, 621.02 5,191, 849, 768. 94 1 6, 214, 698, 804. 75 1 5, 986, 225, 630. 43 6, 301, 043,165. 91 126,011,065,089.39 21S6,286,108. H 18, 394, 391. 22 1 331,173, 957. 25 1 380, 899, 986. 65 -228,473,174.32 19, 710, 021, 923. 48 154. 680, 495.16 49, 726, 029. 40 12, 710, 629, 823. 97 64, 260, 500. 00 32, 396, 585, 097. 69 94, 722, 300. 00 19, 685, 955,. 273. 72 30, 461, 800. 00 12, 774, 890, 323. 97 32, 491, 307, 397. 69 19, 716, 417, 073. 72 5,167, 678, 471. 89 64, 260, 500. 00 19, 692, 245, 776. 67 94, 722, 300. 00 14, 524, 567, 304. 78 30, 461, 800.00 5,103, 417, 971. 89 19, 597, 523, 476.. 67 14, 494,105, 604. 78 1 Reyised to basis of classifications in effect after June 30,1942. 2 Excess credits (deduct). . "^ Summary of receipts and expenditures, trust accounts , etc., fiscal years 1941 and 1942 1941 • Receipts: F e d e r a l old-age a n d survivors insurance t r u s t fund: Appropriations ' i Less: R e i m b u r s e m e n t s t o General Fund 1942 I n c r e a s e or decrease (—) $688,140,728.28- $895,6.18,838.82 26, 839, 994. 86 26, 765, 636. 00 - 7 4 , 358.86 _-. 661, 300, 733. 42 55, 958, 278.12 868, 853, 202. 82 71, 006, 562. 23 • 207, 552,, 469. 40 15, 048, 284. 11 Net ' Agricultural M a r k e t i n g A d m i n i s t r a t i o n . . Unemplo3''ment t r u s t fund . . . . Railroad retirement account.._ Another . 717,259,011.54 244,024,414.25 1,113, 922, 996. 42 126, 883, 857. 53 1 435, 754, 981. 59 939, 859. 765. 05 . 331,448,633.75 1, 243, 587, 217.14 143, 993, 058. 91 1 531, 995, 424. 86 222, 600, 753. 51 87, 424. 219. 50 129, 664, 220. 72 17,109,201.38 . 96, 240, 443. 27 2, 637, 845, 261. 33 3,190, 884, 099. 71 653, 038, 838. 3a 706, 841, 884. 66 217, 001, 988. 25 1,118,127,110.94 115, 773,514. 47 628,164, 368. 38 931, 314, 952. 20 ' 336, 759, 089. 20 1, 243,142, 328.20 143, 743, 910. 67 4, 041, 428, 769. 62 • 224, 473, 067. 54 119,757,100.95 125, 015, 217. "26 27, 970, 396. 20' 3, 413, 264. 401. 24 2, 785, 908. 866. 70 6, 696, 389, 049. 89 3, 910, 480, 183.1& 148, 063, 605. 37 3, 505, 504, 950.18 3, 357, 441, 344. 81 N e t appropriations _ I n t e r e s t on i n v e s t m e n t s Total Expenditures:^ Federal old-age a n d survivors insurance t r u s t fund Agricultural M a r k e t i n g A d m i n i s t r a t i o n . . 1 Unemploj'^ment t r u s t fund i R a i l r o a d retii'ement account Allotheri3 _ .___ Total - Excess of expenditures $207, 47.8,110. 54 1 Revised to basis of classifications in effect after June 30, 1942. 2 Includes investments. 3 Includes net transactions in checking accounts of Government agencies, etc. The total public del^t obligations outstanding on June 30, 1941, were $48,961,443,535.71, and the receipts and retirements during b For a description of the bases used in the tables in this.report and of the accounts through which Treasury transactions-are effected, see pp.-387 and 388. 136 RE'PORT OF T H E SEiCRETARY OF THE TREASURY the fiscal year 1942 were $37,164,349,683.56 and $13,703,348,103.05, respectively, making $72,422,445,116.22 of obligations outstanding on June 30, 1942, an increase for the year of $23,461,001,580.51. The public debt retirem^ents chargeable against ordinary receipts during the year am.ounted to $94,722,300.00 and are included in the total fetirem.ents shown above. Public debt retirements chargeable against ordinary receipts are classified as follows: Cumulative" sinking fund_____Forfeitures, gifts, etc _ _ : _ _ : _ _ _ _ . : _ $75, 341, 600. 00 19,380, 700.00 Total __. 94,722,300.00 The amount of interest paid on the public debt during the year is classified as follows: Class of interest p a y m e n t Amount I n t e r e s t coupons p a i d i 1..: .. Registered interest checks paid Accrued interest paid in cash OUT obligations at r e d e m p t i o n . . '. D i s c o u n t .on T r e a s u r y bills sold . '. D i s c o u n t accrued on U n i t e d States savings b o n d s .. I n t e r e s t paid on obligations, special series (transfer-counter w a r r a n t transactions) Total paid Less r e p a y m e n t s , : '.... J . Net payments.. ... '. $853,562,112.84 170, 869, 713. 05 46. 500, 216.14 4, 657, 069. 51 87, 535, 400. 15 104; 939, 397. 02 1, 268, 063, 908. 71 7, 978, 572. 25 1, 260, 085, 336. 46 The number of pieces of piiblic debt principal obligatioris exam.in.ed, verified, and redeem.ed during the year was 2,550,245 as cbmpared with 1,914,738 pieces foi" the previous year. Checks in paym.ent of interest on the registered obligations of the United States verified and paid totaled 1,108,712 pieces, and the matured interest,coupons of Government obligations examined, verified, and paid totaled 11,284,699 pieces. , • The gold holdings of the Treasury as of June 30, 1942, were 649,614,376 ounces amounting to $22,736,503,160.69, valued at $35 an ounce, an increase of 3,212,000 ounces and $112,419,993.51 over the previous year. The details of these gold holdings are shown in the table on page 594 of this report. The increase in gold -holdings was made up as follows: Net acquisitions by mints and assay oflS.ces on account of imports, etc. (valued at $35 an ounce), $111,690,689.79.; received under the order of the Secretaiy of the Treasury of December 28, .1933 (paid for at $20.67+ an ounce), $430,744.03;,and increment resulting from reduction in the weight of the gold dollar, $298,559.69. Paper currency of each class issued and redeemed during the year and the amounts outstanding, including Treasury and Federal Reserve Banlv holdings on June 30, 1941 and 1942, were as follows: O u t s t a n d i n g J u n e 30,1942 : Outstanding J u n e 30.1941 Class Issued Redeemed I n Treasury G o l d certificates Silver certificates. United Statesnotes T r e a s u r y n o t e s of 1890 F e d e r a l Reserve notes -Federal Reserve B a n k notes National bank notes Total . . Outside Treasury $3,919,680 $2,879, 505,809 1, 928, 233,028 $1,448,084,000 1, 395, 458, 800 185, 276,000 346,681,016 185,276,000 2,900 1,162,048 7,001,520, 625 4, 303,470,000 1, 514, 263, 760 . 1,727,740 20, 703, 704 11, 672,068 151,909,100 $712, 240 $2,874,873,889 12, 738,163 1,968,120,065 2,096, 305 344,584,711 1,157,822 ' 1, 326 42,678,543 9,748,048, 322 18,822,932 163,032 383,502 139,953,540 6,936,830,000 3,112, 220, 938 58, 763, 111 15,095,561,281 12, 329,716, 330 REPORT OF T H E SEiCRETARY OF . THE TREASURY 137 United States paper currency shipped during the year from the Treasury in Washington to Treasury ofiices, Federal Reserve Banks and branches, and others amounted to $1,611,771,570, a decrease of $272,534,189 over the previous year. The Treasurer's Ofl[ice 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: standard dollars Half dollars : Quarter dollars Dimes . Minor: Nickels.. Cents Total . . ... - Shipments from Treasury to Federal Reserve Banks and brarrches Shipments, from' mints to Treasury and Federal Reserve Banks and branches Shipments between. Federal Reserve Banks • and branches $179,998 $19,455,340 .. .25,455,301 27, 644,349 23, 241,199 $655,000 310,000 50,000 275, 000 280,000 10, 809,450 10,503, 250 15,000 459,998 117,408,889 1, 305,000 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 $770,143.17 and $3,376,012.01, respectively., The proceeds of currency received into the Treasurer's cash by the Currencv Redemption Division during the year amounted to $307,275,.082, of which $209,731,840 was in Federal-Reserve notes, $1,531,258 in Federal Reserve Bank notes, $11,512,635 in national bank notes, and $84,499,349 in United States currency. Canceled Federal Reserve notes amounting to $1,295,367,000 were received from Federal Reserve Banks and branches for credit of'. Federal Reserve agents. These notes are not taken into the Treasurer's cash because settlem.ent therefor is made between the Federal Reserve Banks and the Federal Reserve agents. Public m.oneys on deposit in designated Government depositaries on June 30, 1942, to the credit of the Treasurer and to the credit of other Governm.ent officers amounted to $2,403,551,164 and $117,585,817, respectively, including item.s in transit. The table on page 594 shows the amounts, in the various depositaries on June 30 of the last two years. Principal obligations of Government corporations and agencies and insular governments rede.em.ed by the Treasurer during the year amounted to $2,865,115,300; checks issued by the Treasurer in payment of interest on such registered obligations "paid during the year amounted to $9,056,637; interest coupons on such obligations paid amounted to $142,248,759; and interest paid iri cash when such obligations were redeemed amounted to $12,821,708. Funds were advanced to United States disbursing officers by accountable warrants issued in an aggregate amount pf $42,200,581,622. Warrants aggregating $19,151,508,895 were also issued covering public debt transactions. Treasurer's checks aggregating $536,651,598 were issued on settlement warrants in payment of claims settled by the Comptroller General. 138 REPORT OF THE SECRETARY OF THE TREASURY . Checks drawn on the Treasurer of the United States by disbursmg ofl&cers and agencies were paid during the year to an estimated number of 131,600,000, of which 28,300,00q for emergency relief paym.ents were paid for the Treasurer by Federal Reserve Banks acting as his agents. The total number of checks paid during the previous year was 131,851,141, including 49,183,138 checks for em.ergency relief ayments paid through the Federal Reserve Banks. Thus, the num.er of regular checks increased during the fiscal year by 25 percent, while the number of emergency relief payments decreased by 42 percent. Balances to the credit of disbursing officers and Government agencies in 5,725> accounts on June 30, 1942, amounted to $10,087,.282,582, an increase of $7,372,495,506, as compared with the total of such balances in 3,900 accounts on June 30, 1941. Payments to correct irregularities in negotiation of checks were made in 194'2 to the number of 5,734, amounting to $207,637, while in the previous year the number was 8,665 amounting to $248,721. Under the Check Forgery Insurance Act of November 21, 1941 (55 Stat. 777), the Treasurer of the United States is authorized tomake prompt settlements with pa3''ees of lost or stolen checks, which have been paid on forged endorsements, in advance of reclamation. The act authorizes an appropriation of $50,000 to constitute a revolving fund for this purpose. (See exhibit 60 bn p. 341.) From February 21, 1942, when the act became effective, to June 30, 1942, there were 31 instances in which early settlements were made with payees, the amount involved being $1,164.88. Until this legislation became effective, the pa37-ee could not receive payment from the Treasurer until that officer had recovered from the enciorsers the funds improperly paid to other than the payee of the check. Duplicate checks to the number of 18,245 were requested by payees or endorsees during 1942, as compared with 15,937 during the -previous year, the original check in each case having been lost, stolen, wholly or partly destroyed, or so mutilated or defaced as to impair its value to the owner or holder. Drafts in 34 dift'erent kinds of foreign currencies", aggregating 1,949 in number, were purchased during the year by the Treasurer for various agencies of the Government at a cost of $666,419. Comm.ercial checks, drafts, and postal and express money orders, aggregating 2,429,898 items and amounting to $603,240,624, were . deposited by Government officers with the Treasurer of the United States for collection. The Treasurer is custodian of securities pledged for the safekeeping and prompt payment of Governm.ent deposits in bank depositaries, of postal savings funds in depositaries designated to receive such funds, and, under provisions of law or by direction of the Secretary of the Treasury, of various trust funds comprised of bonds and other obligations and of securities placed in safekeeping by various Governm.ent executive departments and bureaus. The' face value of such securities held on June 30, 1941, and June 30, 1942, classified according to the purpose for which held, is shown in the following table: P REPORT OF THB SEICRETARY OF THE TREASURY Purpose for which held June 30, 1941 To secure deposits of public moneys in depositary banks 'To secure deposits of postal s'avings funds For District of Columbia: Teachers'retirement fund.Water fund i Other .: United States savings bonds held for various depositors. JFor the Board of Trustees, Postal Savings System For the Secretary of War _ For the Secretary of the Treasury: Foreign obligations Obligationsonaccouhtof sales of surplus property Capital stock and obligations of Government corporations and agen^ cies _ .-.Other.. : ^... For Federal Deposit Insurance Corporation _ For Federal Savings and Loan Insurance Corporation.. For Federal Farm Mortgage Corporation . _ For AliengProperty investment account, Miscellaneous. J .•_ : Total: ......-—. - _. 139 June 30, 1942 $34,539,376 28,529,600 $107,106, 050 24,061, 750 9,064,750 1,773,000 370,620 10,618,400 1,138,555,840 9, 320,330 9,615,250 1,773,000 398,620 16,561.800 1,134,004,640 10, 370,330 , 12,072,484, 767 12,072,484,757 . 46,737,095 / 46,737,095 r 1,496,678,292 r 2,623,720 178, 746, 350 100,034, 500 716, 229,840 19,832, 056 116,475,107 4, 733.763,451 2,499,288 213,746,350 98,034,500 689,116,820 20,856,447 122,484,907 15,981, 513,632 19,302,615,055 ' Revised. BUDGET AND IMPROVEMENT COMMITTEE The Budget and Improvement Committee is responsible, under the direction of the Budget Officer, for the preparation and review of estimates submitted by Treasury bureaus and divisions for annual or deficiency appropriations. I t is also responsible, under the direction of the Budget Officer, for the investigation of administrative methods and procedure in their relation to appropriation estimates and for other investigations upon assignment by the Administrative Assistant ' to the Secretary. To facilitate the investigations, a Subcommittee on Investigations is assigned the responsibility for determining, through the inspection of field'as well as departmental activities, the justification for proposed increases in appropriations and makes other surveys upon assignment. The review of appropriation estimates includes a thorough examination of the items by the individual, committee members to whom respective bureaus or divisions are assigned. The entire committee then conducts formal hearings at which the bureau or division heads, or their representatives, present oral testimony in further support of the estimates. The committee, after deliberation, submits its recommendations to the Budget Officer for his guidance in determining the items which should be approved for transmittal to the Bureau of the Budget. In addition to the regular estimates of appropriations for the fiscal year 1943, supplemental and deficiency estimates aggregating $747,355,125 were received during the fiscal year. Reserves amounting to $5,824,455 were set aside from the ordinary appropriations for the fiscal year 1942 by the bureaus and offices of t h e Department. During the year, reserves amounting to $3,420 were released by the Director of the Bureau of the Budget after approval of the committee, leaving a reserve of $5,821,035 at the end of t h e year. Of the appropriations made to the Treasury Department for the fiscal year 1943, $5,782,844 has been set aside as reserves for savings and contingencies. 140 REPORT OF THE SEiCRETARY OF THE TREASURY For the fiscal year 1944, estimates aggregating $7,133,940,312 were approved by the Departmental Budget Officer and submitted to the Director of the Bureau of the Budget. Such estimates included $188,745,805 for annual a,ppropriations; $340,352,750 for permanent and indefinite appropriations and special funds; $3,010,934,206 for trust funds; $3,000,000,000 for interest on the public debt; and $593,907,551 for public debt retirements chargeable against ordinary receipts. BUREAU OF THE COMPTROLLER OF THE CURRENCY i The Bureau of the Comptroller of the Currency is responsible for the execution of all laws relating to the supervision of national banls:ing associations and all banks and building and loan associations in the District of Columbia. The Bureau is also responsible for the liquidation of suspended national banks placed in charge of receivers. Under the Emergency Banking Act of March 9, 1933, approval of the Comptroller of the Currency is required for the issuance and retirement of preferred stock of national banking associations. Other duties include those incident to the formation and chartering of new national banking associations, the establishment of branch banks, the consolidation of banks, and the conversion of State banks into national banks. ., * Changes in the, cpndition oj active national banks The total assets of the 5,107 active national banks on June 30, 1942, amounted to $44,719 millions, an increase of $3,404 millions since June 30, 1941, when 5,136 banks reported. The deposits of the active banks in 1942 totaled $40,659 millions, which was $3,308 millions more than in 1941. Since the.current figures exclude $439 millions in reciprocal interbank demand deposits, reported gross on previous call dates, the increase in both deposits and in total assets on a comparable basis would be greater by that amount. The loans and investments totaled $29,545 millions, representing an increase of $3,668 millions during the year. The assets and liabilities of active national banks on the date of each report from June 30, 1941, to June 30, 1942, are shown in the following statement. 1 More detailed information concerning the Bureau of the Comptroller of the Currency is contained in the annual report of the Comptroller. REPORT OF THE SECRETARY OF THE TREASURY 141 Abstract of reports of condition of active national banks on the date of each report from J u n e 30, 1941, to J u n e 30, 1942 . [In t h o u s a n d s of dollars] J u n e 30, W41 (5,136 banks) Sept. 24, 1941 (5,131 banks) D e c . 31, 1941 (5,123 banks) A p r . 4, 1942 (5,115 banks) J u n e 30, 1942 (5,107 banks) L o a n s an.d idiscounts, including o v e r d r a f t s . . . 10,922,^483 U. S.- ( G o v e r n m e n t i securities, direct obligations '-'... 8, ,856, 499 Obligations g u a r a n t e e d b y , - U . - S . Govern2, 279, 453 ment 'i........... Obligations of States a n d political s u b 2,020, 242 divisions . O t h e r b o n d s , notes, a n d d e b e n t u r e s . 1, 590,191 . C o r p o r a t e stocks, including stock of Federal 208, 409 Reserve Banks . J 11,470,256 11, 751, 792 11, 569, 311 10,901,-796 8, 593, 247 9, 786, 743 2, 534, 541 2, 286,309 2,116, 310 1, 629, 269 2, 068,091 1, 606,133 2,024, 715 1, 588,006 2,082,182 1,563,719 1, 960, 534 1, 558, 910 201,735 197,688 194, 952, 25,877,277 Total loans and investments C a s h , balances with other b a n k s including reserve balances, a n d cash i t e m s in process 14, 521, 658 of collection. . B a n k premises owned, furniture and 592, 897 fixtures . -. -.. , 96, 568 R e a l e s t a t e o w n e d other t h a n b a n k premises. I n v e s t m e n t s a n d other assets indirectly representing b a n k premises or other real estate 61, 764 C u s t o m e r s ' liability on acceptances out49, 977 standing Interest, commissions, r e n t , a n d other 61,469 income earned or aiccrued b u t n o t collected. 53,025 O t h e r assets . ', 476,2U 27, 689, SOO. 28,194,979 29, 645,183 ASSETS T o t a l assets 203, 946 15,142,138 15, 001, 930 591, 544 91, 620 590, 579 81,697 10, 665/'769 ''13-,:299, 723 14, 410, 735 1 14,316, 563 591,922 76, 910 588, 690 72,494 60, 629 54,036 63,445 52, 526 39, 492 40,139 34, 950 32, 316 65, 759 53, 710 64, 346 66, 207 74,141 59,455 63, 594 47, 599 41, 314, 635 42, 521,106 •43, 538, 234 43,496, 537 1 44,718, 965 19,194, 051 19, 944,103 20,480, 952 20, 287, 746 21, 945, 397 8, 042, 313 8,044, 337 7, 964, 912 7, 721,120 7, 841, 032 540, 937 2, 529,179 6, 591, 645 603, 581 2, 578, 267 6, 957, 718 1,142, 734 2; 590, 940 6, 789, 685 1, 493, 858 2, 735, 059 6, 843, 042 1,189, 410 2, 741, 720 1 6, 498, 697 585, 549 LIABILITIES D e m a n d deposits of individuals, p a r t n e r ships, a n d corporations T i m e deposits of i n d i v i d u a l s , p a r t n e r ships, a n d corporations , D e p o s i t s of U . S. G o v e r n m e n t , a n d postal savings Deposits of States a n d political subdivisions. Deposits of b a n k s • Other deposits (certified a n d cashiers' checks, etc.) ' T o t a l deposits.. D e m a n d deposits « .^. Time deposits.. Bills p a y a b l e , rediscounts, a n d other liabilities for b o r r o w e d m o n e y M o r t g a g e s or other liens on b a n k premises a n d other real estate Acceptances executed b y or for a c c o u n t of reporting b a n k s and outstanding '. I n t e r e s t , discount, rent, a n d other income collected b u t n o t earned ... I n t e r e s t , taxes, a n d other expenses accrued and unpaid .... Other liabilities... T o t a l liabilities 453,178 410, 314 37, 351, 303 38, 538, 320 8, 514, 979 80, 041, 996 8, 496,324 31,103,009 8, 451, 763 31; 309,194 8,168,299 32,367,109 8,292, 008 2,005 9,275 3, 778" 12, 270 2,014 59 59, 67 59, 379 45, 931 47,558 41, 277 37, 232 55, 644 59,998 62, 613 48, 508 42, 042 56, 215 191, 889 68,168 171, 034 62, 570 167, 777 . 74; 779 169:629 73,'567 225, 425 37, 716, 494 38, 892, 785 39,889,135 1, 523, 383 1, 336,090 498, 376 240, 292 1, 514, 706 1, 350, 710 521, 283 241, 622 1, 515, 794 1, 388, 672 499,081 245, 552 1, 511,895 1, 396,118 515,127 249, 442 3,e 3, 672, 582 442, 861 40,659,117 76 1 41,039,473 CAPITAL ACCOUNTS C a p i t a l stock (see m e m o r a n d a b e l o w ) . Surplus -..'. Undivided profits... Reserves (see m e m o r a n d a b e l o w ) . ._ 3, 598,141 3, 628, 321 T o t a l liabilities a n d capital a c c o u n t s . 41, 314, 635 42, 521,106 Total capital.accounts... 43, 538, 234 1 E x c l u d e s reciprocal b a n k balances of $439,310 t h o u s a n d s , r e p o r t e d gross on prior call d a t e s . 1, 507, 670 1,411, 407 515,949 244,466 3, 679,492 1 44,718,965 142 REPORT OF THB SECRETARY OF THE TREASURY Abstract of reports of condition of active national banks on the date of each report from June 30, 1941, to June 30, 1942—Continued [In thousands of dollars] June 30, 1941 (6,136 banks) Sept. 24, Apr. 4, Dec. 31, June 30, 1941 (5,131 1941 (5,123 1942 (5,115 1942 (5,107 banks) banks) banks) baiiks) MEMOKANDA Par value of capital stock: Class A preferred stock Class B preferred stock Common stock Total .. • - Retirable value of preferred capital stock: Class A preferred stock Class B preferred stock...J Total --^.-- .- Reserves: Reserves for dividends payable in common stock. • Reserves for Other undeclared dividends. Retirement account for preferred stock.. Reserves for contingencies, etc ^otal . - '- -L... Pledged assets and securities loaned: U. S. Government obligations, direct and guaranteed, pledged to secure deposits and other liabilities Other assets pledged to secure deposits and other liabilities, including notes and bills rediscounted and secmities sold under repurchase agreement Assets pledged to qualify for exercise of fiduciary or corporate powers, and for purposes other than to secure liabilities . Securities loaned ,. Total Secured liabilities: Deposits secured by pledged assets pursuant to requirements of law Borrowings secured by pledged assets, including rediscounts and repurchase agreements Other liabilities secured by pledged assets _ -TotaL _• 171,260 13,181 1,340,705 159, 527 13,098 1,343, 743 165,647 12,983 1, 348,834 147, 254 12,745 1,353,386 139,928 12,451 1,356,521 1, 526,146 1, 516, 368 1, 517,364 1,513, 385 1, 508,900 219,908 16,129 207,724 15,046 202,908 14,948 1.91,862 14,693 184 343 14; 399 235,037 222,770 217,856 206,556 198,742 6,667 • 8,494 I 20, 503 204, 628 f 6,187 f 8,155 1 241,622 11 19,312 \ • 249,442 ) I . 211,898 I 8,612 4,418 18,658 212,778 240, 292^ 241,622 246, 652 249, 442 •244,466 2,787,388 3,374,484 3,801,844 3,801,926 ' • 2, 673,112 • 601,405 680, 382 635,813 595,492 642, 287 100,882 19, 344 101,866 27,152 94,481 17, 518 94,116 23,733 92 981 20,942 3, 394, 743 3,496,788 4,122, 296 4, 515,185 4, 458,136 2, 746, 217- 2,802,808 3,462,951 3,840,469 3, 629,848 •1,984 "8,613 3,096 10,006 1,965 621 549 612 424 517 2, 748,722 2,811,970 3,466, 659 - 3,850,889 3, 632, 330 Summary oj changes in the national banking system The authorized capital stock of the 5,109 national banks in existence on June 30, 1942 (including 2 banks that had discontinued business, although not in formal liquidation), consisted of common capital stock aggregating $1,357 millions, an increase during the year of $16 millions, and preferred capital stock aggregating $153 millions, a decrease during the year of $33 millions. . The total net decrease of capital stock was $17 millions. During the year charters were issued to 6 national banking associations^which had common capital stock aggregating over half a million dollars. There was a net decrease of 32 in the number of national banks iii the system duririg the year by reason of voluntary liquidations and 2 receiverships. 143 REPORT OF T H E SECRETARY OF THE TREASURY. Changes in the number and capital stock of national banks during the fiscal year 1942 are shown in the following summary. •Organization, capital stock changes, and liquidations of national banks, fiscal year 1942 Capital stock Number of b a n k s Common 'Charters granted . I n c r e a s e of preferred capital stock: ; 4 b a n k s , b y issues of n e w preferred capital stock I n c r e a s e of common capital stock: 29 .banks, b y regular increases .' 638 b a n k s , b y c o m m o n capital stock d i v i d e n d s 3 b a n k s , b y conversion of preferred capital stock 2 b a n k s , b y consolidation u n d e r act N o v . 7,1918, as a m e n d e d . T o t a l increases $542,089 $425,000 5, 886, 775 15, 305,485 180,200 125, 000 .-... V o l u n t a r y liquidations R ecei verships Decreases of capital stock: 10 b a n k s , b y reduction of c o m m o n capital stock ^.... 922 b a n k s , b y retirement of preferred capital stock 1 b a n k , b y decrease of par v a l u e of preferred capital s t o c k . C h a r t e r s in force J u n e 30,1942.. 22, 039, 549 425,000 4, 954, 000 90,000 1, 691, 500 70,000 •622, 500 31, 708,825 111, 375 38 5,666,500 33, 581, 700 -32 6,141 +16, 373,049 1, 340,140,866 - 3 3 , 1 5 6 , 700 186,043,967 1 5,109 1, 356, 513, 915 152, 887, 267 T o t a l decreases N e t changes during t h e y e a r . . . C h a r t e r s in force J u n e 30,1941. Preferred 1 T h i s figure differs from t h a t s h o w n in t h e table on p . 141. B a n k s t h a t h a v e discontinued business altthough n o t in formal liquidation do not s u b m i t reports of condition b u t are included in this t a b l e . BUREAU OF CUSTOMS Collections ' After 2 years of successive increases, customs collections of :$390,059,109 in 1942 were six-tenths of 1 percent less than those in 1941. Monthly collections in 1942 fluctuated within narrow limits, but for each of the first 7 months of the fiscal year they were larger than for the corresponding months of the previous year, so that at the end 'Of January 1942 collections amounted to $239,654,659, and were 24.8 percent greater than for the first 7 months of the fiscal year 1941. During the last 5 months of 1941, however, customs collections had risen very sharply due to largely increased importations of unmanufactured wool and of certain metals. During the last 5 months of 1942, on the other hand, collections averaged $4,000,000 per month less than during the first 7 months of the year which resulted in collections of only $150,404,564 from February to June 1942, inclusive, .as compared with $200,270,039 during the corresponding months of 1941. The types of collections during each of the past 2 years are shown in the following table. 487543—43- -11 144 REPORT OF T H E SEiCRETARY OF THE TREASURY Customs collections ^ and refunds, fiscal years 1941 and 194 [On basis of accounts of Bureau of Customs] Type 1942 Collections: . Dul;ies: ^Consumption entries.. Warehouse withdrawals Mail entries Baggage entries Informal entries. Appraisement entries Increased and additional duties.. Otherduties Total duties- $210,724,762 $195, 296,996 173, 976, 473 186,298, 749 1, 260,477 889,800 310,343 252, 672 692,847 • 655,448 82,-636 118,237 4, 089, 543 5, 084, 673 183, 522 204, 258 Percentage increase or decrease (—) -7.3 7.1 -29.4 -18.6 -5.4 43.3 24.3 11.3 391,320, 502 ,388, 800,833 -.6 612,044 106,997 30,182 524,602 110, 567 13, 235 -14.3 3.3 -56.2 60, 211 128,986 370, 759 110,127 "-2"7 Miscellaneous: Fines and forfeitures. Liquidated damages Sale of seizures Sale of Government property, unclaimed and abandoned merchandise . . Tonnage tax and navigation fees _ Another customs receipts.. 113, 217 Total miscellaneous 156.9 912, 651 1, 258, 276 37.9 392, 233,153 390, 059,109 -.6 Refunds: Excessive duties Drawback payments. Other 8,503,960 16, 932, 341 20, 047 4,900,037 16, 295,119 44,460 -42.4 -3.'8 121. 8 Total refunds.. 25, 456, 348 21, 239, 616 Total customs collections. J Excludes customs duties of Puerto Rico, which are deposited to the credit of the government'of Puerto Rico, but includes fines and other minor collections of Puerto Rico. Duties on warehouse withdrawals increased substantially over the previous year but this increase was more than offset by the decline in duties on consumption entries. The increase in duties collected on warehouse mthdrawals was due chiefly to the greater quantity of imports of w^ool and sugar, commodities which are usuall}^ placed in customs bonded warehouse upon arrival in the United States and are withdrawn only as needed for use in manufacturing or for direct consumption. Importations of those commodities which are not usually warehoused,, on the other hand, were considerably curtailed as a result of the further spread of hostilities. Almost four-fifths of the duties collected during 1942 were reported by nine customs districts, two of these. New York and Boston, collecting 55 percent. Collections in three Pacific seacoast districts, Los Angeles, San Francisco, and Oregon, declined from the previous year. Diminished collections were also reported in all of the Gulf coast districts except Mobile and in all the South Atlantic districts except South Carolina. Collections increased in all of the North Atlantic districts except New York and in all of the Canadian border districts except Rochester and Montana. Among the interior districts, only Minnesota, Indiana, and Tennessee reported increased collections. Volume oj business In order to present statistics of the volume of customs business which are analogous to collections, the data which follow are limited REPORT OF THE SECRETARY OF THE TREASURY 145 , to the area in which all collections are turned into the Treasury of the United States. Since all customs receipts in the Virgin Islands and all except fines and other minor collections in Puerto Rico are deposited to the credit of those respective governments, none of the data for the former district and none except those on seizures for the latter district are included below. Entries oj merchandise.—There was a decline in the number of all types of entries of merchandise, except informal entries, during 1942, thus continuing the trend begun in 1939. The increase in the number of informal entries was particularly noticeable in the customs district of Maine and New Hampshire and in the three eastern districts along the Mexican border. The number of entries of merchandise during the past 2 years is shown in the following table. Number of entries of merchandise, fiscal years 1941 and 1942 Type Consumption entries Warehouse and rewarehouse entries Warehouse withdrawals .. — Mail entries — Baggage entries Informal entries .-. Appraisement entries All other Total Percentage increase or decrease ( - ) 1941 389,125 62,914 327, 707 294, 513 465, Oil 179, 328 12,177 644,192 365,216 51, 059 249, 995 258, 482 391,161 202, 600 9,925 603,101 2, 374,967 -.- -6.1 -18.8 -23.7 -12.2 -15.9 13.0 -18.5 -6.4 -10.2 Vessel, airplane, and highway traffic.—Contrary to the tendency during the previous fisca-l year, traflic crossing the border increased in 1942. The only traffic declines appeared in the number of ferries and passenger trains entering the United States and in the passengers arriving by vessel from abroad. The following statement covers the leading classes of traffic for the last 2 years. Number of vehicles and persons entering the United States froin abroad, fiscal years 1941 and 1942 1941 K i n d of e n t r a n t Vehicles: A u t o m o b i l e s a n d busses D o c u m e n t e d vessels U n d o c u m e n t e d vessels , - . Ferries Passenger t r a i n s . . J . Aircraft J O t h e r vehicles . . ... Passengers b y : A u t o m o b i l e s a n d busses D o c u m e n t e d vessels : U n d o c u m e n t e d vessels ...1 Ferries Passenger t r a i n s '. Aircraft 0 t h e r vehicles Pedestrians T o t a l passengers a n d p e d e s t r i a n s . _ .. . . 9,446, 396 .33,981 25,279 81, 544 31,945 13,867 419,612 6.0 1 6 21.4 -6 1 —.7 31.3 6.0 -- 23, 625, 373 443, 238 73,804 1,475,719 852,416 93,969 1,611,237 7,933,828 25,706,441 305,190 81,182 1,754,037 1,111,863 133, 716 1,848,867 9,320,250 9.3 -31.1 ' 10.0 18.9 30.4 42. a 14.7 17.5 — 36,009, 584 40, 261,535 11. & _. . . . - Percentage increase or decrease (—) 8,910,950 33,461 .20,821 86,818 32,156 10, 665 395,761 ... . . . i 1942 146 REPORT OF T H E SECRETARY OF T H E TREASURY Airplane traffic on international lines continued its expansion, showing for the eleventh consecutive year an increase in the number of airplanes used. The number of passengers arriving by air from abroad was 42 percent larger than during the preceding year. Almost twofifths of the airplane passengers who reached the United States on the international lines arrived in the Florida customs district, mbst of these at the port of Miami. Large gains over the previous year were also recorded at Detroit, Mich., Buffalo, N. Y., Great Falls, Mont., Bangor, Maine, and Fairbanks, Alaska. Airplane traffic at Miami, Fla., Brownsville, .Tex., Los Angeles, Calif., Juneau, Alaska, and Seattle, Wash., also increased substantially. The following table shows the number of airplanes and airplane passengers entering the United States during the past 2 fiscal years. Number of airplanes and airplane passengers entering the United States, fiscal years 1941 and 1942 A i r p lanes A i r p l a n e passengers Percentage increase or decrease ( - ) District 1941 N o r t h e r n border: Vermont New York IVfarvland Rochester Bufi'alo Michigan Dakota . Montana Othor districts Total - ' - S a u t h e r n border: Sa^n Dieco Arizona E l Paso Laredo - . . Total Alaska - 1942 Airplanes Passenger , 314 1,667 853 41 23 218 149 712 1, 530 . 63 70 659 1,525 1,639 26 30 1,122 641 775 1,349 361 128 481 11,089 11, 204 575 57 621 305 3,573 4,428 353 210 1,990 • 13,654 19, 692 552 92 4,436 5,399 3,958 7,224 1,996 413 109.9 -8.5 92.1 -36.6 30.4 414.7 330. 2 8.8 -11.8 473.0 82.9 313. 7 22.2 75.8' —4 0 61. 4 614. 3 1, 670. 2 10.8 63.1 465.4 96 7 5,640 8,265 32,896 "'59, 306 46.3 80.3 208 35 . 14 25 917 287 10 13 21 1,024 2,036 57 33 42 9, 483, 38.0 -71.4 -7.1 -16.0 11.7 32.1 -93.0 -5r. 5 -16.7 42.2 2,690 4 16 35 • 13,487 1,199 1, 355 11,651 16, 232 13.0 39.3 1,048 76 2,602 1,286 38 2,933 3,781 965 44, 676 6,197 673 51, 307 22. 7 -50.0 12.7 63.9 -30.3 14.8 3, 726 4,255 49, 422 68,177 14.2 17.7 - 10, 565 13,867 93,969 133,715 31.3 42.3 Total Grand total 1941 ' - Florida ' 1942 War activities.—Prior to Decem.ber 7, 1941, num.erous problem.s arose regarding the interpretation and enforcem.ent of the Neutrality Act of 1939 and other laws relating to neutrality and national defense. Subsequent to that tim.e, m.ost of the special problem.s confronting the customs service were those in connection with the prosecution of the war. Among these were the handlhig of com.m.unications or correspondence coming into or going out of this country by courier or otherwise than m the regular course of the mails, the seizure of Italian and Germ.an vessels for violation of the so-called Espionage Act of June 15, 1917, and the changed procedure due tb im.portation and REPORT OF THE SECRETARY OF-THE TREASURY 147 exportation of m.erchandise by various governmental agfencies for use in national defense or belligerent operations. Movements of the arm.ed forces which caused United States personnel to be stationed abroad resulted in legislation for the purpose of relieving such individuals from certam liabilities for custom.s duties. The authority vested in the Secretary of the Navy to make em.ergency purchases of war material abroad without paym.ent of duty on im.portation into the United States was extended by Executive order of the President to the Secretary of War, Secretary of ^Agriculture, Secretary of the Treasury, and the Board of Directors of the Reconstruction Finance Corporation, and the procedure for facilitating the custom.s clearance for shipm.ents m.ade under this authority was set up. Supervision continued over exports to enforce export licensmg requirements for strategic materials, and to control shipments to blocked nationals. The volum.e of work connected with exports Is partially indicated by the 4,444,801 export declarations which were filed in 1942 com.pared with 4,397,350 in 1941. An exam.ination of each of these m.ore than 4 m.illion docum.ent's as well as the actual shipments was required to enforce the Export Control Act. Drawback transactions.—A larger num.ber of drawback entries was received in 1942 than in the preceding year but the am.ount of drawback allowed decreased by $2,109,930. The actual payments were considerably in excess of the total allowed under the various provisions of the Tariff' Act of 1930 due to the paym.ent during the.current year of vouchers certified during the previous year. More than 99 percent of the drawback allowed consisted of drawback on merchandise manufactured from im.ported m.aterials, the m.ost important of which were copper, sugar, lead, and zinc. The num.ber of notices of in.tent to export with benefit of drawback during 1942 were 50,515 fewer than during the previous year. A comparison of these transactions during the past 2 years is presented in the followmg table. Drawback transactions, fiscal years 1941 and 1942 Transaction 1941 1942 Percentage increase or decrease ( - ) Number 19, 573 . Number 22,112 13.0 251,978 143,474 135, 507 12, 409 23,106 6,073 201,464 121, 670 114,437 14,839 17,286 6,446 -20.0 -15.2 '-15. 6 19 6 -25.2 6 1 D r a w b a c k allowed: M a n u f a c t u r e s from i m p o r t e d m e r c h a n d i s e D u t y p a i d on m e r c h a n d i s e exported from c o n t i n u o u s customs custody M e r c h a n d i s e which d i d . n o t conform to s a m p l e or specifications a n d r e t u r n e d to c u s t o m s c u s t o d y a n d exported . . . Import'ed materials used in construction a n d e q u i p m e n t of vessels b u i l t for foreigners Salt used in curing fish Amount $16,790,804.02 Amount $14, 739,192. 73 — 12.2 353. 77 3, 287. 63 3, 207. 83 -2.4 Total drawback allowed.. . I n t e r n a l r e v e n u e refund on account of domestic a l c o h o l . , JI. 16,881,032. 26 217, 230.98 14, 771,101. 89 285, 733. 26 -12. 5 31.5 17,098, 263. 24 ' 15,056,835.15 -11.9 D r a w b a c k entries received D r a w b a c k notices of i n t e n t : Originating in t h e d i s t r i c t . . : Received from other districts F o r w a r d e d to other districts for disposition Certificates of m a n u f a c t u r e received I m p o r t entries used in d r a w b a c k l i q u i d a t i o n Certificates of i m p o r t a t i o n issued Total . .. 61,109.'96 35, 476. 88 11, 404. 62 17, 296. 71 -77.'7 — 51.2 148 REPORT OF T H E SEiCRETARY OF T H E TREASURY The following table shows the principal commodities on which drawback was paid. Principal commodities on which drawback was paid, fiscal years 1941 and 1942 Commodity 1941 1942 $2,449, 215.16 6, 673, 168. 36 683, 466. 33 666, 797. 65 693, 976.91 883, 653. 60 240, 899.90 286, 921. 49 1,893, 899.80 587, 931.04 237, 122.12 37, 426. 49 262, 376. 75 238, 020. 62 831, ^033. 28 146, 930.89 Copper Sugar. L e a d ore, m a t t e , pigs . Zinc ore a n d blocks P e t r o l e u m , crude A l u m i n u m , crude NickelManganese R a w wool a n d m o h a i r T u n g s t e n ore Tobacco, u n m a n u f a c t u r e d B a u x i t e ore Burlap M o t i o n p i c t u r e films Flaxseed... Soybean oil Percentage increase or decrease (—) $5, 725.623. 23 2, 667,673.87 1,033, 201. 36 855, 04.7. 21 465, 993.14 446, 148.10 445, 628.00 399, 253.96 377, 923. 66 324, 229.70 202, 301. 68 170, 358. 24 151, 367. 91 141, 914. 51 134, 359.19 105, 750. 78 133.8 -53.0 51.2 28.2 -21.6 -49.6 84.9 39.2 -80.0 -44.9 -14.7^ 355.2 -42.3 -40.4 -83.8-28.0 Protests and appeals.—A smaller number of protests were filed during 1942 than during the previous year, due, in part, to the decline in imports of those types of goods which involved difficulties" in classification and, in part, to closer supervision by the Bureau over the classification of merchandise. The number of appeals for reappraisement, on the other hand, more than doubled, a condition due to fluctuating market values and to the difficulties encountered by appraising officers in ascertaining the correct foreign value of imported merchandise. . The following statement shows the progress of this work during the past 2 years. Number of protests and appeals, fiscal years 1941 and 1942} • Status Protests: Filed with collectors by importers Allowed by collectors Denied by collectors and forwarded to customs court Appeals for reappraisement filed with collectors ' 1941 -- - 35, 589 1,002 31, 479 3,266 1942 23, 481 1,342 21, 202 7,783 Percentage increase or decrease ( - ) —34.0 33.9 —32 6 138.3 Law enjorcement activities Seizures.—There was a larger number of seizures durmg 1942 than in the preceding year, every type of seizure except narcotic seizures being more numerous. The value of goods seized by customs officers was also very much larger than in 1941. Much of this increase in value was due to the inclusion as customs seizures of the value of certain foreign boats and cargoes some of which, prior to March 1, 1942, would have been classed as seizures under Department .of Commerce laws. However, merchandise and vehicles seized showed a decided increase in value. Two seizures of precious stones alone in 1942 were valued at $831,273. ^ Narcotic seizures, although fewer in number, were valued at almost twice as much as in 1941. This was the second successive year to show a decline in the number of narcotic seizures accompanied by a 149 REPORT OF T H E SEiCRETARY OF T H E TREASURY pronounced increase in their value. The quantity of seized narcotics during 1942, however, was considerably sm.aller than during the previous year, 3,161 ounces of marihuana and 920 ounces of other narcotic drugs being seized in 1942 as com.pared with 8,589 ounces of marihuana and 4,011 ^ ounces of other narcotic drugs during the previous year. Customs seizures in the Southwest districts indicated that there was a continued trickle of marihuana into the United States although most of the seizures"were of no great importance. Liquor seizures, although increasing numerically, showed only a small increase in quantity and an actual decrease in value. The nutnber and principal types of seizures made by the Customs Service and other governm.ental agencies during the past 2 years are shown in the following table. . Seizures for violations of the customs laws, fiscal years 1941 ctnd 1942 Seizure Merchandise: Number Value: Jewelry, precious metals and stones, watches and parts Wearing apparel and luggage.. ( Toilet articles and medicine Textiles and raw wool Furs—skins and manufactured : Edibles and farm produce House furnishings, including rugs Guns and ammunition Hardware Cameras and other sport gbods _. Books and stationer's supplies Cigars, cigarettes, and tobacco Prohibited articles^ Livestock, etc. (excluding horses) Colors, dyes, etc Lubricating oil Cargo of seized vessels Miscellaneous _ Total valuei of merchandise. Prohibited articles: ' Obscene, number., Lottery, number Narcotics: Number._ Value Liquors: Number Quantity (gallons)... Value ^. Boats, automobiles, airplanes, and horses, value. Grand total: Number. Value Percentage increase or decrease (—) 1941 4,619 9.4 190.2 -47.0 34.7 -20.4 24.1 22L4 88.3 .8 7.6 71.7 -6.8 -1.2 -36.9 -65.9 2,177.9 8,621 $1, 340,759 25,145 6.747 182.365 29, 588 28,024 61,187 607 2,798 9,177 2,222 4,766 7,473 4,429 20, 569 61,210 2,980,901 19,439 863,860 4,777,406 459.-6 433 150 558 361 28.9 134.0 789 $43,821 • 693 $84,162 -24.8 92.1 2,778 3,793 $38,154 $246, 232 3,174 3,862 $37,826 $13,364,566 14.3 L8 8, 373 $1,182,067 9,295 $18,263,960 $462,029 47,432 6,009 229,130 23,849 8,719 27,179 602 3,027 5,346 2,358 4,825 11,849 12, 982 903 125.5 6, 327. 6 n.o 1,445.1 In addition to the goods that were seized, claims aggregating $12,485,911 were initiated by the customs service against importers in connection with various irregularities and frauds which did not necessitate a seizure or were discovered after the goods had gone into consumption. The following table presents the record of customs seizures classified according to the various agencies which were instrumental in apprehending violators of customs laws.. 1 Revised. 150 REPORT OF T H E SECRETARY GF THE TREASURY Seizures and arrests for violations of customs laws, classified, according to agencies participating, fiscal year ,1942 Seizures Total 1 Customs .A.gency Service: Investigative Unit Enforcement Unit Customs Service, exclusive of Agency Service :.. Total Custbms Service Immigration Customs Service assisted by other services Other Federal and local officers Grand total • Number 1 Liquor Narcotics Number Value Number Value .330 $1, 755, 407 74, 537 349 11 35 $576 26, 022 3 76 . $210 6,130 8,480 16, 414, 911 526 56, 578 9,159 18, 244, 855 3,520 .74 4,989 27 10, 596 35 . 9,295 18, 233, 960 572 9 83,176 213 9 770 9 3 3 4 593 84,162 Value Lottery Merch an dise and obscene, num- NumValue ber ber 7 309 $1, 328,065 238 . 9,266 3, 048 28, 965 902 4, 004 • 3,437,512' 3,127 35, 305 34 1,800 909 4, 551 .31 . 4, 774, 843 491 659 9 62 28 1, 902- 4,619 4, 777, 406- 3,174 37, 826 909 170 ' Seizures—Continued Total value boats, automobiles, airplanes, and • horses C u s t o m s Agency Service: $426, 556 Investigative U n i t 33,119 Enforcement U n i t C u s t o m s Service, exclusive 12,891,856 of A g e n c y Service. Automobiles Boats Number 5 12 Number Value $409,431 898 Value 44 $17, 075 90 28, 994 Airplanes Horses NumiSI u m ber Value ber • Value 1 $500 1 $50 71 2,727 Number of aj-rests: 33" 159- 42 12, 840, 250 113 47, 781 1 2,300 14 1, 525 • 180^ ,. Total Customs Service. 13, 351, 531 1,016 Immigration C u s t o m s Service assisted 3,390 b y other services O t h e r Federal a n d local 8,629 'officers 59 13, 250, 579 31 7 247 6 93, 850 980 2 2,800 86" 4, 302 1 5 37254 13, 364, 666 67 13. 250. 615 G r a n d total 1 5* 9 3, 365 19 ' 8, 629 280 106, 824 20 47 88 4,^27 486- 1 13' 2 2,800 1 Excludes number of boats, automobiles, airplanes, and horses, as they were seized in connection with narcotics, etc., seizures. Fewer autom.obiles were seized in 1942 than for any other year for which a record was kept. . During the course of the year 19 autom.obiles valued at $7,970 were seized by the Secret Service ofiicers and delivered to the Custom.s Service for forfeiture, as com.pared with 41 autom.obiles valued at $12,391 during the previous year. The following table sum.m.arizes the num.ber of boats, autom.obiles,. etc., seized for customs violations during the past 2 years. REPORT OF THE SECRETARY OF THE TREASURY 151 Boats, automobiles, airplanes, and horses seized, fiscal years 1 9 4 f o,^d 1942 F o r liquor violations F o r narcotic violations Total F o r other violations Seizure 1942 1941 3 $103 4 $15, 814 1 $9, 500 53 $9,106 43 $9,057 37 $10, 730 1941 Boats: Number Value . Automobiles: Number Value.. Airplanes: Number Value Horses: Number Value T o t a l value . 1942 35 $13,-669 • 2 $26 1 $20 $9,235 $24, 891 $20, 230 $13, 669 1941 1942 1941 1942" 49 $120, 025 63 $13, 234,801 234 $84,938 200 $84,098 324 $104, 774 280 $106, 824 3 $8,000 2 $2,800 3 $8,000 2 $2, 800 159 $3, 804 87 $4, 307 161 $3,830 88 $4,327 $216, 767 $13, 326,006 67 53 $129,628 $13,250, 615 •$246,232 $13,364,566 During the year 168 seized automobiles and trucks were returned to petitioners because the violations were not sufiiciently fiagrant to warrant forfeiture. Of the 79 automobiles forfeited, 23 were.assigned for official use either to the Customs Service or to some other governmental agenc}^, and 56 were sold at public auction. In the course of their regular duties ofiicers often apprehend violators of other than customs laws. During the year, 879 seizures were made for other departments and agencies, of which 730 were made for the Department of Agriculture and 127 for the Post Office Department. There were 194 persons apprehended of whom 136 were for the Immigration Service. In addition, 6,284 violations of the Department of Agriculture laws were detected. Legal proceedings.—As the result of narcotic seizures, 228 persons were presented for prosecution. Including cases pending froih the previous year, those which were concluded resulted in 111 convictions and only 29 acquittals. Prison sentences aggregating over 105 years and fines amounting to $13,750 were imposed by the court on convicted oft'enders. In addition, penalties aggregating $21,480 were assessed against the masters of 33 vessels on which narcotic drugs were found concealed; many of these cases have not been concluded, but, including cases initiated prior to 1942, $17,552 was collected from the masters of vessels. In connection with all seizures there were 486 arrests, a decrease of 40 during the year. The high ratio of convictions in the number of cases disposed of continued: Of the 460 cases disposed of in 1942, 298 convictions were secured, or '65 percent; of the 587 cases disposed of in 1941, 403 convictions were secured, or 69 percent. Prison terms to which customs violators were sentenced aggregated more than 189 years in 1942 as compared with 308 years in 1941, while the total .amount of fines imposed by the courts was $27,206 in 1942 and $37,660 m 1941. . . ^ " .° Fines, penalties, etc.—Collections from fines, penalties, and, liquidated damages and sales of seizures aggregated $648,404 in 1942, a decrease of $100,819 from the previous year. Of this total only $13,235 in 1942 consisted of the net proceeds from the sale of seized and forfeited articles compared with $30,182 in the previous year. - ^_ 152 REPORT OF T H E SEiCRETARY OF T H E TREASURY Marine and t a r i f administration. Marine administration.—For many years custom.s field officers performed duties over which the Bureau of Marine Inspection and Navigation, Department of Com.m.erce, exercised administrative control. This anom.alous situation was finally corrected h y Executive Order No. 9083 of February 28, 1942, which transferred, as of March 1, 1942, to the Com.m.issioner of Custom.s, under the direction and supervision of the Secretary of the Treasury, those functions of the Bureau of Marine Inspection and Navigation and of the Secretary of Com.m.erce pertaining to registry, enrollment, and licensing of vessels including the issuance of commissions to yachts, the assignm.ent of signal letters, and the preparation of all reports and publications in connection therewith; the adm.easurem.ent of vessels, administration of tonnage duties, and collection of tolls; the entrance and clearance of vessels and aircraft, regulation of vessels in the coasting and fishing trades, and limitation of the use of foreign yessels in waters under the jurisdiction of the United States; the recording of sales, conveyances, and m.ortgages of vessels; the protection of steerage passengers; and all other functions of the Bureau of Marine Inspection and Navigation and of the Secretary of Conim.erce which were perform.ed by the Bureau of Gustom.s on .their behalf. The power to remit and mitigate fines, penalties, and forfeitures incurred under the laws governing these functions was also transferred to the Bureau of Custom.s. To supervise these additional duties, ^ the Division of Tariff and Marine Adm.inistration was created, formerly designated as the Division of Tariff Adm.inistration, with an additional assistant deputy com.missioner who has direct supervision over the Section of Admeasurement, the-Section of Marine Adm.inistration, and the Section of Marine Publications. These sections administer the laws and regulations covering those functions transferred to the Bureau of Custom.s by Executive Order No. 9083 insofar as they apply to vessels. The entrance of the United States into the war affected to a great degree the maritime comm.erce of the United States and the administration of the laws under the jurisdiction of the Bureau. Orders were issued by the Secretary of the Treasury waiving compliance with the navigation laws in several instances where such action was deemed necessary in the conduct of the war, pursuant to the authority contained in the Second War Powers Act of 1942. The m.ajority of these orders, due to their close relation to the war effort, was given a confidential status and related to a waiver of the coastwise laws. The orders waiving com.pliance with the navigation laws in effect on April 1, 1942, whether issued by the Secretary of Commerce under authority of Executive Order No. 8976, dated December 12, 1941, or by the Secretary of the Treasury under authority of Executive Order No. 8976, as modified by Executive Order No. 9083, were confirmed and continued by the Secretary of the Treasury under this act. Tarif administration.—Although considerable attention was devoted to cases involving the possible application of countervailing duties under section 303 of the Tariff Act of 1930, the facts developed were not sufficient to warrant the issuance of any new countervailing-duty orders, or to change any outstanding orders. No findings of dumping were issued or revoked during the year. 153 REPORT OF T H E SECRETARY OF THE TREASURY No new quotas were established during the fiscal year 1942. One quota, that on cotton established by the President's proclamation bf December 9, 1940, was further modified by a proclamation of June 29, 1942, which, in effect, made a global quota of the quota on cotton having a staple length lYs inches or more but less than l^jU inches.' Under the authority contained in section 318 of the Tariff Act of 1930, the President issued during the year three proclamations declaring the existence of an emergency and authorizing the Secretary of the Treasury to permit the importation of certain commodities free of duty. Proclamation No. 2498, dated July 25, 1941,, permitted until June 30, 1942, the importation free of duty of forage for livestock in drought-affected areas to be designated by the Secretary of Agriculture. Proclamation No'. 2542, dated April 1, 1942, permitted until the termination of the emergency the importation free of duty in Puerto Rico of jerked beef as a substitute low-cost food to replace codfish which had been previously imported from Canada, Newfoundland, and Labrador. Proclamation No. 2553, dated April 27, 1942, permitted until the termination of the emergency the importation free' of duty of food, clothing, and medical, surgical and other supplies by or directly for the account of the American National Red Gross for its use in relief work. Appropriate regulations were issued by the. Acting Secretary of the Treasury in connection with such free importations and were published in the case of forage for livestock as T. D. 50449; jerked beef in Puerto Rico as T. D. 50599; and supplies for the Red Cross as T. D. 50626. Cu§toms Agency Service The Division of Investigations and Patrol, better known as the Customs Agency Service, is the investigative unit of the Customs Service. Its customary work, although continued throughout the year, was greatly curtailed as is revealed by the following partial summary of its activities during the past 2 fiscal years. Activities of the Customs Agency Service, fiscal years 1941 and 1942 Number 1941 Investigations of violations of customs laws: Undervaluation. _ Marking violations . Baggage violations....", Diamond and jewelry smuggling Narcotic smuggling ^ Other smuggling Touring permits Other investigations: Alleged erroneous customs procedure Drawback Classification and market value Customs bonds to determine solvency and sufficiency. Applications for customhouse brokers' licenses Applications for bonded truckmen's licenses Petitions for relief from additional duty Personnel Navigation violations Pilferage of merchandise Foreign, by members of domestic service Miscellaneous Examinations of customhouse broker's records. Oases of cooperation with pther agencies 1942 Percentage increase or decrease (—) 586 85l 716 366 819 727 269 -39.3 -34.6 19.5 -4.7 -22.3 -34.7 -51.1 150 110 1, 209 1, 273 1,083 -26.7 -10.4 -50.4 -41.8 12.11 6.0 -18.& 288. ,6 -81.8 -18.1 -17.7 -L8 -47.3 443.6 965 130 599 384 1,0541,113 650 170 62 84 376 360 1, 289 221 641 3,067 631 99 70 89 • 306 1,399 234 181 445 3,011 205 108 2,201 11,965 154 REPORT OF T H E SEiCRETARY OF T H E TREASURY Only four of the types of investigations listed above showed any increased activity—investigations of applications for custom.house brokers' and bonded truckm.en's licenses, baggage investigations, and personnel investigations. . ' Personnel investigations.—These mvestigations include com.plaints by individuals returnmg from, abroad of treatment accorded them, by customs inspectors, collisions involving official autom.obiles, thefts of Government property, em.ployees under consideration for prom.otion, derelictions ar].d alleged political activity by custom.s e.m.ployees, and /Character investigations of employees probationally appointed to positions in the Custom.s Service, the latter accounting largely, if not entirely, for the great increase in 1942. By arrangement with the Civil Service Comm.ission, Customs Agents in 1942 m.ade the character investigations of the large num.ber of probational appointees. . Baggage investigations.—Violations included under this category covered several types of false declarations, newly purchased merchandise claimed to be used and therefore entitled to free entry as ^personal effects, merchandise undervalued, false claims by returning tourists that they had been in Canada 48 hours or more, false claims that no exemption had been granted during the preceding 30 days, assertions that purchases were incidental to the trip when they had actually been ordered previously, and claims to the ownership of merchandise which was actually the property of others. As a result of these investigations, substantial recoveries were effected.o The number of investigations conducted by the Agency Service under the provisions of the Export Control Act, although rather large prior to the declaration of war, progressively and substantially increased during the last 7 months of the fiscal year. Numerous attempts to export critical, strategic, or other prohibited materials in violation of export control provisions were discovered, seizures made, and offenders prosecuted. Among these were attempts to export platinum, prohibited merchandise under, the guise of ship's stores, and goods to prohibited nationals by listing a fictitious consignee in a neutral or allied country. . In addition to the detailiug of several customs agents to Foreign Funds Control, many investigations were directly conducted by the Customs Agency Service under the Foreign Funds Control provisions. Prior to the entrance of the United States into the war, many Japanese nationals who were returning to Japan were prevented from taking with them money or other articles, the export of which was forbidden. An even more rigid supervision was exercised during the last 7 m.onths of this fiscal year. ° , The Supervising Customs Agent at Seattle' participated in and subsequently supervised the plans for insuring the security of the Seattle waterfront. After actively aiding in organizing the same system in Tacoma, Wash., and- Portland, Oreg., he served in an advisory capacity in the promotion of similar plans at seaports in California and elsewhere. Investigations in connection with alien property control, trading with the enemy, and other measures connected with the war and with national defense required the services of many members of the Customs Agency Service. Cooperation with other agencies.—The coordination plan established in 1934, under which customs investigative officers* cooperated with REPORT OF THE SECRETARY OF THE TREASURY 155 investigative officers of the Coast Guard and of other agencies of the Treasury, was effectively continued^ but cooperation! in law enforcement efforts was not confined either to this field or to the war activities enumerated above. A total of 11,965 instances''of joint eft'orts was recorded during 1942, more than five times as many as in the previous year. These included almost every agency of this Governm en t^and of our neighbors to the north and south, who availed themselves whenever possible of the technical skill, experience, and specialized knowledge of customs agents and patrolmen. Miscellaneous Appraisement Unit.—The widespread wartime disturbance of foreign markets, which are the source of many commodities subject to ad valorem rates of duty, caused fluctuations in the foreign value of imported merchandise accompanied by a generally upward trend in world prices. Appraising officers, in consequence, found it increasingly difB.cult to determine correctly the value of imported merchandise, and this difficulty was aggravated by the final withdrawal during 1942 of Treasury representatives from Europe and the Orient. Information regarding values was, therefore, necessarily obtained locally through the cooperation of importers and was interchanged among appraising officers through the medium of the Customs Information Exchange. Differences in appraised values thus discovered' at the various ports were adjusted through correspondence, supplemented by investigations in the countries in the Western Hemisphere. Of the 15,339 reports of value or classification, 3,229 dift'erences were discovered, slightly more than in the previous year and more than twice as many as in 1940; differences in classification between the various field offi.ces amounted to 991 in 1942 and 1,169 in 1941, but differences in value were 2,238 in 1942 and 1,950 in the previous year. The activities of the Customs Information Exchange, which serves as a clearing house for the dissemination of information for the Customs Service, are summarized as follows: Appraisers' reports of value or classification received Difierences in classification reported Differences in value reported Appraisement appeals reports received Changes in value circulated Reports and price lists affecting values circulated Req uests for foreign'investigation '. '. : :. '. Number 15,339 991 2,238 2,341 635 . . . 1,146 448 Customs School oj Instruction.—Continued emphasis was placed by the customs school of instruction during the year on the promotion and organization of local training classes and discussion groups to supplement the correspondence course of instruction by a discussion of lesson papers and the application of them to local problems. Instruction classes were conducted at 37 ports of entry with an. average of 30 customs officers and employees in attendance at each class. Discussion classes were conducted at 28 additional ports of entry and customs stations where the number of regularly assigned personnel was too^sm.all to \varrant formal classes.* A total of 1,598 classes and 400 discussion groups were conducted during the year, an aggregate, of 1,998 meetings. ' • " . Division oj Engineering and> Weighing.—Extraordinary measures were required in 1942 to provide weighing, gauging, and measuring 156 REPORT OF THE SECRETARY OF THE TREASURY facilities so as to avoid delay in the handling of imports at new locations and in unusual quantities as a result of the dislocation of commerce due to World War conditions. The increasing use of larger trucks to move from the piers critical materials, especiahy wool, for which there was an urgent need in industry and which was imported in much larger quantities than formerly, necessitated the increase in the capacity of many customs scales and the relocation of others. Both of these accomplishments were performed without delay or serious interference with the movement of merchandise and without detriment to the revenue. I n addition, this Division assisted, as in the past, in the preparation of data and plans for customs houses, appraiser's stores, and border stations as well as the selection of sites for new buildings necessitated by the relocation or new construction of highways crossing the border. Division oj Laboratories.—During the fiscal year 1942, the ten customs laboratories tested.^ a total of 100,562 samples of merchandise, only 2.8 percent fewer than in the previous year. The number of samples of sugar, ores, petroleum products, and most other types tested constituted about the same ratio of the total as in 1941. The number of wool samples tested, however, greatly increased from 1,318 in 1941 to 8,000 in 1942 as a result of the inception of the wool testing program on October 1, 1941. The increase in revenue derived from importations of wool directly attributable to the increased accuracy of the sampling and testing procedure is estiinated to be approximately $5,000,000 annually. The Division of Laboratories also made available to the Army, Navy, Lend-Lease Administration, Office of Price Administration, Postal Censors, and other Federal agencies the services of the customs laboratories. These agencies utilized to a considerable extent the diversified experience, technical skill, and equipment available in customs laboratories to satisfy some of their technical needs. Changes in ports and stations.—During the year two ports of entry were established and three were abolished. The ports of entry established were at GuayaniUa and at Jobos, Puerto Rico, and those abolished were at Lancaster, iClinn., Grand Forks, Mich., and Peskan, Mont. No stations were established during the year, but the one at Fargo, N. Dak., was abohshed. Cost oj administration.—The total revenues collected by the Customs Service, including collections for other departments and Puerto Rican cohections other thun duties, amounted to $428,596,660 as compared with $429,544,621 in 1941, a decrease of two-tenths of 1 percent during the year. The expenses, however, were $21,194,075, an increase of $570,650 over 1941, due to increases in salaries provided under the Mead-Ramspeck Act and to the employment during the last months of the year of 600 additional temporary guards. The cost to collect $100 was $4.94 in 1942 as compared with $4.80 in 1941. BUREAU OF ENGRAVING AND PRINTING The deliveries of currency, securities, stamps, and miscellaneous printings by the Bureau during 1942 amounted to 613,538,841 sheets, an increase of 152,924,283 sheets over the previous year, or 33 percent. 157 REPORT OF THE SECRETARY OF THE TREASURY- A comparative statement of deliveries of finished work in the fiscal years 1941 and 1942 follows: Deliveries of finished work, fiscal years 1941 and Sheets Face value Class 1941 Currency: United States notes Silver certificates Overprinted "Hawaii". Federal Reserve n o t e s . . i . . . Overprinted "Hawaii".. Specimens. Total. Bonds, notes, bills, certificates, etc.: Bonds: Panama Canal ._ Postal savings Treasury United States savings United States war savings Consolidated Federal farm loan for the Federal land banks Depositary Farm loan _ Federal Farm Mortgage Corporation Home Owners' Loan Corporation Insular: Philippine. Puerto Rican Notes: Treasury Commodity Credit Corporation Reconstruction Finance Corporation.... United vStates Housing Authority .' Treasury bills Certificates: Indebtedness Cuban silver Philippine treasury Debentures: Consolidated collateral trust for the Federal intermediate credit banks. Consolidated for Federal home loan banks Federal Housing Administration: D efense housing insurance fund Housing insurance fund Mutual mortgage insurance fund. _ : interim certificates: Treasury bonds Puerto Rican bonds. Interim transfer certificates for postal savings bonds Interim.receipts: Federal home loan banks..*. Federal Savings and Loan Insurance Corporation... Specimens: Bonds -, Notes and bills Certificates ^ — Debentures Interim certificates. — Total. 1942 3, 650,000 76, 775,000 $216,180,000 1, 633,080,000 3, 000, 000 4,066, 420,000 22,000,000 '33" 4, 515,000 89, 370,000 250,000 24,165,867 179,167 3 91, 787, 983 118. 480, 037 5, 940, 680,000 881 985,056 11, 852,000 500 1, 545 1, 595, 505 65, 554, 500 15,187,000 600,000 946, 900 14, 886, 389, 500 9, 756, 075,000 . 636,850,000 11, 362,950 . 9,800 2,000 17,383 4,500 1,055 500 50,000 2,476 1,000 2,668 3, 427,000 750,000 800,000,000 1,550,900 64,000 12, 000 16, 577, 200,000 870,000,000 65,000,000 33, 900 7, 595,000,000 32,000 69,300 15,000 2, 664, 400 5, 705,000,000 6,000,000 16, 770,000 39,000 23,860 37, 500 8,305 485,000, 000 104,000,000 500 ;,200 3,375 2,575 17,100 4,975,000 26,947, 500 30, 350,000 7, 850 13,856 138, 900 38,750 136, 900 27, 800 82,030 217, 500 250 1,000 2,000 13 100 279 24 13, 424, 214 87,043,852 Sheets Stamps: Customs Internal Revenue.. District of Columbia.. Federal migrafory-bird hunting. Philippine... Puerto Rican 101,876 149, 712,063 139, 340 23,489 250, 300 1,164, 300 67, 571, 230, 900 Number of stamps, etc., 1942 175,000 157,305,191 200,883 25,000 3, 950,000 15, 644, 720, 394 40,176, 650 2,800,000 2,300, 270 139, 055, 700 158 REPORT OF THE SECRETARY OF THE TREASURY Deliveries of finished work, fiscal years 1941 and 1942—Continued Sheets N u m b e r of s t a m p s , etc., 1942 Class 1942 Stamps—Continued. Specimens: U n i t e d States. F o r experimental purposes. U n i t e d S t a t e s . . District of C o l u m b i a Postage: U n i t e d States ., C a n a l Zone • Philippine Specimens, U n i t e d States Postal savings Specimens Total. Miscellaneous: Checks Warrants Commissions Cert ificates Drafts T r a n s p o r t a t i o n requests '. Nontransferable food order a n d nontransferable surplusfood order s t a m p s ^ Nontransferable ,cotton order a n d nontransferable surplus-cotton order s t a m p s 0 th er miscellaneous . ^ Specim ens . Blank paper. Total Grand total. 4,322 145 2 ... 160, 508,890 150, 239 895, 661 113 • 1, 349,189 5 186, 579,088 220, 468 187, 589 35 .17,154, 946 19, 752, 724,833' 20, 298,800' 11,020,760 ' 1,770' •1, 926,176, 290 314, 295, 611 364,148, 574 37, 540, 930,119 27, 386,154 62, 377 521,075 4, 936, 972 25, 775 1, 316, 751 29,086,821 85, 414 462, 670 5, 727, 213 13,313 1,256,442 145, 481, 915 287, 507 . 275,956 19,801,03326,625' 6, 282, 210 5, 906, 963 6,201,300 1 1, 239, 589,000^ 299, 085 587, 369 2,324 61,905 455, 220 503, 894 3,451 70, 640 2 91^ 044, 0002, 276, 290' 17, 235' 41,106,750 43,866,'378 460, 614, 568 613, 538,841 1,505,081,770^ 1 Excludes 64,370 blank fillers. 2 Excludes 6,270 blank fillers. Dies were engraved for the following new issues of postage stamps:. r--.,. ^^^^^^ Sesquicentennial of the Statehood of Kentucky, series 1942 'Win the War/' series 1942 : ''Free China/' series 1942 . Denomination (cents) ... 3' 3 5- New dies and plates were prepared for various classes of bonds, notes, revenue stamps, and other printed work. The principal items, comprised Treasury bonds. United States w^ar savings bonds and stamps, Treasury notes including four series of tax notes, revenue stamps for distilled spirits, special tax stamps, and Federal use tax stamps for motor vehicles and pleasure boats. The most outstanding task was the production of United States: savings bonds. The printing of these bonds, designated as defense savings bonds, series E, F, and G, was begun in the pievious year and continued until April!942. In the latter m.onth the designation waschanged to United States war savings bonds, the same series classifications being maintained. Production was increased from 100,000" bonds per day at the beginning of the year .to 1,000,000 per day in January 1942. Total deliveries for the year amounted to 80,741,500* bonds, with a face value of $10,392,925,000. . The number of employees on the.pa}^ roll at the beg.inning of the fiscal year was 6,345. The increased requirements for United States and Federal Reserve currency, bonds, postal savings stam.ps, and postage and revenue stamps made it necessary to secure additional REPORT OF T H E SECRETARY OF THE TREASURY 159 personnel, and at the end of the year the number of employees was 7,803, an increase of 1,458 persons, or 23 percent. Expenditures for the year amounted to $17,348,492.43, an increase of $4,144,580.90 over the previous year, or 31.39 percent. The following statement shows the appropriations, reimbursements, and expenditures for the fiscal years 1941 and 1942, respectively. 1942 Appropriations: Salaries and expenses Deficiency Reimbursements to appropriation from other bureaus for work completed i Total Expenditures, salaries and expenses 2 Unexpended balance — 8,450,000.00 $10, 050, 000. 00 260,000. 00 Increase or decrease (—) ;i, 600, 000. 00 -260,000.00 4, 562,477. 23 7, 753, 724.13 3,191, 246. 90 13, 272, 477. 23 13, 203, 911. 53 17,803, 724.13 17, 348,492. 43 4, 531, 246. 90 4,144, 580. 90 S, 565. 70 455, 231. 70 386, 666. 00 1 An additional amount of $227.50, received from employees for lost identification cards, locker keys, package-booth checks, and badges, was deposited to the credit of the Treasurer of the United States as miscellaneous receipts; and $62.50, received from reimbursement for jury service by employees, was deposited to the general fund receipt account. 2 Includes $11,300 transferred to the Bureau of Standards for research work in each of the fiscal years 1941 and 1942; $40,000 in the fiscal year 1941 and $80,000 in the fiscal year 1942 transferred to salaries and expenses,, guard force. Treasury Department, for service rendered in connection with the protection of currency, bonds, stamps, and other papers of value; and $1,776 transferred to United States official mail and messenger service. Post Office Department, in the fiscal year 1941. The amounts of $377,132.19 and $430,965.84 were transferred to the retirement fund in the fiscal years 1941 and 1942, respectively. FOREIGN FUNDS CONTROL ' ' By virtue of the authority given the Secretary of the Treasury by Executive Order No. 8389, as amended, and by Executive Order No. 9095, as amended, under the Trading with the Enemy Act (U. S. C , 1940 ed., title 50, App., Sec. 3; Supp. I, Sec. 5 (b)). Foreign Funds Control has blocked the holdings subject to the jurisdiction of the United States of 36 countries and their nationals. The total volume of property now frozen and subject to regulation by Foreign Funds Control is about $8.5 billions. By principal type this property is divided as follows: Short-term funds, including earmarked gold Secmities Direct investments and miscellaneous Holdings of blocked nationals resident in United States . (In millions) $4,000.0 2,000.0 2,000.0 500.0 The distribution of blocked property by nationality of the owner is as follows: (In miilions) Netherlands, including Netherlands (East) Indies , $1,800.0 Switzerland . . ..: 1,500.0 France and Monaco 1,400.0 Belgium . 400.0 Sweden •. 600.0 China . 300.0 Norway J .-100.0 Japan .• 150.0 Germany 150.0 Italy . 100.0 All others ,750.0 Blocked "nationals resident in the United States (other than business enterprises owned abroad).. • 500.0 Holdings of American citizens in blocked enterprises .. 750. 0 Total . 8,500.0 During the fiscal year 1942, Foreign Funds Control considered 330,747 applications for hcenses to effect specific transactions involv487543—43 12 160 REPORT OF T H E SEiCRETARY OF T H E TREASURY ing total values of about $5.8 billions. This total was distributed by types of transactions approximately as follows: Operating licenses for blocked business enterprises Securities (exclusive of release of imported securities) Ships and shipping Foreign trade Diamonds, pictures, etc Remittances from the United States. Checks and drafts from abroad Foreign exchange Patents, royalties, etc Miscellaneous . --^-- --. Total (In millions) $2,563.8 889.6 360.6 . 308.1 232.5 139.6 . 87.2 29.1 6.8 1,197.6 .--- 6,813.6 BUREAU OF INTERNAL REVENUE « General Internal revenue collections.—During the fiscal year 1942 internal revenue collections, including trust fund collections, totaled $13,048 millions, an increase of $5,678 millions over collections for 1941. The total amount collected included back income taxes of $460 millions, which is approximately $154 millions more than back income tax collections for 1941. Miscellaneous internal revenue collections amounted to $3,856 millions, which is an increase of $883 millions over collections for 1941. The largest increases were as follows: Capital stock tax, $115 millions; gift taxes, $40 millions; liquor taxes, $228 millions; tobacco taxes, $83 millions; manufacturers' excise taxes, $155 millions; and misceUaneous taxes, $193 millions. Employment tax collections totaled $1,185 millions, an increase of $260 millions over the preceding year. Total collections under the Federal Insurance Contributions Act were $895 millions; collections under the Federal Unemployment Tax Act, $120 millions; and collections of carriers taxes, $170 miUions. Total collections of internal revenue during the fiscal years 1941 and 1942 are shown in the foUowing summary, classified according to the administrative organization responsible for the tax. A detailed statement of collections appears in table 7, page 434 of this report. Summary of internal revenue collections, fiscal years 1941 ctnd 1942 , [On basis of reports of collections, see p . 388] 1941 Administrative unit Income Tax Unit ^ Alcohol T a x U n i t Miscellaneous T a x U n i t . A c c o u n t s a n d Collections U n i t tax activities) T o t a l collections •, $3,471,123, 930. 57 820, 056,178. 33 2,153,071, 808. 38 1942 Increase $8,006,883, 543.68 • $4, 535, 759, 613.11 1, 048, 516, 706. 56 228 460 528. 23 2,807,106,423.79 654,034,615. 41 (employment 925, 856,460. 38 1,185, 361,843. 69 259,605,383.-31 7, 370,108, 377. 66 13,047, 868, 517. 72 6, 677, 760,140. 06 1 Includes collections from the tax on unjust enrichment. a More detailed information concerning the activities of the Bureau of Internal Revenue will "be found in the annual report of the Commissioner of Internal Revenue. REPORT OF T H E SEICRETARY OF T H E TREASURY 161 Rejunds, drawbacks, and stamp redemptions.—During the year refunds of tax collections, together with interest, were made from the following appropriations: Refunding internal revenue collections, 1941 and prior years Refunding internal revenue collections, 1942'and prior years Refunds and payments of processing and related taxes, 1939-1942.. : _._• Total, interest included $5,199, 328.19 49, 259, 680. 34 22,073,066.12 76, 532,074.65 The following is a summary of the refunds, showing the number of schedules and claims, the amount of refunds and repayments allowed; and the total amount refunded, including interest, on each class of tax during the fiscal year 1942, with comparison of the totals for 1941. Number of schedules and claims, amount of refunds and repayments, and total refunds, repayments, and interest, by class of tax, fiscal year 1942 and totals for 1941 Class of tax Bituminous coal Capital stock. .... Carriers' taxes.' Distilledspirits Distilled spirits- stamps redeemed Distilled spirits drawbacks (420 certificates). Estate GiftIncome Miscellaneous.. Miscellaneous stamps redeemed Narcotics Narcotic stamps redeemed Sales Federal Insm-ance Contributions Act.. Federal Unemployment Tax Act Sugar Tobacco . Tobacco stamps redeemed Tobacco drawbacks _ Total income and miscellaneous internal revenue Agricultural adj ustment . Grand total, fiscal year 1942. Fiscal year 1941: Income and miscellaneous internal revenue.. Agricultural adjustment Grand total, fiscal year 1941. Number of schedules Number of claims Amount of refunds and repayments 79 2,803 61 8,439 1, 620 992 3,565 432 196, 969 1,714 6,880 150 47 ' 719 41, 253 16, 392 525 117 1,997 35 $6, 140.18 364, 979.19 19, 336. 64 457, 538. 65 80, 787. 69 . 413, 076.80 11, 759, 938. 52 418, 938. 29 24, 843, 127. 68 610, 429.84 562, 241. 69 237. 33 278. 77 1, 496, 985'. 73 1, 211, 867. 47 2,113, 653. 88 938, 451. 28 1, 986. 55 1,687, 035.19 7, 062. 79 $5, 338. 46 408, 135. 80 22, 035. 24 464, 153. 83 81, 180. 68 413, 075. 80 13,144, 514. 25 505, 530. 75 30, 304,259.18 655, 513. 95 668, 056.18 237.33 278. 77 1, 798,863.14 1, 262,411.01 2,190, 546.14 729. 92 060.12 036.19 062. 79 17,023 270 284, 789 458 46, 982, .093. 06 19, 838, 530.41 64,459, 008. 63 22,073,066.12 17, 293 286,247 66, 820, 623. 47 1 76, 632,074. 65 13, 564 1,329 167,393 12, 864 45, 727,315. 92 6, 871,008. 69 54,006,883.18 8,126, 017. 63 14,893 180,257 52, 598,324.61 1 62,131,900.81 17 95 58 316 83 1,865 380 7,021 111 126 27 27 80 3,606 3,224 34 20 26 Total refunds, repayments, and interest 1 Excludes refunds from trust funds set up for Philippine coconut oil, Philippine trust fund, and Puerto Rico trust fund. The amounts refunded from these accounts were for 1941, $985,008.34, $1,457.49, and $1,.933.48, respectively; and for 1942, $234,145.39 (coconut oil) and $225.13 (Puerto Rico). NOTE.—The figm'es in this table will not agree with those given in later sections of this report for the reason that the amounts shown in the later sections relate to claims disposed of by the units, whereas this table shows the actual payments made. If the tax refunds made during the fiscal year 1942 on account of erroneous or iUegal collections of internal revenue and agricultural adjustment taxes and payments for export drawbacks, redemption of stamps, and refunds from trust funds, amounting to $76,766,445, were deducted from the gross collections of $13,047,868,518, the net coUections for the fiscal year 1942 would be $12,971,102,073. The gross collections, however, are used for comparative purposes in these reports. 162 REPORT OF T H E SECRETARY 0F THE TREASURY Additional assessments.—The additional assessments resulting from, office audits and field investigations made during the fiscal years 1941 and 1942 were as follows: Additional assessments, fiscal years 1941 and 1942, by class of tax Class of tax Income ' . Miscellaneous internal revenue: Estate Gift C a p i t a l stock .• Sales Liquors Miscellaneous T(5bacco Coal Silver Sugar... !, 725,157.00 $300, 539, 626.00^ 55, 539, 688. 33 9, 263, 764. 22 994, 812. 55 3, 003, 389. 26 5, 476, 957.12 6, 591, 263. 80 82, 428.18 659, 393.18 71, 390, 182. 91 5,990, 702.88; 1,177, 930. 8& 4, 491, 257. 97 ' 3, 609, 027.11 12,381, 042. 79' 185, 098. 44 401, 147.15 4.76 208. 52- 239, 077. 24 T o t a l miscellaneous i n t e r n a l r e v e n u e . E m p l o y m e n t taxes G r a n d total 1942 . 81,850, 773.88 99, 627, 603. 38: 31, 744, 653. 82 38, 273, 869.01 383, 320, 684. 70 438,441,098.39' 1 I n c l u d e s assessments of $23,049,262 for 1941 a n d $31,854,839 for 1942 m a d e u n d e r t h e jeopardy pirovisions of section 279 of t h e R e v e n u e Act of 1926 a n d section 273 of s u b s e q u e n t r e v e n u e acts. Cost oj administration.—The amount of $77,725,421 was appropriated for the fiscal year 1942 for salaries and expenses in connection with the assessment and collection of internal revenue taxes and the administration of the internal revenue law. The Bureau transferred the sum of $1,300,000 to the Post Office Department for expenses in connection with the sale of motor vehicle use stamps. The expenditures and obligations against the Bureau appropriation, were ,$73,805,704, leaving an unexpended balance of $2,619,717. The expenditures do not include amounts expended for refunding taxes iUegally or erroneouslv collected and for redeeming stamps. The cost of collecting $12,976,589,177 (excluding $71,279,340 collected by post offices) during the year was $0.57 per $100, compared with $0.89 per $100 for 1941. The amount of $1,100,000 was appropriated for the fiscal year 1942 for salaries and administrative expenses in connection with making refunds authorized by Titles IV and VII of the Revenue Act of 1936. The amount expended and obligated from this fund amounted to $853,021, leaving an. unexpended balance of $246,979. Income Tax Unit General junctions.—The Income Tax Unit is charged with the adm.inistration of the internal revenue laws with reference to taxes on income, excess profits of corporations, and refunds of certain processing taxes, and the laws lim.iting profits on certain Arm.y and Navy contracts. The administration includes the preparation of regulations and interpretative and procedural rulings and instructions regarding such laws and the examination and adjustm.ent of returns filed thereunder, through office audits and field investigations, for the purpose of determ.ining the correct tax liability as required by law. REPORT OF THE SECRETARY OF THE TREASURY 163 Returns jiled.—The number of all types of incom.e and excess profits tax returns filed during the fiscal year 1942 on which tax was reported a.nd assessed was 18,164,900, as compared with 7,867,319 returns filed in the fiscal year 1941,^ an increase of 10,297,581. In addition, 9,608,179 taxpayers filed returns during the fiscal year 1942 showing no income subject to tax, compared with 8,283,177 such returns for' the preceding fiscal year. The total number of income tax returns filed by individuals was 26,369,044, which is nearly double the number received in the preceding year. Examination oj income and excess projits tax returns upon receipt by the Washington office.—Of the 27,773,079 incom.e and excess profits tax returns filed during the fiscal year 1942, 4,111,734, consisting prim.arily of the m.ore important returns, were forwarded to the Washington office of the Income Tax Unit. Upon initial review of the returns forwarded to Washington (including thos^ on hand in Washington on July 1, 1941,' relating to previous taxable years), 4,212,556 were closed and 1,139,605 were transmitted, with related information returns and other documents," to the field offices of the Income Tax Unit for further consideration and investigation during the fiscal year 1943. Investigation ojtax returns by the jield offices.—The number of income tax returns, including partnerships and fiduciaries, investigated during the fiscalyear 1942 was 525,384, as compared with 470,876 for the previous year, an increase of 11.6 percent. In addition, 2.6,477 excess profits tax returns were investigated during 1942. These figures include all returns for which the examiners^ reports have been •submitted, whether or not the cases have been finally released by reviewing officers. Estate and gift tax returns investigated by field offices during the fiscal year numbered 18,044, as compared with 17,355 for the previous year, an increase of 4.0 percent. The total number of individual, taxable fiduciary, and corporation income tax returns on which action was com.pleted by the field ofiices •during the year was 939,398, including those investigated as well asthose for which investigations were deemed unnecessary. In addition, the field offices completed action on 432,329 partnership and nontaxable fiduciary income tax returns, 36,460 excess profits tax returns, ^ •and 21,701 estate and gift tax returns. Of the 939,398 income tax returns on which action was completed by the field offices, deficiency adjustments were recommended in 272,255 cases. This compares with a total of 924,358 income tax returns i o r the preceding year with deficiency adjustments numbering 230,806. Out of 21,701 estate and gift tax returns on which action was completed during the fiscal year, deficiency adjustments were recommended in 11,415 cases, as compared with 10,708 deficiency adjustments out of a total of 20,579 returns for the preceding year. Petitions to the Board of Tax Appeals filed during 1942 involved • 5,159 returns and proposed tax deficiencies of $79,435,744. This compares with 5,891 returns and tax deficiencies of $117,927,968 for 1941. Revenue results oj investigations oj income and excess projits tax returns.—The total amount of additional tax, interest, and penalty 1 Including in each fiscal year the delinquent returns filed during that year relating to prior years. 164 REPORT OF THE SECRETARY OF THE TREASURY assessed during 1942 was $288,566,028, of which $280,728,657 applied to income tax returns and $7,837,371 to excess profits tax returns. Excluding jeopardy and duplicate items, the amounts for these two classes of taxes were $248,389,459'and $7,184,260, respectively. Stage at which additional tax was assessed.—Further progress was made in settling cases of proposed additional tax liability by agreements, with taxpayers without issuing formal notices of deficiency, which are otherwise required by law, and from which taxpayers may appeal to the Board of Tax Appeals. Of the total number of 271,709' income tax returns on which regular additional. assessments (including duplicate-regular) were made, 258,766 additional assessments, or 95.2 percent, were made by agreement with the taxpayers without the necessity of a statutory notice. Of the total regular additional tax assessed (including duplicate-regular) aggregating $209,004,867/ the amount assessed by agreement was $169,447,676, or 81.1 percent. Rejunds, abatements, and credits.—The number of income and excess, profits tax cases involving refunds or credits of tax or interest to taxpayers or abatement of tax audited and closed by the Income Tax Unit during 1942 was 77,405, as compared with 73,627 such cases, closed during 1941, an increase of 3;778, or 5'.1 percent. Of the total of 77,405 overassessments for 1942, 42,361 were made to taxpayers without the necessit}^ for filing claims. This compares with 39,730 in the previous year. Of the overassessments settled in the fiscal year 1942 by the Income Tax Unit, 60,149 represented refunds or credits of tax or interest involving $37,907,010, as compared with 57,511 involving $50,438,931 in 1941. The amount involved in overassessments of all types for 1942 represented by refunds, credits, interest, and abatements for income and excess profits tax cases audited in the collectors' offices as well as by the Income Tax Unit was $99,526,248, as compared with $113,600,916 the previous year. There were also allowed 30,469 collectors' claims, of which 12,908 recommended abatements or credits and 17,561 recommended refunds. These claims were largely multiple-item clauns, i. e., claims in behalf of a number of taxpayers, and involved 33,793 items for abatement or credit and 142,156 items for refund. Inventory oj returns on hand in the field offices.—The number of open income tax returns on hand in the field offices as of June 30, 1942, wa& 407,934, compared with 373,889 on the same date last year. The net increase between the two dates was 34,045, or 9.1 percent. <• The net increase in number of returns of prior-year work was 7,187, or 13.2 percent. The percent of open prior-year work to open current-year work at the end of 1942 was 17.8, as compared with 17.1 percent fpr 1941. Miscellaneous Tax Unit The Miscellaneous Tax Unit is concerned with the administration of all internal revenue taxes except the income and excess profits taxes, the taxes applicable to alcohohc beverages, and those relating to employment. The collections of miscellaneous taxes for the fiscal year 1942 were $2,807,106,424, an increase of $654,034,615 as compared with coUections from these sources for the preceding year. REPORT OF THE SECRETARY OF THE TREASURY 165 Estate Tax Division.—There were 19,633 estate tax returns and 30,048 gift tax returns received during the year. Collections of estate tax for the year amounted to $340,322,905, representing a decrease of $14,871,128 as compared with the collections for the preceding year. CoUections of gift tax amounted to $92,217,383, which exceeded the collections for the preceding year.by $40,353,669. Assessment and collection of proposed deficiencies in estate tax and gift tax cases aggregating $51,981,606, asserted in 338 cases, were withheld pending the adjudication of appeals filed with the United States Board of Tax Appeals. As a result of field investigations and Bureaii audits, assessments of $64,239,168 were made in estate tax cases and $5,243,927 in gift tax cases. Tobacco Division.—The coUections of tobacco taxes for the year amounted to $780,982,216, the largest annual /collection from this source since these taxes were first imposed, and represented an increase of $82,905,325 .over the collections for the previous year. Of this amount, $704,933,505 was collected from the tax on small cigarettes. A detailed comparison of the tobacco taxes collected during the fiscal years 1941 and 1942 is shown in table 7, page 434 of this report. Sales Tax Division.—On October 1, 1941, the administration of various taxes was transferred from the Sales Tax Division to the Miscellaneous Division. The Sales Tax Division was assigned the administration of the manufacturers', excise taxes and the retail dealers' excise taxes on the sale of jewelry, furs, and toilet preparations. Collections from these taxes during 1942 amounted to $852,069,383, an increase of $234,696,860 as compared with collections from similar taxes in the preceding year. A summary of these collections during the last 2 years follows; and a more detailed comparison of the collections is shown in table 7, page 434. Summary of taxes collected by the Sales Tax Division, fiscal years 1941 ctnd 1942 Increase or decrease ( - ) Source 1941 1942 Manufacturers'excise taxes (Title IV, Revenue Act of 1932, as amended, and Subtitle C,.Chapter 29, Internal Revenue Code, as amended) Electrical energy Pistols and revolvers Repealed manufacturers'excise taxes _. $663,600,164.42 47,021,015. 62 85,301.13 6, 766,041.76 $718, 200, 329.76 49,977, 581.17 84,494.06 3, 639,853.64 $164, 700,165.33 2,956, 665. 65 -807.08 —3,126,188. 22 617,372,522.93 771,902,258.61 164,629,735.68 Total manufacturers'excise taxes . . Retailers' excise taxes (Chapter 19, Internal Revenue Code) Total 617,372,622.93 80,167,124.46 80,167,124.46 852,069,382.97' 234,696,860.04 Capital Stock Tax Division.—The collections of capital stock tax during the year amounted to $281,900,135, compared with $166,652,640 for the preceding year, an increase of $115,247,495, or 69.2 percent. The collections in 1942 were the largest from this source since the tax was first imposed. Domestic and foreign corporations filed a total of 523,436 returns, of which 27,630 were submitted by corporations organized since June 30, 1940. There were 38,395 delinquent returns filed for the years 1933 to 1940, inclusive. 166 REPORT OF T H E SECRETARY OF THE TREASURY As a result of the review and audit of returns, 17,874 assessments were made, involving tax,. penalty, and interest in the amount of $1,177,931, compared with 19,921 assessments totaling $994,813 made (luring the previous year. Miscellaneous Division.—The Miscellaneous Division was created on October 1, 1941, and is concerned with the administration of the documentary stamp taxes, taxes on oleomargarine, etc., narcotics and marihuana, bituminous coal, silver, hydraulic mining, transportation of oil by pipe line, admissions, dues, safe deposit boxes, telephone, telegraph, radio and cable facilities, processing of coconut oil and other vegetable oils, and the administration of the National Firearms Act and the Federal Firearms Act. The administration of these taxes was transferred fro.m the Sales Tax Division. The Miscellaneous Division is likewise concerned with the duties formerly performed by the Processing Tax Division, including the administration of the tax on manufactured sugar, as well as certain taxes imposed under the Revenue Act of 1941 on the transportation of persons, the use of motor vehicles and boats, and the special taxes on maintaining coin-operated and gaining devices for use, and the operation pf bowling alleys and billiard and pool tables. The Processing Tax t)ivision was abolished at the time of the creation of the Miscellaneous Division. The collections of the taxes administered in the Miscellaneous Division are shown in the following table: Summary of taxes collected by the Miscellaneous Division, fiscal years 1941 and 1942 Increase or decrease (—) Source of taxes Stamps: Use of motor v e h i c l e s . . Documentary Coin-operated devices.. Playing cards. All others T o t a l s t a m p taxes.. Miscellaneous: > Admission to theaters, concerts, cabarets, e t c . . C l u b dues a n d initiation fees ... Telegraph, telephone, cable, a n d radio Sugar C o c o n u t oils, etc., processed T r a n s p o r t a t i o n of persons T r a n s p o r t a t i o n of oil All others . ... T o t a l miscellaneous t a x e s . O t h e r miscellaneous receipts G r a n d total 4, 756, 586. 50 2, 908,900. 83 $72,625,488. 49 35, 903, 807.17 6, 484,999. 54 5, 757, 957. 58 5, 007, 567. 93 $72, 625, 488.49 1, 654, 806. 85 6, 484, 999. 54 1,001, 371. 08 2, 098,667.10 41, 914, 487. 65 125, 779, 820. 71 83,865,333.06 70, 963, 094. 06 6, 582, 649. 28 27, 331,113. 61 74, 834, 839. 60 23,185, 936. 03 12,480, 585. 65 6, 601, 704. 54 115, 032, 268. 75 6, 791, 899. 71 75, 022, 771. 58 68, 229, 803.06 24, 572, 187. 79 21, 378. 895. 32 13, 474, 822.61 9,159, 450. 34 44,069,174.69 209, 250.43 47, 691, 657. 97 -6,605,036.54 1, 386, 251. 76 21, 378, 895. 32 994, 236.96 2, 557, 745: 80 221, 979,922. 77 333, 662, 099.16 111, 682,176. 39 14,154.11 170, 379. 54 156,225.43 -8, 564. 53 459, 612, 299. 41 195, 703, 734. 88 $34, 249, 000. 32 Alcohol Tax Unit For the first time Federal liquor tax receipts exceeded a billion dollars during a fiscal year. The collection of $1,048,516,707 during the fiscal year 1942, compared with $820,056,178 in the preceding year, represented an increase of $228,460,529, or 27.9 percent. Details of these collections will be found in table 7 on p'age 434. Because of war requirements, the demand for industrial alcohol greatly increased during the year. Amendment of the statutes REPORT OF THE SECRETARY OF THE TREASURY 167 governing alcohol production was necessary and was accomplished by the acts of January,24, 1942, and March 27, 1942. These statutes made it possible for beverage distillers^ legally to engage in the production of industrial alcohol and where necessary to transfer spirits of low proof to ether plants equipped to raise the spirits to the necessary degree of proof. The Alcohol Tax Unit operated in close coordination with the various war agencies in bringing about the production of increased supplies of alcohol. 1 . On June 30, 1942, the following premises and proprietors, qualified under internal revenue laws and engaged in the production, distribution, or use of alcohol and alcc)holic liquors, were under the supervision of the Alcohol Tax Unit. Under permit requirements of the Federal Alcohol Admini.stration Act: ^ Number Importers 2 . ^..^.968 Distilleries: Alcohol 3. • 46 Brandy. _.. 127 Registered : . 127 Warehousing and bottling: Bonded warehouses: ^ Alcohol 62Internal revenue . 1 . • 268 Tax-paid bottling houses . ! 113 Wine producers and blenders: Wineries 957 Bonded wine storerooms 108 Rectifying plants 229^ Wholesalers: ^ AVholesale liquor dealers. . 5, 635 Wholesale malt liquor dealers 9, 650 •Not under permit requirements of the Federal Alcohol Administration Act: Breweries 1'.. 492 Denaturing plants <5 ,.... 63 Bordel dealers in specially denatured alcohol..: 52' Bonded manufacturers using specially denatured alcohol 4,158 Hospitals, laboratories, and educational institutions using tax-free alcohol 6, 709 Vinegar.plants using vaporizing process ' 15 Bottle manufacturers ; 61 Retail liquor dealers 260, 53& Retail malt hquor dealers 142,868 Carriers 437 1 Separate permits are required for lessee operations. In addition to the number of premises shown, the lessees are as follows: Registered distilleries, 58; tax-paid bottling houses, 7; rectifying plants, 9. A lessee authorized to operate two or more premises is counted once for each premise. 2 An importer is required to hold only one permit regardless of the number of his premises. 3 Permits are required only where-alcohol is produced for nonindustrial use. < Permits are required only if the proprietor conducts bottling operations. «Total number of premises. Permits are required for tho.^e making sales to trade buyers. A wholesaler is required to hold only one permit regardless of the number of his premises. 6 Includes ten denaturing plants established in connection with registered distilleries and three distillery denaturing bonded warehouses. Procedure Division.—This Division is responsible for planning and developing procedure fbr the headquarters and field offices of the Alcohol Tax Unit; assists in drafting regulations. Treasury decisions, mimeographs, and circulars; reviews for revision all forms prescribed by the Alcohol Tax Unit; and is charged with the administration of regulations relating to traffic in containers of distilled spirits and the supervision of the Statistical Section. Special procedure was developed during the year to enable the Unit to furnish to war,agencies current statistical data concerning production and uses of industrial alcohol and other liquors. Historical statistics covering such items were also prepared for the information of such agencies. Enjorcement Division.—The activities of the Enforcement Division include the investigation, detection, and prevention of willful and fraudulent violations of the internal revenue laws relating to distilled spirits, wines, and .fermented mal^ liquors. During the fiscal year, 11,372 stills having an aggregate cubic 168 REPORT OF THE SECRETARY OF THE TREASURY capacity of 2,170,612 gallons^ were seized, and in connection therewith 5,471,993 gallons of mash were seized and destroyed. Investigators also seized 185,741 gallons of spirits and 3,501 automobiles and trucks. The total apprS^ised value of the property seized was $1,971,618. A total of 20,183 persons were arrested for Federal liquor law violations. In carrying out the Liquor Enforcement Act of 1936, relating to the introduction of tax-paid spirits to dry States, 216 cars and 13,380 gallons of tax-paid liquor were seized, and 312 persons were arrested. Indictments totaling 316 were returned and 357 persons were convicted in cases under the act. The preventive and enforcement program under Regulations No. 17 and Regulations No. 92 continued to ,be an important factor in reducing-the number and size of illicit distilleries. The shortage of cane and beet sugar and the promulgation of the sugar rationing regulations by the Office of Price Administration were of material aid in preventing sugar from getting into illicit channels. In the meantime, moonshiners have experimented with many substitutes for refined sugar, but the preventive raw materials work continues to be effective notwithstanding the frequent changes in the type of materials used and the sources of supply developed. Field Inspection Division.—This Division plans, coordinates, and supervises the permissive functions in the field offices of the 15 field districts. A group of technically trained field inspectors, who serve as representatives of the Alcohol Tax Unit in maintaining an efficient permissive organization in the field offices, are assigned and directed by this Division. They make frequent examinations, by actual inspection of records, documents, and otherwise, to determine whether law, regulations, established policy, and procedure are being followed, and devise and recommend plans .and methods for greater efficiency and economy in the conduct of the work. As a result of new legislation, many more changes in the premises, construction, and equipment of established plants-were macle-during the fiscal year than are normally necessary. Administrative examination of applications, notices, bonds, consents of surety, plats, plans, and other documents submitted in connection with such changes are necessary to insure compliance with the requirements of the law and regulations for the proper protection of the revenue. The total number of such examinations, including those covering 174 new plants and 227 discontinued plants, was 23,396. Laboratory Division.—The Laboratory Division comprises a central laboratory in Washington, D. C , with 13 branch laboratories located throughout the country, and one in San Juan, Puerto Rico. The Laboratory Division performs all the chemical work for the Bureau of Internal Revenue, and its branch laboratories analyze samples of suspected narcotics submitted by officers of the Bureau of Narcotics. The activities of the Washington laboratory include the examination of formulae, samples, and processes in which denatured alcohol is used before permits are issued by the district supervisors for the withdrawal of alcohol. Preparations made with tax-paid alcohol and wine are 1 Represents the cubic capacity of still pots and cookers. Column stills which operate without a still pot or cooker are not reflected in this total. The size of illicit stills is reflected more properly by the mash facilities. The cubic measurement of the mash fermenters of all the illicit stills seized during the fiscal year was 8,387,371 gallons. REPORT OF THE SECRETARY OF THE TREASURY 169 •examined for the purpose of determining whether they are fit for beverage use and, therefore, subject to the rectification tax. Processes used in distilleries, industrial alcohol plants, wineries, breweries, and rectifying plants are reviewed in the laboratory. The laboratory examines samples of oleomargarine, mixed flour, filled cheese, butter, lubricating oil, and soaps for the Miscellaneous Tax Unit. The Washington laboratory also frequently assists the Bureau of Customs, Secret Service, Post Office Department, State Alcoholic Beverage Control Boards, and Police Departments. Odors simulating war gases were furnished instructors in air raid defense. Audit Division.—The Audit Division has general supervision over the work relating to the operation of registered distilleries, internal revenue bonded warehouses, rectifying plants, industrial alcohol plants, industrial alcohol bonded warehouses, denaturing plants, breweries, wineries, bonded wine storerooms, dealers in specially denatured alcohol, and users of tax-free alcohol. I t also conducts the tax accounting, assessment, claim, and compromise functions of the Unit.^ This Division also determines and lists assessments against persons engaging in illicit liquor traffic. I t also examines for allowance or rejection all claims for abatement or refund of taxes, and for the redemption of tax stamps and strip stamps, and reviews and recommends acceptance or rejection of offers in compromise of tax, forfeiture of seized property, or criminal liability. At the beginning of the fiscal year there were on hand 742 offers in compromise aggregating $49,420 submitted in settlement of liabilities incurred in connection with the internal revenue laws. During the year, 5,781 offers amounting to $309,063 were received. Of the number to be disposed of, 278 were forwarded to the Department of Justice, 552 were returned to the field offices for further investigation, 4,799 offers aggregating $266,060 were accepted, and 629 offers totaling $31,620 were rejected, leaving 265 offers on hand at the end of the fiscal year. There were on hand at the beginning of the year 3 offers in compromise aggregating $160 submitted in settlement of liabilities incurred in connection with the Federal Alcohol Administration Act. During the year, 64 offers amounting to $20,795 were received, 58 offers aggregating $19,505 were accepted, and 9 offers totaling $1,450 were rejected, leaving none on hand. Basic Permit and Trade Practice Division.—This Division is charged with administering the provisions of the Federal Alcohol Administration Act and regulations which have been issued thereunder. The Federal Alcohol Administration Act requires that all producers (other than brewers), importers, and wholesale distributors of alcoholic beverages secure basic permits, which are conditioned upon compliance with the provisions of the act, the Twenty-first Amendment and its enabling statutes, and all other Federal alcohol beverage laws. The broad purpose of the statute is the regulation of the conduct of the legitimate liquor industry. War conditions, which prevailed during most of the fiscal year, caused permits in effect to decline from 15,481 on July 1, 1941, to 14,695 on June 30, 1942. 170 REPORT OF THE SECRETARY OF THE TREASURY ' The following table refiects the permit activities under the Federal Alcohol Administration Act during the year and the number of permitsof each class in effect on June 30, 1942. Permit activities, fiscal year 1942 Wholesalers W i n e producers and blenders.. . Distillers Rectifiers W a r e h o u s i n g a n d bottling Importers Total .. . . I n effect at beginning of year Amended 12,042 1,130 354 314 627 1,014 1,310 70 31 23 50 83 1,382 . 103 69 45 86 109 1,963 . 148 89 78 174 128 11,461 1,085"= 334' 281 539' 995- 15,481 1, 567 1,794 2,580 14, 695^ Issued I n effect a t T e r m i n a t e d end of year- The Federal Alcohol Administration Act provides that ho bottler or importer shall bottle or remove from customs custody for consumption distilled spirits, wine, or malt beverages, unless the bottler or importer, upon application, has obtained and has in his possession a certificate of label approval or a certificate of exemption from label approval covering such products. The number of label applications, submitted during the year declined from 78,989 for 1941 to 56,064. In the enforcement of the advertisitaig regulations promulgated under the Federal Alcohol Administration Act, the Division reviewe,d 82,830 advertisements appearing in 19,867 periodicals, representing a substantial increase over similar activities for the preceding year,. and took appropriate regulatory action in 1,023 cases involving various t3^pes of irregularities. Radio continuities numbering 14,147 and 5,120 pieces of point-of-sale advertising were also reviewed. Accounts and Collections Unit The Accounts and Collections Unit is the central administrative organization for the 64 internal revenue collection districts and makes the administrative audit of all expenditures for the Internal Revenue Service. The Unit also administers the employment taxes imposed under Chapter 9 of the Internal Revenue Code, the taxes under Subchapter A (Federal Insurance Contributions Act) with respect to employment by others than carriers. Subchapter B withrespect to em.ployment by carriers, and Subchapter C (Federal Unemployment Tax Act) with respect to the tax on employers of eight or more. There were 44,751,746 tax returns filed in collectors' offices during the fiscal year 1942, an increase of 16,674,509 over the previous year. Of the total returns filed, 27,773,079 were income tax returns, an increase of 11,622,583 during the year. During the fiscal year, 70,420 income tax, 41,781 miscellaneous tax, and 531,250 empldyhient tax returns were investigated by field deputy collectors, and 2,646,645 information returns were verified. At the close of business June 30, 1942, there were outstanding in the 64 collection districts 12,^190 income tax returns, and 1,231,400 inform.ation returns were on hand. REPORT OF T H E ^SECRETARY OF T H E TREASURY 171 Deputy collectors of internal revenue served 476,240 warrants for distraint, which resulted in the coUection of $62,572,099. An average 'C)f 4,720 deputy collectors made 2,873,404 revenue-producing investigations, including the serving of warrants for distraint, compared with 2,220,467 revenue-producing investigations made by an average of 3,732 deputy collectors in the preceding year. The total amount collected and reported for assessment by deputy collectors was $113,794,106, compared with $90,285,877 in the previous year. The average number of investigations made per deputy and the average amount of tax collected and reported for assessment were 609 and $24,109, respectively, compared with 595 and $24,192, respectively, in 1941. There were 174,840 warrants for distraint in custody in the collectors' field forces on June 30, 1942, as compared with 183,594 on hand June 30, 1941. A total of 15,642,869,033 revenue stamps, valued at $3,107,143,869, was issued to collectors of internal revenue and the Postmaster General during the year, compared with 13,878,586,593 stamps valued at $1,455,156,314 issued during 1941. Revenue stamps returned by' collectors of internal revenue and by the Postmaster General, and credited to their accounts, amounted to $652,233,280. There were 231 applications allowed for restamping packages from which the original stamps had been lost, mutilated, or destroyed, compared with 318 applications in the preceding 3^ear. The Disbursement Accounting Division administratively examined and recorded 1,539 monthly accounts, comprising 143,158 vouchers, of collectors of internal revenue, internal revenue agents in charge, heads of staff' divisions, and district supervisors, including t h e ' S a n Juan, Puerto Rico, branch of the District of Maryland, and the Honolulu, Hawaii, branch of the San Francisco Alcohol Tax District No. 14. In addition, 6,042 expense vouchers of employees and 19,346 vouchers covering passenger and freight transportation and^ miscellaneous expenses were audited and passed to the Chief Disbursing Officer, Treasury Department, or the General Accounting Office for payment. Taxes under the Federal Insurance Contributions Act.—Collections of taxes imposed under the Federal Insurance Contributions Act amounted to $895,335,861 for 1942, as compared with $687,327,551 for 1941, an increase of $208,008,310. These amounts include both the employees' tax and the employers' tax, each of which was imposed at the rate of 1 percent of taxable wages paid. Returns under the act are required on a quarterly basis, 9,470,856 being filed during the fiscal year 1942, as compared with 8,684,639 filed in the preceding year. The following table sets forth information relative to claims disposed of under the Federal Insurance Contributions Act and/or Title V I I I of the Social Security Act. 172 REPORT OF THE SECRETARY OF THE TREASURY Claims under the Federal I n s u r a n c e Contributions Act and/or Title V I I I Social Security Act received a n d disposed of, fiscal year 1942 of the U n d e r section 1401 (d) of t h e Federal I n s u r - All o t h e r ance C o n t r i b u tions A c t Claims Number P e n d i n g J u l y 1, 1941... Received d u r i n g y e a r . . T o t a l t o b e disposed of. Allowed in full or in p a r t . . Rejected! Canceled T o t a l disposed of.. 8,542 32,997 5,045 15, 367 41, 539 20, 412 34,894 156 26 12, 644 3,506 103 35,076 16, 253 i;463 4, .159 4,711 P e n d i n g J u n e 30, 1942 . Certificates of allowance issued w h e n n o claims were filed.. Amount Overassessments settled b y Abatement Credit Refund Total Interest - -$784,900 - ---- $889,044 298,197 386, 060 1, 672, 301 47, 665 - -. Grand total 784,900 1, 619, 966 Under the provisions of section 1401 (d) of the Federal Insurance Contributions Act, effective with the calendar year 1940, an employee performing services for more than one employer during a calendar year niay obtain a refund of the amount of employee's tax deducted from his wages and paid to the collector which is in excess of the tax on the first $3,000 of such wages. To obtain such a refund, the employee must file a claim after the calendar year in which the services w^ere performed and within 2 years after the calendar year in which the wages involved are paid. Refunds in the total amount of $784,900 were recommended and the claims rejected involved $3,565. The following table shows the status of the offers in compromise submitted in settlement of liabilities incurred, under the Federal Insurance Contributions Act and/or Title VIII of the Social Security Act. Offers i n compromise under the Federal I n s u r a n c e Contributions Act and/or V I I I of the Social Security Act received a n d disposed of, fiscal year 1942 Offers i n compromise P e n d i n g J u l y 1, 1941 N u m b e r of offers Amount offered Title Liability involved 253 1,319 $51, 363 178, 748 $172, 322 662,445 1,572 230, 111 734,767 Accepted Rejected Withdrawn T e r m i n a t e d b y default T o t a l disposed of 173 26 11 86, 495 28,088 1,797 537 254, 331 133, 438 13, 553 3,623 116, 917 404, 945 P e n d i n g J u n e 30, 1942 664 113,194 329,822 Received d u r i n g year T o t a l t o be disposed of. REPORT OF THE SECRETARY OF THE TREASURY 173 Tax under the Federal Unemployment Tax Act.—^The tax under the Federal Unemployment Tax Act is imposed on employers of eight or more. The rate is 3 percent on taxable wages paid during 1941 with respect to employment. Collections during 1942 amounted to $119,616,968, an increase of $18,959,246 over 1941. Returns are required on an annual basis, 417,647«being filed during 1942, as compared with 368,639 filed during the preceding year. D a t a on the returns, revenue agents' reports, claims, and oft'ers in compromise in connection with the tax under the Federal Unemployment Tax Act are shown in the following tables. Number of Federal unemployment tax returns received, reopened, and disposed of, fiscal year 1942 Returns: Number Pending July 1,1941 : 369,038 Received during year _ _ 417,647 Reopened during year 45,132 Total to be disposed of.. Closed Pending June 30,1942 ...' 831,817 420,684 411,133 Number of revenue agents' reports received and disposed of, fiscal year 1942 Reports: Pending July 1,1941 Received during year .^ Total to be disposed of " Number 1,238 5,379 ^ _ 6,617 Closed: No change in tax liability Deficiencies in tax Overassessments.Total 863 4,301 758 _ • • ...5,922 Pending June 30, 1942 695 Claims under the Federal Unemployment Tax Act and/or Title I X of the Social Security Act received and disposed of, fiscal year 1942 Claims: j Number Pending July 1, 1941 9,569 Received during year.. .27,081 Total to be disposed of ...1 36,650 Allowed in full or in part Rejected. «. Canceled-. 20,694 5,645 120 Total 26,459 Pending June 30, 1942.... •Certificates of overassessment and certificates of allowance issued when no claims were Overassessments settled by— Abatement Credit. _ Refund ' Total.: Interest Grand total. - •. -.. filed 10,191 8,300 Amount $3,799,468 90,829 1,989,611 5,879,808 73,269 6,953,067 174 REPORT OF T H E SECRETARY OF THE TREASURY Offers in compromise under the Federal Unemployment Tax Act und/or Title I X of the Social Security Act received and disposed of, fiscal year 1942 Number of off'ers Offers in compromise T o t a l to b e disposed of Liability involved 207 983 $29, 294 133, 708 $240, 910 1,008, 752 •. 1,190 163, 002 1, 249; 662 . 467 204 21 48,138 39, 927 2, 555 320, 627 334, 724 17, 360 692 90, 620 672, 711 498 72, 382 576, 951 P e n d i n g J u l y 1, 1941 Received d u r i n g year Accepted Rejected Withdrawn Amount offered' T o t a l disposed of P e n d i n g J u n e 30, 1942 . . Carriers taxes.—Collections of carriers taxes under Chapter 9, Subchapter B, of the Internal Revenue Code aggregated $170,409,014 for the fiscal year 1942, an increase of $32,537,827 over 1941. ^The amount for 1942 includes $170,395,247 of coUections from the employers' tax and the employees' tax, both of which were imposed at the rate of 3 percent of the taxable compensation; coUectiori of the employee representatives' tax for 1942, which was imposed at the rate of 6 percent of the taxable compensation, amounted to $13,767, as compared with $20-,637 ^ for the previous year, a decrease of $6,870. Returns are required on a quarterly basis, 30,954 being filed by employers, a decrease of 40, and 1,583 being filed by employee representatives, an increase of 43 over the previous year. The following table sets forth information relative to claims disposed of under Chapter 9, Subchapter B, Internal Revenue Code, and/or the Carriers Taxing Act of 1937. Claims under Chapter 9, Subchapter B , Internal Revenue Code, and/or the Carriers Taxing Act of 1937 received and disposed of, fiscal year 1942 Claims: Number Pending July 1, 1941 .: 60 Received during year .' . Total to be disposed of . Allowed in full or in part Rejected • . Canceled .• 195 255 133 72 1 Total disposed of ^ 206 Pending June 30, 1942... Certificates of allowance issued when no claims were Overassessments settled by— Abatement Credit... ^ Refund . TotaL...... Interest. . . Grand total ....J filed...' .' 49 5 Amount $89,106 . . . 20,782 : 18,736 128,623 2,640 131,263 Technical Staff The Technical Staff is the appellate agency within the Bureau of Internal Revenue for the determination of tax liability in contested income, profits, esfate, and gift tax cases. The Staff organization consists of an administrative office in Washington and 10 field divisions with 37 local offices. The heads of the Staff* field divisions exclusively represent the Commissioner of Internal Revenue within their terri1 Revised. - REPORT OF T H E SECRETARY OF THE TREASURY 175 torial jurisdiction (a) in the determination of tax in disputed cases not before the Board of Tax Appeals, and (b) in the settlement by stipulation of cases docketed by the Board, subject to concurrence of division -counsel in all such stipulations. The Staff considers certain offers in compromise and applications for extensions of time for payment of income taxes, and also reviews final, closing agreements under section 3760 of the Internal Revenue Code. A brief analysis of the work of the Staff field divisions is shown in the following table. Analysis of the work of all field divisions of the Technical Staff, fiscal year 1942 Docketed cases Cases «0n hand July 1, 1941 Received (transfers, etc., deducted) during year Total to be disposed of .. '. i d o s e d by stipulation or agreement Dismissals and defaults.... Unagreed cases submitted to Board Cases appealed to Board . Unagreed action on overassessment and claims cases Total disposed of _ •On hand June 30, 1942 Nondocketed cases 4,253 3, 793 1 3,324 6,024 8,046 9,348 2,474 175 1,269 3,494 646 1,658 430 3, 918 6,128 4,128 2 3, 220 1 Includes 678 cases awaiting taxpayers' action on statutory notices directed or sustained. 2 Includes 620 cases awaiting taxpayers' action on statutory notices directed or sustained. / The nondocketed cases disposed of by agreement, by default, and by unagreed action on claims involved proposed deficiencies in tax :and penalties aggregating $72,720,048 and tentatively determined •overassessments of $2,811,827. The deficiencies and penalties agreed to amounted to $23,915,900 ahd overassessments of $1,697,305 were allowed. Defaults totaled $2,706,001 in tax and penalties with :$78,875 in overassessments. In addition, overassessments were allowed in unagreed claims cases amounting to $502,444. The docketed cases closed by stipulation involved asserted defici-encies in tax and penalties amounting to $92,675,986 and overassessments of $799,946 shown for other years or in associated cases. The :amount agreed to consisted of $25,463,101 in tax and penalties and •$1,503,495 in overassessments. An analysis of the work of the Staff on compromise, extension of, ' time, and closing agreement cases is shown in the following table. Analysis of the work of the Technical Staff on compromise, extension of time, and final closing agreement cases, fiscal year 1942 . closing Compromise Extension of Final agreement time cases cases cases Cases •On hand July 1, 1941 Received (net) during year Total to be disposed of Accepted, granted, .or approved :RejQcted Withdrawn 'Transferred Total disposed of.... 487543—43 2 98 79 602 1,922 100 681" 683 458 177 36 5 92 602 53 1,354 97 655 668 3 26 1 _ 'On hand June 30,1942 645 1, 277 ._ - 13 ^ 176 REPORT OF THE SECRETARY OF THE TREASURY Office oj the Chiej Counsel ^ The activities of the Office of the Chief Counsel for the Bureau of Internal Revenue include the defense of all Federal tax cases appealed to the United States Board of Tax Appeals; the review of refunds, credits, and abatements in excess of $20,000; consideration of various administrative and internal revenue tax matters referred to t h a t office by the Secretary, the Under Secretary, an Assistant Secretary of the Treasury, the General Counsel for the Department of the Treasury, the Commissioner, the assistant to the Commissioner, the heads of units of the Bureau, collectors of internal revenue, and other branches of the Department. They include also the preparation, at the request bf the Department of Justice or of the United States attorneys, of data for use in the prosecution or defense of tax cases (civil and criminal) in suit, and compliance with requests for assistance in such cases; and the preparation, revision, and review of regulations. Treasury decisions, mimeographs, and rulings for the guidance of the officers and employees of the Bureau of Internal Revenue and others concerned. The office is made up of the Chief Counsel's Committee, and eight divisions, viz: Alcohol Tax, Appeals, Civil, Claims, Interpretative, Legislation and Regulations, Penal,and Review. Chiej CounseVs Committee:—The Committee, consisting of three members, serves in an advisory capacity to the. Chief Counsel and the immediate members of his staff, who refer to the Committee cases from all divisions of the office. The Committee considers these ca^es and makes written recommendations as to their proper disposi-' tion. The Committee is also charged with the final review of casesinvolving compromises and closing, agreements, previous to^ their being sent to the Secretary of the Treasury for his approval. Alcohol Tax Division.,—This Division performs the legal work arising in' connection with the administiation and enforcement of the internal revenue liquor laws. The work includes the preparation of opinions and briefs relating to assessment, collection, abatement, and refund of liquor taxes and penalties; compromise of civil and criminal liabilities; and the remission or mitigation of forfeitures. ThisDivision prepares citations to revoke industrial and denatured alcohol permits, conducts permit hearings, and reviews revocation records. I t performs similar work in connection with the issuance, suspension, and revocation of permits under the Federal Alcohol Administration. Act. It assists the Department of Justice in connection with civil and criminal cases arising under the internal revenue laws and the Federal Alcohol Administration Act; gives legal advice to the Deputy Commissioner of Internal Revenue i n charge of the Alcohol Tax Unit, district supervisors, and other officials on questions involving interpretation or construction of said laws; and reviews aU correspondence prepared in the Alcohol Tax Unit involving legal questions. Appeals Division.—This Division has charge of all cases involving income, excess-profits, unjust enrichment, estate, and gift taxes pending before the United States Board of Tax Appeals. Counsel assigned to the ^various field offices, which were created under the decentrahzation program of the Bureau of Internal Revenue, prepare 1 For a more detailed statement concerning, and statistical tables showing, the work performed by the Chief Counsel's .Committee and the respective divisions of the Chief Counsel's Office, reference is madeto "the Annual Report of the Commissioner of Internal Revenue for the fiscal year 1942. REPORT OF THE SECRETARY OF THE TREASURY 177 answers to petitions filed with the Board of Tax Appeals and advise the various Staff divisions upon legal questions arising in the determination of income, profits, estate, and gift tax liability. All proposed settlements are concurred in by counsel. Counsel also have exclusive authority to represent the Commissioner of Internal Revenue in the defense of all cases set for hearing before the Board of Tax Appeals. This Division also has a general supervision of the preparation of the contents of the records on review in all cases wherein are filed petitions for review^ by the United States Circuit Courts of Appeals of final decisions of the United States Board of Tax Appeals. In such proceedings, where the Commissioner of Internal Revenue is petitioner, this duty is performed in the Division subject to approval by the Department of Justice; in cases where a taxpayer is petitioner, the Division has sole charge of the preparation of the record. Civil Division.—The work of this Division includes the preparation of statements" of fact for the Department of. Justice in all actions brought by taxpayers to recover taxes and for injunctions in the Federal courts, which statements set forth the position of the Bureau on the issues involved and contain references to applicable sections of the revenue acts, regulations, arid decisions of the courts. The Division also assembles the evidence, obtains witnesses, and assists at the trial of cases when requested by the Department of Justice; prepares recommendations for or against the institution of suits in connection with claims ofthe Government against, taxpayers, transferees, bonding companies, and others; and, when suits are recommended, prepares statements for the Department of Justice similar to those in actions brought by taxpayers. Stipulations of facts for the use of the Department of Justice and for vsubmission to the courts m actions in the district courts and in the Court of Claims are examined and approved, modified, disapproved, or new stipulations prepared; and the Division makes recommendations for or against an appeal frcrn adverse judgments of district courts-and for or against applications to the Supreme Court for writs of certiora.ri in cases of adverse decisions rendered by the circuit courts of appeal and the Court of Claims. The Division makes recommendations for or against acceptance of offers submitted for settlement or ccmpromise of cases pending in court. I t also handles all cases in which liens for taxes are involved in mortgage foreclosure actions pending in Federal and State courts, and considers all applications for the release of Federal tax liens and the .discharge of property from such liens which is permissible under sections 3673, 3674, 3675, 3676, and 3677 of the Internal Revenue Code. Claims Division.—This Division is comprised of four sections, viz: Processing Tax, Reorganization, Bankruptcy and Receivership, and Compromise. The Processing Tax Section has jurisdiction over all matters involving processing, floor stocks, compensating, and custom processing taxes, as well as over unjust enrichment tax matters not within the jurisdiction of any,decentralized office. I t represents'the Commissioner of Internal Revenue in all cases before the United States Processing Tax Board ol Review involving refunds of amounts collected under the Agricultural Adjustment Act. The Section has the same jurisdiction and duties in matters involving Titles I I I , IV, and V I I of the Revenue Act of 1936 as have the Civil, Interpretative, Legis 178 REPORT OF THE SECRETARY OF THE TREASURY lation and Regulations, and Review Divisions with respect to questions involving income, excess-profits, capital stock, estate, and -miscellaneous taxes. The section prepares records on review in all cases wherein the Commissioner files petitions for review by the United States Circuit Courts ol Appeals of final decisions .of thp United States Processing Tax Board of Review. In cases in which petitions for'review are filed by taxpayers, the records are subject to the approval of this Section. The Reorganizati,on Section is charged with the duty of protecting the interests ahd claims of the United States in proceedings instituted under sections 77, 77B, Chapters X and XV of the National Bankruptcy Act, and arrangement proceedings under Chapters X I , X I I , and X I I I of the act. The Bankruptcy and Receivership Section performs all legal work incident t o ' t h e protection of the interests and claims of the United States in bankruptcy and receivership proceedings. The Com.promise Section is charged with the prosecution of claims filed by collectors against the estates of deceased taxpayers, against insolvent banks, and in liquidation proceedings, including assignments for the benefit of creditors. At the request of the Departm.ent of Justice, the Section assists in trials involving the aforementioned types of claims. Interpretative Division.—The functions of this Division consist of the preparation of letters and m.em.oranda- for the signature of the Head of the Division, the Chief Counsel, the Comm.issioner, or the Secretary, interpreting internal revenue statutes, and the review of all correspondence, for the signature of the Com.m.issioner or of the Secretary or of an official of his office, containing a ruling or opinion regarding internal revenue laws prepared in the adm.inistrative units of the Bureau and routed through the Chief Counsel's office for approval; assisting in the preparation and review of briefs to be filed with the United States Board of Tax Appeals in key cases; reviewing actions on decisions in special cases; reviewing closing agreem.ents covering proposed transactions; editing the m.aterial submitted for publication in the Internal Revenue Bulletin; and t h e preparation of opinions and rulings in special cases assigned by the Chief Counsel. Included in this Division is the Digest Section, the functions of which are to preserve, digest, and m.ake readUy available to the m.em.bers of the Chief Counsel's staff all opinions, rulings, and other docum.ents which have been prepared or reviewed by the Chief Counsel's office. '"'^^ ^^ te • '^ Legislation and Regulations Division.—The regulations issued under the internal revenue laws, including tax conventions with foreign countries, and the reports on legislation introduced in the Congress affecting the internal revenue, exciept such as relate l^o taxes on alcoholic beverages, are prepared or reviewed in this Division. In addition, the Division considers suggestions for am.endments of and additions td the various internal revenue laws, and prepares reports thereon for the consideration of the Com.m.issioner and the General Counsel. I t participates in the preparation of income tax form.s and assists in the drafting of tax conventions. Penal Division.—This Division deals with practically all classes of internal revenue tax cases when criminal liability is alleged, including income and profits, miscellaneous, and social security tax cases; con REPORT OF THE SECRETARY OF THE TREASURY 179 siders offers in com.promise of liability where crim.inal proceedings have been instituted or recomm.endations for prosecution have been made to the Bureau or by the Bureau to the Departm'ent of Justice; and prepares opinions construing the criminal and percentage penalty statutes. It also considers claims for reward under section 3463 of the Revised Statutes or section 3792 of the Internal Revenue Code, and whether cases closed by agreement under section 606 of the Revenue Act of 1928, and sim.ilar provisions of other revenue acts and the Internal Revenue Cocfe, should be reopened because of ^'fraud or malfeasance, or misrepresentation of a material fact." Whenever requested by the Department of Justice, attorneys from this division assist in the prosecution of criminal cases. Review Division.—This Division reviews overassessments of income, excess profits, war profits, estate, gift, and miscellaneous taxes proposed for allowance (also deficiencies when coupled with overassessments) , where the amount of the overassessments in any case exceeds $20,000, and proposed refund of any tax in excess of $20,000. I t prepares reports to the Joint Comm.ittee on Internal Revenue Taxation required by section 3777 of the Internal Revenue Code, where the overpayments of income, excess profits, war profits, estate, or gift taxes exceed $75,000; and prepares public decisions where the overassessments exceed $20,000. I t also examines and reviews special cases referred to it by the Chief Counsel. Intelligence Unit The Intelligence Unit is principally concerned with the investigation of tax fraud cases in cooperation with internal revenue agents and deputy collectors. During the year, 863 investigations were made of alleged evasion of income and miscellaneous taxes, and of this number, 223 cases, involving 364 individuals, were recommended for prosecution. On this charge there were convictions of 119 individuals, and 2 acquittals. Recommendation was made in these cases for assessment of additional taxes and penalties amounting to $37,766,629. In addition to collections by the Bureau of Internal Revenue of taxes, penalties, and interest, amounts are covered into the Treasury as a result 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 while employed on the cases. There were 2,696 investigations of applications of attorneys and agents to practice before the Treasury Department and 76 investigations of charges against enrolled agents and attorneys, resulting in the disbarment of 11, the suspension of 1, the reprimand of 3, and the rejection of applications of 6. There were 5 names stricken from the rolls during the course of disbarment proceedings, and 2 resignations were accepted ^ V i t h prejudice." The investigation of charges against employees of the Bureau of Internal Revenue in 114 cases resulted in the separation from the Service of 63 employees, and the prosecution of 36 of whom 30 were convicted. ' There were 13,581 cases of miscellaneous character investigated, including a number for the Bureau of Narcotics and the Customs Service, and of persons under consideration for appointment to various , positions in the Treasury Department. 180 ' : REJPORT OF T H E SECRETARY OF T H E TREASURY LEGAL DIVISION The General Counsel, chief law officer of the Department and in charge of all legal activities thereof, heads a Legal Division composed of the Office of the General Counsel and the legal staffs in all branches of the Department. Since the entrance of- the United States into the war, the work of the Division has been greatly expanded. In connection with the duty of the Bureau of Customs under T. D. 505:36 to enforce section 3 (c) of^ the Trading With the Enemy Act and under delegation from the Director of Censorship to censor tangible communications, outside the maUs, from and to foreign countries, the Division aided in drafting orders, regulations, instructions, and licenses, and made numerous legal interpretations. Under the lend-lease program, the Division has passed upon the legality of lend-lease contracts involving the purchase of more than one and one-half billion dollars of supplies for the Allies and has drafted more than 17,000 such contracts. The difficulty, resulting from the war, of securing supplies of opium •for medicinal and scientific uses has necessitated provision for a stock pile of opium by the Bureau of Narcotics to guard against the contingency of future closing out of sources of supply. In that connection, the Division has assisted in the formation of plans for the possible growing of opium poppies under Government supervision and in the furtherance of other proposals to augment and conserve the supply of narcotics. ' The development and expansion of the foreign funds freezing control program has expanded the work of the Division. The Division has collaborated with the Department of State and the Board of Economic Warfare in the development of economic and financial controls over transactions deemed inimical to the defense of the'Western Hemisphere. The General Counsel represented the United States at the Inter-American Conference on Economic and Financial Controls. The Division also performed the legal work involved in connection with the interpretation of the laws and regulations applicable to monetary and industrial transactions in gold and silver, the acquisition by the United States of monetary metals, transactions in gold and foreign exchange with foreign governments and foreign central banks, and the stabilization of the exchange value of the dollar, including the drafting of stabilization agreements and other international monetary arrangements. In relation to the activities of the Coast Guard, the Division performed numerous services, until it was transferred to the Navy Department by Executive Order No. 8929. As it is the maritime police force of the United States and also a branch of the armed forces, the activities of the Coast Guard gave rise to numerous legal problems. The Division aided in the drafting of the act of July 11, 1941, 55 Stat. 584, providing for the making of contracts, the deposit of daniage payments, and other matters concerning the Coast Guard. The Division also assisted in drafting the various orders transferring Coast Gu'ard equipment and personnel to the Navy. The Division assisted in drafting the Public Debt Act of 1942, did work in the preparation and issuance of war savings bonds, and cooperated in revising regulations governing savings bonds. Problems relating to the acceptance, under Title X I of the Second War Powers Act, 1942, of conditional gifts to the United States for REPORT OF THE SECRETARY OF THE TREASURY 181 the furtherance of the war program and to the handling of securities :arid gold bullion taken from the Philippine Islands were also of importance in the Division's activities. The war has also resulted in an increase in the various ordinary and routine duties of the Division. The Division prepared 54 formal opinions and many informal opinions, studies, and memoranda for the guidance of the administrative officers of the Department. Thirty-five' legislative proposals •considered desirable for the efficient functioning of the Department v^ere drafted. Representatives of the Division frequently appeared before Congressional committees to furnish technical assistance and to explain the purpose, effect, and legality of legislation affecting the Department and furnished other technical assistance to such committees. Assistance was rendered in the preparation of 414 legislative reports and in drafting numerous executive orders and proclamations. Action was taken on offers to compromise claims of the United States and in suits filed against officers of the Department and the UnitedStates. The Division passed upon the legal sufficiency of 350 assignments •executed under the Assign.nient of Claims Act of 1940 involving contracts entered into by the Department, examined 13,467 indemnity or official bonds, drafted legislation concerning payment of claims of Airierican nationals agaiast Mexico, performed legal functions in connection with the Coriiptroller of the Currency's supervision of national banking associations, aiding in litigation involving receivership banks in liquidation, and did other legal work relating to monetary, fiscal, :and public debt matters. The Division approved a large number of cases, for settlement witho u t administration arising under the Adjusted Compensation Payment Act of 1936, as amended, and under certain regulations, and handled a number of escheat cases. Assistance w^as rendered to the Department of Justice in numerous cases involving matters affecting the Treasuiy Department. In connection with the liquidation of indebtedness «of certain carriers under the Transportation Act of 1920, representatives of the Division participated in the equity receivership proceedings of one of the country's major carriers and continued participation in the reorganization proceedings of three other carriers under section 77 of the Bankruptcy Act. The Division furnished advice concerning the award, execution, and performance of procurement contracts; examined surety bonds in connectioD therewith; and rendered services in connection with the revision of, and approval of deviations from, various standard contract forms. The Division considered questions concerning Federal narcotic drug and marihuana laws, prepared drafts of legislation relating to traffic in narcotic drugs, and assisted States in the adoption or amendment and enforcement of the Uniform State Narcotic Drug Act. I n addition to furnishing legal advice to the Bureau of Customs, the Division maintained liaison with the Assistant Attorney General in charge of customs litigation and made numerous studies in connection with pending litigation. Assista.nce was given to that Assistant Attorney General in the drafting of briefs and the preparation of certain cases for trial. Drafts of trade agreements aft'ecting the collection of revenue were studied, and consideration was given to proposed legis 182 REPORT OF THE SECRETARY OF THE TREASURY • lation revising and clarifying customs laws. - Drafting and review work was done on a new edition of the customs regulations. The work of t h e Division has been expanded considerably as a result of the transfer tothe Bureau oi Customs, under Executive Order No. 9083, of jurisdiction over many of the functions formerly performed by the Customs, field service on behalf of the foimer Bureau of Marine Inspection and Navigation of the Departm.ent of Commerce. In the field of taxation, the Division handled 4,724 incoirie; excessprofits, unjust eririchment, estate, and gift tax appeals involving $176,849,521 and recoveries of $73,844,595; closed 71 appeals to thc' Processing Tax Board of Review involving $26,726,491, of which $3,113,988 was recovered by claimants; handled 2,169 claims against, estates of deceased taxpayers, insolvent banks, and in liquidation proceedings, the total payments received being $5,505,013; disposed of 3,033 civU and 962 criminal cases; handled 299 claim.s for reward under section 3792 of the Internal Reveriue Code; reviewed 503 claimed overassessments of income, excess-profits, war-profits, gift, and other taxes,, approving'reminds in the amount of $36,907,231, and reviewed 333 claims, involving $215,109,036, representing amounts paid asprocessing and floor stocks taxes; and disposed of 3,387 cases involving compromises and closing agreements. In 1,468 coiporate reorganization cases closed under sections 77 and 77B and Chapters X, X I , XII^ X I I I , and XV of the Bankruptcy Act, claims in. the amount of $6,258,459 were settled for $941,267; and 407 cases under that act were closed in which no tax claims were filed. In 5,44!6 bankruptcy and receivership cases disposed of during the yeiar the sum of $1,688,299 was collected on claims amounting to $11,818,072. In connection with the administration and.enforcement of the internal revenue liquor laws,, the Division prepared or reviewed 6,631 memoranda, 349 briefs, 5,518 opinions, 246 libels, 29 indictments, 8,262 case reports, 80 claims, of over $5,000 each, 5,031 compromise cases, 3 revocations, and 785 petitions for remission and mitigation ol forfeiture. The Division drafted num.erous regulations under the internal revenue laws, and assisted in drafting tax conventions with foreign countries and a large number of reports on legislation introduced in the' Congress affecting the internal revenue. Legal opinions on interpretative questions aris-' ing under the internal revenue laws were rendered. ; BUREAU OF THE MINT 1 Institutions oj the Mint Service During the fiscal year 1942, seven mint institutions were in operation: Coinage mints at Philadelphia, San Francisco, and Denver; assay office at New York, which handles the major portion of the gold imported and exported, and its auxiliary sUver bullion depository at West Point; gold bullion depository at Fort Knox, Ky.; mint at New Orleans, conducted as an assay office; and assay office at Seattle. The two last-named institutions are, in effect, bullion-purchasing agencies but also serve the public by making assays of ores and bullion. Electrolytic refineries are maintained at the New York, Denver, and San Francisco institutions. . 1 More detailed information concerning the activities of the Bureau of the Mint is contained in the annual report of the Director of the Mint. ' R|:PORT OF T H E SECRETARY OF T H E TREASURY 183 The mint at New Orleans, originally established in 1835, was discontinued as of June 30, 1942. The appropriation granted for operation of the mints and assay offices during the fiscal year 1943 did not provide funds for operation of the New Orleans Mint. Coinage Domestic coin manufactured during the fiscal year 1942, amounting to 2,114,890,662 pieces, exceeded the production pf any previous fiscal year in the history of the Government. The nearest approach to this production was 1,599,349,007 pieces in 1941, and768,090,830 in 1940. As in previous years, the coin most largely produced was the 1-cent piece. . The total production in 1942, in amount $111,006,180, consisted of 449,336,162 subsidiary sUver coins, $85,307,259; 226,084,400 nickel coins, $11,304,220; and 1,439,470,100 bronze coins, $14,^ 394,701. Coinage for foreign governments amounted to 281,050,000 pieces, compared with 170,672,500 pieces during the prior year. The foreign coinage consisted of silver and bronze coins for Australia, the Netherlands Government, and Peru. The grand total of domestic and foreign coins made in 1942 amounted to 2,395,940,662 pieces, an increase of 625,919,155 over the prior year. Minor coinage alloys Manufacture of the nickel-copper 5-cent coin was discontinued in May 1942 by reason of the need of those metals for other uses in connection with the war effort. The Second War Powers Act, approved March 27, 1942, contained provision for a 5-cent coin of half silver and half copper, with authority to vary those proportions and to add other metals if in the public interest. (See exhibit 45, page 293.) An effect of this law would be to save for war use all the nickel and up to one-third of the copper contained in the alloy previously used—25 percent nickel and 75 percent copper. A satisfactory alloy for the 5-cent coin^—one that would produce a coin acceptable for operating the many vending and slot machines in use, as well as for other purposes—had not been determined upon at the end of the fiscal year. At the end of the year consideration was also being given the subject of substitutes for the alloy in the 1-cent coin—95 percent copper, 5 percent tin and zinc—and to other measures for conserving, for war use, metals heretofore used in manufacture of coin. .' • \ Bullion deposit transactions ^ The number of bullion deposit transactions during the year totaled 35,521, including 83 inter-mint-service transactions, as compared with 48,147 and 75, respectively, during the prior year. The deposit transactions required 52,406 assay determinations, which compares with 74,716 assay determinations in 1941. . Transjers oj bullion J o r long-term storage . Refined gold bullion having a value of approximately $1,004,500,000was transferred during the fiscal year 1942 from the New York Assay Office to the bullion depository at Fort Knox, and approximately 184 REPORT OF THE SECRETARY OF T H E TREASURY $1,189,900,000 in refined, and unrefined, gold bullion was transferred from the mint at San Francisco to the mint at Denver for long-term storage. The balance of silver bullion in the bullion depository at West Point remained unchanged at 1,542,697,791^ fine ounces, all of w^hich was transferred from Government buildings and rented quarters in New York City since completion of the depository in 1938. Silver bullion, in quantity 4,817,828 fine ounces, was delivered inJune 1942 to the Defense Plant Corporation under the terms of a contract dated May 6, 1942, providing, in effect, for the loan of about one billion ounces of silver to be used as a substitute for copper or other strategic materials'in plants that are engaged in or essential to the war effort. Its principal use is understood to be in bus bars, for transmission of electric current. This, silver is to be returned to Treasury custody under the terms of the contract, after it has performed its function. Gold operations Gold acquisitions by the mints and assay offices during the year, stated on the usual ba.sis of classified melted receipts, amounted to $664,440,587; receipts from other Treasury offices of domestic coin melted during the year amounted to $470,600; and transfers between mint-service institutions amounted to $2,226,584,768.' These transactions total $2,891,495,955, compared with $12,938,276,121 for the prior year. The acquisitions include $10,854 of gold received at $20.67+ per fine ounce, which had not been previously surrendered under the nationalization orders. The increment on this gold amounted to $7,523. ' Silver operations ; The Government's acquisitions of silver during the year totaled 122,712,671 fine ounces, at an average cost of 57.2 cents per fine ounce and a total cost of $70,230,843. The acquisitions consist of the following: Amount (fine ounces) Item Newly mined domestic silver. Pm'chase Act silver Silver contained in gold bullion deposits, etc . Silver received in exchange for Government-stamped bars TotaL. .. .. . . _ Cost 68, 512, 907. 50 $48, 681, 543. 77' 53, 414,124.16 21, 282,146. 90 '257,495.27 87, 582. 83' 528,144. 23 179, 569. 09 122,712,671.16 70,230,842.59' ' United, States coin received for recoinage totaled 1,828,660 fine ounces, with a recoinage value of $2,527,955. Silver deposited by other governments, for foreign coinage, totaled 7,345,556 fine ounces. SUver transfers between mint-service institutions totaled 4,625,656 fine ounces. These items plus the silver acquired during the year brought the total transactions in silver to 136,512,543 fine ounces, compared with the prior year's total of 273,974,554. During the year $69,934,545 of sUver certificates were issued against 54,090,000 fine ounces of silver bullion valued at $1.29+ per 1 Revised. REPORT OF THE SECRETARY OF THE TREASURY 185 fine ounce, the statutory monetary value of silver. Such silver had been acquired at an average price of 6 3 + cents per ounce. The difference between the cost of the silver held to secure such certificates and the monetary value of such silver is $35,458,194, and this amount constitutes seigniorage. The open-market price of silver in New York (mean of bid and asked) during the fiscal year 1942 averaged $0.35284. The price remained unchanged at $0.35062 from July 1, 1941, to November 28, 1941, when it advanced to $0.35437, which price prevaUed, without change, through June 30, 1942. For newly mined domestic silver a return to the depositor of $0.7111+ per fine ounce, established by the act of, July 6, 1939,' prevailed during the fiscal year 1942. ^ • Rejineries The electrolytic refineries produced during the fiscal year 7,749,270 fine ounces (265.7 tons) of electrolytically refined gold bullion and 6,272,610 fine ounces (215.1 tons) of silver bullion. During the prior year the quantities produced were 7,508,837 fine ounces (257.4 tons) of gold and 5,073,331 fine ounces (173.9 tons) of silver. Stocks of unrefined gold and silver bullion in mint institutions decreased during the year by approximately 99.5 tons, leaving a total of 2,051.6 tons. There was an increase in the fiscal year 1941 of about 78.1 tons. Stock^of coin and monetary bullion in the United States On June 30, 1942, the estimated stock of domestic coin in the United States was $1,301,639,122, of which $547,077,254 was standard silver doUars, $529,814,276 subsidiary silver coin, and $224,747,592 minor coin. The stoQk of gold bullion, including coin, held iiivthe Treasury on the same date was valued at $22,736,704,552, an increase of $112,506,840, and the stock of silver bullion was 2,524,328,815 fine ounces, an increase of 33,194,358. Domestic production of gold and silver Domestic gold production during the calendar year 1941 was 5,976,419 fine ounces, with a monetary value of $209,174,600, comparedwith 6,003,105 fine ounces, with a monetary value of $210,108,700 in 1940, which was the previous year of largest production. Domestic silver production during the calendar year 1941 totaled 72,336,029 dunces. This compares with 69,585,734 ounces for 1940 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 1941 is ^estimated at $67,977,110. Gold returned from industrial use amounted to $30,975,490. These items give a net industrial consumption of new gold during the year of $37,001,620, compared with $13,306,032 during the calendar year 1940. SUver used in the arts is estimated at 92,793,574 fine ounces, of which 72,432,318 fine ounces were new material. 186 ,REPORT OF THE SECRETARY'OF THE. TREASURY Compared with the prior year, there was an increase in gold consumption of approximately 765,700 ounces and an increase in silver consumption in industry of about 25,700,000 ounces. Appropriations, expenses, and income Regular appropriations available for the Mint Service during the fiscal year 1942 totaled $3,512,840; the First Deficiency Appropriation Act of February 21, 1942, .provided $1,895,900, $500,000 of which was for special movements of bullion during the fiscal year 1942, to remain available until June 30, 1943; the Third Supplemental National Defense Appropriation Act, approved December 17, 1941, provided $6,335; and reimbursements to appropriations fbr services rendered amounted to $1,107,534, making a total of $6,522,609. Expenses amounted to $6,294,712,,of which $5,847,733 was chargeable to appropriations and $446,979 chargeable to income. The regular income realized by the Treasury from the Mint Service aggregated $69,025,597, of which $65,583,203 was seigniorage. The seigniorage on subsidiary silver coin was $42,354,043, and on minor coin, $23,229,160. Extraordinary income aggregated $35,465,717, of which $35,458,194 w^as seigniorage on silver bullion revalued to $1.29+ per'ounce, and $7,523 was the increment to $35 per ounce on revalued gold. General activities The number and value of deposits, transfers, gross income, and expenses for the fiscal year 1942, and the number of employees on June 30, 1942, at each institution are shown in the following table-. Deposits of gold and silver, income, expenses, and employees, by institutionis, fiscal year. 19 42 . Institution Number of bullion deposit transactions! Number Monetary of assay value of gold determin- and silver ations on receipts, bullion including deposits transfers! Excess of EmployGross . Gross income or ees, regular of expenses 30, "June expenses 1942 income i (-) Philadelphia San Francisco Denver-New York _ New Orleans Seattle Fort Knox 4,258 14.742 4,115 8, 359 866 3,181 5,702 $18,445,203 $42, 676, 525$2,784, 974 $39,891, 551 16,413 223,177, 687 12, 300,971 1. 399, 562 10,901,409 6,686 1, 260,128, 693 12, 710, 772 1,079,466 11, 631, 306 615, 275 18, 971 623,163. 950 1, 249, 344 734,069 417,157 38, 926 -34, 550 866 4,376 36,152 26, 315, 672 47, 457 3,768 83, 609 1, 004, 487,044 76, 356 -76, 356 Total Bureau ofthe Mint 35, 521 ^ 62,406 3,056,135,406 69,025, 597 6,160, 810 62, 864, 787 133,903 -133,903 2,062 50 35, 521 52.406 3, 056,135, 406 69,025, 597 6, 294, 713 62,730, 884 2,112 48,147 74, 716 13,153, 340,866 51, 653, 974 6,871, 717 44, 782, 257 2,428 Grand total Prior fiscal year " 958 438 396 220 14 36 1 Includes 83 inter-institution transactions amounting to $2,232,565,414. . DIVISION OF MONETARY RESEARCH The Division of Monetary Research in the Office of the Secretary provides information, economic analyses, and recommendations for t h e use of the Secretary of the Treasury and other Treasury officials to assist in the formulation and execution of the monetary policies of the Department in connection with the stabilization fund, other REPORT OF THE SECRETARY OF THE. TREASURY- 187 operations under the Gold Reserve Act, and operations under the Silver Purchase Act. Analyses are made pertaining to 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, monetary, banking, and fiscal policies of foreign countries, exchange and trade restrictions abroad, and simUar problems. Analyses are also prepared relating'to the customs activities of the Department and to the duties of the Secretary of the Treasury under the Tariff Act and on other matters pertaining to international trade, including the trade agreement program. In addition, the Division provides economic analyses in connection with the Treasury's Foreign Funds Control, and supervises the collection and use of data obtained in the census of foreigh-owned assets in the United States. Economic analyses and reports are also prepared in connection with the Treasury's participation in the Board of Economic Warfare. The Division also is responsible for the economic and financial work in connection with the negotiation of exchange stabUization agreements, made by. the United States with foreign governments and central banks for the purpose of promoting international exchange stability. The Treasuiy's operations under these agreements are performed under the stabilization fund, which is administered by the Division. Stabilization fund gold transactions with foreign governments and central banks constitute fmother responsibilities of the Division. BUREAU OF NARCOTICS 1 The Bureau of Narcotics, foUowing its established policy, continued to direct its principal enforcement activities against major narcotic law violators and toward the elimination of the primary sources of • supply of illicit narcotic drugs. These activities, together with the reduced smuggling from abroad, resulted in a further decrease in the quantities of such drugs available in the illicit market. Prices remained high and adulteration increased. The number of thefts of drugs from wholesalers and retailers during the year showed an increase over 1941, but, due to the policy of the Bureau in urging a reduction in the size of such stocks, the quantities of drugs lost by these thefts were somewhat less than during the previous year. .The forgery and false execution of prescriptions and the improper prescribing and dispensing of narcotics remain significant enforcement problems. The activities of the Bureau resulted in 1,777 arrests for violations of the Federal narcotic laws and the seizure of 1,614 ounces of narcotic drugs and 171 vehicles during the year, as compared with 1,809 arrests and seizures of 1,852 ounces of narcotic drugs and 185 vehicles during 1941. There was an increase in the total number of violations reported under the narcotic laws, a total of 2,617 violations having been reported for 1942 compared with a total of 2,424 during the previous year. There were 1,090 arrests under the Federal marihuana laws and seizures of 723 pounds of bulk marihuana, 13 pounds marihuana seeds, 31,123 marihuana cigarettes, and 1,693 growing plants, as 1 Further information concerning narcotics is available in the separate report of the Commissioner of Narcotics. 188 REPORT OF THE SECRETARY OF THE TREASURY compared with 1,010 arrests and seizures of 699 pounds bulk marihuana, 3 pounds marihuana seeds, 16,509 marihuana cigarettes, and 569 growing plants during 1941. I n addition to these seizures of marihuana in connection with prosecutions under the law, the Bureau of Narcotics, in cooperation with State and local authorities, conducted a campaign of marihuana eradication in which the Alcohol Tax Unit of the Bureau of Internal Revenue participated. I t involved growths of varying density found on 9,742 acres. A total of 1,159 violations under the Federal marihuana law was reported as compared with 1,111 violations reported during 1941. None of those reported was against persons registered under the law. The tables following show the number of violations, by registered and nonregistered persons, of the narcotic and marihuana laws and the number dispos^ed of during the fiscal year as reported by Federal narcotic enforcement officers. Violations of the narcotic laws and the cases disposed of, fiscal year 1942 Registered persons Federal court Pending July 1, 1941... Reported during 1942: Federal Joint State court Nonregistered persons Federal court State court 1,061 1,378 398 781 60 Total to be disposed of.. 1,320 Convicted: Federal Joint Acquitted: Federal-.-. Joint Dropped: Federal Joint Compromised: FederaL--. Joint— 133 10 202 145 765 151 16 7 312 312 16 34 28 297 7 Total disposed of-. 799 1,738 Pending June 30, 1942... 521 1,099 Sentences imposed . Federal i Joint Total 247 15 --. Fines irnposed: Federal ... Joint-— -. Total $73, 902. 47 950. 00 1,534 317 145 132 17 12 1,851 278 29 $350.00 750. 00 $44,448.00 651.00 1,100. 00 45, 099.00 $888. 21 871. 00 1 Represents 4 cases involving tax liability which were closed on payment of taxes and penalties in the sum of $9.80; and 304 cases which were compromised in the sum of $36,448.50. NOTE,—Federal cases are made by Federal officers working independently, while joint cases are made by Federal and State officers working in cooperation with each other. , . REPORT OF T H E SECRETARY OF T H E TREASURY 189 Violations of the m a r i h u a n a laios and the cases disposed of, fiscal year 1942 Nonregistered persons Registered persons \ P e n d i n g . J u l y . l , 1941 R e p o r t e d during 1942: ' Federal Joint 322 780 379 1,481 3 . . 2 ._ - " T o t a l disposed of P e n d i n g J u n e 30, 1942 23 1 S e n t e n c e s imposed: Federal Joint a o 570 264 28 27 14 9 5 145 55 9 8 2 1,134 1 347 1 q • o P 893 349 Total F i n e s imposed: Federal _ - - . -" Joint i S t a t e court F e d e r a l court 3 T o t a l to be'disposed of Convicted: Federal Joint Acquitted: Federal ~ Joint Dropped: Federal Joint S t a t e court F e d e r a l court -- p o "Y ' Total.- s 23 10 52 43 6 5 15 3 95 11 15 1, 242 , 10 _ ^ fl o •1 $4, 062.00 1, 452. 00 $132.70 • 478. 00 5, .'lU.nn 6in 7n NoTj:.—Federal cases are made by Federal officers working independently, while joint cases are made by Federal and State officers working in cooperation with each other. Registrations under the Federal narcotic a n d m a r i h u a n a laius, J u n e 30, 1942 Narcotic law Registrants I m p o r t e r s , manufacturers, p r o d u c e r s , a n d c o m p o u n d e r s Importers, manufacturers, a n d compounders. P r o d u c e r s (growers) Dealers Wholesale Retail . - . Practitioners •Dealers i n a n d m a n u f a c t u r e r s of u n t a x e d p r e p a r a t i o n s Users for p u r p o s e s of research, instruction, or analysis ' Total- Marihuana law 152 11 8 929 228 . : _ _. 1, 248 51, 025 158,765 1 150, 355 106 361, 651 685 172 10, 025 1 Includes registrations for which payment of occupational tax is not required under the act, because also Tegistered in some other class. Opium supplies continued to be available for import and additional quantities were imported during the year. I n addition to the considerable reserve stocks imported by manufacturers and stored for normal domestic consum.ption and export, provision was made for a large Government-owned stock of this strategic material to be held as a further emergency reserve. 190 REPORT iOF THE SECRETARY OF THE TREASURY Coca leaves continued to be im.ported both for medicinal purposes and the m.anufacture of nonnarcotic flavoring extracts. Exports of narcotic drugs of all kinds amounted to 22,642 ounces in 1942, a decrease of 515 ounces under the previous year. The drugsexported during 1942 involved 188,823 taxable ounces of products. • The net quantity of pure drugs of all kinds sold by m.anufacturers todom.estic purchasers for civilian use am.ounted to 488,902 ounces, a. decrease of 13,588 ounces under the previous year. 'DIVISION OF PERSONNEL The Division of Personnel is charged with the supervision of thepersonnel activities of the entire Department, and itS/general functions include initiating, planning, and formulating personnel policies, procedures, practices, and programs, and coordinating and exercising control over the Department's personnel operations so that they will conform to approved policies and procedures. The functions of theDivision are principally in the nature of advisory and control activities, with the personnel operations of the Department being actually carried out in the personnel units of the several branches, bureaus,, and offices. This decentralization of personnel work, with control being retained in the central personnel office, is in line with theDepartment's policy of facilitating and strengthening the functioningof the operating organizations. The Division, headed by the Director pf Personnel for the Treasury Department, has been organized to include activities relating to position-classification, salary administration, recruitment, appointment, placement, promotion, separation, retirement, discipline, investiga^ tion, efficiency rating, employee relations, leave, forms and records,, and civil service rules and regulations. . On June 30, 1942, there weie 24,610 employees in the departmental service and 43,586 employees in the field service of the- Treasurjr Department, as compared with 20,483 employees in the departmental service and 64,501 employees in the field service on June 30, 1941. The 1941 figures include the mUitary and civilian personnel of "theUnited States Coast Guard which has since been transferred to theNavy Department. During the year the Division considered and acted upon 115,596 personnel recommendations relating to the^ appointment, promotion, reassignment, retirement, suspension, and separation of employees; reviewed and processed 21,373 classification actions for departmental positions, as compared with 10,275 classification actions for the same service in the fiscal year 1941." The Division of Personnel was also engaged in fostering, developing, and maintaining a comprehensive program of personnel nianagement, in the^ interests of bettering employee-employer relations, attaining higher standards of performance, and incieasing the efficiency and effectiveness of administration. COMMITTEE ON PRACTICE ' ^The Committee on Practice, formerly the Committee on •Enrollment and Disbarment, is an administrative and judicial body. ' It. has charge of the enrollment of attorneys and agents for practice* REPORT OF THE SECRETARY OF THE TREASURY ' 191 bef01 e 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. The committee also issues licenses to customhouse brokers and makes findings of fact and recommendations to the Secretary in proceedings for the revocation or suspension of such licenses. The following statement sumimarizes the work of the committee for the fiscal year 1942. Attorneys and agents: Applications for enrollment approved Applications for enrollment disapproved Ap])lications withdrawn on advice of committee Formal hearings on apphcations _ . - :: Number 2,582: 6121 a - __ Complaints against enrolled persons: Pending July 1, 1941.. Filed during the year ...'. 33 24 — Disposed of: Disbarred '. Stricken from the rolls in the course of disbarment proceedings... Suspensions.. Reprimands Dismissed - 11 ._... 5 1 3 4 — Pending June 30,1942-^ Charges made, names strickenfrom-the rolls...::...,..- — - - . . - . . . . . : . - : . . . - . . . . . - . - . Cases of minor infractions of the regulations in which enrollees were given an opportunity to show cause why proceedings should not be instituted.. Customhouse brokers: Applications for licenses approved Applications withdrawn -.Licenses canceled Licenses revoked Suspensions.. Reprimands - _• _.. - 1. ._: 57 2^ 33^ 2 13. 45 • 4 2& 1 0' o» Since the organization in 1921 of the Committee, 61,761 applications for enrollment have been approved and 757 disapproved. Two hundred and thirty-seven practitioners have been disbarred from further practice before the Treasury Department, ]37 have been suspended from practice for various periods, and 179 have been reprimanded. PROCESSING TAX BOARD OF REVIEW The Processing Tax Board of Review has jurisdiction to review the allowance or disallowance by the Commissioner of Internal Revenue of claims for refund of processing tax paid under the Agricultural Adjustment Act and to determine the amount of refund due any claimant with respect to such claim. The decisions of the Board are reviewable by the Circuit Courts of Appeals of the United States. and the United States Court of Appeals for the District of Columbia and subject to further review by the Supreme Court of the United States, upon certification or certiorari as provided in the Judicial Code, as amended. The Secretary of the Treasury designates the members of the Board and assigns to it such personnel in the Treasury Department as may be necessary to perform its functions. 487543—43 14 192 REPORT OF THE SECRETARY OF T H E TREASURY The following table summarizes the work of the Board during the fiscal years 1941 and 1942. 1941 1942 Cases Number Refund claimed Number Refund claimed Before the Board of Review: On hand atbeginning of year Filed during year Reconsidered during year Total to be reviewed Decided On hand at end of year. . Decisions appealed to Circuit Courts of Appeals: On hand at beginning of year Filed during year . I Total to be reviewed Decided by Circuit Courts On hand at end of year. ' Before the Supreme Court: Filed during year for writ of certiorari Certiorari denied 59 103 3 $6, 993. 216. 08 23, 472, 557. 76 162,598.25 62 36 7 165 103 30, 628, 372. 09 18, 676, 225. 02 105 53 32, 010 132 16 23,395,483 24 62 11, 952,147. 07 52 8,614 648 92 12 17 981, 081.16 1,113, 633. 23 9 9 338, 661. 59 1,474,132. 41 29 20 2, 094, 714. 39 1,756,052.80 9 338,661.59 2 2 262, 229. 66 262, 229. 66 18 1 12 6 $11,952 147 07 19,638,819 99 419 165 10 1, 812, 794. 00 1, 077, 278. 23 735,515 77 Pending|in Supreme Court 13 reversed, 4 affirmed, and 5 dismissed. PROCUREMENT DIVISION Augmented by the assignment of important tasks in the prosecution of the war and the greater utilization of its facilities by other agencies of the Government, the functions and activities of the Procurement Division, as assigned under Executive Order No. 6166 and expanded under Executive orders and regulations issued under the First and Second War Powers Acts, have increased in both scope and volume. The following table summarizes the purchases by the Division under its various activities during the fiscal years 1941 and 1942. mi im Regular activities Printing and binding . Ernergency relief... Strategic and-critical materials Lend-lease activities Defense housing projects Refugee relief program Total purchases. - -- . $15,430,464 2,380,148 219,287,390 29,378,252 21,037,555 5,360, 572 18,452,198 $21,648,545 6,061,395 171,711,188 6,544,303 1,126,438,327 . 15, 4.33, 708 17,053,849 311,326,579 1,364,891,315 Purchases made under General Schedule of Supply contracts by the various governmental departments and agencies during 1942 amounted to $273,522,472. This was a record high and was $154,497,711 more than the total during 1941 of $119,024,761. . Purchasing under the lend-lease program, which started during AprU 1941, gained momentum and during 1942 totaled $1,126,438,327. The First War Powers Act, approved December 18, 1941, afforded the greatest possible latitude in the making of wartime purchases, emphasis being placed upon speed, and, in accordance with the authority, formal processes of purchasing were set aside for prompt purchase through direct negotiation. The normal process of public bid openings and award to the lowest bidder of the entire quantity required was found to be ineft'ective REPORT OF THE SECRETARY OF THE TREASURY 193 in the procurement of supplies under war conditions, which necessitate the utmost speed and the consideration of special economic aspects. During the year considerable progress was made in placing the contracting and pm*chasing of commercial items in common use by Government agencies on a planned basis. The primary aim has been to provide for the procurement of essential nonmilitary requirements promptly and economically with due regard for the demands of the war program. Emphasis was placed on the conservation of critical materials by ehminating nonessential items and by modifying specifications and on broadening the sources of supply by means of zoning and the making of negotiated contracts. Requhements of nonwar agencies for a number of essential classes of commodities have been channeled through the Division, which effects purchases on a centralized basis, providing opportunities for consolidated purchases. Consolidated purchase plans were put in operation with respect to motor vehicles, wood office desks and file cases, typewriters, paper products, lumber, electrical equipment, and machinery. The details of the individual plans vary somewhat depending upon the extent of central control required. In the case of items of limited supply subject to rationing, such as motor vehicles and typewriters, requisitioning agencies are required to submit formal justifications of need on standard forms prescribed for the purpose, and formal approval by the rationing authorities is secured in advance of making the purchase. Limitation and Conservation Orders issued by the War Production Board for the conservation of. critical materials in connection with the war effort has brought about changes in the design and details of construction in a number of items of office furniture. The-need for a less expensive type of desk was recognized, and a table type of desk for clerical and typewriter use was designed. Contracts were let with a number of manufacturers all over the country to provide fbr immediate delivery to widely separated offices. The entire program since January first approximates 250,000 desks of all types. For the first time contracts were executed for the standard types of maple household furniture. Prior to the adoption of a standard, a number of agencies in the Government were making separate contracts covering a variety of types and qualities. Contracts covering the purchase of gasoline, based on estimated requirements, indicated an approximate increase of 160 percent over that for 1941. The increase in the purchase of fuel oil was approximately 78 percent. This increase was due in part to the increased military activity; for example, during the first quarter of the fiscal year onl}'^ 35 ordnance plants were supplied as against 71 during the last quarter. Among the special activities of the Division was an arrangem.ent made with the Office Machinery and Equipm.ent Procurem.ent Committee of the War Production Board whereby the Division undertook the purchase of some 600,000 used standard typewriters required by the armed forces and other vital war agencies during the next two years. Plans were made to purchase machines held" in stock by dealers, and to locate and procure excess typewriters in the hands of business firms, the general public, and Federal agencies. At the close of the year bid invitations had been sent to dealers all over the country to secure offerings from their stocks of serviceable typewriters; type 194 REPORT OF T H E SEiCRETARY OF T H E TREASURY writer m.anufacturers had supplied nam.es of firm.3 which had purchased machines in substantial volume over the past few years, and steps were being taken to solicit offerings from these holders; and a survey questionnaire had been circulated among Federal agencies. Later plans call for an organized appeal to the general public to turn in all typewriters which can possibly be spared. Working in collaboration with the War Production Board and other war agencies the Division took active steps to conserve critical supplies and materials used by the Government. Early in the year Federal agencies were requested to survey imm.ediately existing supplies and equipment to insure their full utilization, and to make available for use elsewhere all material not required for current use. Specifications were also revised to provide for the various types of wood vertical files. These changes and revisions have resulted in a saving of thousands of dollars and many tons of critical materials. I n order to conserve strategic and critical materials and apply them to war purposes, 347 Emergency Alternate Federal Specifications and 95 revisions to these specifications were issued. The principal purpose of these specifications, which were prepared in conjunction with the War Production Board, has been to develop comm.odities made of substitute materials such as electric cable having only a small amount of rubber insulation and no rubber in the jacket; wood or plastic substitutes for metals; and the elimination of alum.inum, brass, tin, • and chromium. In addition, 334 revisions and amendments were made to existing Federal Specifications, and 86 new specifications were promulgated, bringing the number of Federal Specifications in effect as of June 30, 1942, to- a total of 1,437. During .the year, 102 new Procurement Division Specifications were issued, and 75 were revised. . There were 305 Procurement Division Specifications in effect as of June 30, 1942. Procurement Division Specifications are used when there are no existing Federal Specifications for the com.modities and are frequently the basis for the preparation of Federal Specifications. The-Procurem.ent Division continued to coordinate purchases by the . Federal Governm.ent of blind-m.ade products of 55 institutions. Purchases m.ade by the Government departments and agencies increased during 1942 and amounted to $3,502,510.64, com.pared with $2,157,000 recorded in 1941. The Defense Housing Unit purchased plumbing equipment for kitchen, laundry, and bath, water and oil tanks, medicine cabinets, heating and cooking units, lighting fixtures and refrigerators for defense housing to the extent of $15,433,708 during 1942. For a discussion of the Division's activities in this connection, see page 55. The Warehouse, in which are stocked commodities in common use in the Government, filled requisitions received from the various activities, both in the District of Columbia and the field, amounting to $7,937,490 for 1942, compared with $5,017,224 for 1941. This represented 19,824 tons of material delivered by Warehouse trucks in the District of Columbia and vicinity and the shipment of 10,692 tons to field activities, or a total of 30,516 tons for 1942 as compared with 14,648 tons in^ the District of Columbia and 7,819 tons to field activities, or a total of 22,467 tons for 1941. In order to handle expeditiously the increased volume of business, the General Supply Fund, which is used as a revolving fund to finance REPORT OF THE SECRETARY OF THE TREASURY 195 the Warehouse, Fuel Yard, and simUar activities, was increased during the year by $2,000,000, making a total fund of $5,020,196. ^ This increase permitted an appreciation in the average Warehouse inventory m 1942 to $2,056,231, as compared with $1,119,676 for 1941. Similarly, the Warehouse storage, shipping, and delivery space used in the Procurem.ent Division building was increased in 1942 from 271,470 square feet to 321,470 square feet. In. addition to the use of electric platform trucks, the Warehouse Division acquired 10 gasoline tiering trucks in order that the maximum vertical space could be used in the building. As a residt of the rigid inspections and tests given to dehveries, improvement in the quality of commodities supplied on Government order continued. Of the total of 3,308 inspections and tests during 1942, only 409 were performed at the Bureau of Standards and 37 at other departments, the balance being performed in the laboratory of the Inspection Division. Rejections of material were only 4.58 percent, which is an indication that the vendors supplying material are familiar with tho standards required by the applicable specifications. Fuel deliveries to the departments and agencies in and adjacent to the District of Columbia during the year amounted to 385,443 tons of coal and 15,991,128 gaUons of fuel oU. Because of the expansion of the Government activities in the District of Columbia, 418 additional locations were served during the year. This represents a total of 1,413, as compared with only 995 locations during the previous year. Negotiations are under way for the purchase of fuel oil and gasoline either in railroad cars jor tank wagons for the purpose of conserving transportation and the elimination of railroad crosshauling. Arrangements have been made for the standby storage of 500,000 gallons of fuel oil for the use of Government activities in the District of Columbia. Storage facUities have also been provided for approximately 90,000 tons of coal in addition to the storage facilities at the Procm'ement Division Fuel Yard. During 1942 a total of 373,478 gallons of gasoline and 7,729 gallons of oU were issued to the automobiles of Federal agencies in the District of Columbia which utilized the facilities of the Garage. The number of service transactions amounted to 38,603, and 5,223 repair orders were completed for the fiscal year 1942. Overhauls and adjustments of typewriters for various agencies totaled 32,575 during 1942. Savings on this work indicated an economy of approximately $20,000 to the using offices. In the disposition of surplus and forfeited personal .property during the year, this Division arranged for the transfer between Government agencies of approximately 29,000 items valued at $4,070,000. The sales of surplus and waste material in the District of Columbia and vicinity, determined to be of no further use, totaled $250,076. The Division also participated in the collection and sale of s,crap aluminum collected in the national scrap aluminum campaign, and acted as receiving agent in collecting rubber and unserviceable paint brushes donated for salvage purposes by Government agencies. , Under the Federal Alcohol Administration Act, the Division distributed by gift among charitable institutions 24,000 gallons of alcohol, wines, and m;alt beverages, with an appraised value of $98,757. Surplus chairs, desks, and other equipment were reconditioned in the Furniture Repair Shop and transferred for re-use to Government 196 REPORT OF THE SECRETARY OF THE TREASURY agencies in the District of Columbia. In addition, the Furniture Repair Shop manufactured new furniture to meet the need of specific requirements of the various war agencies. The total value of this material was in excess of $60,000 during 1942. The duties of the Central Traffic Service (formerly the Federal Traffic Division) were extended in accordance with Bureau of the Budget Circular No. 387, dated February 12, 1942, to provide a central transportation rate information service for all Government agencies in Washington, D. C., to pohduct surveys of Government traffic practices, to negotiate with carriers and their agents for special rates, and to prepare and file complaints before the Interstate Com-' merce Commission and other public regulatory bodies. On October 1, 1941, the Division of Printing was transferred to and consolidated with the Procurement Division. The procurement of the stationer}^ requirements for the various bureaus and offices of the Treasury Department was thereafter performed by the regiUar purchasing units of the Division. The functions of requisitioning of the printing and binding requirements of the Treasury Department, including the maintenance of control over field printing, the authorizingof engraving work to be performed by the Bureau of Engraving and Printing, and the ^supervision of newspaper and periodical advertising for the Treasury Department were established in a new section known as the Printing and Binding Section. During the year $580,361 was made available specifically for printing and binding by appropriations to the Treasury Department, and there were also transfers from other funds to the regular printing and. binding fund. Of the total appropriated, $575,289 was expended, leaving an unobligated balance of $5,072. There were 5,562 requisitions placed with the Public Printer at a cost of $6,061,395. Of these, 1,629 requisitions, in the amount of $4,292^028, submitted b}^ the Bureau of the Public Debt, were chargeable to funds other than the printing and binding appropriation. Approximately 86 percent of the 1,629 requisitions were for the War Savings Staff' for the promotion and sale of war savings bonds and stamps. During the year there were 5,627 requisitions placed with the Bureau of Engraving and Printing, calling for a total of 172,155,245 disbursing officers' checks, commissions, certificates, drafts, transportation requests, and warrants, as compared with 4,526 requisitions calling for 163,187,605 checks, drafts, com.missions, etc., for 1941. This work was ordered at the instance of the Government service at large, and the increase is attributable to the prevailing war conditions. The Division continued during the year the purchasing of clothing, medical supphes, textiles, and hospital apparatus for the American Red Cross under the refugee relief program, as augmented by the foreign war relief program. A more detailed discussion appears on page 55. During the year contracts and purchases of strategic and critical materials under the act of June 7, 1939-(Public No. 117), totaled $6,544,303. For a discussion of the activities of the Division in this connection see page 54. On page 53 appears a summary of the Procurement Division's activities under the Lend-Lease Act. This is its most important task in the present war effort, and is by far its largest activity at the present REPORT OF THE SECRETARY OF THE TREASURY 197 time. Purchases during the past year totaled $1,126,438,327, and have required the establishment of warehousing facilities for assembly, of shipments. There were issued b}^ the field procurement offices during the year 466,352 purchase orders covering purchases valued at $171,711,188, of which a m o u n t m o r e t h a n $100,000,000 was for projects directly connected with the war program, such as airports, military highways, water supply systems and repairs, and alterations on military reservations. Included in the purchases also were 14,034,000 yards of textiles for the Work Projects Administration at a cost of $2,630,500 and more than $1,000,000 in new and used machine shop equipment for the National Youth Administration for use in its defense training program. . There were executed for field offices of agencies engaged in emergency relief work approximately 3,000 new leases and 1,975 renewals of leases; also, several thousand agreements for space on a $1 per annum basis were executed. In the interest of efficiency and economy, the Emergency Relief Branch at the close of the fiscal year had formulated plans to consolidate its field offices into eight regional offices with purchasing officers in each of the several States. Federal Business Associations, acting under the direction of the Director of Procurement, continued their activities of promoting economy and efficiency in the conduct of Federal business within the particular localities of the 107 associations. The associations cooperated with the Post Office Department in the solicitation by t h a t Agency for the loan from various Government establishments of trucks for handling Christmas mail for the 1941 season, which project resulted in a saving of $166,147 in vehicle rental for the Postal Service. The associations also conducted patriotic rallies in the larger cities, organized banquets and obtained prominent speakers, promoted and assisted in the promotion of military and civic parades and celebrations for the purpose of stimulating the war effort. They also organized committees to further campaigns for the sale of war savings bonds and stamps, for contributions to the Blood Bank, to fight inflation, to prevent freight congestion, to finance the Red Cross, to further civilian defense activities and to participate generally in such national movements. DIVISION OF RESEARCH AND STATISTICS The Division of Research and Statistics in the Office of the Secretary serves as a research staff for the Secretary and other Treasury officials on matters relating to fiscal operations and policies, the estimated volume and source of future revenues, actuarial considerations involved in certain Treasury functions, and various general economic problems arising in connecticn with Treasury activities. In connection with Treasury borrowing operations, the Division prepares reports for the use of officials concerned with the management of the public debt. Current a.nd 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 the maturities to be employed in particular financing operations. The effects of actual and proposed fiscal operations on the credit structure and g;en eral economv of the countrv are analvzed 198 REPORT OF THE SECRETARY OF THE TREASURY and long-range trends are appraised. Studies are made of existing laws and of legislative proposals in their relation to Treasury financing a,nd Federal fiscal policies. Estimates of Federal receipts from internal revenue taxes and from customs duties under existing laws are prepared for use in forecasting the Treasury's cash position for financing purposes and in all regular and interim Budget reports, and for such other purposes as may be required. Special revenue estimates are prepared for Treasury officials and for congressional committees working on tax legislation. Reports are prepared on the actuarial status of 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. Other actuarial analyses are made as required. The Government Actuary, who is on.the staff of the Division, is a member of the Board of Actuaries, established under the Civil Service Retirement Act, and is the Treasury Department's representative on the Actuarial Advisory Committee of the Railroad Retirement Board. SECRET SERVICE DIVISION An outstanding accomplishment of the Secret Service Division during the year was the smashing of a conspiracy to flood the country with counterfeit 25f!S war savings stamps. In New York City on May 12, 1942, Secret Service Agents and Post Office Inspectors arrested six men comprising the engravers, printers, financial backers and distributors of these stamps, and captured 200,692_^bogus stamps with a representative value of $50,173, together with a 25-design plate from which the counterfeits were printed. This venture was suppressed before anyone was defrauded, as none of the stamps were placed in circulation. Five defendants were sentenced in New York on June 11 to serve 10 years each, and one was sentenced to serve 8 years. , Cooperating with the Royal Canadian Mounted Police, agents of the Secret Service and the United States Customs Service on October 4, 1941, arrested two men at Buffalo, N. Y., and seized $10,000 in gold which they attempted to smuggle from Canada into the United States. Investigation disclosed that these men and their Canadian accoiriplices had stolen almost $3,000,000 ih gold from niines in Ontario and Quebec and were smuggling it into the United States for sale. The accomplices also were arrested, and all were convicted in the courts of both countries. Following the appearance in Tacoma, Wash., in. December 1941 of a deceptive bogus $20 note. Secret Service Agents identified it as the work of a counterfeiter who, up to 1939, had served 20 years in United States prisons for counterfeiting. This man was arrested by cooperate ing Mexican police in Mexico City on March 26, 1942, with a complete plant for the manufacture of $50 and. $100 notes and Mexican currency. As a result of the Secretary's directive-of January 1, 1937, t h a t .more intensive efforts be extended by the Secret Service towards the suppression of counterfeiting, losses suffered by victims of counterfeit notes totalled $47,882, a drop of 93 percent from the yearly average during the period 1933 to 1936, prior to the Secret Service program of Crime Prevention Through Education. In this program, the Secret Service received hearty cooperation from publishers of school text- REPORT OF THE SECRETARY OF THE TREASURY 199 books, who are: incorporating in many such books information about .counterfeit money and how to detect it. I t is expected that the texts will bef widely aidopted by schools and will be supplemented by the Secret Service motion picture '^Know Your Money," which has already been seen by some 4,500,000 students and more than 3,000,000 merchants j bankers,' and other adult groups. The Secret Service ^^Know Your Money" booklet, already in use in schools, was formally, endorsed by the National Education Association in October 1941. Educational Secret Service displays are on view in many parts of the country and the program of Crime Prevention Through Education has even been carried to the comic strips. As a part of the crime prevention program and as a service to the banks of the country, the Secret Service early in 1942, in cooperation with the Board of Governors of the Federal Reserve System, distributed to all banks a card index describing all counterfeit bUls which appeared in circulation since the size of United States currency was changed in 1929. The index is kept current and makes it possible for every bank in the country to identify quickly any bogus biU. An order issued January 29, 1942, authorizes all banks and banking institutions of any nature whatsoever, organized under general or special Federal or State statutes, to take possession of and deliver to the Secret ^ Service all counterfeit money presented at their places of business. Following the attack on Pearl Harbor, the Secret Service and other Treasury agencies cooperated with the Foreign Funds Control Unit of the Treasury Department in impounding and freezing the assets of the enemy and organized a force of guards to insure the safety of the seized property. The White House DetaU of Secret Service Agents assigned to protect the President has necessarUy been augmented since the declaration of war, and the agents have received special instruction in the use and effect of war gases and bombs. Members of the White House Police and of the Secret Service Uniformed Force have also had simUar training. There were. 22 new counterfeit note issues detected during the year, 9 of which warranted the distribution of descriptive warning circulars. " Agents captured 34 metal plates for the printing of counterfeit obligations, including one brass plate bearing 25 impressions for bogus war savings stamps; 23 plates with impressions of the Treasury Seal, serial numbers, and portraits from paper money; 23 film negatives for counterfeit obligations, and 4 film negatives for the Treasury Seal, serial numbers, and portraits; 12 steel dies, 252}^ plaster molds, .and 26.K metal molds for the manufacture of counterfeit coins; and other counterfeiting paraphernalia. Agents seized counterfeit and altered notes with a total representative value of $72,950. Of this amount, $10,441 was seized before it reached chculation, and of the balance only $47,882 represented losses suffered by victims of passers of counterfeit notes. Counterfeit coin seizures had a representative value of $39,807, of which $5,289 was captured before it reached circulation. Of the balance, only $28,768 represented losses to the public. During the year there were 26,821 cases disposed of. In the 1,898 cases brought to trial, convictions were obtained in 97.6 percent of 200 RE-PORT d F T H E SECRETARY OF THEi TREASURY the cases, as compared to 97.1 percent in convictions during the previous year. Fines in criminal cases totaled $32,988 and imprisonments totaled 1,692 years, 3 months, 3 days, and 5 hours. Additional sentences totaling 2,260 years and 7 days were suspended or probated. The Secret Service investigated 11,985 cases relating to forged Government checks. • The following tables present data relating to the seizure of counterfeit money and other work of the Secret Service during the fiscal year. • Counterfeit money seized, fiscal years 1941 and 1942 Counterfeit and altered notes seized: After being circulated Before being circulated Total Counterfeit coins seized: After being circulated Before being circulated Total - - - ._ ... G r a n d total • Increase or decrease (—) Percentage increase or decrease ( - ) $62, 510 10, 441 - $ 2 8 , 587 -7,873 -31.38 -42.99 109, 411 72, 951 - 3 6 , 460 -33.32 49, 866 2, 427 34, 518 5,289 -15,348 2, 862 - 3 0 . 78 117.92 52, 293 39,807 -12,4.86 -23.88 161, 704 112, 758 - 4 8 , 946 -30.27 1941 1942 $91,097 18, 314 Number of investigations of criminal and noncriminal activities, fiscal years 1941 and 1942 1941 C r i m i n a l cases: M a k i n g or passing: . Counterfeit notes Counterfeit coins '. Altered currency . . Forgery of G o v e r n m e n t checks stolen or altered b o n d s . . - . Violation of Gold Reserye A c t Violation of F a r m L o a n Act Miscellaneous offenses ...." . .. . . Total - N o n c r i m i n a l cases: Personnel (applicants) . . Miscellaneous . . . Total G r a n d total - - - - 1942 Percentage increase or decrease (—) 622 624 173 11, 985 71 132 19 5,614 -130 -137 26 -2,176 -17 -20 -13 3,612 -17.29 -18.00 17.69 -15.37 - 1 9 32 — 13.16 —40 63 180. 42 18, 095 19, 240 1,145 6.33 2,987 548 5,785 1, 796 2,798 1,248 93. 67 227 74 752 761 147 14,161 88 152 32 2,002 ' Increase or decrease ( - ) . 3,535 7,581 4,046 114 46 21, 630 26, 821 5,191 24 00 REPORT OF THE SECRETARY OF THE TREASURY 201 Number of arrests and cases disposed of, fiscal years 1941 and 1942 1941 .Arrests for: • M a k i n g or passing: •' • Counterfeit n o t e s : Counterfeit coins Altered obligations F o r g e r y of G o v e r n m e n t checks Violation of Gold Reserve Act Violation of F a r m L o a n Act Miscellaneous' offenses . - . . _ Total arrests..C a s e s disposed of: Convictions in connection w i t h : Counterfeit notes Counterfeit coins Altered obligations Forgery of G o v e r n m e n t checks Violation of Gold Reserve Act Violation of F a r m Loan Act Miscellaneous offenses ..- .- -.. . T o t a l convictions -Acquittals Dismissed, not indicted, or died before trial T o t a l cases disposed of • 1942 Increase or decrease ( - ) Percentage • increase or decrease ( - ) 198 554 64 1,859 25 7 242 117 200 55 1,171 27 7 308 -81 -354 -9 -688 2 66 27.27 2,949 1,885 -1,064 - 3 6 . 08 189 396 62 1,736 16 6 167 119 211 46 1,173 11 4 289 -70 -185 -16 -563 -5 -2 122 -37.04 - 4 6 . 72 -25.81 -32.43 - 3 1 25 -33.33 73.05 -719 -31 -43. -27.95 - 4 0 . 79 - 1 8 86 -793 - 2 7 57 . 2,572 76 228 1,853 45 185 2,876 2,083 . -40.91 -63.90 — 14.06 -37.01 8.00 OFFICE OF THE TAX LEGISLATIVE COUNSEL The Office of the Tax Legislative Counsel assists the Secretary and those persons designated by him to supervise the tax program of the Treasury in planning and coordinating the legislative recommendations of the Treasury Department with respect to internal revenue and in drafting internal revenue legislation. This Office represents the Department before the congressional committees in matters involving internal revenue legislation. During the fiscal year 1942, the efforts of the Office of the Tax Legislative Counsel have been directed toward the formulation of a war tax program which will provide sufficient revenue for the successful prosecution of the war and will distribute the burden equitably among all portions of the population and upon the various types of business enterprise. The principal revenue legislation in the fiscal year 1942 was the Revenue Act of 1941, which increased substantially the rates of most of the various Federal taxes. The Office also began an extensive study of the administration of the internal revenue laws in order to be of assistance to the Congress in the preparation of the current revenue revision to be enacted as the Revenue Act of 1942. The act postponing income tax payments of persons in the military or naval forces, and the act extending the time for applications, and •changing the procedure, for certification of national defense facilities and contracts for amortization purposes, exemplify the legislation affecting internal revenue which was drafted with the assistance of the Office of the Tax Legislative Counsel. The Tax Legislative Counsel participated in numerous conferences with representatives of the War Production Board, the War Department, the Navy Department, and the Maritime Commission upon the question of excessive profits derived from war contracts and renegotiation of contracts. The Office supervised the preparation of reports 202 REPORT OF THE SECRETARY OF THE TREASURY by the Treasury upon bills pending before congressional committees and represented the Departm.ent in committee hearings on m.any of the bills. Other duties included assistance in the preparation of regulations interpreting the Internal Revenue Code, review of Treasury decisions amending existing regulations, and handling of a large volum.e of correspondence consisting of suggestions for improvement of the tax structure knd inquiries concerning existing provisions of the tax law. DIVISION OF TAX RESEABCH The Division of Tax Research in the Office of the Secretary conducts research in the economic aspects of taxation essential to the formulation of Treasury tax policy. In this connection the Division prepares reports and studies and conducts surveys for the use of the Secretary of the Treasury and other designated officials of the Treasury Department. When requested, it also provides information on various aspects of taxation and tax policy for the use of the Committee on Ways and Means of the House of Representatives, the Committee on Finance of the Senate, the Joint Committee on Internal Revenue Taxation, and the several Federal executive and administrative agencies'. The research functions consist primarily of making basic surveys of the tax problems of the Federal Government and devising alternative methods of meeting the Government's revenue requirements. Comprehensive analyses are made of the relationship of revenue yields to prospective revenue requirements, the desired economic objectives of the tax system, and the economic effects of taxation. Individual taxes are studied with relation to their effects on the particular groups of taxpayers involved, the equitable treatment of taxpayers within a particular group, the administrative aiid compliance problems inherent in the tax, and the integration of the particular tax with the tax system as a whole. Studies are made of the distribution of the tax burden of specific taxes, the total Federal tax load, and the combined Federal, State, and local burden. The inter-relationships of-Federal, State, and local taxes are studied from the broader view of intergovernmental fiscal relations. Specific State and local taxes are also studied to determine the joint eft'ect of such taxes and Federal taxes and also with a view to giving the Federal Government the benefit of State and local tax expeiience. Similar studies are made of foreign tax systems and selected taxes in foreign countries for the purpose of comparing tax policies and obtaining the benefit of foreign experience. In a limited number of cases field surveys are made for the purpose of supplementing office research. After Pearl Harbor the need of transforming our economy to an all-out war basis required drastic steps in the field of taxation. The existing tax svstem would have provided revenue sufficient to meet only a small fraction of the necessary expenditures. Moreover, the growing pressure on prices of rising money incomes in the face of a declining volume of civilian goods and services pointed to the necessity of fiscal measures to maintain the stability of the economy. The development of the tax system to meet the needs of wartime fiscal policy thus became a major problem. Against this background of requirements of the tax system, the Division of Tax Research has had to expand greatly the scope of its REPORT OF THE SECRETARY OF THE TREASURY 203 studies. Changes in economic conditions, shifts in the distribution of income, and the need for increasing production have presented new problems and rendered tax problems more difficult. Additional research has been necessary in two principal directions: First, the development of new taxes to meet special war revenue needs in such a manner as to facilitate the conversion of industry to war production and to contribute to the control of inflation; and second, the adjustment of existing taxes to meet the requirements of'a nation at war. Increases in tax rates have intensified the problems of equitable .treatment of taxpayers and of maintaining incentives for production. Equity considerations have required that attention be given to the elimination of provisions affording unduly favorable treatment to certain classes of taxpayers as well as to the provision of relief for undue hardship in other cases. The imposition of higher taxes on corporation incomes, particularly very high excess profits tax rates, have made it necessary to reexamine many provisions of the law relating to the definition of taxable income and to devise special provisions to prevent the taxation of fictitious income. The need of providing special relief for the purpose of avoiding undue hardship or providing incentives needed for war production has greatly complicated the problems of business taxation. In the case of individuals, it has been necessary to give greatly increased attention to the fixed commitments of taxpayers and to variations in individual expenditure patterns. The Director and members of the Division assist in the presentation of the Treasury's tax programs to the congressional committees and confer with members of these committees and the staff of the Joint Committee on Internal Revenue Taxation for the purpose of explaining and developing research on various tax matters. Members of the Division also participate in conferences with taxpayers who desire to call special problems to the attention of the Treasury Department. The Division also is responsible for the assembly and publication of aU statistical information pertaining to Federal taxation, and in this connection exercises general supervision over the work of the Statistical Section of the Income Tax Unit in the Bureau of Internal Revenue, Correspondence relating to taxation is handled by the Division. WAR SAVINGS STAFF On April 15, 1942, by Treasury Department Order No. 45, the name of the Defense Savings Staff was changed to War Savings Staff. Throughout the year, the organization continued its work of promoting the sale of United States savings bonds 'and stamps. Sales of bonds amounted to slightly more than $6 billions. Stamp sales amounted to $308 mUlions. EXHIBITS 205 PUBLIC DEBT Issues and redemptions of Treasury bonds and Treasury notes Exhibit 1 Offering of Treasury notes of Tax Series A-1943 and Tax Series B-1943 On July 22, 1941, Secretary of the Treasury Morgenthau offered for sale two issues of nontransferable Treasury notes of Tax Series A-1943 and Tax Series B-1943, both acceptable at par and accrued interest in payment'of Federal income taxes. These notes were on sale from August 1 to December 31, 1941. [Department Circular No. 667. Public Debt] TREASUKY DEPARTMENT, - Washington, July 22,• 1941. I. OFFERING OF NOTES 1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, offers for sale, to the people of the United States, through the Federal Reserve Banks, at par and accrued interest, two issues of nontransferable notes of the United States, designated Treasury notes of Tax Series A-1943 and Treasury notes of Tax Series B-1943. As hereinafter provided, the notes of both series will be acceptable at par and accrued interest in payment of Federal income taxes: Provided, however, that not exceeding $1,200 principal amount of notes of Tax Series A-1943, and the accrued interest thereon, will be accepted from any one owner in any period of twelve consecutive months in payment of taxes due from such owner. If not presented in payment of taxes, the notes will be redeemable at the purchase price as hereinafter provided. 2. Descriptions of the notes of both series and their terms are hereinafter fully set forth. The notes will be placed on sale beginning August 1, 1941, and the sale will continue until December 31, 1941, unless earlier terminated, as to either or both series, by the Secretary of the Treasury. II. DESCRIPTION OF NOTES 1. General.^—The notes of both series will be dated August 1, 1941, and will mature August 1, 1943. The owner's name and address and the date of issue will be entered on each note at the time of its issue by a Federal Reserve Bank. The month in which payment is received by a Federal.Reserve Bank pr branch, or by the Treasurer of the United States, will determine the purchase price and issue date of each note., The notes may not be transferred. No hypothecation of the notes on any account will be recognized by the Treasur}^ Department, and they will not be accepted to secure deposits of public money. Except as herein provided, the notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing bonds and notes of the United States. 2, Denominations and interest.^—The notes of Tax Series A-1943 will be issued in denominations of $25, $50, and $100, and interest thereon will accrue during each month after August 1941 in the amount of 16 cents on each $100 principal amount, that is, 4 cents on each $25, 8 cents on each $50, and 16 cents on each $100 denomination of note. The notes of Tax Series B-1943 will be issued in denominations of $100, $500, $1,000, $10,000, and $100,000, and interest thereon will accrue each month after August 1941 in the amount of 4 cents on each $100 principal amount, that is, 4 cents on each $100, 20 cents on each $500, 40 cents on each $1,000, $4 on each $10,000, and $40 o-n each $100,000 denomination of note. In no case, however, shall interest accrue beyond the month in which the note is presented in payment of taxes, or beyond its maturity. Exchanges of 1 Amended, see p. 212. 2 Amended, see p. 211. 207 487543—43 15 208 REPOiRT OF T H E SEGRETARY OF T H E TREASURY authorized denominations of each series from higher t o lower, b u t n o t from lower t o higher, m a y be arranged a t t h e Federal Reserve Bank of issue. 3. Purchase price, and tax-payment value.—The notes of both series will be sold a t p a r during August 1941, a n d will be sold a t par a n d accrued interest during each subsequent m o n t h while they remain on sale, t h e purchase price for a note of any denomination of either series advancing each m o n t h after August 1941 in the' a m o u n t of one month's, interest on t h a t note. Tables, showing for each m o n t h from August 1941 to August 1943, for each denomination of each series, t h e principal a m o u n t of t h e notes with accrued interest added, are appended to this circular. T h e t o t a l shown for any denomination for a n y m o n t h — A u g u s t t h r o u g h December 1941—while t h e notes remain on sale, is t h e purchase price, or cost, of t h e note, during t h a t m o n t h . Also, the t o t a l shown for any denomination for any m o n t h thereafter is t h e t a x - p a y m e n t value, or t h e a m o u n t a t which t h e note will be acceptable during t h a t m o n t h in p a y m e n t of Federal income taxes as herein provided. 4. Acceptability i n payinent of taxes.—The notes of both.series (but not more t h a n $1,200 principal a m o u n t of notes of Tax Series A-1943 from any one owner •in any period of twelve consecutive months) will be acceptable, a t par and accrued interest, in p a y m e n t of Federal income taxes (current a n d back personal a n d corporation taxes, and excess-profits taxes). T h e conditions of presentation, surrender and acceptance of t h e notes in p a y m e n t of such taxes are set forth in section IV of this circular. 5. Payment or redemption for cash.—The notes of either series m a y not be called by the Secretary of t h e Treasury for redemption prior to m a t u r i t y . If such notes are not presented in p a y m e n t of t a x e s : (1) t h e y will be payable a t m a t u r i t y , or '(2) they will be redeemable prior to m a t u r i t y , a t t h e owner's option a n d request, as hereinafter provided in section V a n d in either case p a y m e n t will be m a d e only at t h e price paid for t h e notes. . 6. Taxation.—Income derived from t h e notes shall be subject t o all Federal taxes, now or hereafter imposed. T h e notes shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, or by any local taxing authority. III. PURCHASE OF NOTES 1. Applications and paii/?neni.—Applications will be received by t h e Federal Reserve Banks and branches, a n d by t h e Treasurer of t h e United States, Washington, D . C. Banking institutions generally m a y submit applications for account of customers, b u t only t h e Federal Reserve Banks and t h e Treasurer of t h e United States are authorized to act as official agencies. Every application m u s t be accompanied by p a y m e n t in' full, a t p a r and accrued interest to the m o n t h in which p a y m e n t is received b y a Federal Reserve Bank or branch, or t h e Treasurer of t h e United States. Any form of exchange, including personal checks, will be accepted subject to collection, and should be drawn to the order of t h e Federal Reserve Bank or of the Treasurer of t h e United States, as t h e case m a y be. Any depositary, qualified p u r s u a n t to t h e provisions of Treasury D e p a r t m e n t Circular No. 92 (revised F e b r u a r y 23, 1932, as supplemented) will be permitted to make p a y m e n t by credit for notes applied for on behalf of itself or its customers up to any a m o u n t for which it shall be qualified in excess of existing deposits. ' 2." Reservations.—The Secretary- of t h e Treasury reserves t h e right to reject any application in whole or in part, a n d to refuse to issue or permit to be issued hereunder any notes in any case or in any class or classes of cases if he deems such action to be in t h e public interest, and his action in any such respect shall be final. If an application is rejected, in whole or in part, any p a y m e n t received therefor will be refunded. T h e Secretary of t h e Treasury, in his discretion, m a y designate agencies other t h a n those herein provided for t h e sale of, or for t h e handling of applications for. Treasury notes to be issued hereunder. 3. Delivery of notes.—Upon acceptance of full-paid applications, notes will be duly issued and, unless delivered in person, will be delivered, by registered mail within t h e . Continental United States, t h e Territories and Insular Possessions of t h e United States, the Canal Zone, and t h e Philippine Islands. No deliveries elsewhere will be made. 4. Form of application.—In applying for notes under this circular, -care should be exercised to specify whether those of Tax Series A-1943 or Tax Series B-1943 are desired, and there m u s t be furnished t h e n a m e and address of the individual. REPORT OF T H E SEiCRETARY OF T H E TREASURY 209 corporation, or other entity in which t h e notes are to be issued; and if address for t h e delivery of t h e notes is different, appropriate instructions should be given. T h e n a m e should be in t h e same form as t h a t used in t h e Federal income tax r e t u r n of t h e purchaser. T h e use of an official application form is desirable, b u t not necessary. Appropriate forms m a y be obtained on application to any Federal Reserve Bank or branch, and banking institutions generally will supply such forms. IV. PRESENTATION IN P A Y M E N T OF TAXES 1. After three m o n t h s from m o n t h of purchase (as shown by t h e date of issue on each note), b u t n o t before J a n u a r y 1, 1942, during such time, and under such rules a n d regulations as the Commissioner of I n t e r n a l Revenue, with the approval of.the Secretary of t h e Treasury, shall prescribe, notes issued hereunder in t h e n a m e of a taxpayer (individual, corporation, or other entity) m a y be presented a n d surrendered by such taxpayer, his agent, or his estate, to t h e Collector of I n t e r n a l Revenue to whom t h e tax return is made, and will be receivable by t h e Collector a t par and accrued interest from August 1941 to the month, inclusive (but no accrual beyond August 1943), in which presented in p a y m e n t of any Federal income taxes (current and back personal and corporation taxes, and excessprofit taxes) assessed against t h e original purchaser or his estate, b u t not more t h a n $1,200 principal a m o u n t of notes of Tax Series A-1943, and t h e accrued interest thereon, m a y be accepted by t h e Collector in any period of twelve ,consecutive m o n t h s in p a y m e n t of Federal income taxes due from such owner. ' T h e notes m u s t be forwarded to t h e Collector a t t h e risk and expense of t h e owner, and, for his protection, should be forwarded by registered mail, if not presented in person. V. CASH R E D E M P T I O N A T OR P R I O R TO MATURITY 1. General.—Any Treasury note of Tax Series A-1943 or Tax Series B-1943 will be redeemed for cash a t t h e purchase price a t or before m a t u r i t y . Notes of Tax Series A-1943 m a y be redeemed before m a t u r i t y without advance notice, b u t notes of Tax Series B-1943 m a y be redeemed before m a t u r i t y only after 60 days from date of issue and on 30 days' advance notice. T h e timely surrender of a note of Tax Series B-1943, bearing a properly executed request for p a y m e n t , will be accepted as constituting t h e advance notice required hereunder. 2. Execution of request for payment.—The owner in; whose n a m e t h e note is inscribed m u s t appear before one of t h e officers authorized by t h e Secretary of t h e Treasury to witness and certify requests for payment, establish his identity, a n d in t h e presence of such officer sign t h e request for paj^ment appearing on t h e • back of t h e note, adding t h e address to which check- is to be mailed. After t h e , request for p a y m e n t has been so signed, t h e witnessing officer should complete a n d sign t h e certificate provided for his use. . 3. Officers authorized to witness and certify requests for payment.—Any officers authorized to witness and certify requests for p a y m e n t of United States savings bonds, as set forth in Treasury D e p a r t m e n t Circular No. 530, F o u r t h Revision, as amended, are hereby authorized to witness a n d certify requests for cash redemption of Treasury! notes issued under this circular. Such officers include United States postmasters, certain other post office officials, a n d t h e executive officers ofall banks and t r u s t companies incorporated in t h e United States or its organized territories, including officers a t branches thereof who are certified to the Treasury D e p a r t m e n t as executive officers. 4. Presentation and surrender.—Notes bearing properly executed requests for p a y m e n t m u s t be presented a n d surrendered t o t h e Federal Reserve Bank of issue, a t t h e expense and risk of t h e owner. For»the owner's protection, notes should be forwarded by registered mail, if not presented in person. 5. Disability or death.—In case of t h e disability or death of t h e pwner, and t h e notes are not to be presented in p a y m e n t of Federal income taxes due from his estate, instructions should be obtained from t h e Federal Reserve Bank of issue before t h e request for p a y m e n t is executed, or t h e notes presented. 6. Partial redemption.—Partial cash redemption of notes of either series, corresponding to an authorized denomination, m a y be m a d e in t h e same manner, appropriate changes being m a d e in t h e request 'for p a y m e n t . I n case of partial r e d e m p tion of a note, the remainder will b e reissued with t h e same date of issue as t h e note surrendered. 7. Payment.—Payment of any note, either a t m a t u r i t y or on redemption before m a t u r i t y , will be made only by t h e Federal Reserve Bank t h a t issued t h e note, and will be made by check drawn to t h e order of t h e owner, and mailed to t h e 210 REPORT OF THE SECRETARY OF THE TREASURY address given in his request for p a y m e n t . I n any case, p a y m e n t will be made a t t h e purchase price of t h e "note, t h a t is, a t p a r a n d accrued interest (if any) paid a t t h e time of purchase. VI. G E N E R A L PROVISIONS 1. Federal Reserve Banks, as fiscal agents of t h e United States, are authorized to perform such services or acts as m a y be appropriate a n d necessary under t h e provisiohs of this circular, a n d under a n y instructions given by t h e Secretary of t h e Treasury. 2. T h e Secretary of t h e Treasury m a y a t any time or from time t o time supplem e n t or amend t h e terms of this circular, or of any a m e n d m e n t s or supplements thereto, a n d m a y a t a n y t i m e or from time t o time prescribe a m e n d a t o r y rules and regulations governing t h e offering of t h e notes, information as t o which will promptly be furnished t o t h e Federal Reserve Banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. TREASURY NOTES TAX S E R I E S A-1943 Purchase price and t a x - p a y m e n t value during successive m o n t h s Table, showing for each month.from August 1941 to August 1943, for. notes of each denomination, the principal amount with accrued interest added. The total shown for any denomination, for any month—August through December 1941—while the notes remain on sale, is the purchase price, or cost, of the note during that month. Also, the total shown for ^any denomination for any month thereafter is the tax-payment value, or the amount at which the note will be acceptable during that month i n payment of Federal income taxes. PURCHASE PRICE A u g u s t 1941 . S e p t e m b e r 1941 October 1941 $25 $50 $100 $25.00 25.04 25.08 $50. 00 50. 08 50.16 $100.00 100.16 100. 32 > N o v e m b e r 1941.. D e c e m b e r 1941 $25 $50 $100 $25.12 25.16 $50. 24 50.32 $100 48 100 64 $25. 60 25.64 25.68 25.72 25.76 25.80 25.84 25.88 25.92 25.96 $51. 20 51.28 51. 36 51.44 51.52 51.60 51.68 51.76 51.84 51.92 $102.40 102. 56 102. 72 102. 88 103.04 103. 20 103.86 103. 52 103.68 103.84 TAX-PAYMENT VALUE J a n u a r y 1942... F e b r u a r y 1942.. M a r c h 1942 April 1942 M a y 1942 J u n e 1942 J u l y 1942.. A u g u s t 1942.... S e p t e m b e r 1942. October 1942_.- $25. 20 25.24 25.28 25.32 25.36 25.40 25.44 25.48 25.52 25.56 $50. 40 50.48 50.56 50.64 50.72 50. 80 50.88 50.96 51.04 51.12 $100.80 100.96 101.12 101.28 101. 44 101. 60 101. 76 101.92 102. 08 102. 24 N o v e m b e r 1942 D e c e m b e r 1942. J a n u a r y 1943... F e b r u a r y 1943. M a r c h 1943 April 1943 M a y 1943 J u n e 1943 J u l y 1943 A u g u s t 1943 REPORT OF T H E SEiCKEfTARY OF T H E TREASTJRY TREASURY NOTES 211 TAX SERIES B-1943 Purchase price a n d t a x - p a y m e n t value during successive m o n t h s Table, showing for each month from August 1941 to August 1943, for notes of each denomination, the principal amount with accrued interest added. The total shown for any denomination, for any month—August through December 1941—while the notes remain on sale, is the purchase price, or cost, of the note during that month. . Also, the total shown for any denomination for any month thereafter is the tax-payment value, or the amount at which the note will be acceptable during that month in payment of Federal income taxes. PURCHASE PRICE $500 $100 August 1941 September 1941 October 1941.. N o v e m b e r 1941 D e c e m b e r 1941 .. $100.00 100.04 100.08 100.12 100.16 $500.00 500. 20 500.40 500.60 500.80 $1,000 $10,000 $100,000 $1,000.00 1, 000.40 1,000.80 1,001.20 1,001.60 $10,000 10,004 10,008 10,012 10,016 $100,000 100,040 100,080 100,120 100,160 $1, 002.00 1,002.40 1,002.80 1, 003. 20 1,003. 60 1,004.00 1,004.40 1,004.80 1,005. 20 1,005. 60 1,006.00 1,006.40 1,006.80 1,007.20 1,007. 60 1, 008.00 1, 008. 40 1, 008.80 1, 009. 20 1,009. 60 $10,020 10,024 10,028 10, 032 10.036 10,040 10,044 10,048 10,052 10,056 10, 060 10,064 10,068 10,072 10, 076 • 10,080 10,084 10, 088 10,092 10, 096 $100, 200 100, 240 100, 280 100, 320 100, 360 100, 400 100, 440 100, 480 100,520 100.560 100, 600 100,640 100, 680 100.720 100, 760 100, 800 100,840 100,880 100, 920 100,960 TAX-PAYMENT VALUE January 1942... February 1942.. March 1942 April 1942 May 1942....... June 1942 July 194^ August 1942 September 1942. October 1942.... November 1942. December 1942. January 1943... February 1943.. March 1943 April 1943 May 1943 Jmie 1943 Julym3 August 1943 $100. 20 100. 24 100.28 100. 32 100. 36 100.40 100. 44 100. 48 100. 52 100. 56 100. 60 100. 64 100. 68 100.72 100. 76 100.80 100.84 100.88 100.92 100.96 $501.00 501.20 501.40 501. 60 501.80 502.00 502. 20 502. 40 502. 60 502.80 503,00 503. 20 503.40 503.60 503.80 504. 00 504. 20 504.40 504.60 504.80 [First amendment to Department Circular No. 667] TREASURY DEPARTMENT, Washington, August 7, 19411. Section I I (2) of D e p a r t m e n t Circular N o . 667, dated July 22, 1941, is hereby amended t o read as follows: 2. Denominations and interest.—The notes of T a x Series A-1943 will be issued in denominations of $25, $50, a n d $100, a n d interest thereon will accrue during each m o n t h after August 1941 in t h e a m o u n t of 16 eents on each $100 principal a m o u n t , t h a t is, 4 cents on each $25, 8 cents on each $50, a n d 16 cents on each $100 denomination of note. T h e notes of T a x Series B-1943 will be issued in denominations of $100, $500, $1,000, $10,000, $100,000, $500,000, and $1,000,000, a n d interest thereon will accrue each m o n t h after August 1941 in t h e a m o u n t of 4 cents on each $100 principal amount, t h a t is, 4 cents on each $100, 20 cents on each $500, 40 cents on each $1,000, $4 on each $10,000, $40 on each $100,000, $200 on each $500,000, a n d $400 on each $1,000,000 denomination of note. I n no case, however, shall interest accrue beyond t h e m o n t h in which t h e note is presented in p a y m e n t of taxes, or beyond its m a t u r i t y . Exchanges of authorized denominations of each series from higher t o lower, b u t not from lower t o higher, m a y be arranged a t t h e Federal Reserve Bank of issue. H E N R Y MORGENTHAU, Jr., Secretary of the Treasury. 212 REPOiRJT OF T H E SEiCRETARY OF T H E TREASURY [Second amendment to Department Circular No. 667] TREASURY DEPARTMENT, Washington, October 21, 1941.. 1. Section I I (1) of D e p a r t m e n t Circular N o . 667, dated July 22, 1941, is hereby amended t o read as follows: 1. General.—Tlie notes of both series will be dated August 1, 1941, a n d will m a t u r e August 1, 1943. T h e owner's name and address a n d t h e date of issue w i l l b e entered on each note a t t h e time of its issue by a Federal Reserve Bank. T h e m o n t h in which p a y m e n t is received by a Federal Reserve B a n k or-branch, or b y t h e Treasurer of t h e United States, will determine t h e purchase price a n d issue date of each note. T h e notes m a y not be transferred except in the case of notes issued in t h e name of a parent corporation, in which case t h e y m a y be reissued in t h e name of a subsidiary of t h a t corporation with t h e same dating as t h e notes surrendered, upon presentation t o t h e Federal Reserve B a n k of issue; for t h e purposes of this p a r a g r a p h a subsidiary corporation is defined as one more t h a n 50 percent of whose stock with voting power is held by another corporation. No hypothecation of t h e notes on a n y account will be recognized by t h e Treasury D e p a r t m e n t , and they will not be accepted t o secure deposits of public money. Except as herein provided, t h e notes will be subject t o t h e general regulations of t h e Treasury D e p a r t m e n t , now or hereafter prescribed, governing bonds and notes of t h e United States. H E N R Y IVIORGENTHAU, Jr., , Secretary of the Treasury. Exhibit 2 Offering of 2% percent Treasury bonds of 1967-72 Q On October 9, 1941, Secretary of t h e Treasury Morgenthau offered for cash, subscription $1,200,000,000, or thereabouts, of 2}^ percent • Treasury bonds of 1967-72, and at t h e same time offered t h e holders of 1}^ percent Treasury notes of Series C-1941, matiiring December 15, 1941, t h e privilege of exchanging their m a t u r i n g notes for additional a m o u n t s of t h e Treasury^ bonds of 1967-72. A further additional a m o u n t of $100,000,000 could be sold t o Governrrient inv e s t m e n t accounts. I n t h e related press release it was s t a t e d t h a t $204,425,400 of Treasury notes of Series C - 1 9 4 i were t h e n outstanding. . < [Department Circular No. 670. Public Debt] TREASURY DEPARTMENT, Washington, October 9, 1941. I. OFFERING OF BONDS 1. 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, as amended, invites subscriptions, a t p a r and accrued interest, from t h e people of t h e United States for 2>^ percent bonds of t h e United States, designated Treasury bonds of 1967-72. T h e a m o u n t of t h e public offering is $1,200,000,000, or thereabouts, with t h e right reserved t o t h e Secretary of t h e Treasury to increase t h e offering by an a m o u n t sufficient t o accept all subscriptions for which Treasury notes of Series C-1941, m a t u r i n g December 15, 1941, are tendered in p a y m e n t and accepted. I n addition t o t h e a m o u n t offered for public subscription, $100,000,000, or ^thereabouts, of these bonds m a y be allotted t o Government investment accounts against cash p a y m e n t . II. DESCRIPTION OF BONDS 1. T h e bonds will be dated October 20, 1941, and will bear interest from t h a t d a t e a t t h e r a t e of 2J^ percent per annum, payable on a semiannual basis on March 15 and September 15 in each year until t h e principal a m o u n t becomes payable. T h e y will m a t u r e September 15, 1972, b u t m a y be redeemed a t t h e option of t h e United States on and after September 15, 1967, in whole or in part, a t p a r and accrued interest, on any interest day or daj^s, on 4 m o n t h s ' notice of redemption given in such m a n n e r as t h e Secretary of t h e Treasury shall prescribe. I n case of partial redemption t h e bonds t o be redeemed will be determined by such method as m a y be prescribed by t h e Secretary of t h e Treasury. F r o m t h e d a t e of redemption designated in any such notice, interest on t h e bonds called for redemption shall cease. REPORT OF THE SECRETARY OF THE TREASURY 213 2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from.all taxation now or hereafter imposed on the principal or interest thereof by any State, or . any of the possessions of the United States, or by any local taxing authority. 3. 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. 4. 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 iDonds 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. 5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing IJnited States bonds. III. SUBSCRIPTION AND ALLOTMENT. 1. Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their subscriptions, or of the securities which may be allotted thereon, prior to the closing of the subscription books. 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 by payment of 10 percent of the amount of bonds applied for. , . 2. 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, 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, subscriptions in payment of which Treasury notes of Series C-1941 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. IV. PAYMENT 1. Payment at par and accrued interest, if any, for bonds allotted on cash subscrip^tions hereunder must be made or completed on or before October 20, 1941, 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 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 ciualified in excess of existing deposits, when so notified by the Federal Reserve Bank of its district. Treasury notes of Series C-1941, maturing December 15, 1941, with coupon dated December 15, 1941, attached, will be accepted at par in payment for any bonds subscribed for and allotted, and should accompany the subscription. Accrued interest from June 15, 1941, to October 20, 1941 ($4.33743 per $1,000), will be paid following acceptance of the notes. v . GENERAL PROVISIONS 1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks of the respective districts, to issue allotment notices, to receive payment for^ bonds allotted, to make delivery of bonds on full-paid subscriptions allotted, and they may issue interim .receipts pending delivery of the definitive bonds. 2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve Banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury.- 214 REPORT OF T H E SEiCRETARY OF T H E TREASURY. Exhibits Subscriptions and allotments, -Treasury bonds of 1967-72 (from press releases, October 10, Id, and 22, 1941 0 On October 9, 1941, Secretary of the Treasury Morgenthau announced t h a t the subscription books for t h e cash offering of 2J^ percent Treasury bonds of 1967-72 closed a t t h e close of business October 9. Cash subscriptions aggregated $10,445,341,100, of which $1,407,503,200 was allotted. - Cash subscriptions were allotted 12J^ percent, on a straight percentage basis, .with adjustments, where necessary, to t h e $100 denomination. The subscription books for t h e receipt of subscriptions in p a y m e n t of which Treasury notes of Series C-1941, m a t u r i n g December 15, 1941, were tendered closed a t t h e close of business October 10. Exchange subscriptions aggregated $188,971,200, all of which were allotted in full. Subscriptions a n d allotments were divided among the Federal Reserve districts and the Treasury as follows: ' ; . Cash subscriptions Federal Reserve district Received Boston New York Philadelphia Cleveland Richmond A tlan ta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Treasury ..:.. - $951, 726, 650 4, 921,587, 550 616, 842, 550 691, 193, 300 418, 370, 400 535, 350, 350 1, 091,686, 900 255, 191, 450 163, 917, 350 137, 529, 200 193, 407, 050 446, 072, 050 22, 466, 300 Government investment accounts10, 445, 341,100 Total Allotted $119, 071,100 615, 575, 950 77, 328, 350 86, 556, 300 52, 392, 900 67, 069, 950 136, 678, 450 32,104, 000 20, 541, 900 17, 277, 700 24, 267, 600 55,826, 900 2,812,100 100, 000,000 1,407, 503, 200 Exchange subscriptions received (allotted in full) $12, 907, 700 127, 640,100 7, 763, 300 3, 294, 700 2, 562, 900 509, 200 13, 634, 300 3, 334,800 9,114, 600 1, 347, 000 2, 351. 500 3, 997, 500 613, 600 188, 971, 200 Total subscriptions allotted $131, 978, 800 743, 216, 050 85, 091, 650 89, 851, 000 54, 955, 800 67, 579,150 150, 312, 750 35, 438, 800 29, 656, 500 18, 624, 700 26, 619,100 59.824,400 3.325, 700 100,000, 000 1, 596, 474, 400 Exhibit 4 Offering of 1 percent Treasury notes of Series A-1946 On October 23, 1941, Secretary of t h e Treasury Morgenthau invited subscriptions for 1 percent Treasury notes of Series A-1946 from t h e holders of % percent Reconstruction Finance Corporation notes of Series P, m a t u r i n g November 1, 1941, and 1 percent Commodity Credit Corporation notes of Series E, m a t u r i n g .November 15, 1941. T h e a m o u n t of the offering was limited to the aggregate proceeds of p a y m e n t of t h e two m a t u r i n g corporate issues applied to t h e purchase of the new Treasury notes. In t h e related press release it was stated t h a t there were t h e n outstanding $299,839,000 of Reconstruction Finance Corporation notes of Series P and $204,241,000 of Commodity Credit Corporation notes of Series E. I t was also stated t h a t all of t h e Government guaranteed issues in t h e hands of the public would eventually be converted into TTreasury issues so t h a t the*' m a r k e t would ultimately be dealing with b u t one class of Government obligation. [Department Circular No. 671. Public Debt] TREASURY DEPARTMENT, Washington, October 23, 1941. 1. OFFERING OF NOTES AND INVITATION FOR TENDERS 1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t par, from t h e people of t h e United States for 1 percent notes of the United States, designated Treasury notes of Series A-1946, t h e offering to be limited to t h e a m o u n t of subscriptions entered as provided in t h e two. next succeeding paragraphs. 2. T h e Secretary of t h e Treasury offers to apply t h e proceeds of p a y m e n t of Reconstruction Finance Corporation notes of Series P, m a t u r i n g November 1, I'RevisedNov. 27, 1941. REPORT OF T H E SEICRETARY OF T H E TREASURY 215 1941, tendered for p a y m e n t in accordance with sections I I I and IV of this circular, to p a y m e n t for Treasury notes subscribed for hereunder. Tenders of Series P notes for t h a t purpose are invited. 3. T h e Secretary of t h e Treasury, on behalf of Commodity Credit Corporation, offers to purchase on November 1, 1941, a t p a r a n d accrued interest, Commodity Credit Corporation notes of Series E, m a t u r i n g November 15, 1941, to t h e extent to which the holders thereof subscribe for Treasury notes hereunder. Tenders of Series E notes for t h a t purpose are invited. II. DESCRIPTION OF NOTES 1. T h e notes will be dated November 1, 1941, and will bear interest from t h a t d a t e a t the r a t e of 1 percent per annum, payable on a semiannual basis on March 15 a n d September 15 in each year until t h e principal a m o u n t becomes payable. T h e y will m a t u r e March 15,1946, and will not be subject to call for redemption prior to m a t u r i t y . 2. T h e income derived from t h e notes shall be subject to all Federal taxes, now or hereafter imposed. T h e notes shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, or by any local taxing authority. 3. T h e notes will be accepted a t par during such time and under such rules a n d regulations as shall be prescribed or approved by ,the Secretary of the Treasury in p a y m e n t of, income and profits taxes payable a t the m a t u r i t y of the notes. 4. T h e notes will be. acceptable to secure deposits of public moneys, b u t will not bear t h e circulation privilege. 5. Bearer notes with interest coupons attached will be issued in denominations of $100, $500, $1,000, $5,000, $10,000, a n d $100,000. T h e notes will not be issued in registered form. 6. T h e notes will be subject to the general regulations of the Treasury D e p a r t ment, now or hereafter prescribed, governing United States notes. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received a t the Federal Reserve^ Banks and branches a n d a t t h e Treasury^ D e p a r t m e n t , Washington, and should be accompanied by Reconstruction Finance Corporation notes of Series P tendered for p a y m e n t , or C o m m o d i t y Credit Corporation notes of Series E tendered for purchase, t o a p a r a m o u n t equal to t h e par a m o u n t of Treasury notes of Series A-1946 subscribed for. Banking institutions generally m a y submit subscriptions for account of customers, b u t only t h e Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as official agencies. ^ 2. T h e Secretary of t h e Treasury reserves the right to reject any subscription, in whole or in part, to allot less t h a n the a m o u n t of notes applied for, and. to close t h e books as to any or all subscriptions a t any time without notice; and any action he m a y t a k e in these respects shall be final. Subject to these reservations, all subscriptions will be allotted in full.' Allotment notices will be sent out p r o m p t l y upon allotment. IV. PAYMENT 1. P a y m e n t a t p a r for notes allotted hereunder m u s t be m a d e on or before N o v e m b e r 1,1941, or on later allotment, and m a y be m a d e only through application of t h e principal proceeds of p a y m e n t of a like p a r a m o u n t of Reconstruction Finance Corporation notes of Series P, m a t u r i n g November 1, 1941, or of Commodity Credit Corporation notes of Series E, m a t u r i n g November 15, 1941. Commodity Credit Corporation notes of Series E tendered for purchase m u s t have coupons dated November 15, 1941, attached, and p a y m e n t will be m a d e a t p a r a n d accrued interest to November 1, 1941. Accrued interest from M a y 1 5 , ' 1941, to November 1, 1941, on Series E notes ($4.619565 per $1,000) will be paid following acceptance of the notes. V. GENERAL PROVISIONS i . As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to receive subscriptions, to m a k e allotments on t h e basis and up t o t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve IBanks of t h e respective districts, to issue allotment notices, to receive payment, for notes allotted, to m a k e delivery of notes on full-paid subscriptions allotted, a n d t h e y m a y issue interim receipts pending delivery of t h e definitive notes. 216 REPORT OF T H E SECRETARY OF T H E TREASURY .. 2. T h e Secretary of the Treasury m a y a t any time, or from time to time, prescribe suppli3mental 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. H E N R Y M O R G E N T H A U , Jr., Secretary of the Treasury. Exhibit 5 Allotments, Treasury notes of Series A-1946 {from press releases, October 23 and 30, 1941 0 On October 23, 1941, Secretar}^ of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e offering of 1 percent Treasury notes of Series A-1946—open to t h e holders of Reconstruction Finance Corporation notes of Series P , m a t u r i n g November 1, 1941, and of Commodity Credit Corporation notes of Series E, m a t u r i n g November 15, 1941—would close a t t h e close of business October 24. T h e principal proceeds of the pa3^ment of $502,866,000 of m a t u r i n g corporate notes were applied to p a y m e n t for a like a m o u n t of new Treasury notes. -Allotments were divided among t h e Federal Reserve districts a n d t h e Treasury as follows: . Federal Reserve district Subscriptions Subscriptions from holders of from holders of Total subscripCommodity Reconstruction tions received Credit CorFinance Corporation notes poration notes (allotted in full) of Series E of Series P Boston New York Philadelphia.. Cleveland Richmond Atlanta Chicago St. Louis Minneapolis.. Kansas City.. Dallas San Francisco Treasury ^ $1,020, 000 227, 076, 000 1,512,000 4, 712, 000 3,848,000 250, 000 61, 695, 000 2, 010, 000 2, 170, 000 2, 731, 000 1,820, 000 590, 000 10,000 $5, 887, 000 132, 088, 000 5,741, 000 267, 000 8,647, 000 ^2, 450, 000 1,091, 000 29, 755, 000 3, 250, 000 3,401,000 '3, 041, 000 6, 504, 000 1,300,000 $6, 907, 000 359,164, 000 7, 253,000 • 12, 979, 000 6, 495,000 1, 700, 000 80, 786, 000 • 5, 765, 000 5, 420,000 6,132, 000 7, 861, 000 2, 094,000 310, 000 Total... 299, 444, 000 203, 422, 000 502, 866, 000 Exhibit 6 Offering of 2}^ percent Treasury bonds of 1967-72 {additional) and 2 percent Treasury bonds vf 1951-55 ' •On December 4, 1941, Secretary of t h e Treasury Morgenthau offered for cash subscription $1,000,000,000 of 2^2 percent Treasury bonds of 1967-72 and $500,000,000 of 2 percent Treasury bonds of 1951-55! An additional a m o u n t of $50,000,000, or thereabouts, of Treasury bonds of 1967-72 could be sold t o Government investment accounts. T h e Treasury bonds of 1967-72 were an . addition to t h e series issued p u r s u a n t to D e p a r t m e n t Circular N o . 670, dated October 9, 1941. In t h e related press release of December 4, 1941, it was stated t h a t , for t h e benefit of small investors, preferential allotments would be given t o cash subscribers u p to $5,000 of t h e bonds of either or both series, where delivery in registered bonds 90 days after issue d a t e was specified; those who entered such subscription for preferential allotment were not permitted t o e n t e r a n y other subscription for the same issue. [Department Circular No. 672. Public Debt] TREASURY DEPARTMENT, Washington, December 4, 1941I. OFFERING OF BONDS ; 1. T h e Secretary of t h e Treasury, p u r s u a n t to the a u t h o r i t y of the Second Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest, 1 Revised Nov. 27, 1941. REPORT OF THE SECRETARY OF THE TREASURY 217 from the people of the United States for 2% percent bonds of the United States, designated Treasury bonds of 1967-72. The amount of the public offering is $1,000,000,000, or thereabouts. In addition to the amount offered for public subscription, $50,000,000,. or thereabputs, of these bonds may be allotted to Government investment accounts. II. DESCRIPTION OF BONDS 1. The bonds now offered will be an* addition to and will form a part of the series of 2>^ percent Treasury bonds of 1967-72 issued pursuant to Department Circular No. 670, dated October 9, 1941, will be freely interchangeable therewith, are identical in all respects therewith, and are described in the following quotation from Department Circular No. 670: [Description omitted here, see p. 212.] , III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their subscriptions, or of the securities which may be allotted thereon, prior to the closing of the subscription books. 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. Subscriptions from banks and trust companies for their own account will be received without deposit. Subscriptions from all others must be accompanied by payment of 10 percent of the amount of bonds applied for. The" bases on w^hich subscriptions will be entertained from the various classes of subscribers are contained in Treasury press statement of December 3, 1941, a copy of which is attached (see p. 218)) 2. 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, 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. Subscriptions for amounts up to and including $5,000 where the subscribers specify that delivery be made in registered bonds 90 days after the issue date will be given preferred allotment. In each such case a subscriber may not enter any other subscription, and payment must be made as provided in section IV of this circular. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced. IV. PAYMENT 1. Payment at par and accrued interest from October 20, 1941, for bonds allotted hereunder must be made or completed on or before December 15, 1941, 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 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 30 notified by the Federal Reserve Bank of its district. Accrued interest at 2}i oercent from October 20, 1941, to December 15, 1941, on $1,000 face amount is $3.8674. V. GENERAL PROVISIONS 1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions, to make allotments on the basis and up to the amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks of the respective districts, to issue allotment notices, to receive payment for bonds allotted, to make delivery of bonds on full-paid subscriptions allotted, and they may issue interim receipts pending delivery of the definitive bonds. 2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve Banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury, 218 REPOiRJT OF T H E SEiORETARY OF T H E TREASURY [Treasury press statement, Dec. 3,1941] ' TREASURY DEPARTMENT, Washington, December 3, 1941. I n advance of t h e cash offering of Treasury securities to be announced tomorrow, t h e Treasury t o d a y announced the basis on which subscriptions will be entertained from t h e various classes of subscribers who will participate in t h a t offering. T h e primary purpose is, so far as possible, to meet t h e legitimate investment requirements of t h e public, a n d . t o accomplish t h a t purpose subscriptions will be grouped broadly into four classes, as follows: Banks and t r u s t companies for their own account—not to exceed 50 percent of capital and surplus. M u t u a l savings and cooperative banks. Federal savings and loan associations, t r u s t accounts and investment corporations, pension funds, insurance companies, and similar institutions and funds—not to exceed ten percent of total resources. Corporations organized for profit, and dealers and brokers—^not to exceed 50 percent of n e t worth. Individuals—not to exceed 50 percent of net worth or 100 percent of cash deposited with subscription. ( N O T E . — N o preferred allotment will be made on such full-paid subscriptions.) Notwithstanding t h e general limitations outlined above, t h e Federal Reserve Banks are authorized and instructed to continue to examine applications for cash offerings of securities issued by t h e Treasury, and to report to t h e Secretary of t h e Treasury any which, in their judgment, require special t r e a t m e n t , or,which appear to be excessive from t h e standpoint of t h e resources or investment practices of t h e subscribers, or for other reasons, with recommendation as to t h e acceptance, reduction, or rejection of any such applications, which recommendations will be p r o m p t l y acted upon by t h e Secretary. o T?he cooperation of banking institutions, and of t h e subscribing public generally, is' earnestly solicited so t h a t subscriptions forwarded to t h e Federal Reserve Banks and t h e Treasury will in each instance be for a m o u n t s not in excess of t h e limitation set forth above. Attention is again invited to t h e requirement t h a t subscribers agree not to sell or otherwise dispose of their subscriptions, or of t h e securities which m a y be allotted thereon, prior to the closing of t h e subscription books. I t is also requested t h a t banks and others refrain from making any unsecured loans, or loans collateralized in whole or in p a r t by t h e securities subscribed for, to coyer t h e initial deposits which are required to be paid when subscriptions are entered. [Department Circular No. 673. Public Debt] TREASURY DEPARTMENT, Washington, December 4) 1941I. OFFERING OF BONDS 1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t p a r and accrued interest, from t h e people of t h e United States for 2 percent bonds of t h e United States, designated Treasury bonds of 1951-55. T h e a m o u n t of t h e offering is $500,000,000, or thereabouts. II. DESCRIPTION OF BONDS 1. T h e bonds will be dated December 15, 1941, a n d will bear interest from t h a t date at t h e r a t e of 2 percent per a n n u m , payable semiannually on J u n e 15 ahd December 15 in each year until t h e principal a m o u n t becomes payable. T h e y will m a t u r e December 15, 1955, b u t m a y be redeemed a t t h e option of t h e United States on a n d after December 15, 1951, in whole or in part, a t p a r a n d accrued interest, on any interest day or days, 'on 4 m o n t h s ' notice of redemption given in such manner as t h e Secretary of t h e Treasury shall prescribe.^ * * * III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at t h e Federal Reserve Banks and branches and a t t h e Treasury Department., Washington.^ * * * i Omitted portion similar to corresponding section of Department Circular No. 670. p. 212. 2 Omitted portion similar to corresponding section of Department Circular No. 672, p. 216. 219 REPORT OF THB SECRETARY OF THB TREASURY IV. PAYMENT 1. P a y m e n t at par and accrued interest, if any, for bonds allotted hereunder m u s t be m a d e or completed on or before Deicember 15, 1941, or on later allotment. I n every case where p a y m e n t is not so completed, t h e paynient with application up to 10 percent of t h e a m o u n t of bonds applied for shall, upon declaration m a d e by t h e Secretary of t h e Treasury in his discretion, be forfeited to t h e United States. Any qualified depositary will be permitted t o m a k e p a y m e n t by credit for bonds allotted to it for itself and its customers up to any a m o u n t for which it shall be. qualified, in excess of existing deposits, when so notified by t h e Federal Reserve Bank of its district. V. G E N E R A L P R O V I S I O N S 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to receive subscriptions i * * *. H E N R Y MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 7 Subscriptions and allotments, Treasury bonds of 1967-72 {additional) and Treasury bonds of 1951-55 {from press releases, December 5, 8, and 16, 194P) On December 4, 1941, Secretary of t h e Treasury Morgenthau announced t h a t the subscription books for t h e offering of 2>^ percent Treasury bonds of 1967-72 a n d 2 percent Treasury bonds of 1951-55 closed at t h e close of business December 4, except for the receipt of subscriptions for a m o u n t s up to and including $5,000, where t h e subscribers specified that" delivery might be made in registered bonds 90 days after t h e issue date. T h e subscription iDooks for t h e receipt of subscriptions of t h a t class closed at the close of business December 6. For t h e 2}i percent Treasury bonds of 1967-72 subscriptions totaled $6,979,193,950, of which $1,119,570,750 was allotted. Subscriptions for $5,000 or less, where t h e subscribers specified t h a t delivery be made in registered bonds 90 days after t h e issue date, were allotted in full, $26,043,450 having been allotted. All other subscriptions were allotted 15 percent on a straight percentage basis, with adjustments, where necessary, to t h e $100 denomination. For t h e 2 percent Treasury bonds of 1951-55 subscriptions totaled $4,727,898,150, of which $532,687,950 was allotted. Subscriptions for $5,000 or less, where t h e subscribers specified t h a t delivery be m a d e in registered bon-ds 90 days after t h e issue date, were allotted in full, $13,800,850 having been allotted. All other subscriptions were allotted 11 percent on a straight percentage basis, with adjustments, where necessary, to t h e $100 denomination. Subscriptions and allotments were divided among t h e Federal Reserve districts and t h e Treasury as follows: T r e a s u r y b o n d s of 1967-72 T r e a s u r y b o n d s of 1951-55 F e d e r a l Reserve district Subscriptions received Boston.. New York Philadelphia Cleveland Richmond Atlanta Chicago St. L o u i s .Minneapolis Kansas City Dallas . San Francisco Treasury Government investment accounts. Total .... $637,834,450 3,433,309, 300 441, 752, 800 400,009, 850 252,414, 250 255,674, 400 672, 230, 950 153, 192, 050 122, 166,450 118, 588,100 148,225, 550 336,961, 400 6,834, 400 6, 979,193, 950 Subscriptions allotted Subscriptions received Subscriptions allotted $96, 686, 700 $343, 340, 850 520, 857, 900 2, 242, 647, 450 .69,108,850 272, 261, 950 61, 204, 550 •319, 816, 050 39, 397, 700 164, 714, 650 39,173, 300 182, 288, 250 103, 871, 700 537, 042, 950 24, 658, 850 114, 617, 300 19, 642, 450 64, 802, 350 19, 475, 400 84, 841, 550 22, 989,850 107, 621, 250 51, 467, 900 280, 768, 550 1, 035, 600 13, 135, 000 50, 000,000 1,119, 570, 750 4, 727, 898,150 1 O m i t t e d portion similar to corresponding section of D e p a r t m e n t Circular N o . 672, p . 216. 2 R e v i s e d M a r . 21 a n d M a y 20,1942. $38, 273, 800 248, 713, 950 30,840,900 35,804,450 19, 054,100 20, 680, 300 61,476,150 13, 824, 000 8, 332, 900 10, 603,150 12, 257, 750 31, 365,100 1, 461,400 532, 687, 950 220 REPORT OF THE SECRETARY OF THE TREASURY Exhibit 8 Offering of Treasury notes of Tax Series A-1944 di^d Tax Series B-1944 • On December 15, 1941, Secretary of the Treasury Morgenthau offered for sale two issues of nontransferable Treasury notes of Tax Series A-1944 and Tax Series B-1944, both receivable, at par and accrued.interest, in pa3^ment of Federal income, estate, and gift taxes. These notes were placed on sale on January 1, 1942. [Department Circular No. 674. Public Debt] T R E A S U R Y DEPAR';rMENT, Washington, December 15, 1941. I. OFFERING OF NOTES 1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, offers for sale, to the people of the United States, at par and accrued interest, two issues of nontransferable notes of the United States, designated Treasury notes of Tax Series A-1944 and Treasury notes of Tax Series B-1944, which notes, under authority of section 3657 of the Internal Revenue Code, and subject to the limitations and conditions hereinafter set forth, will be receivable, at par and accrued interest, in payment of Federal income, estate, and gift taxes. 2. The notes will be placed on sale January 1, 1942, and the sale will continue until December 31, 1942, unless earlier terminated, as to either or both series, by the Secretary of the Treasury. II. DESCRIPTION OF NOTES 1. General.—The notes of both series will be dated January 1, 1942; they will mature January 1, 1944, and may not be called by the Secretary of the Treasury .for redemption before maturity. Subject to the limitations and conditions set forth in section IV of this circular, the notes of both series will be receivable, at par and accrued interest, in payment of Federal income, estate, and gift taxes, if the notes are not presented in payment of taxes, they will be payable at maturity, or, at the owner's option and request, they will be redeemable before maturity, as provided in section V of this circular, but in either case payment will be nm'de only at the price paid for the notes. 2. Form, inscription, dating.—The owner's name and address will be entered on each note.at the time of its issue by an authorized issuing agent, and the date of issue will be shown by an imprint of the agent's dating stamp. The month in which payment is received and credited by a Federal Reserve Bank or branch, or by the Treasurer of the United States, will determine the purchase price and issue date of each note. The notes may not be transferred, except that, if notes, are held b};^ a corporation owning more than 50 percent of the stock, with voting power, of another corporation, such notes may be transferred to the subsidiary upon request of the corporation and surrender of the notes to the agent that issued them. No hypothecation of the notes on any account will be recognized by the Treasury Department, and they will not be accepted to secure deposits of public money. 3. Denominations and interest.—The notes of Tax Series A-1944 will be issued in denominations of $25, $50, $100, $500, and $1,000, and interest tliereon will accrue from January 1942 in the amount of 16 cents each month on each $100 principal amount, that is, 4 cents on each $25, 8 cents on each $50, 16 cents on each $100, 80 cents on each $500, and $1.60 on each $1,000 denomination of note. The notes of Tax Series B-1944 will be issued in denominations of $100, $500, $1,000, $10,000, $100,000, $500,000, and $1,000,000, and. interest thereon will accrue from January 1942 in the amount of 4 cents each month on each $100 principal ainount, that is, 4 cents on each $100, 20 cents on each $500, 40 cents on each $1,000, $4 on each $10,000, $40 on each $100,000, $200 on each $500,000, aind $400 on each $1,000,000 denomination of note. In no case, however, shall interest accrue beyond the month in which the note is presented in payment of taxes, or beyond its maturity. Exchanges of authorized denominations of each series from higher to lower, but not from" lower to higher, may be arranged at the office of the agent that issued the note. 4. Purchase price and tax-payment value.—Tables are appended to this circular showing the principal amount with accrued interest added, for notes of each REPORT OF T H E S E I O R E T A R Y ' OF T H E TREASURY 221 denomination of each series, for each m o n t h from J a n u a r y 1942 to Januar}^ 1944, inclusive. T h e t o t a l shown for any denomination for any month-—January t h r o u g h December 1942—while t h e notes remain on sale, is t h e purchase price, or cost, of t h e note during t h a t m o n t h . Also, t h e total shown for any denomination for any m o n t h — J a n u a r y 1942 through J a n u a r y "1944—is t h e t a x - p a y m e n t value of t h e note if receivable during t h a t inonth in p a y m e n t of taxes, subject to the provisions of section IV of this circular. 5. Taxation.—Income derived from t h e notes shall be subject to all Federal taxes, now or hereafter imposed. T h e notes shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, or by any local taxing authority. III. PURCHASE OF NQTES 1. Applications and payment.—Applications will be received by t h e Federa -Reserve Banks and branches, and by t h e Treasurer of the United States, Wash" ington, D. C. ' Banking institutions generally m a y submit applications for ac". count of customers, b u t only t h e Federal Reserve Banks and the Treasury Departm e n t are authorized to act as official agencies.^ Every application m u s t be accompanied by p a y m e n t in full, at p a r and accrued interest from J a n u a r y 1942 t o t h e m o n t h in which p a y m e n t in immediately available funds is received by a Federal Reserve Bank or branch, or t h e Treasurer, of t h e United States. Any form of exchange, including personal checks, will be accepted subject to collection, a n d should be drawn to t h e order of t h e Federal Reserve Bank or of t h e Treasurer of t h e United States, as payee, as t h e case m a y be; defense savings stamps will be accepted a t their face value in lieu of cash. T h e date funds are m a d e available on collection of exchange will govern t h e issue price and issue date of t h e notes. Any depositary, qualified p u r s u a n t to t h e provisions of Treasury D e p a r t m e n t • Circular No. 92 (revised February 23, 1932, as supplemented) will be permitted to m a k e p a y m e n t by credit'for notes applied for on behalf of itself or its customers up to any a m o u n t for which it shall be qualified in excess of existing deposits. 2. Reservations.—The Secretary of t h e Treasury reserves t h e right to reject any application in whole or in part, and to refuse to issue or permit to be issued hereunder any notes of either or both series in any case or in any class or classes of cases if he deems such action to be in t h e public interest, and his action ih any such respect shall be final. If an application is rejected, in whole or in part, any paym e n t received therefor will be refunded. T h e Secretary of t h e Treasury, in his discretion, m a y designate agencies other t h a n those herein provided for t h e sale of, or for t h e handling of applications for. Treasury notes to be issued hereunder. 3. Delivery of notes.—Upon acceptance of full-paid applications, notes will be duly issued and, unless delivered in person, will be delivered by registered mail within t h e Continental United States, t h e Territories and Insular Possessions of t h e United States, t h e Canal Zone and t h e Philippine Islands. No deliveries elsewhere will be made. 4. Form of application.—In applying for notes uiider this circular, care should be exercised to specify whether those of Tax Series A-1944 or Tax Series B-1944 are desired, and there m u s t be furnished t h e n a m e and address of t h e individual, corporation, or other entity in which t h e notes are to be issue<i; a n d if address for t h e delivery of t h e notes is different, appropriate instructions should be given. T h e n a m e should be in t h e same form as t h a t used in t h e Federal" t a x return of t h e purchaser, except t h a t in t h e case of joint tax returns of individuals the* notes should be inscribed individually—the notes-will'riot be issued in t h e names of two or more persons jointly. T h e application should be accompanied by remittance to cover t h e purchase price—that is, par—together with accrued interest from J a n u a r y 1942 to t h e m o n t h in which t h e application will be received and t h e remittance collected by an authorized issuing agent. T h e use of an official application form is desirable, b u t not necessary. Appropriate forms m a y be obtained on application to any Federal Reserve Bank or branch, or t h e Treasurer of t h e United States", Washington,' D . C.; banking institutions generally have Ibeen supplied with forms for t h e use of their customers. IV. PRESENTATION IN PAYMENT OF TAXES 1. During and after t h e t h i r d calendar m o n t h from m o n t h of purchase (as "shown by t h e issuing agent's dating s t a m p on each note), during such time, a n d under such rules and regulations as t h e Commissioner of Internal Revenue, with 222 R E P O I R T OF T H E SECRETARY OF T H E TREASURY the approval of t h e Secretary of t h e Treasury, shall prescribe, notes issued hereunder in t h e n a m e of a t a x p a y e r (individual, corporation, or other entity) m a y be presented and surrendered by such taxpayer, his agent, or his estate, to t h e Collector of I n t e r n a l Revenue to whom t h e tax return is made, and will be receivable by t h e Collector a t p a r and accrued interest from J a n u a r y 1942 to the m o n t h , inclusive (but no accrual beyond J a n u a r y 1944), in which presented, in p a y m e n t of any Federal income taxes (current and back personal and corporation taxes, and excess-profits tax'es), or any Federal estate or gift taxes (current and back), assessed against t h e original purchaser or his estate, b u t t h e Collector will accept (a) not more t h a n $1,200 principal a m o u n t of notes of T a x Series A-1944, or of T a x Series A-1943, or pf t h e two in combination, and (b) t h e a m o u n t of t h e accrued interest thereon, on account of any one taxpayer's liability for each class of taxes (income, estate, or gift) for each taxable period: Provided, T h a t this limitation shall apply separately to husband and wife on a joint return, and shall apply separately to an owner before death and to his estate for t h e balance of the same year. T h e notes m u s t be forwarded to t h e Collector a t t h e risk and expense» of t h e owner, and, for t h e owner's protection, should be forwarded by registered mail, if not presented in person. V. CASH R E D E M P T I O N A T OR P R I O R TO M A T U R I T Y 1. General.—Any Treasury note of TTax Series A-1944 or Tax Series B-1944 will be redeemed for cash a t t h e purchase price a t or before m a t u r i t y . Notes of T a x Series A-1944 m a y -be redeemed before m a t u r i t y without advance notice, b u t notes of Tax Series B-1944 m a y be redeemed before m a t u r i t y only after 60 days from date of issue (as shown by the dating s t a m p of t h e issuing agent) and on 30 d a y s ' advance notice. T h e timely surrender of a note of Tax. Series B-1944, bearing a properly executed request for payment, will be accepted as constituting t h e advance notice required hereunder. 2. Execution of request for payment.—-The owner in whose n a m e t h e note is inscribed m u s t appear before one of t h e officers authorized b y t h e Secretary of t h e Treasury to witness and certify requests for p a y m e n t , establish his identity, and in t h e presence of such officer sign t h e request for p a y m e n t appearing on t h e back of t h e note, adding t h e address to which check is to be mailed. After t h e request for p a y m e n t has been so signed, the witnessing officer should complete and sign t h e certificate provided for his use. 3. Officers authorized to witness and certify requests for payment.—All ofRcers authorized to witness and certify requests for p a y m e n t of United States savings bonds, as set forth in Treasury D e p a r t m e n t Circular No. 530, F o u r t h Revision, as amended, are hereby authorized to witness and certify requests for cash redernption of Treasury notes issued under this circular. Such officers include United States postmasters, certain other post office officials, and t h e executive officers of all banks and t r u s t companies incorporated in t h e United States or its organized territories, including officers a t branches thereof who are certified to t h e Treasury D e p a r t m e n t as executive officers. 4. Presentation and surrender.—Notes bearing properly executed requests for p a y m e n t m u s t be presented and surrendered to t h e agent t h a t issued the notes (as shown by t h e agent's dating s t a m p ) , a t the expense and risk of the owner. For t h e owner's, protection, notes should be forwarded by registered mail, if not presented in person. 5. Disability or death.—In case of t h e disabilitj^ or d e a t h of t h e owner, and t h e notes are not to be presented in p a y m e n t of Federal income, estate, or gift taxes due from him or from his estate, instructions should be obtained from t h e issuing; agent before t h e request for p a y m e n t is executed, or t h e notes presented. 6. P a r t i a l redemption.—^Partial cash redemption of notes of either series, corresponding to an authorized denomination, m a y be m a d e in t h e same m a n n e r as for full cash redemption, appropriate changes being m a d e in t h e request for p a y m e n t . I n case of partial redemption of a note, t h e remainder will be reissued in t h e same n a m e and with t h e same date of issue as t h e note surrendered. 7. P a y m e n t . — P a y m e n t of any note, either a t m a t u r i t y or on redemption before m a t u r i t y , Tvill be m a d e only by t h e Federal Reserve Bank or t h e Treasury D e p a r t m e n t , as t h e case m a y be, t h a t issued t h e note, and will be m a d e by check drawn to t h e order of t h e owner, and mailed to t h e address given in his request . for p a y m e n t . In any case, p a y m e n t will be m a d e a t t h e purchase price of t h e note, t h a t is, a t p a r and accrued interest (if any) paid a t t h e time of purchase. 223 EE.PORT OF T H E SECRETARY OF T H B TREASfURY' VI. GENERAL PROVISIONS 1. Except as provided in this circular, t h e notes issued hereunder will be subject to t h e general regulations of t h e Treasury D e p a r t m e n t , ndw or hereafter prescribed, governing bonds and notes of the United States. 2. Federal Reserve Banks and their branches, as fiscal agents of t h e United States, are authorized to perform such services or acts as m a y be appropriate a n d necessary under t h e provisions of this circular, and uhder any instructions given by t h e Secretary of t h e Treasury. / 3. T h e Secretary of t h e Treasury m a y a t any time or from time to time supplem e n t or amend t h e terms of this circular, or of any a m e n d m e n t s or supplements thereto, and m a y a t any time or from time to time prescribe a m e n d a t o r y rules a n d regulations governing t h e offering of t h e notes, information as to which will p r o m p t l y be furnished to t h e Federal Reserve Banlis. HENRY MORGENTHAU, Jr., Secretary of the Treasury. TREASURY NOTES T A X S E R I E S A-1944 Purchase price and t a x - p a y m e n t value during successive m o n t h s The table below shows the principal amount with accrued interest added, for notes of each denomination, for each month from J a n u a r y 1942 io J a n u a r y 1944, inclusive. The total shown for any denomination for any month—January through December 1942—while the notes remain on sale, is the purchase price, or cost of the note during that month. Also the total shown for any denomination for any month—January 1942 through J a n u a r y 1944—i^ the tax-payment value of the note if receivable during that month in payment of taxes. 1942: Januai'y--February.. March April May June.. July August September. October... November. December. 1943: January... February.. March April May June July August September. October... November. December. 1944: January..- 487543—43- -16 $25 $50 $25. 00 25.04 25.08 25.12 25.16 25.20 25.24 25.28 25.32 25.36 25.40 25.44 $50. 00 50.08 50.16 50.24 50.32 50.40 50.48 50.56 50.64 50.72 50.80 50.88 $100. 00 100.16 100. 32 100.48 100. 64 100. 80" 100. 96 101.12 101. 28 101. 44 101. 60 .101. 76 25. 48 25.52 25.56 25.60 25.64 25.68 25.72 25. 76 25.80 25.84 25.88 25.92 50.96 51.04 51.12 51.20 51.28 51.36 51.44 51.52 51. 60 51.68 51.76 51.84 102. 08 102. 24 102. 40 102. 56 102. 72 102. 88 103.04 103. 20 103.36 103. 52 103. 68 509.60 510.40 511. 20 512. 00 512. 80 513. 60 514. 40 515. 20 516. 00 516.80 517. 60 518. 40 1,019. 20 1, 020. 80 1, 022.40 1, 024. 00 1, 025. 60 1, 027. 20 1, 028. 80 1, 030.40 1, 032.00 1, 033. 60 1, 035. 20 1, 036.80 25.96 51.92 103.84 519. 20 1, 038. 40 $100 iOl. 92 $500 $1,000 $500.00 $1,000.00 500. 80 1,001. 60 501. 60 1,003. 20 502. 40 1, 004. 80 503. 20 1, 006. 40 504. 00 1, 008. 00 504.80 1, 009. 60 505. 60 1, Oil. 20 506. 40 1, 012.80 507. 20 1, 014. 40 508. 00 1, 016. 00 1,017. 60 508.80 224 REPORT OF T H E SECRETARY OF T H E TREASURY TREASURY NOTES—^TAX SERIES B-1944 Purchase price and tax-payment value during successive months The table below shows the principal amount ivith accrued interest added, for- notes of each denomination, for each month from January 1942 to January 1944, inclusive. The total shown for any denomination for any month—January through December 1942—while the notes remain on sale, is the purchase price, or cost of the note during that month. Also the total shown for any denomination for any month—January 1942 through January 1944—i^ l^^ tax-payment value of the note if receivable during that month in payment of taxes. $100 1942: January... February.. March April May June • July August September October..November. December. 1943: January... February.. March April May June July .. August September. October November. December. 1944: January.... $100. 00 100. 04 100.08 100.12 100.16 • 100.20 100.24 100. 28 • 100.32 100. 36 100.40 100.44 $500 $1,000 $10,000 $100,000 $500,000 $500. 00 $1, 000. 00 $10, 000 $100, 000 $500, 000 500. 20 1, 000. 40 10,004 100, 040 500, 200 500. 40 1,000. 80 10, 008 100,080 500, 400 500. 60 1,001. 20 10,012 100,120 500, OCO 10, 016 100,160 500. 80 1, 001. 60 500,803 10,020 100, 200 501. 00 1, 002. 00 501, 000 501.20 1, 002.40 10, 024 100, 240 501, 200 501. 40 1, 002. 80 • 10, 028 100, 280 501,400. 501. 60 1, 003. 20 10, 032 . 100, 320 501,603 501. 80 1,003. 60 10,036 100,360 501, 800 502. 00 1,004.00 10,040. 100, 400 502, 000 502. 20 1,004. 40 •10,044 .100,440 502, 200 100. 48 100.52 100. 56 100.60 100. 64 100. 68 100. 72 100.76 100.80 100.84 100.88 100.92 502. 40 502. 60 502.80 503. 00 503. 20 503. 40 503. 60 503. 80 504. 00 504. 20 604.40 604. 60 1, 004. 80 1, 005. 20 1, 005. 60 1, 006. 00 1, 006. 40 1,006.80' 1, 007. 20 1, 007. 60 1, 008. 00 1, 008. 40 1,008. 80 1, 009. 20 100, 480 10, 048 10,052 100, 520 10, 056 100,560 10, 060 100,600 10, 064 . 100,640 10, 068 100,680 10,072 100,720 10, 076 100, 760 10, 080 100, 800 10, 084 100, 840 10, 088 100, 880 10, 092 100,920. 100.96 §04. 80 1,009. 60 10,096 100, 960 $1,000,000 $1, 000, 000 1, 000,400 1.000, 800 1.001, 200 1,001,600 . 1,002,000 1.002, 400 1, 002,800 1, 003, 200 1, 003, 600 1, 004, 000 1, 004,400 502,400 1, 004, 800 502,600 1, 005, 200 502,800 1, 005, 600 503, 000 1, 006, 000 503, 200 1 1, 006, 400 1,006, 800 503,400 1, 007, 200 503,600 1, 007, 600 503,800 1,008, 000 504,000 504,200 1.008, 400 504,400 1, 008,800 504,600 1, 009, 200 504,800 1.009, 600 Exhibit 9 Offering of 2 percent Treasury bonds of 1949-51 On January 12, 1942, Secretary of the Treasury Morgenthau invited subscriptions for 2 percent Treasury bonds of 1949-51 from the holders of (1) 1% percent Treasury notes of Series A-1942, maturing March 15, 1942, (2) 3 percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on January 15, 1942, (3) 2% percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on March 1, 1942, and (4) % percent Reconstruction Finance Corporation notes of Series R, maturing January 15, 1942. The amount of the offering was limited to the amount of these securities tendered and accepted. In the related press release it was stated that the amounts of the four issues then outstanding were approximately as follows: Treasury notes of Series. A-1942, $426,000,000; 3 percent Federal Farm Mortgage Corporation bonds of 1942-47, $236,000,000; 2% percent Federal Farm Mortgage Corporation bonds of 1942-47, $103,000,000; and Reconstruction Finance Corporation notes of Series R, $310,000,000. [Department Circular No. 676. Public Debt] TREASURY DEPARTMENT, Washington, January 12, 1942. 1. OFFERING OF BONDS AND INVITATION FOR TENDERS 1. The Secretary of-the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, invites subscriptions, at par, from the people of the United States for 2 percent bonds of the United States, designated Treasury bonds of 1949-51, the amount of the offering to be limited to the amount of securities tendered and accepted as provided in the following subparagraphs: REPORT OF THE SEICRETARY OF THE TREASURY 225 (a) Treasury notes of Series A-1942.—Treasury notes of Series A-1942, maturing March 15, 1942, will be accepted in payment for Treasury bonds subscribed for hereunder. (6) 3 Percent Federal Farm Mortgage Corporation bonds of 1942-47.—The Secretary of the Treasury offers to apply the proceeds of payment of 3 percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on January 15, 1942, tendered for payment in accordance with sections III and IV of this circular, to payment for Treasury b.onds subscribed for hereunder. Tenders of 3 percent Federal Farm Mortgage Corporation bonds of 1942-47 for that purpose are invited. (c) ;8% Percent Federal Farm Mortgage Corporation bonds of 1942-47.—The Secretary of the Treasury, on behalf of the Federa] Farm Mortgage Corporation, offers to purchase on January 15, 1942, at par and accrued interest, 2% percent Federal Farm Mortgage Corporation bonds of 1942-47, called for redemption on March 1, 1942, to the extent to which the holders thereof subscribe for Treasury bonds hereunder. Tenders of 2)^ percent Federal Farm Mortgage Corporation bonds of 1942-47 for that purpose are invited. {d) Reconstruction Finance Corporation notes of Series R.—The Secretary of the Treasury offers to apply the proceeds of payment of Reconstruction Finance Corporation notes of Series R, maturing January 15, 1942, tendered for payment in accordance with sections III and IV of this circular, to payment for Treasury bonds subscribed for hereunder. Tenders of Series R notes for that purpose are invited. II. DESCRIPTION OF BONDS 1. The bonds will be dated January 15, 1942, and will bear interest from that date at the'rate of 2 percent per annum, payable on a semiannual basis on June 15 and December 15 in each year until the principal amount becomes payable. They will mature June 15, 1951, but may be redeemed at the option of the United States on and after June 15, 1949, 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. 2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from, all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority., 3. 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. 4. 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. 5. The bonds will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United^States bonds. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington, and should be accompanied by " securities of one or more of the issues enumerated in section 1 hereof, tendered for payment or purchase as the case may be, to an aggregate par amount equal to the par amount of .Treasury bonds of 1949-51 subscribed for hereunder. 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. 2. 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, and to close /the books as to any or all subscriptions at any time without notice; andany 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. 226 REPORT OF THE SECRETARY OF THE TREASURY IV. PAYMENT 1. P a y m e n t a t par for bonds allotted hereunder m u s t be m a d e on or before J a n u a r y 15, 1942, or on later allotment a n d m a y be m a d e only in Treasury notes of Series A-1942 or through application of t h e principal proceeds of p a y m e n t of 3 percent Federal F a r m Mortgage Corporation bonds of 1942-47, 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47, or Reconstruction Finance Corporation notes of Series R, in an aggregate par a m o u n t equal to t h e a m o u n t of bonds allotted hereunder. Coupons dated March 15, 1942, must be a t t a c h e d to Treasury notes of Series A-1942 when surrendered, a n d accrued interest from September 15,'1941, to J a n u a r y 15, 1942 ($5.89779 per $1,000) will be paid following acceptance of the notes. • Coupons dated March 1, 1942, m u s t be a t t a c h e d to 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47 in coupon form a n d accrued interest from September 1, 1941, to J a n u a r y 15, 1942 ($10.33149 per $1,000), will be paid following acceptance of t h e bonds. In t h e case of registered bonds of either issue, checks in p a y m e n t of final interest will be drawn in accordance with the assignments on t h e bonds surrendered. V. SURRENDER OF CALLED BONDS 1. Coupon bonds.—3 percent a n d 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47 in coupon form tendered hereunder should be presented and surrendered with t h e subscription to a Federal Reserve Bank or branch or to t h e Treasurer of t h e United States, Washington, D . C. Coupons dated July. 15, 1942, a n d IVfarchl, 1942, respectively, ^ n d all coupon^ bearing subsequent dates, should be a t t a c h e d to such bonds when surrendered, a n d if any such coupons are missing, t h e subscription m u s t be accompanied by cash p a y m e n t equal to the face a m o u n t of t h e missing coupons. T h e bonds m u s t be delivered a t t h e expense a n d risk of t h e holder. Facilities for transportation of bonds by registered mail insured m a y be arranged between incorporated banks a n d t r u s t companies a n a t h e Federal Reserve Banks, a n d holders m a y t a k e a d v a n t a g e of such arrangements when available, utilizing such incorporated banks a n d t r u s t companies as their agents. 2. Registered bonds.—3 percent a n d 2% percent Federal F a r m Mortgage Corporation bonds of 1942-47 in registered form tendered hereunder should be assigned by t h e registered payees or assignees thereof in one of t h e forms hereafter set forth, a n d thereafter should be presented a n d surrendered with t h e subscription to a Federal Reserve Bank or branch or to t h e Treasury D e p a r t m e n t , Division of Loans a n d Currency, Washington, D . C. T h e bonds m u s t be delivered a t t h e expense a n d risk of t h e holder. T h e proper forms of assignment a r e : (a) Where 3 percent bonds are surrendered.—If t h e new bonds are desired registered in t h e same n a m e as t h e ' b o n d s surrendered, ' T e d e r a l F a r m Mortgage Corporation for p a y m e n t , - t h e proceeds to be applied to p a y m e n t for Treasury bonds of 1 9 4 9 - 5 1 " ; if t h e new bonds are desired registered in another name, ''Federal F a r m Mortgage Corporation for p a y m e n t , t h e proceeds to be applied to p a y m e n t for Treasury bonds of 1949-51 in t h e n a m e of _"; if t h e new bonds are desired in coupon form, ''Federal F a r m Mortgage Corporation for p a y m e n t , t h e proceeds to be applied to p a y m e n t for Treasury bonds of 1949-51 in coupon form to be delivered to " (5) Where 2% percent bonds are surrendered.—If t h e new bonds are desired registered in t h e same n a m e as t h e bonds surrendered, "Federal F a r m Mortgage Corporation for purchase, t h e principal proceeds to be applied to p a y m e n t for Treasury bonds of 1 9 4 9 - 5 1 " ; if t h e new bonds are desired registered in another name, "Federal F a r m Mortgaoje Corporation for purchase, t h e principal proceeds to be applied to p a y m e n t for Treasury bonds of 1949-51 in t h e name of " ; if t h e new bonds-are desired in coupon form, "Federal F a r m Mortgage Corporation for purchase, t h e principal proceeds to be applied to p a y m e n t for Treasury bonds of 1949-51 in coupon form to be delivered to " VI. GENERAL PROVISIONS 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to receive subscriptions, to m a k e allotments on t h e basis a n d up t o t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve Banks 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, a n d they m a y issue interim receipts pending delivery of t h e definitive bonds. 227 REPORT OF T H E SE'CRETARY OF T H E TREASUR.Y 2. 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 a n d regulations governing t h e offering, which will be communicated p r o m p t l y to t h e Federal Reserve Banks. H E N R Y MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 10 Allotments, Treasury bonds of 1949-51 {from press releases, J a n u a r y 13 and 19, 1942^) On J a n u a r y 12, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e offering of 2 percent Treasury bonds of 1949-51— open t o the holders of Treasury notes of Series A-1942, maturing March 15, 1942, 3 percent Federal F a r m Mortgage Corporation bonds of 1942-47, called for redemption J a n u a r y 15, 1942, 2% percent Federal F^,rm Mortgage Corporation bonds of 1942-47, called for redemption March 1, 1942, and Reconstruction Finance Corporation notes of Series R, m a t u r i n g J a n u a r y 15, 1 9 4 2 ^ w o u l d close a t t h e close of business J a n u a r y 13, except for t h e receipt of subscriptions from holders of $15,000 or less of t h e two issues of Federal F a r m Mortgage Corporation bonds. For t h e latter class t h e subscription books closed at the close of business J a n u a r y 14. • . Subscriptions to t h e Treasury bonds of 1949-51 aggregated $1,014,018,900, all of which were allotted in full. T h e allotments were divided among t h e Federal Reserve districts and t h e Treasury as follows: Treasury notes of Series A-1942 Federal Farm Mortgage Corporation bonds San Francisco Treasury $29,451, 500 272, 205, 600 10, 500, 500 14, 234, 400 7,121, 500 1, 585, 300 38, 595, 300 7, 917, 200 1, 341, 500 11, 532, 500 2, 079, 900 9, 038, 600 783, 900 $6,159, 900 106, 326, 700 21, 766, 600 7,170, 900 6, 952, 800 510,100 31, 331,000 3, 556, 500 4,106, 500 6, 222, 200 922, 800 7, 754, 700 471, 200 $2,135, 800 64, 023, 800 6, 417, 700 1, 450, 700 2,863,400 733, 400 6, 372, 800 1, 293,100 2, 027, 200 2, 399, 200 524,100 5, 429, 600 158,600 $3,410, 000 241, 549, 000 5,189, 000 7, 856, 000 2,425, 000 2,130,000 33, 823,000 2, 534,000 2, 806,000 4, 640, 000 751, 000 1, 422, 000 15, 000 Total... 406, 387, 700 203, 251, 900 95,829,300 308, 550, 000 1, 014,018, 900 Federal Reserve district Boston New York PhiladelphiaCleveland Richmond...Atlanta. Chicago. St. Louis Minneapolis.. Kansas City.. Dallas Reconstruction Finance Corporation notes of Series R 2 ^ percent 3 percent Total subscriptions received (allotted in full) $41,157, 200 684,105,100 43, 873, 800 30, 712,000 19, 362, 700 4, 958,800 110,122,100 15, 300, 800 10, 281, 200 24, 793, 900 4, 277, 800 23, 644,900 1, 428, 600 Exhibit 11 Off'ering of 2)i percent Treasury bonds of 1952-55 On F e b r u a r y 13, 1942, Secretary of t h e Treasury Morgenthau invited cash subscriptions for 2]4 percent Treasury bonds of 1952-55, in the a m o u n t of $1,500,000,000, or thereabouts. [Department Circular No. 681. Public Debt] TREASURY DEPARTMENT, Washington, February 13, 1942. I. O F F E R I N G OF BONDS 1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e authority of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t p a r and accrued interest, from t h e people of t h e United States for 2}4 percent bonds of t h e United States, designated Treasury bonds of 1952-55. The a m o u n t of the offering is $1,500,000,000, or thereabouts. J Revised Mar. 21,1942. 228 REPOIRT OF T H E SECRETARY OF THE , TREASURY II. DESCRIPTION OF BONDS 1. T h e bonds will be dated F e b r u a r y 25, 1942, and will bear interest from t h a t date a t t h e r a t e of 23^ percent per annum, payable on a semiannual basis on J u n e 15 a n d December 15 in each year until t h e principal a m o u n t becomes payable. T h e y will m a t u r e J u n e 15, 1955, b u t iriay be redeemed a t t h e option of t h e United States on and after J u n e 15, 1952, in whole or in part, a t p a r and accrued interest, on any interest day or days, on 4 m o n t h s ' notice of redemption given in such m a n n e r as t h e Secretary of t h e Treasury shall prescribe.^ * 5i« * III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received a t t h e Federal Reserve Banks and .branches and a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree not to sell or otherwise dispose of their subscriptions, or of t h e securities which m a y be allotted thereon, prior to t h e closing of the subscription books. Banking institutions generally m a y submit subscriptions for account of customers, b u t only the Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as official agencies. Others t h a n banking institutions will not be permitted to enter subscriptions except for their own account. Subscriptions from b a n k s and t r u s t companies for their own account will be received without deposit. Subscriptions from all others m u s t be accompanied by p a y m e n t of 10 percent of t h e a m o u n t of bonds applied for. . Subscriptions will be entertained from t h e various classes of subscribers on t h e following bases: 1. Banks and t r u s t companies for their own account—not to exceed 50 percent of capital and surplus. 2. M u t u a l savings and cooperative banks. Federal savings and loan associations, t r u s t accounts and investment corporations, pension funds, insurance companies, and similar institutions and funds—not to exceed 10 percent of t o t a l resources. 3. Corporations organized for profit, and" dealers and brokers—not to exceed 50 percent of net worth. 4.' Individuals—not to exceed 50 percent of net worth or 100 percent of cash deposited with subscription. (Note: No preferred allotment will be m a d e on such full-paid subscriptions.) 2. The Secretary of t h e Treasury reserves t h e right to reject any subscription, in -whole or in part, to allot less t h a n the a m o u n t of bonds applied for, and to close t h e books as to any or all subscriptions a t any time without notice; and any action he m a y t a k e in these respects shall be final. Subscriptions for a m o u n t s up to and including $5,000, where the subscribers specify t h a t delivery be m a d e in registered bonds 90 days after t h e issue date, will be given preferred allotment. I n each such case a subscriber m a y not enter any other subscription, and p a y m e n t m u s t be m a d e as provided in section IV of this circular. Allotment notices will be sent out p r o m p t l y upon allotment, and t h e basis of t h e allotment will be publicly announced. • ' IV. PAYMENT 1. P a y m e n t a t p a r and accrued interest, if any, for bonds allotted hereunder m u s t be made or completed on or before F e b r u a r y 25, 1942, or on later allotment. I n every case where paj^ment is not so completed, t h e p a y m e n t with application u p to 10 percent of t h e a m o u n t of bonds applied for shall, upon declaration m a d e by the Secretary of t h e Treasury in his discretion, be forfeited to the United States. Any qualified depositary will be permitted to m a k e p a y m e n t by credit for bonds aliotted to it for itself and its customers up to any a m o u n t for which it shall be qualified in excess of existing deposits, when so notified by t h e Federal Reserve Bank of its district. V. GENERAL PROVISIONS 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized and requested to receive subscriptions 1 * * *. " H E N R Y MORGENTHAU, Jr., Secretary of the Treasury. 1 Omitted portion similar to corresponding section of Department Circular No. 670, p. 212, 229 REPORT OF T H E SECRETARY OF T H E TREASURY Exhibit 12 Subscriptions and allotments. Treasury bonds of 1952-55 {from press releases, February 14, 18, and 24, 1942 i) On February 13, 1942, Secretary of the Treasury Morgenthau announced that the subscription books for the cash offering of 2}^ percent Treasury bonds of 1952-55 closed at the close of business February 13, except for the receipt of subscriptions for amounts up to and including $5,000 where the subscribers specified that delivery be made in registered bonds 90 days after issue date. For the latter subscriptions the books closed at the close of business on February 14, 1942. Subscriptions aggregated $4,696,698,550, of which $1,510,795,300 was allotted. Subscriptions in amounts up to and including $5,000, totaling about $13,132,000, where the subscribers specified the 90-day delivery, were allotted in full. All other subscriptions were allotted 32 percent on a straight percentage basis, with adjustments, where necessary, to the $100 denomination. Subscriptions and allotments were divided among the Federal Reserve districts and the Treasury as follows: Federal Reserve district Boston.. New York Philadelphia. Cleveland Richmond Af-lantfl Chicago St. Louis. Subscriptions Subscriptions received allotted $421, 663, 350 2,132, 610, 450 306, 370. 700 312, 431, 500 205, 568,150 178, 212, 050 499, 427, 950 130,102, 400 $135,224,800 684,174,100 98,824,400 100. 649, 250 66; 374, 400 57,371,000 160, 284, 450 42, 210, 950 Federal Reserve district Minneapolis Kansas City Dallas San Francisco Treasury Total - _ . _ Subscriptions Subscriptions received allotted $68,152, 600 87, 987, 050 101,830,600 251,120, 850 1, 220, 900 $22, 677, 800 29,101, 450 32, 855, 300 80, 655, 800 391,600 4, 696, 698, 550 1, 510, 795, 300 Exhibit 13 Offering of 2 percent Treasury bonds of 1949-51 and 2)^ percent Treasury bonds of 1962-67 On May 4, 1942, Secretary of the Treasury Morgenthau invited cash subscriptions for $1,250,000,000, or thereabouts, of 2 percent Treasury bonds of 1949-51 and for an unspecified amount of 2% percent Treasury bonds of 196?-67. [Department Circular No. 684. Public Debt] TREASURY DEPARTMENT, Washington, May 4, 1942 I. OFFERING OP BONDS 1. The Secretary of the Treasury, pursuant to the authority of the Second Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest, from the people of, the United States for bonds of the" United States, designated 2 percent Treasury bonds of 1949-51. The amount of the offering is $1,250,000,000, or thereabouts. II. DESCRIPTION OF BONDS 1. The bonds will be dated May 15, 1942, and will bear interest from that date at the rate of 2 percent per annum, payable on a semiannual basis on September 15, 1942, and thereafter on March 15 and September 15 in each j^ear until the principal amount becomes payable. , They will mature September 15, 1951, but may b e ' redeemed at the option of the United States on and after September 15, 1949, 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 anj'- such notice, interest on the bonds called for redemption shall cease. 2. The income derived from the bonds shall be subject to all Federal taxes, now or hereafter imposed. The bonds shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation 1 Revised July 25,1942. 230 REPORT OF T H E SEiCRETARY OF T H E TREASURY now or hereafter imposed on t h e principal or interest thereof b y a n y State, or any of t h e possessions of t h e United States, or by a n y local taxing authority. 3. T h e bonds will be acceptable t o secure deposits of public moneys, b u t will not bear t h e circulation privilege a n d will n o t be entitled t o any privilege of conversion. 4. Bearer bonds with interest coupons attached, a n d bonds registered as t o principal a n d interest, will be issued in denominations of $100, $500, $1,000, $5,000, $10,000 a n d $100,000. Provision will be made for t h e interchange of bonds of different denominations a n d of coupon a n d registered bonds, a n d for t h e transfer of registered bonds, under rules a n d regulations prescribed b y t h e Secret a r y of t h e Treasury. 5. T h e bonds will be subject t o t h e general regulations of t h e Treasury Department, now or hereafter prescribed, governing United States bonds. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received a t t h e Federal Reserve Banks a n d branches a n d a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree not t o sell or otherwise dispose of their subscriptions, or of t h e securities which m a y be allotted thereon, prior t o t h e closing of t h e subscription books. Banking institutions generally m a y submit subscriptions for account of customers^ b u t only t h e Federal Reserve Banks a n d t h e Treasury D e p a r t m e n t are authorized t o act as official agencies. Others t h a n banking institutions will n o t be permitted t o enter subscriptions except for their own account. Subscriptions from banks a n d t r u s t companies for-their own account will be received without deposit. Subscriptions from all others m u s t be accompanied by p a y m e n t of 10 percent of t h e a m o u n t of bonds applied for. 2. T h e Secretary of t h e Treasury reserves t h e right t o reject any subscription, in whole or in p a r t , t o allot less t h a n t h e amount of bonds applied for, a n d t o close t h e books as t o a n y or all subscriptions a t a n y time without notice; a n d a n y action he m a y t a k e in these respects shall be final. Subject t o these reservations, subscriptions for a m o u n t s u p t o a n d including $10,000 will be allotted in full. T h e ' basis of t h e allotment on all other subscriptions will be publicly announced, a n d allotment notices will be sent o u t p r o m p t l y upon allotment. IV. PAYMENT 1. P a y m e n t a t p a r a n d accrued interest, if a n y , for bonds allotted hereunder m u s t be m a d e or completed on or before M a y 15, 1942, or on later allotment. I n every case where p a y m e n t is n o t so completed, t h e p a y m e n t with application up t o 10 percent of t h e a m o u n t of bonds applied for shall, upon declaration made b y t h e Secretary of t h e Treasury in his discretion, be forfeited t o t h e United States. Any qualified depositary will be permitted t o make p a y m e n t by credit for bonds allotted to it for itself a n d its customers u p t o any a m o u n t for which it shall be qualified in excess of existing deposits, when so notified by t h e Federal Reserve Bank of its district. V. GENERAL PROVISIONS 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized and requested t o receive subscriptions i * * *. HENRY MORGENTHAU, Jr., Secretary of the Treasury. [Department Circular No. 685. Public Debt] TREASURY DEPARTMENT, Washington, M a y 4, 1942. I. O F F E R I N G O F B O N D S 1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest, from t h e peoplie of t h e United States for bonds of t h e United States, designated 2y2 percent Treasury bonds of 1962-67. These bonds will n o t be available for subscription, for their own account, by commercial b a n k s which accept demand deposits. T h e a m o u n t of t h e offering is n o t specifically limited. II. DESCRIPTION sOF BONDS 1. T h e bonds will be dated M a y 5, 1942, a n d will bear interest from t h a t date a t t h e rate of 2)4 percent per a n n u m , payable on a semiannual basis on J u n e 15 a n d 1 Omitted portion similar to corresponding section of Department Circular No. "670, p. 212. REPORT OF T H E SEICRETARY OF T H E TREASURY 231 December 15 in each year until t h e principal a m o u n t becomes payable, t h e first p a y m e n t being m a d e December 15, 1942. They will m a t u r e J u n e 15, 1967, b u t m a y be redeemed a t t h e option of t h e United States on and after J u n e 15, 1962, in whole or in part, a t - p a r and accrued interest, on any interest day or days, on 4 m o n t h s ' notice of redemption given in such m a n n e r as t h e Secretary of t h e Treasury shall prescribe. In case of p a r t i a l redemption t h e bonds to be redeemed will be determined by such m e t h o d as m a y be prescribed by t h e Secretary of- t h e Treasury. F r o m t h e date of redemption designated in any such notice, interest on t h e bonds called for redemption shall cease. 2. T h e income derived from t h e bonds shall be subject to all Federal taxes, now or hereafter imposed. T h e bonds shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, or by any local taxing authority. 3. T h e bonds will not be acceptable to secure deposits of public moneys before M a y 5, 1952, they will not bear the circulation privilege, and they will not be entitled to any privilege of conversion. 4. Bonds registered as to principal and interest will be issued in denominations of $100, $500, $1,000, $5,000, $10,000 and $100,000. T h e bonds will not be issued in coupon form prior to M a y 5, 1952, b u t will be available in coupon form after ^that d a t e , J n t h e same denominations as, and,freely interchangeable with the registered bonds of this issue. Under rules and regulations prescribed by t h e Secret a r y of the Treasury, provision will be m a d e for t h e transfer of t h e bonds, other t h a n to commercial banks which accept demand deposits, and for exchanges of denominations, on and after July 6, 1942. They will not be eligible for transfer to commercial banks which accept demand deposits before M a y 5, 1952. However, t h e bonds m a y be.pledged as collateral for loans, including loans by commercial banks which accept demand deposits, b u t any such bank acquiring such bonds before May 5, 1952, because of t h e failure of such loans to be paid a t m a t u rity will be required to dispose of t h e m in t h e same m a n n e r as they dispose of other assets not eligible to be owned by banks. 5. Except as provided in the preceding paragraphs, t h e bonds will be subject to t h e general regulations of t h e Treasury D e p a r t m e n t , now or hereafter prescribed, governing United States bonds. Iir. SUBSCRIPTION A N D ALLOTMENT 1. Subscriptions will be received a t t h e Fedei;al Reserve Banks and branches and a t t h e Treasury D e p a r t m e n t , Washington. Banking institutions and security dealers generally m a y submit subscriptions for account of customers, b u t only t h e Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as official agencies. Subscriptions m u s t be accompanied by p a y m e n t in full for t h e a m o u n t of bonds applied for. 2. T h e Secretary of t h e Treasury reserves t h e right to reject any subscription, in whole or in part, to allot less t h a n t h e ainount of bonds applied for, and to close t h e books as to any or all subscriptions a t any time without notice; and any action he m a y t a k e in these respects shall be final. Subject to these reservations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment. IV. PAYMENT 1. P a y m e n t a t par and accrued interest, if any, for bonds allotted hereunder m u s t be m a d e on or before May 5, 1942, or on later allotment. One day's accrued interest is $0.06868 per $1,000. Any qualified depositary will.be p e r m i t t e d , t o m a k e p a y m e n t by credit for bonds allotted to its customers up to any a m o u n t for which it shall be qualified in excess of existing deposits, when so notified by t h e Federal Reserve Bank of its district. V. GENERAL PROVISIONS 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to receive subscriptions i * * *. H E N R Y MORGENTHAU, . ' > Omitted portion similar to corresponding section of Department Circular No. 670, p. 212. Jr., Secretary of the Treasury. 232 REPORT OF. T H E SEiCRETARY OF T H E TREASURY Exhibit 14 Subscriptions and allotments. Treasury bonds of 1949-51 and Treasury bonds of 1962-67 {from press releases. May 4, 8, 12, and^ 18, 1942 i) On M a y 4, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e cash offering of $1,250,000,000, or thereabouts, of 2 percent Treasury bonds of 1949-51 closed a t t h e close of business M a y 4. Subscriptions aggregated $3,283,343,400, of which $1,292,444,100 was allotted. Subscriptions up to and including $10,000 were allotted in full; a n d subscriptions in a m o u n t s over $10,000 were allotted 38 percent, on a straight percentage basis, b u t n o t less t h a n $10,000 on any one subscription, with adjustments, where necessary, to t h e $100 denomination. For t h e 2>^ percent Treasury bonds of 1962-67 t h e subscription books closed a t t h e close of business M a y 14, 1942. Subscriptions aggregated $882,198,000, all of which were allotted in full. T h e subscriptions and allotments were divided among t h e Federal Reserve districts a n d t h e Treasury as follows: T r e a s u r y b o n d s of 1949-51 F e d e r a l Reserve district Subscriptions Boston N e w York .Philadelphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San F r a n c i s c o . - " Treasury $67,734, 500 493,606, 700 53,614,700 67, 555, 600 47,175,700 72,399, 400 280, 228, 400 37,002, 900 23,189, 000 28, 982, 900 35, 329, 800 83, 439, 500 2,185,000 $55,689,400 587, Oil, 100 27, 274, 900 28,928,100 14,958,300 • 6, 717, 700 48,432,600 6, 826,100 8, 570, 200 5,187, 400 19,339, 700 18, 069, 700 55,192, 800 $123,423,900 1,080,617,800 80,889,600 96,483,700 62,134,000 79,117,100 328, 661, 000 43, 829, 000 31, 759, 200 34,170,300 54,669, 500 101, 509, 200 57, 377,800 3, 283, 343,400 1, "292,444,100 882,198,000 2,174,642,100 .... . - . -- T o t a l allotments • $174,935,000 1, 289, 326, 300 136,489, 900 170,332,400 _ _ . 118,470, 900 163,858,800 . . 719,358, 500 83,653, 400 53,172, 900 66,997, 200 84, 668,600 216,329, 500 5, 750,000 - - . Allotments Treasury b o n d s of 1962-67 (allotted in full) Total.-.. Exhibit 15 Offering of I j i percent Treasury notes of Series B-1946 , On M a y 25, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions for 13^ percent Treasury [notes of Series :B-1946, in p a y m e n t of which only H o m e Owners' Loan Corporation 2)4 percent bonds of Series G 1942-44, called . for redemption on July 1, 1942, or Reconstruction Finance Corporation 1 percent notes of Series S, m a t u r i n g July 1, 1942, might be tendered. T h e a m o u n t of t h e offering was limited to t h e a m o u n t of Series G bonds and Series S notes tendered a n d accepted. In t h e related press release it was s t a t e d t h a t there were then, o u t s t a n d i n g $875,438,625 of Series G bonds a n d $275,868,000 of Series S notes. [Department Circular No. 686. Public Debt] TREASURY DEPARTMENT, Washington, M a y 25,'1942. I. OFFERING OF NOTES 1. T h e Secretary of t h e Treasury, p u r s u a n t to t h e a u t h o r i t y of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t par, frqm t h e people of t h e United Sta,,tes for notes of t h e United States, designated 1}^ percent Treasury notes of Series B-1946, in p a y m e n t of which only H o m e Owners' Loan Corporation 2]4 percent bonds, Series G 1942-44, called for redemption on July 1, 1942, or Reconstruction Finance Corporation 1 percent notes of Series S, m a t u r i n g July 1, 1942, m a y be tendered. T h e a m o u n t of t h e offering under this circular will be liihited to t h e a m o u n t of such Series G bonds a n d Series S notes tendered a n d accepted. 1 Revised July 25, 1942, and Aug. 21, 1942. REPORT OF THE SEiCRETARY OF THE TREASURY 233 II. DESCRIPTION OF NOTES 1. The notes will be dated June 5, 1942, and will bear interest from that date at the rate of IH percent per annum, payable on a semiannual basis on December 15, 1942, and thereafter on June 15 and December 15 in each year until the principal amount becomes payable. They will mature December 15, 1946, and will not be subject to call for redemption prior to maturity. 2. The income derived from the notes shall be subject to all Federal taxes, now or hereafter imposed. The notes shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State,'or any of the possessions of the United States, or by any local taxing authority. 3. 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. 4. The notes will be acceptable to secure deposits of public moneys, but will not bear the circulation privilege. 5. 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. 6. The notes will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States notes. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches and -at the Treasury Department, Washington. Banking institutions generally may submit subscriptions for account of customers, but only the Federal Reserve Banks and the Treasury Department are authorized to act as official agencies. 2. 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, and to close the books as to any or all subscriptions at any time without notice; and any action he may take in these respects shall be final. Subject to these reservations, all subscriptions will be allotted in full. Allotment notices will be sent out promptly upon allotment. IV. PAYMENT 1. Payment at par for notes allotted hereunder must be made on or before June 5, 1942, or on later allotment, and may be made only in Home Owners' Loan Corporation bonds of Series G 1942-44, called for redemption on July 1, 1942, or in Reconstruction Finance Corporation notes of Series S, maturing July 1, 1942, which will be accepted at pai, and should accompany the subscription. Coupons dated July 1, 1942, must be attached to bearer securities of either issue when surrendered, and accrued interest from January 1, 1942, to June 5, 1942 ($9.63398 per $1,000 in the case of Series G bonds and $4.28177 per $1,000 in the case of Series S notes) will be paid following acceptance of the securities. In the case, of the Series G registered bonds, checks, in payment of accrued interest will be drawn in accordance with the assignments on the bonds surrendered. v . SURRENDER OF CALLED BONDS 1. Coupon bonds.—Home Owners' Loan Corporation bonds of Series G 1942-44 in coupon form tendered hereunder should be presented and surrendered with the subscription to a Federal Reserve Bank or branch or to the Treasurer of the United States, Washington, D. C. Coupons dated July 1, 1942, and all coupons bearing subsequent dates, should be attached to such 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. 2. Registered bonds.—Home Owners' Loan Corporation bonds of Series G 194244 in registered form tendered hereunder should be assigned by the registered payees or assignees thereof to "The Secretary of the Treasury for exchange for Treasury notes of Series B-1946 to be delivered to ," and thereafter should be presented and surrendered with the subscription to a Federal Reserve Bank or branch or to the Treasury Department, Division of Loans and 234 REPORT OF T H E SEORETARY OF T H E TREASURY Currency, Washington, D . C. risk of t h e holder. T h e bonds m u s t be delivered a t t h e expense a n d VI. GENERAL PROVISIONS 1. As fiscal agents of t h e United States, Federal Reserye Banks a r e authorized' a n d requested t o receive subscriptions, t o m a k e allotments on t h e basis a n d u p to t h e a m o u n t s indicated b y t h e Secretary of t h e Treasury t o t h e Federal Reserve Banks of t h e respective districts, t o issue allotment notices, to.receive p a y m e n t for notes allotted, t o m a k e delivery of notes on full-paid subscriptions allotted,, a n d t h e y m a y issue interim receipts pending delivery of t h e definitive notes. '2. T h e Secretary of t h e Treasury m a y a t a n y time, or from time t o time, p r e scribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e offering,, which will be communicated p r o m p t l y t o t h e Federal Reserve B a n k s . HENRY MORGENTHAU, Jr., Secretary of the Treasury. ; Exhibit 16 Allotments, Treasury notes of Series B-1946 {from press releases. M a y 26 a n d J u n e 1, 1942 0 On M a y 25, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e offering of l>i percent Treasury notes of Series B-1946— open t o t h e holders of H o m e Owners' Loan Corporation 2J4 percent bonds of Series G 1942-44, called for redemption on July 1, 1942, a n d Reconstruction Finance Corporation 1 percent notes of Series S, m a t u r i n g July 1, 1942—would close a t t h e close of business M a y 26, 1942, except for t h e receipt of subscriptions from holders of $25,000 or less of t h e H o m e Owners' Loan Corporation b o n d s . For t h e latter class t h e subscription books closed a t t h e close of business M a y 27. Subscriptions t o t h e Treasury notes of Series B-1946 aggregated $1,118,386,400, all of which were allotted in full. T h e allotments were divided ^among t h e Federal Reserve districts a n d t h e Treasury as follows: Federal Reserve district Boston . N e w York Philadelphia Cleveland Richmond -Atlanta Chicago : -. St. Louis . Minneapolis Kansas City Dallas.... San F r a n c i s c o . . . . . Treasury Home Owners' Loan Corporation b o n d s exchanged Reconstruction F i n a n c e Corporation notes exchanged $18,139,100 551,060,500 . 44, 378,100 20, 647, 300 38, 380, 400 10, 674, 600 75, 262,100 13, 342, 400 10,190, 000 17, 283,100 5, 794, 700 36,443,100 4, 519,000 $7,839,000 198,042,000 6,398,000 5, 765,000 5,813,000 3, 612,000 29, 524, 000 2,459,000 4, 799, 000 2, 665,000 995, 000 4,196,000 165,000 $25,978,100 749,102, 500 50, 776,100 26,412, 300 44,193,400 14, 286, 600 104, 786,100 15,801,400 14,989,000 19, 948,100 6, 789, 700 40,639,100 4,684,000 846,114,400 272, 272,000 1,118, 386, 400 .. .- Total T o t a l allotments United States savings bond.s Exhibit 17 Offering of United States war savings bonds of Series E and war savings stamps for installment payments [Department Circular No. 653, Revised. Public Debt] TREASURY DEPARTMENT, Washington, J u n e 1, 1942. 1. OFFERING OF UNITED STATES WAR SAVINGS BONDS OF SERIES E 1. 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, as amended, offers for sale, t o t h e people of t h e United States, 1 Revised July 16, 1942. REPORT OF T H E SEICRETARY OF T H E TREASURY 235 t h r o u g h t h e Postal Service a n d other designated agencies, United States savings bonds of Series E, which bonds are hereby designated United States war savings bonds,1 and m a y hereinafter be referred to as bonds of Series E. A description of t h e bonds, their terms, and t h e conditions of their issue and redemption are hereinafter fully set forth. 2. United States savings bonds of Series E include bonds issued as defense savings bonds under this circular as originally published, and those issued as war savings bonds under this circular as revised. T h e former bonds will be withdrawn from sale when existing stocks are exhausted, and t h e new bonds will t h e n be placed on sale without further notice, and their sale will continue until terminated b y t h e Secretary of t h e Treasury. As their terms and t h e conditions of their issue are identical, no distinction is to be m a d e between any bonds of Series E, whether issued as defense or as war savings bonds. ^ I I . DESCRIPTION AND TERMS OF BONDS 1. T h e bonds of Series E will be issued only in registered form, in denominations of $25, $50, $100, $500, and $1,000 (maturity values), a t prices hereinafter set forth. E a c h bond will bear t h e facsimile signature of t h e Secretary of the Treasury, and will bear b o t h an imprint (in red) and an impression of t h e Seal of the Treasury. At t h e time of issue, t h e issuing agent will inscribe the name and address of t h e owner on each bond, will enter t h e date as of which t h e bond is issued in t h e upper Tight corner, and will imprint his dating s t a m p (with current date) in t h e circle in t h e lower left corner. Bonds of Series E shall be valid only if duly inscribed a n d dated, as above provided, a n d delivered by an authorized agent following receipt of p a y m e n t therefor. 2. T h e bonds will, in each instance, be dated as of the first day of the m o n t h in which p a y m e n t of the issue price is received by an agent authorized to issue t h e b o n d s ; t h e bonds will m a t u r e and be payable a t face value 10 years from such issue d a t e . T h e .bonds m a y not be called for redemption by t h e Secretary of t h e T r e a s u r y prior to m a t u r i t y , b u t they m a y be redeemed prior to m a t u r i t y , a f t e r ' '60 days from t h e issue date, a t t h e owner's option, a t fixed redemption values. N o interest as such will be paid on t h e bonds, b u t they will increase in redemption value a t t h e end of t h e first year from issue date, and a t t h e end of each successive "half-year period thereafter until their m a t u r i t y , when t h e face a m o u n t becomes payable. T h e increment in value will be payable only upon redemption of t h e bonds. A table of redemption values for each bond appears on its face. T h e purchase price of bonds of Series E has been fixed so as to afford an investment yield of a b o u t 2.9 percent per annuni compounded semiannually if t h e bonds are held to i n a t u r i t y ; if t h e owner exercises his option to redeem a bond prior to m a t u r i t y t h e investment yield will be less. T h e table a t t h e end of this circular •shows: (1) H o w bonds of Series E, by denominations, increase in redemption value •during t h e successive half-year periods following issue, and (2) the computed investment yields (a) on t h e issue price from issue date t o t h e iDeginning of each lialf-year period, and {b) on t h e current redemption value from the beginning of each half-year period to m a t u r i t y a t t h e end of t h e 10-year period. 3. T h e bonds will not be transferable, and will be payable only to t h e owner n a m e d thereon, except in case of death or disability of t h e owner or as otherwise specifically provided in t h e regulations governing savings bonds, and in any event only in accordance with such regulations.. Accordingly they m a y not be sold, and m a y not be hypothecated as collateral for a loan. 4. T A X A T I O N . — F o r t h e purpose of determining taxes and tax exemptions, t h e increment in value represented by t h e difference between t h e price paid for United States savings bonds issued on a discount basis, and t h e redemption value received therefor (whether a t or before maturity) shall be considered as interest, and such interest on bonds of Series E is not exempt from income, or profits taxes now or liereafter imposed by t h e United States.^ T h e bonds s h a l l b e subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, or by any local taxing authority. 1 United States savings bonds of Series F and G, issued pursuant to Department Circular No. 654, Revised, dated .Tune 1, 1942, are also included in the designation United States war savings bonds. 2 For information concerning the taxable and exempt status under Federal tax laws of the interest (increment in value) on United States savings bonds issued on a discount basis (including bonds of Series E), .and alternate methods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 5299, JR. A. No. 1177, dated December 17,1941. 236 REPORT OF T H E SEiCRETARY OF T H E TREASURY III. PURCHASE OF BONDS. 1. A G E N C I E S . — B o n d s of Series E m a y be purchased, while this offer is in effectas follows: (a) Over-the-counter for cash: (1) At United ^States 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, and generally a t classified stations a n d branches. (2) At t h e Treasury D e p a r t m e n t , Washington, D . . C , a t Federal Reserve B a n k s a n d branches, a n d a t such incorporated banks, t r u s t companies, m u t u a l savings , b a n k s and other agencies as are duly designated a n d have duly qualified as sales agents p u r s u a n t t o t h e provisions of Treasury D e p a r t m e n t Circular No. 657, d a t e d April 15, 1941, as amended a n d supplemented. (5) On mail order.—Bonds of Series E maj^ be purchased by mail upon application t o the Treasurer of t h e United States, Washington, D . C , or to any Federal Reserve Bank or branch, accompanied by a remittance to cover t h e is^ie price. Any form of exchange, including personal checks, will be accepted, subject, to collection. Checks, or other forms of exchange, should be drawn to t h e order of t h e Treasurer of t h e United States or t h e Federal Reserve Bank, as t h e case m a y be. (c) Other agencies.—The Secretary of t h e Treasury, in his discretion, m a y designdite other agencies for t h e sale of or for t h e handling of applications for bonds of Series E, which shall operate under such t e r m s a n d conditions as t h e Secretary of t h e Treasury m a y prescribe or approve. 2. POSTAL SAVINGS.—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. 3. U N I T E D STATES W A R SAVINGS STAMPS FOR INSTALLMENT PAYMENTS.— W a r savings stamps, in denominations of 10, 25, and 50 cents, a n d $1 a n d $5, m a y be purchased a t any post office where bonds of Series E are on sale a n d a t such other agencies as m a y be designated from time to time. These s t a m p s m a y be used t o accumulate credits^for t h e purchase of war saivings bonds. Albums, for affixing t h e stamps, will be available without charge, and such albums will be receivable, in t h e a m o u n t of t h e affixed stamps, on t h e purchase price of war savings bonds. A Treasury issue of war savings stamps will hereafter be m a d e available to replace t h e Postal Savings issue of defense stamps. T h e latter s t a m p s will be withdrawn from sale when existing stocks are exhausted a n d t h e new s t a m p s will be placed on sale without further notice, and their sale will continue until terminated by t h e Secretary of t h e Treasury. Defense postal savings s t a m p s will hereafter be included in t h e t e r m war savings s t a m p s a n d no distinction is t o be m a d e between any such s t a m p s whether issued as defense postal savings s t a m p s or as war savings stamps, a n d t h e s t a m p s .of either issue m a y be used interchangeably t o accumulate credits for t h e purchase of war savings bonds. 4. I S S U E P R I C E S . — T h e issue prices of t h e various denominations of bonds of Series E follow: . D E N O M I N A T I O N ( m a t u r i t y v a l u e ) . $25.00 $50.00 $100.00 $500.00 $1,000.00 I S S U E (purchase) P R I C E $18.75 $37.50 $75.00 $375.00 $750.00 IV. LIMITATION ON HOLDINGS 1. T h e a m o u n t of United States savings bond of Series E of a n y designation originally issued during a n y one calendar year to a n y one person, including those registered in t h e n a m e of t h a t person alone, a n d those registered in t h e n a m e of t h a t person with a n o t h e r n a m e d as coowner, t h a t m a y be held by t h a t person a t a n y one time shall not exceed $5,000 ( m a t u r i t y value). Any bonds acquired on original issue which create an excess m u s t immediately be surrendered for refund of t h e issue price, as provided in t h e regulations governing savings bonds. V. AUTHORIZED FORMS OF REGISTRATION 1. Bonds of Series E m a y be registered only in t h e names of n a t u r a l persons ( t h a t is, individuals) whether adults or minors, in their own right, who are residents of t h e continental United States, t h e Territories a n d Insular Possessions of t h e United States, t h e Canal Zone, t h e Philippine Islands, or citizens of t h e United States temporarily residing abroad, as follows: (a) I n t h e n a m e of one person, {b) in t h e names of two (but not more t h a n two) persons as coowners, a n d (c) in t h e n a m e of one person payable on d e a t h to one (but not more t h a n one) other designated person. Full information as to authorized forms of registration will be found in t h e regulations governing savings bonds (see sec. I X , par. 1). REPORT OF THE SECRETARY OF THE TREASURY 237. VI. DELIVERY AND SAFEKEEPING OF BONDS OF SERIES E 1. Postmasters a n d other authorized sales agents from whom bonds of Series E m a y be purchased are authorized to deliver such bonds duly inscribed and dated upon receipt of t h e issue price. Bonds issued upon mail order applications m a d e t o a F e d e r a l Reserve Bank or branch, or t o t h e Treasurer of t h e United States will be delivered within t h e continental United States, t h e Territories a n d Insular Possessions of t h e United States, t h e Canal Zone a n d t h e Philippine Islands.^ N o deliveries elsewhere will be made. • If purchased b y citizens, of t h e United States temporarily residing abroad, bonds will be delivered in t h e United States, or held in safekeeping, as t h e purchaser m a y direct. Delivery should n o t be accepted b y any purchaser until he h a s verified that, t h e correct name a n d address are duly inscribed on t h e face of t h e bond, t h a t t h e bond is duly dated as of t h e first d a y of t h e m o n t h in which p a y m e n t of t h e issue price was received by t h e agent, a n d t h a t t h e dating s t a m p (with current date) of t h e postmaster or other issuing agent is imprinted in t h e circle in t h e lower left corner of t h e bond. 2. A savings bond will be held in safekeeping without charge by t h e Secretary of t h e Treasury if t h e holder so desires, a n d in such connection t h e facilities of t h e Federal Reserve Banks, as fiscal agents of t h e United States, a n d those, of t h e Treasurer of t h e United States, will be utilized. Arrangements m a y be m a d e for such safekeeping a t t h e time of purchase, or subsequently. Postmasters generally, and branches of Federal Reserve Banks,^ will assist holders in arranging for safekeeping, b u t will n o t act as safekeeping agents. • VII.- P A Y M E N T AT MATURITY OR REDEMPTION PRIOR TO MATURITY 1. G E N E R A L ; — A n y bond of Series E will be paid in full a t m a t u r i t y , or, a t t h e option of t h e owner, after 60 days from t h e issue date, will be redeemed in whole or in p a r t a t t h e appropriate redemption value prior t o m a t u r i t y , following pres-i entation a n d surrender of t h e bond, with t h e request for p a y m e n t properly exe-: cubed, all in accordance with t h e regulations governing savings bonds. 2. E X E C U T I O N OF R E Q U E S T FOR P A Y M E N T . — T h e registered owner, or other per- son entitled t o p a y m e n t under t h e regulations governing savings bonds, m u s t appear before one of t h e officers authorized b y t h e Secretary of t h e Treasury t o witness a n d certify requests for payment, establish his identity, a n d in t h e presence of such officer sign t h e request for p a y m e n t , adding t h e address to which t h e check is t o be rnailed. After t h e request for p a y m e n t has been so signed, t h e witnessing officer should complete a n d sign t h e certificate provided for his use.- Unless otherwise authorized in a particular case, t h e form of request appearing on t h e back of t h e bond m u s t be used. • " 3. O F F I C E R S AUTHORIZED TO W I T N E S S AND C E R T I F Y REQUESTS FOR P A Y - M E N T . — T h e officers-authorized t o witness a n d certify requests for p a y m e n t of savings bonds are fully set forth in t h e regulations governing savings bonds, such officers including United States postmasters a n d certain oLher post office officials, a n d t h e executive officers of all banks or t r u s t companies incorporated in t h e United States or its organized Territories, including officers a t domestic and foreign branches who are certified t o t h e Treasury Department, as executive officers. ^ . . 4. PRESENTATION AND SURRENDER.—After t h e request for p a y m e n t h a s been duly executed by. t h e person entitled a n d b y t h e certifying officer, t h e bond m u s t be presented a n d surrendered t o t h e Treasury D e p a r t m e n t , Washington, or t o a Federal Reserve Bank or branch, a t t h e expense a n d risk of t h e owner. F o r t h e owner's protection, t h e bond should be forwarded by registered mail, if n o t presented in person. 5. DISABILITY OR D E A T H . — I n case of t h e disability of t h e registered owner, or the death of t h e registered owner n o t survived b y a coowner or a-designated beneficiary, instructions should 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 , before t h e request for p a y m e n t is executed. 6. M E T H O D OF P A Y M E N T . — T h e only agencies authorized t o p a y or redeem savings bonds are t h e Treasury D e p a r t m e n t a n d t h e Federal Reserve Banks, b u t bonds t o be redeemed m a y be presented to branches of Federal Reserve Banks. Postmasters are n o t authorized t o m a k e p a y m e n t , b u t generally they will assist 3 If bonds are issued within the United States, deliveries thereof outside the Continental United States, at the risk and expense of the United States, mav be susDended during the war emergency, but in any such case bonds will be delivered to addresses within the United States, or will be held in safekeeping as the purchaser may direct. 4 Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection an inquiry may be addressed to the branch. 238 REPORT OF T H E SEiCRETARY OF T H E TREASURY owners in securing p a y m e n t , at or before m a t u r i t y . P a y m e n t in all cases will be m a d e b y check drawn to t h e order of t h e registered owner or other person entitled to p a y m e n t , and mailed to t h e address given in t h e request for p a y m e n t . 7. PARTIAL R E D E M P T I O N . — P a r t i a l redemption a t current redemption value of a savings bond of Series E of a" denomination higher t h a n $25 ( m a t u r i t y value) is permitted, b u t m u s t accord to an authorized denomination. In case of partial redemption the remainder will be reissued in authorized denominations bearing the same issue date as t h e bond surrendered. VIII. SERIES DESIGNATION 1. United States savings bonds of Series E, issued during t h e calendar year 1942 (either as defense or war savings bonds) will be designated Series E-1942, a n d those which m a y be issued in subsequent calendar years will be similarly designated by t h e series letter E followed by t h e year of issue. IX. GENERAL PROVISIONS 1. All bonds of Series E, issued p u r s u a n t t o this circular, shall be subject to t h e regulations prescribed from time to time by t h e Secretary of the Treasury to govern United Stales savings bonds. Such regulations m a y require, among other things, . reasonable notice in case of presentation of bonds of Series E for redemption prior t o m a t u r i t y . T h e present regulations governing savings bonds are set forth in Treasury D e p a r t m e n t Circular No. 530, Fifth Revision, dated J u n e 1, 1942, copies of which m a y be obtained on application to the Treasury D e p a r t m e n t , or to a n y Federal Reserve Bank. 2. The Secretary of the Treasury reserves the right to reject any application for bonds of Series E, in whole or in p a r t , and to refuse to issue or permit to be issued hereunder any such bonds in any case or any class or classes of cases if he deems such action to be in t h e public interest, and his action in any such respect shall be final. 3. Postmasters in charge of post offices where bonds of Series E are on sale, under regulations promulgated by t h e Posltmaster General, and Federal Reserve Banks, as fiscal agents of t h e United States, are authorized to perform such fiscal agency services as m a y be requested of t h e m by the Secretary of t h e Treasury in connection with t h e issue, delivery, safekeeping, redemption, and p a y m e n t of bonds of Series E. Other sales agencies will be subject to t h e provisions of Treasury D e p a r t m e n t Circular No. 657, dated April 15, 1941, as amended or supplemented. • 4. T h e Secretary of t h e Treasury m a y a t any time or from time to time supplem e n t or amend t h e t e r m s of this circular, or of any a m e n d m e n t s or supplements t h e r e t o , information as to which will be p r o m p t l y furnished to t h e P o s t m a s t e r General, the Federal Reserve Banks and other sales agencies. 5. T h e offering of United States savings bonds of Series E, p u r s u a n t to this circular, revised, is separate and distinct from t h e concurrent offerings of United States savings bonds of Series F and of Series G, p u r s u a n t to Treasury Depart:ment Circular No. 654, Revised, dated J u n e 1, 1942. T h e bonds of Series E, F , and G so offered and issued constitute issues of United States war savings bonds, .and are so designated. H E N R Y MORGENTHAU, Jr., Secretary of the Treasury, REPORT OF THE SECRETARY OF THE TREASURY UNITED STATES SAVINGS BONDS 230 SERIES E Table of redemption values and investment yields Table showing: {1) How bonds of Series E, by denominations, increase in redemp- . Hon value during successive half-year periods following issue; {2) the approximate investment yield on the purchase price from issue date to ihe beginning of each halfyear period; and {3) the approximate investment yield on the current redemption value from the beginning of each half-year period to maturity. Yields are expressed in terms of rate percent per annum, compounded semiannually. Maturity value. Issue price Period after issue date First H year K t o 1 year 1 to IM years.-'... IH to 2 years :.. •2 to 2H years....' '2H^to 3 years 3 to 3H years ••3H to 4 years. ....... 4 to 4M years 4>^ to 5 years .:. '5 to 53^ years b}4. to 6 years 6 to 6H years .• (6M to 7 years 7 to 7M years.. — 7M to 8 years 8 to 8M years '8M to 9 years — '9 to 9H years •^}/2 to 10 years Maturity value (10 years from issue d ate) $25.00 18.75 $50. OO $100. 00 $500. 00 $1, 000. 00 375. 00 37.50 75.00 750.00 (3) Approxi(2) Approximate investmate invest- ment yield on ment yield on current redemppurchase price tion value from issue date from begin(1) Redemption values during each half-year ' to beginning ning of each • pei;iod of each halfhalf-year , year period period to maturity $75. 00 $375.00 1 $18. 75 $37.50 18.75 .37.50 75.00 375.00 1 18. 87 37. 75 75.50 377. 50 38.00 76.00 380. 00 19.-00 19.12 38.25 76. 50 382.50 19. 25 38.50 385.00 77.00 19.50 39.03 78.03 k 390. 0) 19.75 39.50 79.00 395.00 20.00 40.00 80.00 400. 00 405. 00 20. 25 "40.50 81.00 41.00 82.00 410.0) 20.50 20.75 4L50 . 83.00 415.00 42.00 84.00 420.00 21.00 43.00 86.00 430.03 21.50 44.00 88.00 440.03 22.00 45.03 90.00 450.00 22.50 46.03 92.00 460.03 23.00 47. 00 94.00 470. 00 23.50 48.00 96.00 480. 00 24.00 49.00 98.00 490.00 24.50 25.00 50.00 100.00 500.00 $750. 00 750. 00 755. 00 760.00 765.00 770. 00 780. 00 790. 00 .800. 00 810. 00 820.00 830. 00 840. 00 860.00 880. 00 900. 00 920. 00 940. 00 960. 00 980. 00 1,000.00 Percent 0.00 .67 .88 .99 1.06 1.31 1.49 1.62 •1.72 1.79 1.85 1.90 2.12 2.30 2.45 2.57 2.67 2.76 2.84 Percent 12.90 ' 3.05 3.15 3.25 3.38 ' 3.52 3.58 3.66 3.75 3.87 4.01 4.18 4.41 4.36 4.31 4.26 4.21 4.17 4.12 4.08 2.90 1 Approximate investment yield for entire period from issuance to maturity. OTHER SERIES United States savings bonds of Series F and of Series G are also offered for sale concurrently with Bonds of Series E. The bonds of Series F will be issued on .a discount basis, with a 12-year maturity, at 74 percent of their maturity value; if held to maturity the yield will approximate 2.53 percent per annum. The bonds of Series G, likewise with a 12-year maturity, will be issued at par, and will bear interest at the rate of 2)^ percent per annum payable semiannually. The bonds of both series will be redeemable before maturity, at the option of owners, , at fixed redemption values, in which case the investment yields will be less than if held to maturity. These bonds are intended to provide facilities for the larger investors, and registration will not be restricted to individuals. The aggregate amount of bonds of either series, or of the two series combined, originally issued to any one person during any one calendar year that may be held by that person •at any one time may not exceed $100,000 (issue price). Full particulars regarding these bonds are set forth in Treasury Department .Circular No. 654, Revised, dated June 1, 1942, copies of which may be obtained from the Treasury Department, Washington, or from any Federal Reserve Bank. 487543—43- -17 240 REPORT OF T H E SEiCRETARY OF THiE TREASURY Exhibit 18 Offering of United States war savings bonds of Series F and Series G [Department Circular No. 654, Revised. Public Debt] TREASURY DEPARTMENT, Washington, J u n e 1, 1942. I. O F F E R I N G OP UNITED STATES W A R SAVINGS BONDS O F SERIES F A N D SERIES G 1. 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, as amended, offers for sale, t o t h e people of t h e United States, through t h e Federal Reserve Banks, United States savings bonds of Series F a n d Series G, which bonds a r e hereby designated United States w a r savings bonds,^ a n d m a y hereinafter be referred t o as bonds of Series F a n d Series G. Descriptions of t h e bonds of b o t h series, their terms, a n d t h e conditions of their issue a n d redemption are hereinafter fully set forth. 2. United States savings bonds of Series F and G include bonds issued as bonds of defense Series F a n d G under this circular as originally published a n d amended, a n d those issued as war savings bonds under this circular as revised. T h e former bonds will b e withdrawn from sale when existing stocks.are exhausted, a n d t h e new bonds will then be placed on sale without further notice, a n d their sale will continue until terminated b y t h e Secretary of t h e Treasury. As their terms and t h e conditions of their issue are identical, no distinction is t o be m a d e between any bonds of Series F or G, whether issued as bonds of defense Series F or G or as war savings, bonds. II. D E S C R I P T I O N A N D TERMS OF B O N D S ^ 1. T h e bonds of Series F a n d Series G will be issued only in registered form, in denominations of $25 2 (for Series F only), $100, $500, $1,000, $5,000 a n d $10,000 (maturity values), a t prices hereinafter set forth. E a c h bond will bear t h e facsimile signature of t h e Secretary of t h e Treasury, a n d will bear both a n imprint in color (brown for Series F and blue for Series G) a n d an impression of t h e Seal of t h e Treasury. A t t h e time of issue, t h e issuing agent will inscribe t h e n a m e and address of t h e owner on each bond, will enter t h e d a t e as of which t h e bond is issued in t h e upper right corner, a n d will imprint his dating s t a m p (with current date) in t h e circle in t h e lower left corner. T h e bonds shall b e valid only if duly inscribed a n d dated, as above provided, a n d delivered b y a n authorized agent following receipt of p a y m e n t therefor. 2. T h e bonds of each series will, in each instance, be dated as of the first d a y of t h e m o n t h in which p a y m e n t of t h e issue price is received b y a n agent authorized t o issue t h e bonds (see sec. HI)'; t h e bonds will m a t u r e a n d b e payable a t face value 12 years from such issue date. T h e bonds of either series m a y not be called for redemption b y t h e Secretary of t h e Treasury prior t o m a t u r i t y , b u t t h e y m a y b e redeemed prior t o m a t u r i t y , after six m o n t h s from t h e issue date, at t h e owner's option, a t fixed redemption values, as hereinafter provided. 3. Bonds of Series F will be issued on a discount basis a t 74 percent of their m a t u r i t y value. No interest as such will be paid on t h e bonds, b u t they will increase in redemption value a t t h e end of t h e first year from issue date, a n d at t h e end of each successive half-year period thereafter until their m a t u r i t y , when t h e face a m o u n t becomes paj^able. T h e increment in value will be payable only upon redemption of t h e bonds. A table of redemption values for each bond a p p e a r s on i t s face. T h e purchase price of bonds of Series F has been fixed so as t o afford a n i n v e s t m e n t yield of a b o u t 2.53 percent p e r a n n u m compounded semiannually if t h e bonds are held t o m a t u r i t y ; if t h e owner exercises his optior to redeem a bond pi ior t o m a t u r i t y t h e investment yield will be less. 4:. Bonds of Series G will be issued a t par, and will bear interest a t t h e r a t e oi 2>^ percent per a n n u m , payable semiannually from d a t e of issue. Interest will be paid by check drawn t o t h e order of t h e registered owner and mailed to his address I n t e r e s t will cease a t m a t u r i t y , or, in case of redemption before m a t u r i t y , a t the end of t h e interest period next preceding t h e d a t e of redemption. A table oj redemption values for each bond appears on i t s face, and t h e difference betweer t h e face a m o u n t of t h e bond and t h e redemption value fixed for any period repre sents a n a d j u s t m e n t (or refund) of interest. Accordingly, if t h e owner exerciser his option t o redeem a bond prior t o m a t u r i t y , t h e investment yield will b e less t h a n t h e interest r a t e on t h e bonds. Bonds of Series G m a y b e redeemed ai 1 United States savings bonds of Series E, issued pursuant to Department Circulai- No. 653, Revised dated June 1,1942. are also included in the designation United States war savings bonds. 2 Department Circular No. 654. dated Anr. 15,1941, was amended Dec. 12,1941, to.provide the additiona denomination of $25 for United States savings bonds of defense Series F, effective Jan. 1, 1942. REPORT O F - T H E SEGRETARY O F . T H E TREASURY 241 p a r ( l ) ' u p o n t h e d e a t h of t h e owner, or a coowner, if a n a t u r a l person, or (2),. as to bonds held by a trustee or other fiduciary, upon t h e d e a t h of any person which results in termination of t h e t r u s t , in whole or in p a r t . If t h e t r u s t is^ t e r m i n a t e d only in p a r t , rede;niption a<t p a r will be m a d e only to the extent of t h e pro r a t a portion of t h e t r u s t so terminated, to t h e next lower multiple of $100. I n any case request for redemption a t p a r m u s t be m a d e within ^4 m o n t h s after t h e date of d e a t h and in accordance with t h e regulations governing savings bonds. 5. Tables a t t h e end of this circular show separately, for bonds"of Series F a n d those of Series G: (1) T h e redemption values, by denominations, during t h e successive half-year periods Nfollowwig issue, and (2) t h e computed i n v e s t m e n t yields (a) on t h e issue price from issue d a t e tb t h e beginning of each half-year period, and (6) on the current redemption value from the beginning of each half-year period to m a t u r i t y a t the end of t h e 12-year period. 6. T h e bonds will not be transferable, and will be payable only to t h e o w n e r n a m e d thereon, except in case of d e a t h or disability of t h e owner or as otherwise specifically provided in t h e regulations governing savings bonds, a n d in any e v e n t only in accordance with such regulations. Accordingly they m a y not be sold, a n d m a y n o t be h y p o t h e c a t e d as collateral for a loan. 7. Taxation.—For t h e purpose of determining taxes and tax exemptions, t h e increment in value of savings bonds of Series F represented by the^ difference between t h e price paid and t h e redemption value received therefor (whether a t or before m a t u r i t y ) shall b e considered as interest, and such interest on such bondsof Series F, and ipterest on bonds of Series G, is not exempt from income or profits taxes now or hereafter imposed by t h e United States.^ The bonds shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of t h e possessions of t h e United States, o r b}^ any local taxing a u t h o r i t y . III. PURCHASE OF BONDS 1. Agenxies.—Bonds of Series F and .Series G m a y be purchased, while thisoffer is in effect, upon application to any Federal Reserve Bank or. branch, or tot h e Treasurer of t h e United States, Washington, D . C: Sales agencies, duly quahfied under t h e provisions of Treasury D e p a r t m e n t Circular No. 657, dated' April 15, 1941, as amended and supplemented, and banking institutions geneia-lly,. m a y submit applications for account of customers, but' only the Federal R e s e r v e Banks (and. branches) and t h e Treasury D e p a r t m e n t are authorized to act as official agencies, and t h e receipt of application and p a y m e n t at an official agency will govern t h e dating of t h e bonds issued. 2. Payment for bonds.—Every application must be accompanied by p a y m e n t in full of the issue price.. Any form of exchange, including personal checks, will be accepted, subject to collection. Checks, or other forms of exchange, should be drawn to t h e order of the Federal Reserve Bank, or the Treasurer of t h e United States, as t h e case m a y be. Any qualified depositary, p u r s u a n t to t h e provisions of Treasury D e p a r t m e n t Circular No. 92 (revised F e b r u a r y 23, 1932,. as supplemented), will be permitted to make p a y m e n t by credit for bonds applied for on behalf of its customers up to any a m o u n t for which it shall be qualified in excess of existing deposits, when so notified by t h e Federal Reserve B a n k - o f its district; ./ 3. Postal savings.—Subject to regulations prescribed by the Board of Trusteesof j:he Postal Savings System, the withdrawal of postal savings deposits will b e permitted for t h e purpose of acquiring savings bonds.. 4. Other agencies.—The Secretary of the Treasury, in his discretion, may designate agencies other t h a n those herein designated for t h e sale of, or for t h e handling of applications for, savings bonds of Series F and Series G. 5. For7n of application.—In applying for bonds under this circular, care should be exercised to specify whether those of Series F or Series G are desired, a n d there m u s t be furnished: (1) Instructions for registration of the bonds to be issued, which m u s t be in one of t h e authorized forms (see.sec. V); (2) t h e post officeaddress of each person (or other entity) whose name appears in t h e registration;(3) address for dehvery of t h e bonds; and (4), in case of bonds of Series G, address^ for mailing interest checks. The use of an official application form is desirable, b u t not necessary. The application should be forwar.ded to t h e Federal Reserve Bank, or branch, of the district, accompanied by remittance to COiver t h e p u r s For information concerning the taxable and exempt status under Federal tax. laws of the interest (or increment in value of.those issued on a discount basis, including bonds of Series F), and themethods of reporting such interest, see Internal Revenue Mimeograph, Coll. No. 5299, R. A. No. 1177, dated'December17,1941. "' 242 REPORT OF THE SEiCRETARY OF THE TREASURY chase price ($74 for each $100 face amount of bonds of Series F, or $100 for each . $100 face amount of bonds of Series G). 6. Issue prices.—The issue prices of the various denominations of bonds of Series F and Series G follow: SERIES F DENOMINATION, (maturity value) ISSUE (purchase) Price .$25.00 $18.50 - $100 $74 $500 $370 $1,000 $740 $5,000 $3,700 $10 000 $7^400 . . . . . . . $100 $100 $500 $500 $1,000 $1,000 $5,000 $5,000 $10 000 $10,000 SERIES G DENOMINATION (maturity value) ISSUE (purchase) Price. IV. LIMITATION ON HOLDINGS 1. The amount of United States savings bonds of Series F or of Series G, or the combined aggregate amount of both series, originally issued-during any one calendar year to any one person, including those registered in the name of that person alone, and those registered in the name of that person with another named as coowner, that may be held by that person at any one time shall not exceed $100,000 (issue price), effective for the calendar year 1942, and thereafter. Any bonds acquired on original issue which create an excess must immediiately be surrendered for refund of the issue price, as provided in the regulations governing .savings bonds. V. AUTHORIZED FORMS OF REGISTRATION 1. United States savings bonds of Series F and Series G may be registered as Mlows: (1) In the names of natural persons (that is, individuals) whether adults or minors, in their own right, as follows: (a) In the name of one person, (b) In the names of two (but not more than two) persons as coowners, and (c) In the name of one person payable on death to one (but not more than one) other designated person; (2) In the name of an incorporated or unincorporated body, in its own right (except a commercial bank, which, for this purpose, is defined as a bank that accepts demand deposits); (3) In the name of a fiduciary; and (4) In the name of the owner or custodian of public funds. 2. Restrictions.—Registration is restricted,' in the case of individuals, to those who are residents of the continental United States, the Territories and Insular Possessions of the United States, the Canal Zone, the Philippine Islands, or citizens of the tfnited States temporarily residing abroad. The same restrictions will/apply to the registration of bonds in any other authorized form. 3. Full information regarding authorized forms of registration will be found in the ..regulations governing savings bonds (see sec. IX, par. 1). . In every form of registration, the post office address must be given, and if more than one name appears the post office address of each must be furnished. VI. DELIVERY AND SAFEKEEPING OF BONDS 1. Federal Reserve Banks (and branches) are authorized to deliver bonds of "Series F and .Series G duly inscribed and dated upon receipt of the issue price. Unless delivered in person, bonds issued will be delivered within the continental. United States, the Territories and Insular Possessions of the United States, the Canal Zone and the Philippine Islands.^ No deliveries elsewhere will be made. If purchased by citizens of the United States temporarily residing abroad, bonds will be delivered in the United States, or held in safekeeping, as the purchaser may •direct. Delivery should not be accepted by any purchaser until he has verified that the correct name and address are duly inscribed on the face of the bond, that the bond' is duly dated as of the first day of the month in which payment of the issue price was received by the agent, and that the dating stamp (with current date) of the issuing agent is imprinted in the circle in the lower left corner of the bond. • ' • 2. Savings bonds of Series F or Series G will be held in safekeeping without •charge ;^vfthe Secretary of the Treasury if the holder so desires, and in such con-nection#he facihties of the Federal Reserve Banks, as fiscal agents of the United * If bonds are issued within the United States, deliveries thereof outside the continental United States, at -the risk and expense of the United States, may be susoended during the war emergency, but in any such , -case bonds will be delivered to addresses within the United States, or will be held in safekeeping, as the ^purchaser may direct. REPORT OF THE' SECRETARY OF THE TREASURY 243 States, and those of the Treasurer of the United States, will be utilized.^ Arranger ments may be made for such safekeeping at the time of purchase, or subsequently. VII. P A Y M E N T AT MATURITY OR REDEMPTION BEFORE MATURITY 1. General.—^Any savings bond of Series F or Series G will be paid in full at maturity, or, at the option of the owner, after 6 months from the issue date, will be redeemed in whole or in part at the appropriate redemption value prior to maturity, on the first day of any calendar month, • on one month's notice in writing, following presentation and surrender of the bond, with the request for payment properly executed, all in accordance with the regulations governing savings bonds. 2. Notice of redemption.—When a savings bond of Series F or Series G is to be redeemed prior to maturity, a notice in writing of the owner's intention must be given to and be received by a Federal Reserve Bank or branch, or the Treasury Department not less than one calendar month in advance. A duly executed request for payment will be accepted as constituting the required notice. 3. Execution of request for payment.—The registered owner, or other person entitled to payment under the regulations governing savings bonds, must appear before one of the officers authorized by the Secretary of the Treasury to witness and certify requests for payment, establish his identity, and in the presence of such officer sign the request for payment, adding the address to which the check is to be mailed. After the request for payinent has been so signed, the witnessing officer should complete and sign the certificate provided for his use. Unless otherwise authorized in a particular case, the form of request appearing on the back of the bond must be used. 4. Officers authorized to witness and certify requests for payment.—The officers authorized to witness and certify requests for payment of savings bonds are fully set forth in the regulations governing savings bonds, such officers including United States postmasters and certain other post office officials, and the executive officers of all banksand trust companies incorporated in th,e United States or'its organized Territories, including officers at domestic and forejgn branches who are certified to the Treasury Department as executive officers. 5. Presentation and surrender.—After the request for payment has been duly executed by the person entitled and by the certifying officer, the bond must be presented and surrendered to a Federal Reserve Bank or branch, or to the Treasury Depalrtment, Washington, at the expense and risk of the owner. For the owner's protection, the bond should be forwarded by registered mail, if not presented in person. 6. Disability or death.—In case of the disability of the registered owner, or the death of the registered owner not survived by a coowner or a designated beneficiary, instructions should be obtained from the Treasury Depiartment, Division of Loans and Currency, Washington, D. C , before the request for payment ;is executed. 7. Method of payment.—The only agencies authorized to pay or redeem savings bonds are the Federal Reserve Banks and the Treasury Department. Payment in all cases will be made by check ,drawn to the order of the registered owner or other person entitled to payment, and mailed to the address given in the request for payment. / 8. Partial redemption.—Partial redemption at current redemption value of a bond of Series F, of a denomination higher than $25 (maturity value), or of a bond of Series G, of a denomination higher than $100, is permitted, but must correspond to an authorized,denomination. In case of partial redemption the remainder will be reissued in authorized_denominations bearing the same issue date as the bond surrendered. VIII. SERIES DESIGNATION 1. Bonds of Series-F, issued during the calendar year T942 (either as defense series or as war savings bonds) will be designated Series F-1942, and those of Series G will be similarly designated Series G-1942, Bonds of either series which may be issued in subsequent calendar years will be similarly designated by the series letter, F or G, followed by the year of issue. IX. GENERAL PROVISIONS 1. All bonds of Series F and Series G, issued pursuant to this circular, shall be subject to the regulations prescribed from .time to time by the Secretary of the Treasury to govern United States savings bonds. The present regulations « Safekeeping facilities may be offered at some branches of Federal Reserve Banks, and in such connection an inquiry may be addressed to the branch. 244 REPORT OF T H E SEiCRETARY OF T H E TREASURY governing savings bonds are set forth in Treasury Department Circular No. 530,"Fifth Revision, dated June 1, 1942, copies of which may be obtained on application to the Treasury Department, or to any,Federal Reserve Bank. 2. The Secretary of the Treasury reserves the right to reject any application for savings bonds of either Series "F or Series G, in whole or in part, and to refuse to issue or permit to be issued hereunder any such savings bonds in any case or any class or classes of cases if he deems ^uch action to be in the public interest, and his action in any such respect shall be final. 3. Federal Reserve Banks, as €scal agents of the United States, are authorized ' to perform such services as may be requested of them by the Secretary of the Treasury in connection with the issue, delivery, safekeeping, redemption, and payment of savings bonds of Series F and Series G. 4. The Secretary of the Treasury may at any time or from time to time supplement or amend the terms of this circular, or of any amendments or supplements thereto, information as to which will be promptly furnished the Federal Reserve Banks. ' ' 5.' The offerings of United States savings bonds of Series F and Series G, pursuant to this circular, revised, are separate and distinct from the concurrent offering of United States savings bonds of Series E pursuant to Department Circular No. 653, Revised, dated June 1, 1942. The bonds of Series E, F, and G fio offered and issued constitute issues of United States war savings bonds, and are so designated. . HENRY MORGENTHAU, Jr., Secretary of the Treasury. UNITED S T A T E S SAVINGS BONDS SERIES F Table of redemption values and investment yields Table showing: {1) How United States savings bonds of Series F, by denominations, increase in redemption value during successive half-year periods following issue; {2) the approximate investment yield- on the purchase price from issue date to the beginning of each half-year period; and {3) the approximate investment yield on the current redemption value from the beginning of each half-year period to maturity. Yields are expressed in terms of rate percent per annum, compounded semiannually. M a t u r i t y value Issue price "Period after issue date $25.00 $18. 50 $100.' 00 $74. 00 $500.00 $370. 00 $1, 000 $740 $5,000 $3, 700 $10,000 $7,400 (1) R e d e m p t i o n values d iu-ing eac ll half-ye ar period (3) Approxi(2) Approxim a t e investm a t e invest- m e n t yield on m e n t yield on c u r r e n t rep u r c h a s e price demption from issue d a t e value from b e to beginning ginning of each of each halfhalf-year p e y e a r period riod t o m a tm'ity Percent • F i r s t H year H t o 1 year 1 t o I H years I H t o 2 years 2 t o 2 H years 2 H t o 3 years 3 t o 3 H years 3 H to 4 years 4 t o 4 H years 4 H t o 5 years 5 t o 5 H years S H to 6 years. 6 t o GH years • 6 ^ to 7 years 7 t o 7 H years 7 H to 8 years. S to 8 H years S H t o 9 years •9 t o 9 H y e a r s . . 9 H t o 10 years 10 t o lOH years lOH t o 11 years 11 t o I I H years l l H t o 12 y e a r s M a t u r i t y value (12 y e a r s from issue date) N o t rec ieemable $74.00 $370.00 $18.50 371. 00 74.20 18. 55 372. 50 18.62 74.50 374. 50 18.72 74.90 377. 00 18. 85 75.40 380. 00 19.00 76.00 383. 50 19.17 76.70 388. 00 19. 40 77.60 393. 00 19.65 78.60 398. 50 19.92 79.70 404. 50 20.22 80.90 411.00 20.55 82.20 417. 50 20.87 83.50 424. 00 21.20 84.80 430. 50 21.52 86.10 437. 00 21.85 87.40 443. 50 22.17 88.70 450. 00 22.50 90.00 457. 00 22.85 91.40 464. 50 23.22 92.90 472. 50 23.62 94.50 481. 00 24.05 96.20 24.50 98. 00 490.00 $25. 00 $1D.0.00 •• $500.00 $740 742 745 749 754 760 767 776 786 797 .809 822835 848 861 874 887 900 914 929 .945 962 980 $1,000 $3,700 3,710 3,725 3,745 3,770 3.800 3, 835 3,880 3,930 3,985 4.045 4,110 •4,175 4,240 4,305 4,370 4,435 4,500 4,570 4,645 4,725 4,810 4,900 $7,400 7,420 7,450 7,490 7,540 7, 600 7, 670 7,760 7,860 7,970 8,090 8,220 8, 350 8,480 . 8, 610 8.740 8, 870 9,000 9,140 9,290 9,450 9,620 9,800 $5,000 $10,000 « Approximate investment yield for entire period from issuance to maturity. " 0.00 .27 .45 .61 .75 .89 1.03 1.19 1.34 1.49 1.63 1.76 1.87 1.96 2.03 2.09 2.14 2.19 2.24 2.29 2.34 2.40 2.46 2.53 Percent 1 2.53 2.64 2.73 2.82 2.91 2.99 .3.07 3.15 3.20 3.24 3.27 3.29 3.29 3.31 3.32 3.35 3.40 3.46 3.54 3.63 3.72 3.81 3.91 4.08 RE'PORT OF THE' SECRETARY OF T H E TREASTJRY UNITED STATES SAVINGS BONDS 245 SERIES G Table of redemption values and investment yields Table showing: (1) How"^ United States savings bonds of Series G (paying a current return at the rate of 21/2 percent per annum on the purchase price, payable semiannually) change i n redemption value, by denominations, during successive half-year periods following issue; (2) the approximate investment yield on the purchase price from issue date to the beginning of each half-year period; and-(3) the approximate investment yield on the current, redemption value from the beginning of each half-year period to, maturity. Yields are expressed in terms of rate percent per annum, compounded semiriaHriually, and take into account the current return. ^ • Maturity value. Issue price Period after issue d a t e (2) Approximate investment yield .on p u r chase price from issue d a t e (1) R e d e m p t i o n values d u r i n g each half-year to beginning period of each halfyear, period $100.00 $100.00 $.500.00 $500.00 .$1,000 $1,000 $5,000 $5,000 $10,000 $10,000 Percent Fii-st H year H to 1 y e a r . . 1 to I H years.-. I H to 2 y e a r s . . 2 to 2 H years 2 H to 3 years 3 to 3 H years . 33/2 to 4 years---^ 4 to 4 H years 4H to 5 y e a r s . . J . : 5 to 5V^ years 5 H to 6 years 6 to 6 H years 6 H to 7 years 7 to 7 H years 7 H to 8 years 8 to 8 H years 8V2 to 9 years 9 to 93/2 years . 9 H to 10 years 10 to 103/2 years IOV2 to 11 years 11 to IIV2 years l l H to 12 years M a t u r i t y • value (12 years from issue date) N o t redeemable.. $98. 80 $494. 00 489.00 97.80 484. 50 96. 90 96.20 481.00 478.00 95.60 95.10 475. 50 94. 80 474.00 94.70 473. 50 94.70 473. 50 94.90 474. 50 95.20 476.00 95.50 477. 50 95.80 479.00 96.10 480. 50 96.40 482.00 96.70 483. 50 - 97.00 485.00 97.30 486. 50 97.60 488. 00 97.90 489. 50 98.20 491. 00 493.^00 98. 60 99.20 496. 00 $100.00 $500.00 $988- $4, 940 9,780 978 4,890 .9, 690 969 4,845 9,620 962 4,810 9,560 956 4,780 9,510 951 4, 755 9,480 948 4,740 9,470 947 4,735 9,470 947 4,735 9,490 949 4,745 9,520 952 4,760 9, 550 955 4, 775 9,580 ^ 958 4,790 9,610 4,805 961 964 4,820 • 9, 640 9,670 4,835 967 9,700 970 4,850 9,730 973 4,865 976 4,880 i 9,760 9,790 979 4,895 9,820 982 4,910 9,860 986 4,9.30 9,920 992 4,960 0.10 .30 .44 .61 ..75 -.88 1.04 1.20 1.35 1.51 1.66 1.79 1.89 1.98 2.05 2.12 2.1.8 2.23 2.27 2.31 2.35 2.39 2.44 $10,000 2.50 $1,000 $5,000 (3) Approximate investment yield on current redemption value from beginning of each hall-year period to m a t m ' i t y Percent 12.50 2.62 2.73 -2.84 2.94 3.04 3.13 3.20 3.26 3.30 3.32 3.33 3.33 3.34 3.35 3.37 3.39 3.42 3.46 3.51 3.60 3.75 3.94 4.13 ' A p p r o x i m a t e iiiyestment yield for entire period from issuance to m a t u r i t y . OTHER SERIES United States savings bonds of Series E are also offered for sale concurrently with those of Series F and Series G. T h e y are intended primarily for t h e investm e n t of small or m o d e r a t e a m o u n t s saved from current income b y individuals, a n d their issue is restricted to individuals in their own right, with t h e a m o u n t originally issued to any one person during any one calendar year t h a t t h a t person m a y hold limited to $5,000 (maturity value). Full particulars regarding savings bonds of Series E are set forth in Treasury D e p a r t m e n t Circular No. 653,. Revised, d a t e d J u n e 1, 1942, copies of which m a y be obtained from t h e Treasury D e p a r t m e n t , Washington, or from any Federal Reserve Bank. 246 REPORT OF T H E SECRETARY OF T H E TREASURY Exhibit 19 Second amendment, April 20, 1942, to Department Circidar No. 530, Fourth Revision,, prescribing regulations governing United States savings bonds TREASURY DEPARTMENT, Washington, April 20, 1942. To_Owners of United States savings bonds, and Others Concerned: r. Section 315.11 (a) of D e p a r t m e n t Circular No." 530, F o u r t h Revision, dated' April 15, 1941, is hereby amended by adding thereto a subparagraph numbered 4, reading as follows: ''(4) Reissue to add coowner.—A savings bond registered in t h e n a m e of one person alone in his own right, or t o which one" person is shown to be entitled in his own right, under these regulations, upon appropriate request (Form P D 1762) by such person m a y be reissued in whole or in p a r t (but only in authorized, denominations) in t h e n a m e of t h e owner together with t h a t of another individual as coowner: Provided, however, t h a t if a bond is so reissued in t h e names of twO' individuals as coowners, t h e registration m a y not thereafter be changed so long as both coowners are living, a n d Provided further, t h a t no. such" reissue will be effective which results in a n y one person holding bonds in excess of t h e limitation set forth in Section 315.4 hereof, and t h a t bonds reissued in accordance with this subparagraph will be considered for t h e purposes of computation of holdings as originally issued in both names. Reissues under t h e provisions of this s u b pars graph m a y be made only at a Federrl Reserve Bank or a t t h e Treasury D e p a r t m e n t , Washington, T>. C . " 2. Section 315.12 (b) of D e p a r t m e n t Circular No. 530, F o u r t h Revision, dated April 15, 1941, is hereby amended t o read as follows: (b) Reissue during lifetime of registered owner.—A savings bond registered in t h e name of one person payable on death t o a designated beneficiary m a y not be reissued during t h e lifetime of such beneficiary so as to eliminate lais name. If such beneficiary should predecease t h e registered owner, t h e bond m a y , upon appropriate request by t h e registered owner, a n d proof of t h e death of t h e beneficiary, be reissued in t h e name of t h e registered owner alone, or in his name payable on death t o a new beneficiary. A bond registered in t h e beneficiary form m a y be reissued upon appropriate request (Foim P D 1762) by t h e registered owner with t h e name of t h e designated beneficiary as coowner, with t h e same restrictions a n d provisions set forth in section 315.11 (a) (4) of this circular as amended; such reissue m a y be made only a t a Federal Reserve Bank or a t t h e Treasury D e p a r t m e n t . D . W. B E L L , Acting Secretary of the Treasury. Exhibit 20 Fifth revision, J u n e 1, 1942, of Department Circidar No. 530, prescribing regulations governing United States savings bonds TREASURY DEPARTMENT, ^ Washington, J u n e 1, 1942. To Owners of United States savings bonds, and Others Concerned: D e p a r t m e n t Circular No. 530, F o u r t h Revision, dated April 15, 1941 (6 F . R. 2191),.as amended, is hereby further amended a n d issued as a Fifth Revision t o read as follows: T h e following regulations governing United States savings bonds are published for t h e information a n d guidance of all concerned: SUBPART A APPLICABILITY SEC. 315.1. Applicability of regulations.—These regulations apply generally t o all United States savings bonds of all series of whatever designation and bearing any issue dates whatever except as otherwise specifically provided herein. SUBPART B REGISTRATION SEC. 315.2. General.—United .States savings bonds will be issued only in • registered form. T h e n a m e a n d complete post office address of t h e owner, as REPORT OF THE SECRETARY OF THE TREASURY 247 well as t h e name of t h e coowner or designated beneficiary, if any, a n d t h e date as of which t h e bond is issued will be inscribed thereon a t t h e tirne of issue b y a n authorized issuing agent.^ T h e form of registration used m u s t express t h e actual ownership of a n d interest in t h e bond and, except as otherwise specifically provided in these regulations, will be considered a^ conclusive of such ownership and interest. No designation of a-n attorney, agent or other representative t o request or receive p a y m e n t on behalf of t h e owner, nor a n y restriction on t h e right of such owner t o receive p a y m e n t of t h e bond, other t h a n as provided in these regulations, m a y be m a d e in t h e registration or otherwise. SEC. 315.3. Restrictions.—Only residents (whether individuals or others) of t h e United States, including its Territories arid Insular Possessions, t h e Canal Zone a n d t h e Philippine Islands, a n d American citizens temporarily residing abroad, m a y be named as owners, coowners or designated beneficiaries, on borids originally issued on or after April 1, 1940, or authorized reissues thereof.^ SEC. 315.4. Authorized forms of registration, Series E.—Bonds of Series E m a y be registered only in t h e names of individuals (natural persons), whether adults or minors, in their own right in one of t h e following forms of registration: (a) O N E P E R S O N : I n t h e name of one person, for example: ''John A. Jones." (6) T w o P E R S O N S — C O O W N E R S H I P F O R M : I n t h e n a m e s df t w o (but n o t m o r e t h a n two) persons in t h e alternative as coowners, for example: ''John A. Jones O R Mrs. Ella S. Jones." No other form of registration establishing coownership is authorized, (c) T w o P E R S O N S — B E N E F I C I A R Y F O R M : I n t h e n a m e of one (but n o t m o r e t h a n one) person, payable on death t o one (biit n o t more t h a n one) other person,Jor example: " J o h n A. Jones, payable on .death t o Miss M a r y E . Jones." " P a y a b l e on death t o " m a y be abbreviated as " p . o. d." T h e first person named is hereinafter referred t o as t h e owner or registered owner, a n d t h e second person named as t h e beneficiary or designated.beneficiary. If it is desired t h a t a bond revert t o t h e United States uppn t h e death of the owner as a donation, it m a y be registered in t h e name of t h e owner with t h e Treasurer of t h e United States named as beneficiary. T h e full name of t h e owner a n d t h a t of t h e coowner or beneficiary, if any, should be used and should be t h e n a m e b y which t h e person is ordinarily known and under which he does business; if there are two given names t h e initial of one iriay be used, a n d if a person is habitually known a n d does business b y initial only of his given names, registration m a y be in such form. T h e n a m e m a y be preceded b y a n y applicable title such as " D r . , " " R e v . , " etc., a n d in t h e case of women should be preceded b y " M r s . " or " M i s s . " A married woman's own n a m e should be used, n o t t h a t of her husband, for example,- " M r s . M a r y A. J o n e s , " n o t " M r s . F r a n k B . J o n e s . " A minor, whether or n o t under legal guardianship, m a y be named as owner or coowner if t h e bonds are purchased as a gift t o him a n d a minor m a y n a m e a coowner or beneficiary on bonds purchased by him from his wages, earnings or other money in his possession; b u t bonds purchased b y a parent or guardian with funds already belonging t o a minor m u s t be registered in t h e minor's n a m e alone without t h e addition of a coowner or beneficiary. If a person named in t h e registration of t h e bond is under legal disability a n d a guardian or similar representative of his estate h a s been appointed b y a court or is otherwise legally qualified, t h e registration should indicate such facts b y t h e addition of appropriate words, for example, " F r a n k Jones, a minor under legal guardianship of H e n r y S m i t h . " Bonds should n o t be registered in t h e n a m e of a person under disability for reasons other t h a n minority unless a legal representative of his estate has been appointed. SEC. 315.5. Authorized forms of registration, Series F and 6^.^Bonds of Series F or G m a y be registered in t h e names of individuals in their own right as set forth in sec. 315.4 above, a n d subject t o t h e same conditions as therein set forth. Bonds of these t w o series m a y also be registered in t h e names of fiduciaries, corporations, associations or partnerships, except t h a t they m a y n o t be registered in t h e names of commercial banks, t h a t is, banks accepting demand deposits in t h e 1 The date of maturity is also inscribed on savings bonds of Series A, Series B, and Series D. 2 Under the terms of Executive Order No. 8389, as amended, and the regulations issued thereunder, bonds may not be issued to nationals (as defined in said order) of blocked countries or to nationals of enemy countries, whether or not residing in the United States, unless such nationals are generally or specially licensed under the terms of the order. 248 REPOiRT OF T H E SECRETARY OF THGE TREASURY usual and general course of business. T h e following forms are authorized for such registration: (a) Executors, administrators, guardians, etc.—In t h e n a m e of one or more executors, administrators, guardians, conservators pr other representatives of a single estate appointed by a court of competent jurisdiction or otherwise legally qualified, all of whose names m u s t be included in t h e registration, followed by adequate identifying reference to t h e estate, for example: ' ' J o h n Smith, executor of t h e will (or administrator of t h e estate) of H e n r y J. Smith, deceased," or "William C. Jones, guardian (or ... • conservator, etc.) of t h e estate of J a m e s D . Brown, a minor (or an incompetent)." If a guardian or other legal representative holds a common fund for t h e account of two or more estates or wards, bonds should be registered in the n a m e of the representative for each such estate or ward separately, even t h o u g h t h e representative was appointed in a single proceeding. A father or mother, as such, or as n a t u r a l guardian, is not considered a fiduciary for purposes of registration. ^ _,,.., (6) Trustees.^-In t h e name or names of one or more trustees or other fiduciaries of a single duly constituted t r u s t estate, which will be considered as an entity-, followed by a d e q u a t e identifying reference to t h e t r u s t instrument or other a u t h o r i t y creating t h e t r u s t , for example: " J o h n C. Brown a n d t h e First National Bank, trustees undei t h e will of H e n r y C. Brown, deceased," or " T h e Second National Bank, trustee under an agreement with George E. White, d a t e d F e b r u a r y 1, 1935." T h e names of all trustees m u s t be given, unless t h e y are too numerous, act as a board, or hold office for a limited period of time. Registration m a y be in t h e title without t h e names of t h e trustees in t h e case of unincorporated lodges, churches, societies or similar organizations, title t o whose property is held by trustees, and in t h e case of public officers, corporations or bodies acting as trustees under express authority of law, for example: \ " T r u s t e e s of t h e First Baptist Church,. Akron, Ohio, an unincorporated association," or "Treasurer of t h e State of Nebraska, in t r u s t for t h e policyholders of X Corporation, under Section _ _ of Nebraska Statutes." If t h e instrument or other a u t h o r i t y creating t h e t r u s t establishes a board of trustees acting as a board and not as individuals, registration m a y be in t h e n a m e of t h e board as such, for example: " B o a r d of Trustees for t h e State Hospital for t h e Insane, under Section of N e b r a s k a S t a t u t e s . ' ' Registration m a y n o t be m a d e in t h e names of trustees under an agreem e n t or other i n s t r u m e n t purporting t o create a t r u s t where t h e funds used represent merely security for t h e performance of an obligation, except under a s t a t u t e t h e terms of which expressly create an actual t r u s t relationship. ' . . •(c) Pension or retirement funds, etc.—Registration m a y be m a d e in t h e names a n d title, or title alone, of trustees ^of a pension or retirement fund or of an investment, savings, insurance, annuity, or similar fund or trust, b u t in all such cases t h e fund will be regarded as an entity regardless of t h e n u m b e r of beneficiaries or t h e m a n n e r in which their respective interests are established or determined. Segregation of individual shares as a m a t t e r of bookkeeping or as a result of individual agreements with beneficiaries will not operate to constitute separate t r u s t s under these regulations. {d) Private corporations and associations.—In t h e name of any private organization, whether incorporated or unincorporated (except commercial banks as hereinbefore defined), using in each case the full legal name of t h e organization without mention of any officer or member b u t making reference, if desired, to a particular bookkeeping account or fund (not a trust), as follows: (1) A private corporation, followed by the words "a corporation," for example: "Smith Manufacturing Company, a corporation;" REPORT OF THE SECRETARY OF THE TREASUR.Y 249 (2) An unincorporated association, lodge, church or society, or similar body, followed by t h e words " a n unincorporated association," for example: " T h e Lotus Club, an unincorporated asso>ciation." T h e t e r m " a n unincorporatsod association" should not be used t o describe a t r u s t fund, a partnership or a business conducted under a trade n a m e ; (3) A partnership, considered as an entity, followed, by t h e words " a p a r t n e r s h i p , " for example: "Smith and Brow^n, a partnership." (e) States and public corporations.—In t h e full legal name or title of the owner or custodian of public funds, other t h a n t r u s t funds, as follows: (1) Any sovereignty, as a State, or any public corporation, as a county, citv, town or school district, for example: "State of M a i n e , " or "Town of Rye, New Y o r k " . (2) Any board, commission or other public body duly constituted b y law, for example: " M a r y l a n d State Highway Commission." (3) Any public officer designated by title only, for example: "Treasurer, City of Chicago." Registration m a y include reference to a particular bookkeeping account, if desired. (/) *Sc/ioo/.s.—^Registration is not authorized in t h e name of an unincorporated oV public school, or class or activity thereof. Bonds held for the benefit of such school, class or activity should be registered in the name of a school principal or other school officer, as trustee, by title only, for example: "Principal, Western High School, in t r u s t for Class of 1940 Library F u n d ; " a written agreeihent of t r u s t will not be required in cases of small amounts. SEC. 315.6. Unauthorized registration.—Savings bonds inscribed in a form n o t substantially in agreement with those authorized by this subpart, will not be considered as validly issued and will be accepted only for a refund of t h e purchase price, except in those cases in which reissue can be made under the provisions of these regulations. SEC. 315.7. Forms of registration on reissue.—Bonds reissued under t h e provisions of these regulations m a y be reissued in any form of registration p e r m i t t e d by t h e regulations in effect on t h e date of original issue. . . -• SUBPART C — L I M I T A T I O N ON TRANSFER SEC. 315.8.- Not transferable.—United States savings bonds are not transferable a n d are payable only to t h e owners named thereon except in case of the disability or d e a t h of t h e owner or as otherwise specifically provided herein, b u t in any event only in accordance with the provisions of these regulations. Accordingly, savings bonds m a y not be sold or hypothecated as collateral .for a loan and m a y not be used as security for t h e performance of an obligation except as expressly provided in these regulations. SUBPART D L I M I T A T I O N ON HOLDINGS SEC. 315.9. Amount which may be held.—As provided by section 22 of t h e Second Liberty Bond Act, as added February 4, 1935 (U. S. C. 1940 Ed., title 31, section 757c), and by regulations prescribed by t h e Secretary of t h e Treasury p u r s u a n t to t h e authority of t h a t section, as amended by t h e Public Debt Act of J.941, 55 Stat. 7, t h e amounts of savings bonds of t h e several series issued during any one calendar year t h a t m a y be held by any one person, at any one time are limited a s follows: (a) Series A, B, C, and D—$10,000 (maturity value) of each series. (6) Series E—$5,000 (maturity value). (c) Series F and G—$50,000 (issue price) for t h e calendar year 1941, a n d $100,000 (issue price) for each calendar .year thereafter, of either series or of t h e combined aggregate, of both. The term "person" shall mean any legal entity, including b u t not limited to^ an individual, a partnership, a corporation (public or private), an unincorporated association or a t r u s t estate. SEC. 315.10. Calculation of amount.—in computing t h e a m o u n t of savings bonds of any one series issued during any one calendar year held by any one person a t any one time for the purpose of determining whether the ainount is in 250 REPORT OF THE, SECRETARY OF THE TREASURY excess of the authorized lirriit as set forth in the next preceding section, the following rules shall govern: (a) The holdings of each person, as defined in the next preceding section, iridividually and in a fiduciary capacity, shall be computed separately. (b) In the case of bonds of Series A, B, C, D, and E, the computation shall be based upon maturity values. In the case of bonds of Series F and G, the computation shall be based upon issue prices. (c) There'must be taken into account (1) all bonds originally issued to and registered in the name of that person alone or in his name with another as coowner, and (2) all .bonds reissued to add his name as coowner under the provisions of sec. 315.29 (a) hereof, or to designate him as a coowner instead of as a beneficiary, under the provisions of sec. 315.35 hereof. {d) There must be taken into account all bonds of Series A, B,C, and D acquired before March 1, 1941, on the death of another or the happening of any other event, but not those of which such person is merely the designated beneficiary upon the death of the registered owner, or those held for his benefit by a fiduciary, unless he became entitled to such bonds absolutely before March 1, 1941, as the result of the death of the registered owner or the termination of the trust, as the case may be. (e) Nothing herein contained shall be construed to invalidate any holdings within, or to validate any holdings in excess of, the authorized limits, as computed under the regulations in force at the time such holdings were acquired. SEC. 315.11. Disposition of excess.—li any person at any time acquires savings bonds issued during any one calendar year in excess of the prescribed amount the excess must be immediately surrendered for refund of the purchase price. SUBPART E LOST, STOLEN, MUTILATED, DEFACED, OR DESTROYED BONDS SEC. 315.12. Relief in case of loss, etc.—Under the provisions of the Government Losses in Shipment Act, relief either by the issue of a substitute bond or by payment may be given in case of the loss, theft, destruction, mutilation, or defacement of a savings bond. In any such case immediate notice of the facts, together with a complete description of the bond (including series, year of issue, serial number and name and address of the registered owner) should be given to the Treasury Department, Division of Loans and Currency, Merchandise Mart, Chicago, Illinois. The Department will thereupon furnish an appropriate form :and full instructions for presenting the evidence necessary to secure relief under the law and the regulations as contained in Department Circular No. 300, as amended. If such bond is subsequently recovered immediate notice of such recovery should be given to the Division of Loans and Currency (at the address above), in.order that delay may be avoided upon a later presentation of the bond for payment. SUBPART F—SAFEKEEPING FACILITIES SEC. 315.13. Safekeeping of bonds.—Arrangements may be made for the safekeeping of a savings bond by the Treasury or by a Federal Reserve Bank as fiscal agent of the United States. Application forms for safekeeping may be secured from postmasters, Federal Reserve Banks, or the Treasury Department. SUBPART G—INTEREST SEC. 315.14. General.—United States savings bonds are issued in two forms: (1) appreciation bonds, issued on a discount basis and redeemable before maturity at increasing fixed redemption values; and (2) current income bonds, bearing interest payable semiannually and redeemable before maturity at fixed redemption values less than the face amount of the bond. At present Series G constitutes the •only issue of current income savings bonds. ' SEC. 315.15. Appreciation bonds.—No interest as such is paid on savings bonds issued on a discount basis. Such bon4s increase in redemption value at the end of the first year from issue date and at the end of each successive half-year period thereafter until their maturity, when the full amount becomes payable. The increment in value represents interest and is payable only on redemption of the bonds, whether at or before maturity. SEC. 315.16. Current income bonds.—Each such bond bears interest at a specified rate computed on the face amount of the bond and payable semiannually, beginning six months from issue date. Except for redemption at par as provided in sec. 315.18 (c) of Subpart H hereof, full advantage of interest at the rate specified REPORT OF THE SECRETARY OF THE TREASURY 251 m a y be secured onlyif t h e bonds are held to m a t u r i t y ; if bonds are redeemed before i n a t u r i t y at current redemption values t h e difference between t h e face or full m a t u r i t y value and t h e current redemption value then payable in accordance with t h e table printed on t h e face of each bond, will represent an adjustment of interest for t h e rate appropriate for t h e shorter term, as set forth in the tables a t t a c h e d to the circular announcing t h e issue of such bonds. (a) Method of interest payments.—Interest due on current income bonds will be paid on each interest p a y m e n t date by check drawn t o the order of t h e person or persons in whose name t h e bond is inscribed in the same form' as their names appear in t h e inscription on t h e bond, except t h a t in the case of a bond registered in t h e form " A , " payable on death to " B , " t h e check will be drawn to t h e order of A alone until t h e Treasury receives notice of A's death, from w^hich date t h e p a y m e n t of interest will be suspended until such time as t h e bond is presented for p a y m e n t or reissue. " Interest so withheld will be paid to t h e person entitled to p a y m e n t of the bond, or in case of reissue to the person in whose name the bond is reissued. Interest checks on bonds registered in t h e names of coowners will be mailed to the payee first n a m e d a t his address of record unless otherwise specifically directed. , (6) Reissue during interest period.—If a current income bond is reissued for SLny reason between interest p a y m e n t dates, interest for the entire period will, be paid, on t h e next interest p a y m e n t date, by check drawn to the person, in whose name t h e bond is reissued. Ordinarily, if a bond is received for reissue less t h a n a m o n t h prior to an interest p a y m e n t date, reissue' cannot be effected until after such interest p a y m e n t date. (c) Change of address.—Prompt notice should be giyen to the Treasury D e p a r t ment, Division of Loans and Currency, Merchandise Mart, Chicago,. ) Illinois, of any change of address by the owner of current income bonds. The notice should refer to all bonds for which it is desired t h a t the address be changed and should describe each bond by date, serial number, series (including year of issue) and inscription appearing on the face of the bond. {d) Termination of interest.—In case of redemption prior to m a t u r i t y of current ^ income bonds interest will cease on the last day of the interest period next preceding the date of redemption. In case of partial redemption interest on the amount redeemed will cease on the last day of the interest period next preceding t h e date of partial redemption, and interest due thereafter will be paid only on t h e lower amount remaining after partial redemption, (e) Consolidation of checks.—Whenever possible a single check will be issued on each p a y m e n t date for interest on all current income bonds of a single series due to any owner on t h a t date. (/) Endorsement of checks.—Interest checks m u s t be endorsed in accordance with the requirements of the Treasurer bf t h e United States, by t h e payees, either personally or by an attorney in fact, or in case of t h e d e a t h of t h e payee, by his executor or administrator. Forms for t h e a p p o i n t m e n t of such a t t o r n e y m a y be obtained from t h e Treasurer of the U n i t e d States or from any Federal Reserve Bank. SUBPART H—GENERAL PAYMENT AND REDEMPTION PROVISIONS S E C . 315.17. Payment at maturity.—Pursuant to its t e r m s / a savings bond of a n y series will be paid a t or after m a t u r i t y a t its full face or m a t u r i t y value, b u t only following presentation and surrender of t h e bond for t h a t purpose with a > request for p a y m e n t properly signed and certified as herein provided. SEC. 315.18. Redemption before maturity.—Pursuant to its terms, a savings bond m a y not be called for redemption by t h e Secretary of t^he Treasury prior to m a t u r i t y , b u t m a y be redeemed in whole or in p a r t a t t h e option of t h e owner, prior to m a t u r i t y under t h e terms and conditions set forth in t h e offering circular of each series and in accordance with t h e provisions of these regulations, b u t only following presentation and surrender for t h a t purpose with a request for p a y m e n t duly signed and certified as provided herein. (a) Series A, B,. C, D and E.—A bond of Series A, B, C, D or E will be re-^ deemed in whole or in p a r t a t any time after 60 days from t h e issue date without advance notice, a t t h e appropriate redemption value a s shown on the face of t h e bond. (6) Series F and G.—A bond of Series F or G will be redeemed, in whole or in. part, on one m o n t h ' s notice in writing, on t h e first day of any m o n t h n o t less t h a n six m o n t h s from t h e issue date, a t the appropriate redemption 252 REPORT OF T H E SECRETARY OF T H E TREASURY value as shown on t h e face of t h e bond. T h e owner's option t o redeem m a y be shown b y a signed request for p a y m e n t or b y express written notice, and p a y m e n t will be m a d e as of t h e first day of t h e first m o n t h following by a t least one full m o n t h t h e d a t e of receipt of notice b y t h e Treasury D e p a r t m e n t or a Federal Reserve Bank. For example, if t h e request or notice is received on J u n e 15, t h e effective redemption d a t e will be August 1. If express notice is given, t h e b o n d . n i u s t be surrendered to t h e same agency to which t h e notice is given n o t less t h a n fifteen days before t h e effective redemption date. (See sec. 315.16 {d) for provisions as to interest in case current income bonds are redeemed'^' prior to maturity.) ,.v ' '^^' (c) Series G—Redemption ai par before maturity.—Subject to t h e provisions of t h e pr;eceding subsection a bond of Series G (but not of Series F) will be redeemed a t p a r before m a t u r i t y , in whole or in p a r t : (1) upon t h e d e a t h of t h e owner or a coowner if a n a t u r a l person; or (2) if held by a trustee or other fiduciary upon t h e termination of t h e trust, in whole or in part, by reason of t h e d e a t h of any person. If t h e t r u s t is terminated only in p a r t , redemption a t p a r will be m a d e to t h e extent of n o t m o r e , t h a n t h e pro r a t a portion of t h e t r u s t so t e r m i n a t e d and only in a m o u n t s corresponding to authorized denominations. Proof of d e a t h m u s t be furnished and notice of intention t o redeem a t p a r before m a t u r i t y m u s t be received by t h e Treasury D e p a r t m e n t or a Federal Reserve Ba'nk within four m o n t h s after t h e d a t e of death. P a y m e n t will ordinarily be m a d e on t h e first available d a t e : Provided, however. T h a t payiment will be postponed until t h e next interest p a y m e n t date, upon r e q u e s t of t h e persons presenting t h e bond. S E C . 315.19. Form and execution of requests for payment.—Requests for p a y m e n t of savings bonds, unless otherwise authorized in a particular case, m u s t be executed, on t h e form appearing on t h e back of t h e bond t o be surrendered a n d unless otherwise specifically requested p a y m e n t will be m a d e p u r s u a n t t o a duly executed request on t h e earliest day consistent with these regulations. (a) Date of request.—Ordinarily requests executed more t h a n six m o n t h s before .the d a t e of receipt of.a bond by a Federal Reserve B a n k or t h e Treasury D e p a r t m e n t will not be accepted. (5) Identification and signature of owner.—The registered owner in whose n a m e t h e bond is inscribed, or such other person as m a y be entitled to p a y m e n t under t h e provisions of these regulations, m u s t appear before one of t h e officers authorized t o certify requests for p a y m e n t (see sec. 315.20' hereof), establish his identity a n d in t h e presence of such officer sign t h e request for p a y m e n t in ink, adding in t h e space provided t h e address to which t h e check issued in p a y m e n t is t o be mailed. A signaturem a d e by m a r k (X) m u s t be witnessed by a t leasfe- one p e r s o n in addition to t h e ceitifying officer a n d m u s t be a t t e s t e d b y endorsement in t h e blank space substantially as follows: "Witness to t h e above signature by m a r k " , folloAved b y t h e signature a n d address of t h e witness. If t h e n a m e of t h e registered owner or other person entitled to p a y m e n t , as it appears in t h e registration or in evidence on file a t t h e Treasury D e p a r t m e n t , Division of Loans a n d Currency, has been changed b y * marriage or in any other legal manner, t h e signature t o t h e request for p a y m e n t should show b o t h names and t h e m a n n e r in which t h e change was made, for example, "Miss M a r y T. Jones, now b y marriage Mrs. M a r y T . S m i t h " , or " J u n g Smelt, now b y court order John S m i t h " . I n case of a change of n a m e other t h a n b y marriage t h e request should be supported by satisfactory proof of such change, unless already on file.N o request signed in behalf of t h e owner or person entitled to p a y m e n t b y an agent or a person acting-under a power,of a t t o r n e y will be recognized b y t h e Treasury D e p a r t m e n t except in those cases arising under S u b p a r t R hereof. (c) Certification of xequesi.—After t h e request for p a y m e n t has been signed b y t h e owner t h e certifying officer should complete a n d sign t h e ceitificate appearing a t t h e end of t h e form for request for p a y m e n t , an^d t h e bond should t h e n be presented a n d surrendered as provided in sec. 315.23 hereof. S E C . 315.20. Certifying officers.—The following officers are authorized to certify requests for p a y m e n t : (a) At United States post offices.—Any postmaster, acting postmaster or in REPORT OF THE SECRETARY OF THE. TREASURY 253 epector in charge, or other post office official or clerk heretofore or hereafter designated for t h e purpose. . One 'or. more of these officials will be found a t every United States post office, classified branch or station. A post office official or clerk other t h a n a postmaster, acting postmaster or inspector in charge, should certify in.the n a m e of t h e postmaster or acting postmaster, followed by his own signature a n d official title, for example, " J o h n Doe, postmaster, by Richard Roe, postal cashier". . Signatures of these officers should be authenticated by a legible imprint of t h e post office dating s t a m p . • • {b) Banks, trust companies and branches.—Any officer of any incorporated b a n k . or t r u s t company or b r a n c h thereof, domestic or foreign, including b a n k s or t r u s t companies incorporated in t h e United States or its orga-.. nized Territories, those doing business in t h e organized Territories o r . Insular Possessions of t h e United States and t h e Commonwealth of thePhilippines under Federal charter or organized under Federal law. Federal Reserye Banks, Federal land banks, a n d Federal home loan b a n k s ; a n d . Federal Reserve agents a n d Assistant Federal Reserve agents, located a t t h e seyeral Federal Reserve Banks. Certifications by any of these offi-. cers should be authenticated by either a legible impression of t h e corpor a t e seal of t h e b a n k or t r u s t company or, in t h e case of banks or t r u s t companies a n d their branches which are authorized a n d duly qualified i issuing agents for bonds pf Series E, b y a legible imprint of t h e issuing agent's daliing s t a m p . (c) Issuing agents not banks or trust companies.—Any officers of corporations notbanks or t r u s t companies, and of all other organizations, which are duly qualified issuing agents for bonds of Series E. All certifications by suchofficers m u s t be a u t h e n t i c a t e d by a legible imprint of t h e issuing agent's dating stahap. -' ; id) United States officials.—Judges, clerks a n d deptuty clerks of United Statescourts, including United States courts for t h e organized Territories, Insular Possessions a n d t h e Canal Zone; United States Commissioners;. United States a t t o r n e y s ; United States collectors of customs a n d their• deputies; United States collectors of .internal [revenue a n d their deputies;, commissioned officers of t h e United States Army, N a v y , Marine Corps, a n d C o a s t . G u a r d , b u t only for members of their respective services, members of their families. and civilian emploj^ees a t Posts or Bases o r Stations (such certifying officer should indicate his rank and s t a t e thatt h e person signing t h e request is one. of t h e class whose requests he is authorized t p certify); t h e officer in charge of any home, hospital or other facility of t h e Veterans' Administration, b u t only for patients a n d m e m bers of such facilities; certain officers of Federal penal institutions design a t e d for t h a t purpose b y t h e Secretary of t h e Treasury and certainofficers of t h e United States Public H e a l t h Service Hospitals a t Lexington, Kentucky, and a t F o r t Worth, Texas, and of United States Marine Hospitals a t F o r t Stanton, New Mexico, and Carville, Louisiana, designated for t h a t purpose by t h e Secretary of t h e Treasury (in each case, however, only for inmates or employees of t h e institution involved). '(e) Officers authorized i n particular localities.—Certain officers in the Treasury D e p a r t m e n t ; t h e Governors a n d Treasurers of Hawaii, Puerto Rico, a n d Alaska; t h e Governor and Commissioner of Finance of t h e Virgin Islands; t h e Governors a n d Administrative N a v a l and Marine officers of G u a m a n d American Samoa; t h e Governor, p a y m a s t e r or acting paymaster, and collector or acting collector of t h e P a n a m a Canal; postmasters a n d acting postmasters in t h e Bureau of Posts of t h e Canal Zone; t h e United States High Commissioner t o t h e Commonwealth of t h e Philippines, his Executive Assistant, a n d t h e Chief Clerk in .his office, t h e Treasurer 'of t h e Commonwealth a n d t h e city treasurers of Manila a n d Baguio, and judges and clerks of courts of record of t h e Commonwealth whose signatures and official positions are certified b y t h e Secretary of Justice. (/) I n foreign countries.—In a foreign .country requests for paynient m a y be signed in t h e presence of and be certified b y anj^ United States diplomatic or consular representative, or manager or other officer of a foreign b r a n c h of a b a n k or t r u s t company incorporated in t h e United States, whose • • signature is a t t e s t e d by an impression of t h e corporate seal or is certified to t h e T r e a s u r y . D e p a r t m e n t . . If such an officer is not available, requests for p a y m e n t m a y be signed in t h e presence of and be certified by a n o t a r y .ox o t h e r officer authorized t o administer oaths, b u t his official 254 REPORT OF T H E SECRETARY OF" THE TREASURY • character and jurisdiction m u s t be certified by a tJnited States diplomatic ' or consular officer under seal of his office. N. . • {g) Special provision:—In t h e event none of t h e officers' authorized to certify requests for p a y m e n t of savings bonds is readily accessible, t h e Commissioner of t h e Public D e b t is authorized to m a k e special provision for any particular case. , S E C . . 3 1 5 . 2 1 . General instructions to certifying officers.-.—Certifjang officers should require positive identification of t h e person signing requests for p a y m e n t and will be held fully responsible therefor. I n all cases a certifying officer m u s t affix to t h e certification his official signature, title, address and seal, or dating s t a m p , and t h e d a t e of execution. Officers of Veterans Facilities, Public H e a l t h Service Hospitals, Marine Hospitals, and Federal penal institutions, should use t h e seal of the p a r t i c ular institution or service, where such seal is available. If a certifying officer, other t h a n a post office official, officer of la bank or t r u s t company, or officer of an issuing agent,, does not possess an official seal, t h a t fact should be m a d e known and attested. . • SEC. 315.22. Interested person not to certify.—No person authorized to certify requests for p a y m e n t m a y certify a request for p a y m e n t of a bond of which he i.s t h e owner, or in which he has an interest, either in his own right or in a n y representative capacity. SEC. 315.23. Presentation and surrender.—After t h e request for p a y m e n t has been duly signed by the owner and certified as above"provided, t h e bond should be presented and surrendered, if a bond of Series F or G to a Federal Reserve Bank o r branch or to t h e Division of Loans and Currency, Merchandise M a r t , Chicago, Illinois, or, if a bond of any other series, to a Federal Reserve Bank or branch o r t o the Treasurer of t h e United States, Washington, D. C. Usually p a y m e n t will be expedited by surrender to a FederaFReserve Bank. In all cases presentation will be a t the expense and risk of t h e owner, and, for his protection, the bond should be forwarded by registered mail if not presented in person. P a y m e n t will' be m a d e by check drawn to t h e order of t h e registered owner or other personentitled and mailed to him a t t h e address given in his request for p a y m e n t . SEC. 315.24. Partial redeinption.—A savings bond of an}^ series in a denomination other t h a n the lowest authorized for tliat series m a y be redeemed in p a r t a t c u r r e n t redemption value, b u t only in a m o u n t s corresponding to authorized denominations,, upon presentation and surrender of t h e bond in accordance with this subpart. I n any such case, before t h e request for p a y m e n t is signed there should be added to the first sentence of t h e request t h e words " t o t h e extent of $ (maturity value), and reissue of t h e remainder." Upon partial.redemption of a savings b o n d t h e remainder will be reissued as of t h e original issue date as provided in Subpart S hereof. F6r p a y m e n t of interest on bonds of Series G in case of partial redemption see Subpart G hereof. SUBPART I MINORS AND PERSONS UNDER OTHER LEGAL DISABILITY SEC. 315.25. Payment to legal guardians.—If t h e Treasury D e p a r t m e n t , Division of Loans and Currency, has been properly notified,^by t h e form of registration or otherwise, t h a t t h e owner of a savings bond is a minor or a person judically declared incompetent to manage his estate and t h a t a guardian or similar legal representative has been appointed for t h e estate of such minor or incompetent by a court having jurisdiction or is otherwise legally qualified, p a y m e n t will be madeonly to such guardian or similar legal representative. In such case t h e request for p a y m e n t appearing on. t h e back of t h e bond should be signed by t h e guardian or other legal representative as such, for example, " J o h n A. Jones, guardian (committee) of t h e estate of H e n r y W. Smith, a minor (an i n c o m p e t e n t ) . " Unless theform of registration gives t h e name of t h e representative, there m u s t be submitted in support of t h e request a certificate or a certified copy of t h e letters of appointm e n t from t h e court making t h e a p p o i n t m e n t under t h e seal of the court, establishing t h a t t h e a p p o i n t m e n t is in full force. Such certificate or certification (except in the case of corporate fiduciaries) should be dated not more t h a n six m o n t h s prior to t h e date of presentation of t h e bond for p a y m e n t . See Subpart M hereof for p a y m e n t provisions applicable to bonds registered in the names of" guardians and similar fiduciaries. SEC. 315.26. Payment to minors.—If t h e Treasury D e p a r t m e n t , Division /of Loans and Currency, has not received proper notice t h a t a guardian or similar representative of t h e estate of a minor has been appointed or is otherwise duly qualified, p a y m e n t w i l l b e m a d e direct to such minor, provided h e i s , ' a t the time p a y m e n t is requested, of sufficient competency and understanding to sign hisn a m e to the request and t o comprehend t h e nature of such act. I n general the REPORT OF THE SECRETARY OF THE-TREASURY 255 fact that the request for payment has been signed by a minor-and duly certified in accordance with Subpart H hereof will be accepted as sufficient proof of such competency and understanding. SEC. 315.27. Payment to parents of minors.—If the Treasury Department has not been properly notified that a guardian or similar legal representative of the estate of a minor owner of a savings bond has been appointed or is otherwise legally qualified, and if such minor owner is not of sufficient competency and understanding to execute the request for payment, payment will be made to either parent of the minor with whom he resides, or if the minor does not reside with eithef parent, then to the person who furnishes his chief support. The parent or such other person should sign the request for payment in his own name, on behalf of the minor, in the form "Mrs. Mary Jones, on behalf of John C. Jones,".and should sign a certificate, in substantially the following form, w,hich may be typed on the back of the bond: "I certify that I am the (relationship) of John C. Jones and the person with w^hom he resides. He is years of age and is not of sufficient competency and understanding to sign this request." If a person other than a parent signs the request on behalf of the minor he should also certify that the minor does not reside with either parent and that he furnishes his chief support. The Treasury Department may in any particular case require further proof that the minor is not of sufficient competency and understanding to execute the request for payment and of the right- of the person executing the request to act on behalf of the minor. SEC. 315.28. Payment to voluntary guardian of person under disability.—In any case where the adult owner of a bond has been judicially declared incompetent or such incompetency, in the opinion of the Secretary of the Treasury, is otherwise established, and no duly qualified legal representative of his estate is acting, and the<" entire gross-value of his personal estate'does not-exceed'$500, payment-will be made to a member of his family or other person acting as voluntary guardian, upon presentation of proof satisfactory to the Secretary of the Treasury that the proceeds of the bond are necessary for the purchase of necessaries for the incompetent or for his wife or minor children or other persons dependent upon him for support. Applications for such payment should be made only on appropriate forms, which may be obtained from the Treasury Department, Division of Loans and Currency, Merchandise Mart, Chicago, Illinois, or any Federal Reserve Bank. The request for payment should not be executed, nor the bond presented, until the application has been approved and instructions have been given by the Treasury Department. SUBPART J S I N G L E NAME ADDITION OF COOWNER, ETC. SEC. 315.29. Reissue for certain purposes.—A savings bond of any series registered in the name of one person in his own right, or to which one person is shown to be entitled in his own right under these regulations, may be. reissued upon appropriate request for the following purposes: (a) Addition of coowner.—Reissue in the name of the owner with that of another natural person as coowner, provided that bonds reissued in accordance • with this subsection will be considered for the purposes of computation' of holdings under Subpart D of these regulations as originally issued in both names and no reissue will be effective which results in any one person holding bonds in excess of the established limitation for the series to which the bonds belong. Requests for reissue under this subsection should be made on Form PD 1762. {b) Addition of a beneficiary .—Reissue in the name of the owner with thename of another natural person as designated beneficiary. Applications for . reissue under the provisions of this subsection.should be made on Form PD 1077. SEC. 315.30. Reissue upon request of a minor.—Reissues under the provisions of this subpart will be made upon request Of owners, notwithstanding the fact that they are minors, provided they are of sufficient competency and understanding, and are under no legal disability other than minority. SEC. 315.31. Reissue only ai Federal Reserve Banks and Treasury.—Reissues in accordance with the provisions of this subpart may be made only at Federal Reserve Banks or at the Treasury Department. A coowner may be added only by reissue of the bond. Federal Reserve Banks, however, may, in appropriate 487543—43 18 256 REPORT OF THE SECRETARY OF'^ THE'T^ cases, a d d t h e n a m e of a beneficiary to, bonds already-outstanding w^ithout reissue, providing such addition is properly certified b y t h e Federal Reserve Bank. SUBPART K TWO NAMES—COOWNERSHIP FORM SEC. 315.32. Payment or reissue.—A. savings bond registered in t h e names of two persons as coowners in t h e form " J o h n A. Jones O R Mrs. M a r y C. . J o n e s " , ' will be paid or reissued as follows: .. (a) During the lives, of both ycoowners.-^Duving the lives of b o t h coowners t h e bond will be paid t o either coowner upon his separate request without requiring t h e signature of t h e other coowner; a n d upon p a y m e n t to either coowner t h e other person shall cease to have any interest in t h e bond. T h e bond will also be paid t o b o t h coowners upon their joint request, in which case p a y m e n t will be m a d e b y check drawn t o t h e order of b o t h coowners in t h e form, for example, " J o h n A. Jones a n d Mrs. M a r y C. Jones", a n d t h e check m u s t be endorsed b y b o t h payees. T h e bond will n o t be reissued in any form during t h e lives of b o t h coowners except as specifically provided in these regulations. (b) After the death of one coowner,—If either coowner dies without having presented and surrendered t h e bond for p a y m e n t to a FederaL Reserve Bank or,the Treasury D e p a r t m e n t , the surviving poowrieir "will be recognized as t h e sole and absolute.owner" of t h e bond, and p a y m e n t will be m a d e only-to him: Provided, however, T h a t if a coowner dies after he has properly executed t h e request for p a y m e n t and after t h e bond has actually been received by a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , p a y m e n t of t h e bond, or check if one has been issued, will be m a d e to his estate (see Subpart P hereof). Upon proof of t h e death of one coowner and appropriate request by t h e surviving coowner t h e bond will be reissued in t h e name of such survivor alone, or in his n a m e with another individual as coowner, or in his name payable on death"; to a designated beneficiary. , - ' ._ (c) On death of both coowners in com,mon disaster.—If both coowners die in a common disaster under such'conditions t h a t it cannot be established, either by presumption of law or otherwise, which coowner died first, t h e bond will be eonsidered as belonging t o t h e estates of both coowners.. {d) After the deaih of a surviving coowner.-^-li a surviving coowner who became • solely entitled to t h e bond under t h e provisions of subsection (b) of this • section" dies without havin.g submitted t h e bond for p a y m e n t or reissue, t h e bond will be paid or reissued as though it were registered in the name of such last deceased coowner alone. In this case proof of t h e death of both coowners and of t h e order in which they died will be required. SEC. 315.33. Place of reissuc^^Reissues 2iuthov\zed in this subpart,will be made in accordance Avith t h e provisions of Subpart S hereof, but-only^" at a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , and applications for such reissues should be made on form's provided, for t h a t purpose. SUBPART L TWO NAMES BENEFICIARY FORM • SEC. 315.34. Payment to registered oiuner.—A bond registered in t h e name of one person payable on death to another, for example, " H e n r y W.. Ash, payable on death to John C. Black", will be paid to t h e registered owner'during his lifetime upon his properly executed request as though no beneficiary h a d been named in the re.scistration. SEC. 315.35. Reissue during the lifetime of registered owner.—A bond registered in t h e name of one person paya.ble on death to another m a y n o t be reissued during t h e latter's lifetime to elimina.te his name, b u t m a y be reissued, on request of t h e registered owner on F o r m P D 1762, t o name t h e beneficiarv as coowner, subject t o t h e same restrictions and conditions contained in sec. 315.29 -{a). If the.beneficiary should predecease t h e registered owner, upon proof of such death and upon request of t h e registered owner, t h e bond m a y be reissued in his name alone, or in his name with another individual as coowner, or in his name paj^able on death to a designated beneficiary. . SEC. 315.36. Payment or reissue to beneficiary.—If t h e registered owner dies .without having presented and surrendered t h e bond for p a y m e n t or authorized reissue to a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , and is survived b y . t h e beneficiary, upon proof of such d e a t h and survivorship, t h e beneficiary will be recognized as t h e sole and absolute owner of t h e bond, and it will be paid REPORT OF T H E SEIORETARY OF T H E TREASURY 257 only to him, or m a y be reissued in his name alone, or otherwise reissued in accordance with Subpart J as though it were registered in his name alone: Provided, however, T h a t if t h e bond with a properly executed request by t h e registered owner for p a y m e n t or authorized reissue has actually been received by a Federal Reserve Bank or t h e Treasury D e p a r t m e n t , p a y m e n t of t h e bond, or check, if one has been issued, will be made to the.estate of ^the deceased owner in accordance with :sec. 315.49. ^ . SEC. '315.^7. Payment or reissue after death of the surviving beneficiary.—After t h e death of a surviving beneficiary who became entitled under t h e provisions •of this subpart, the boiid will be paid or reissued in accordance with Subpart J as t h o u g h it were registered in tl\e name of t h e surviving beneficiary alone. I n this case proof of the d e a t h of b o t h t h e registered owner and t h e beneficiary a n d of t h e order in which t h e y died will be required. SEC. 315.38. Conditions of reissue.—Vveissne'MwdeT this subpart will be made in accordance with Subpart S hereof, b u t only at ai Federal Reserve Bank or t h e Treasury Departnient and applications for such reissue should be made on forms provided for t h a t purpose. SUBPART M FIDUCIARIES SEC. 315.39. Payment to fiduciaries.—A savings bond registered in the name of, or otherwise belonging to, a fiduciary estate, w i l l b e paid to t h e fiduciaries of such e s t a t e upon their request. T h e request for p a y m e n t m u s t be signed by all acting fiduciaries, except for p a y m e n t a t m a t u r i t y , when a request by any one or more acting fiduciaries will be accepted, b u t p a y m e n t will be m a d e to all. If t h e bond is registered in the names of individual fiduciaries of the estate who are still acting, no further evidence of a u t h o r i t y will be required. I n other cases t h e request for p a y m e n t m u s t be supported by evidence as spepified;below: (a) Fiduciaries—By title only.—If the bond is registered in t h e titles without t h e narhes of the fiduciaries, satisfactory proof of the incumbency of t h e fiduciaries m u s t be furnished, except in t h e case of public officers. {b) Succeeding fiduciaries.—If the fiduciaries in whose names t h e bonds were registered have been succeeded by other fiduciaries, satisfactory proof of successorship m u s t be furnished. (c) Boards, committees, etc., as fiduciaries.—If t h e fiduciaries consist of a board, committee, commission, or public body, or are otherwise empowered t o act as a unit, a request for p a y m e n t before m a t u r i t y mus,t be supported b y a duly certified copy of a resolutior^ of t h e board or other body authorizing such action, e x c e p t t h a t in t h e case of a public board or commission a request signed in its name by a duly authorized officer thereof wall ordinarily be accepted without further proof of the officer's aujbhority. I n any case t h e request m u s t be signed in t h e n a m e of t h e board or other body by an authorized officer or agent thereof. {d) Corporate fiduciaries.—If a public or p r i v a t e corporation or a political body, such as a State or county, is acting as a fiduciary, a request for p a y m e n t m u s t be signed in the n a m e of t h e corporation or other body, in t h e fiduciary capacity in which it is acting, by an authorized offjcer thereof. (e) Registration not disclosing trust..—If the form in which the bond is registered does not show t h a t it belongs to a fiduciary estate or does not identify t h e estate to which it belongs, satisfactory proof of ownership m u s t be furnished. . SEC. 315.40. Reissue in the name of a succeeding fiduciary.—If a'person in whose n a m e a savings bond is registered as a fiduciary has been succeeded as such fiduciary by another person, the bond will be reissued in the name of the succeeding fiduciary upon appropriate request and satisfactory proof of successorship. • SEC. 315.41. Reissue ih the name of, or payment to, the person entitled.— (a) Distribution of trust estate in kind.—A savings bond to w^hich a beneficiary of a t r u s t has become lawfully entitled, in whole or in part, under t h e terms of t h e trust, will be reissued in his name to the extent of his interest, as a distribution in kind, upon t h e request of the trustee or trustees and their certification t h a t such person is entitled arid has agreed to reissue in his name: Provided, T h a t if a trustee himself is so entitled in his own right, his request for reissue in his n a m e m u s t be supported by an order of court or other satisfactory proof t h a t he is so entitled, unless a co- ' fiduciary joins in the request: .Provided further, T h a t if the form in whic^h the bond is registered .does not show t h a t it belongs to a t r u s t estate, t h e request for reissue m u s t be supported by satisfactory proof of ownership. 258 , REPORT OF THE SECRETARY OF -THE TREASURY {b) After termination of trust estate.—If the person who would be lawfully entitled to a savings bond upon the termination of a t r u s t does not desire to have such distribution to him in kind, as provided in t h e next preceding subsection, t h e trustee or trustees should redeem t h e bond in accordance with the provisions of sec. 315.39 hereof before the estate is terminated. If, however, the estate is terminated without such p a y m e n t or reissue having been made, the bond will thereafter be paid t o or reissued in t h e n a m e of t h e person lawfully entitled upon his request and satisfactory proof of ownership, supplemented, if there are two or more persons having any a p p a r e n t interest in the bond, by an agreement executed b}^ all such persons. (c) Upon termination of guardianship estate.—A savings bond registered in t h e n a m e of a guardian or similar legal representative of the estate of a minor or incompetent, if the estate is terminated during the ward's lifetiriie, will be reissued in t h e name of the former ward upon the representative's request and certification t h a t the former ward is entitled and has agreed to reissue in his name, or will be paid to or reissued in the name of t h e former ward upon his own request, supported in either case by satisfactory proof t h a t his disability has been removed. Certification by t h e representative t h a t a former minor has attained his majority, or t h a t the legal disability of a female ward has been removed by marriage, if t h e S t a t e law so provides, will ordinarily be accepted as sufficient, b u t if t h e disability is removed by court order a duly certified cop}^ of the order will be necessary. Upon the death of the ward a bond registered in the name of his guardian or similar representative will be reissued in accordance with the provisions of S u b p a r t P as though it were registered in the name of the ward alone. SEC. 315:42. Bonds held by trustee where reissue not'authorized.—Savings-bonds which by their terms or under the regulations in force a t the time of their issue m a y not be registered in t h e name of a fiduciary m a y be held without change of registration by a trustee pr other fiduciary under t h e will of a deceased owner of the bonds, b u t will not be reissued in the name of the fiduciary. Upon proof of the appointment and authority of the fiduciary bonds so held will be paid to the fidiiciary, or upon termination of the t r u s t will be reissued in t h e . n a m e s of t h e persons entitled in their own right in accordance with the provisions of this subpart. SUBPART N PRIVATE CORPORATIONS, ASSOCIATIONS, PARTNERSHIPS, ETC. SEC. 315.43. Payment^to corporations or unincorporated associations.—A savings bond registered in the name of a private corporation or an unincorporated association will be p a i d to such corporation or unincorporated association upon request for pa3anent on its behalf by a duly authorized officer thereof. T h e signature t o the request should be in t h e form, for example, " T h e Jones Coal Company, a corporation, by William A. Smith, president," or " T h e Lotus Club, an unincorporated association, by John Jones, treasurer." A request^for pa3anent so .signed and duly certified will ordinarily be accepted without further proof of the officer's authority. SEC. 315.44. Payment to partnerships.—A savings bond registered in the name of a partnership will be paid upon a request for p a y m e n t signed by a general partner. T h e signature to the request should be in the form " S m i t h and Jones, a partnership, by John Jones, a general p a r t n e r . " A request for p a y m e n t so signed and duly certified will ordinarily be accepted as sufficient proof t h a t t h e person signing t h e request is duly authorized. SEC. 315.45. Reissue or payinent to successors of corporations, unincorporated associations or partnerships.—A savings bond registered in t h e name of a p'rivate corporation, an unincorporated association or partnership, which has been succeeded by another corporation, unincorporated association or partnership as t h e result of merger, consolidation, reincorporation, conversion, reorganization, or otherwise by operation of law or in any m a n n e r whereby t h e ownership of the succeeding organization is substantially identical with t h a t of its predecessor, will be paid to, or reissued in t h e ' n a m e of, t h e succeeding corporation, unincorporated association or partnership upon appropriate request on its behalf supported h j satisfactory proof of lawful successorship. SEC. 315.46. Reissue or payment on dissolution.— (a) Corporations.—A savings bond registered in t h e name of a private corporation which is in process of dissolution will be paid to t h e authorized repre REPORT OF THE ^ SECRETARY OF • THE. ^TREASURY 259 sentative of the-corporation .upon a- duly executed request for payment supported by satisfactory evidence of the. representative's authority. Upon the termination of dissolution proceedings such bonds may be reissued in the names of those persons, other than the creditors, entitled to the assets of the corporation to the extent of their respective interests upon the duly executed request of the authorized representative of the corporation and upon proof of compliance with all statutory provisions governing the voluntary dissolution of such corporation, and that the persons in whose names reissue is requested are entitled and have agreed to such reissue: Provided, That if the dissolution proceedings are had under the direction of a court, proof of the authority of the representative and of the persons entitled to distribution must consist of certified copies of orders of the court. <b) Partnerships.—A savings bond registered in the name of a partnership which has been dissolved by death or withdrawal of a partner, or in-any other manner, will be paid to or reissued in the names of the persons entitled thereto as the result of such dissolution to the extent of their respective interests, upon their request supported by satisfactory evidence of their title, including proof that the debts of the partnership have been paid or properly provided for. SUBPART O STATES, PUBLIC CORPORATIONS, AND PUBLIC BOARDS, COMMISSIONS, AND OFFICERS SEC. 3i5.47. In names of Stales, public corporations, and public boards.—k. savings bond registered in the name of a State or of a county, city, towri, village or other public corporation, or in the name of a public board or commission, will be paid upon a request signed in the name of such State, corporation, board or commission by a duly authorized officer thereof. A request for payment so signed -and duly certified will ordinarily be accepted without further proof of the officer's -•authority. SEC. 315.48. In names of public officers.—^^A savings bond registered in the title, without the name, of an officer of a State or public corporation, such as a county, •city, town or viUage, will be paid upon request for payment signed by the desig;nated officer. The fact that the request for payment is signed and duly certified will ordinarily be accepted as sufficient proof that the person signing is the incumbent of the designated office. SUBPART P—DECEASED OWNERS SEC. 315.49. Payment or reissue on death of owner.-^U^on the death of the owner of a savings bond, who. was not survived by a coowner or designated beneficiary and who had not during his lifetime presented and surrendered the bond to a Federal Reserve Bank or the Treasury Department with a duly executed and proper request-for an authorized reissue, the bond will be paid or reissued as hereinafter provided. The provisions of this section shaU also apply td savings bonds regis"tered in the names of executors or administrators, except that proof of their appointment and qualification may not be required. Established forms for use in such -cases and for requests for payment or reissue may be obtained from any. Federal Reserve Bank or from the Treasury Department, Division of Loans and Currency, Merchandise Mart, Chicago, Illinois, and should be used in every instance. (o) In course of administration.—If the estate of the decedent is being administered in a court of competent jurisdiction, the bond will be paid to the duly qualified representative of the estate or will be reissued in the names of the persons entitled to share in the estate upon the request of the duly appointed and qualified representative of the estate, who should certify that the persons named are entitled to. the extent specified for each and have consented to such reissue. The request for payment or reissue should be signed in thie form, for example, "John A. Jones, administrator of the estate (or executor of the will) of Henry W. Jones, deceased." Reissue will be made to the persons entitled in their names alone, or with a coowner (provided no excess holdings will be created) or beneficiary upon appropriate request by such persons. A request for payment or reissue must be supported by proof of the representative's authority. Such proof may consist of a court certificate or a certified copy of the representative's letters of appointment issued by the court having jurisdiction; / the certificate, or the certification to the letters, must be under the seal of the court, must contain a statement that the appointment is in full 260 REPORT OF T H E SECRETARY OF T H E TREASURY force, a n d should be dated within six m o n t h s of t h e date of presentation of t h e bond for p a y m e n t or reissue. If t h e representative is himself the person entitled and desires reissue in his own name, t h e request for reissue m u s t be supported by an order of court, unlesss a coadminist r a t o r or coexecutor joins in t h e request. (6). After settlement through court proceedings.—If t h e estate of t h e decedent has been settled in a court of competent jurisdiction, the bond will be paid to,^^ or reissued, in the name of, t h e persons entitled thereto as• determined^ by t h e court: Provided, TYiBbt if.there a r e ' t w o or more persons having an apparent interest,in t h e bond, aii agreement should be executed by t h e m . T h e request for p a y m e n t or reissue, and t h e agreement, if necessary^ m u s t be supported by duly certified copies of t h e pertinent court records. (c) -Without administration.—If no legal representative of t h e decedent's estate has been or is to be appointed, a n d if it is established to the satisfaction of t h e Secretary of t h e Treasury either t h a t t h e gross value of t h e personal estate does not exceed $500, or t h a t administration of the estate is not required in t h e State of the decedent's last domicile, the bond will be paid to, or reissued in t h e name of, t h e persons entitled t o share in t h e 3State, without requiring administration, p u r s u a n t to an agreement and request by t h e m on the form prescribed by the Treasury D e p a r t m e n t and supported by t h e evidence called for by t h a t form: Proviaed, however. T h a t reissue will not be m a d e in t h e name of a creditor of t h e estate. No p a y m e n t or reissue will be permitted without administration if .any of the persons entitled are minors or incompetents,rexc'e^t to t h e m or in their names, in whole or .to t h e extent of'their interests in t h e decedent's entire personal estate, or upon compliance with t h e provisions of Subp a r t I hereof governing p a y m e n t of savings bonds registered i n the names of such persons. SEC. 315.50. Forms of registration on reissue.—In no case will bonds be reissued hereunder except i n . a form authorized upon original issue b y t h e regulations^in force jat the time bonds surrendered were issued. SUBPART Q C R E D I T O R ' S BIGHTS AND JUDICIAL PROCEEDINGS SEC, 315.51. Creditor's rights.—A creditor of the owner of a savings bond m a y secure p a y m e n t thereof to t h e extent of the owner's interest, or to t h e extent of the creditor's claim, whichever is smaller, through valid judicial proceedings: Provided, however, T h a t no such proceedings will be recognized if they would give effect to an a t t e m p t e d voluntary transfer inter vivos of t h e bond or would defeat or impair the rights of survivorship conferred by these regulations, upon coowners a n d beneficiaries. P a y m e n t , or partial p a y m e n t in a n ' a m o u n t not in excess of t h a t to which the creditor is entitled, will be made upon presentation a n d surrender of t h e bond with t h e request for p a y m e n t duly executed, a t t h e redemption value current 30 days after t h e proceedings have become final, or current a t the time t h e bond is presented for payment, whichever is earlier. No reissue of the bond "will be made to t h e creditor under t h e provisions of this section. SEC. 315.52. Determination of interest as between owner and coowner or beneficiary.— Conflicting claims as to ownership of or interest in a savings bond, as between t h e registered owner a n d t h e coowner, or t h e registered owner a n d a designated beneficiary m a y be determined by valid judicial proceedings", in which case t h e bond m a y be reissued in t h e names of t h e respective coowners or t h e owner and t h e beneficiary to the extent of their respective interests as determined by such proceedings, b u t only in authorized denominations. SEC. 315.53. Evidence necessary.—To establish the validity of judicial proceedings there m u s t be submitted a certified copy of t h e judgment or decree of court and of any necessary supplementary proceedings, as well as a certificate from t h e clerk of t h e court under t h e court seal, showing t h a t t h e j u d g m e n t or decree is in full force and effoct and has become final under the laws of the jurisdiction. T h e Secretary of t h e Treasurj^ m a y in any case require such further information, docum e n t s and security as he m a y deem necessary. SEC. 315.54. Bankruptcy and insolvency.—Payment (but not reissue) of a sav-~ ings bond will be made to a duly qualified trustee in b a n k r u p t c y or receiver of t h e estate of t h e registered owrier, adjudicated b a n k r u p t or insolvent, upon request for p a y m e n t duly executed.by such trustee or receiver and supported by satisfactory proof of his a p p o i n t m e n t and qualifications. REPORT OF THE; SECRETARY OF THE TREASURY SUBPART R 261 PLEDGE WITH SECRETARY OF TREASURY OR FEDERAL RESERVE B A N K S SEC. 315.55. Deposit under Department Circulars No. 154 o,nd No. 657.—Notwithstanding any other provisions of this or any other circular, a savings bond m a y be pledged by the registered owner in lieu of surety under the provisions of D e p a r t m e n t . Circular No. 154, amended: Provided, T h a t t h e bond approving officer is t h e Secretary of t h e Treasury. I n such cases an irrevocable power of a t t o r n e y shall be executed authorizing t h e Secretary t o request p a y m e n t , a n d paym e n t of the bond will, if it becomes necessary, be made upon such request a t t h e then appropriate redemption value. No pledge to a bond approving officer other t h a n t h e Secretary of the Treasury will be perrnitted. A savings borid m a y also be deposited as security with a Federal Reserve Bank under t h e provisions of Dep a r t m e n t Circular No. 657 by an institution certified under t h a t circular as an issuing agent for savings bonds of Series E. I n no other cases are .savings ;.bonds suitable for use as collateral, nor will a power,of .-attorney fo" request p a y m e n t be recognized in any other case.--; • „ ' • "^ SUBPART S—^^REISSUE AND DENOMINATIONAL EXCHANGE SEC. 315.56. General.—Reissue of savings bonds in different names or in a different form of registration will be m a d e only in t h e following instances and only in denominations a n d forms of registration authorized for t h e bonds surrendered: (a) To correct an error in the original issue, upon request of the owner or coowner, supported by satisfactory proof of such error unless t h e error was m a d e by t h e issuing agent; {b) T o show a change in t h e n a m e of an owner, coowner, or beneficiary upon his request, supported by satisfactory proof of t h e change if for any other reason t h a n marriage; . (c) As otherwise specifically provided in these regulations. SEC. 315.57. Requests for reissue.—Requests for reissue should be sighed by t h e person authorized under these regulations to-make such requests, on appropriate forms which m a y be obtained froiri any Federal Reserve Bank or from t h e Treasury D e p a r t m e n t , Division of Loans and Currency. If t h e request is by reason of a change of n a m e t h e signature should show both names, and t h e manner in which t h e change took place. A request for reissue m u s t be signed in "the presence of a n d be certified by an officer authorized under Subpart H hereof to certify requests for p a y m e n t . A request m a y not be signed by a person under any legal disability other t h a n minority. I t m a y be signed by a minor who is of sufficient competericy a n d understanding t o sign his name to t h e request and to comprehend t h e nature of such act. I n general t h e fact t h a t a request foi reissue has been signed b}'' a minor.and duly certified will be accepted as sufficient proof of such competency a n d understanding. SEC. 315.58. Agencies authorized to make reissue.—Reissues under (6) and (c) hereof m a y be m a d e only a t a Federal Reserve Bank or t h e Treasury D e p a r t m e n t . SEC. 315.59. Date of bonds on reissue.—The new bonds will be of t h e same series, will bear t h e same issue date, a n d will have t h e same rights and privileges as t h e bonds surrendered. S E C . 315.60. Effective; d a i e : — I n a n y case of authorized reissue t h e Treasury Dep a r t m e n t reseryes the"'right to t r e a t t h e receipt by a Federal Reserve Bank or t h e T r e a s u r y D e p a r t m e n t of a bond and appropriate request for reissue thereof as determining t h e date upon which reissue is Effective. SEC. 315.61. Denominational exchange.—Exchange as between authorized d e nominations will not be p e r m i t t e d except in cases of partial redemption or authorized reissue. SUBPART T ^ F U R T H E R PROVISIONS S E C . 315.62. Regulations prescribed.—These regulations are prescribed by t h e Secretary of t h e Treasury as governing United States savings bonds issued under t h e authority of section 22 of t h e Second Liberty Bond Act, as amended, and p u r s u a n t to t h e various d e p a r t m e n t circulars offering such bonds for sale. T h e provisions of Treasury D e p a r t m e n t Circular No. 300, as amended, have no application to such savings bonds except as to cases arising under S u b p a r t E hereof. • SEC. 315.63. Preservation of rights.—Nothing in these regulations contained shall be construed to limit or restrict any existing rights which holders of savings bonds heretofore issued m a y have acquired under t h e circulars offering such bonds for sale, or under t h e regulations in force a t t h e time of purchase. 262 REPORT OF T H E SECRETARY OF THE TREASURY S E C . 315.64. Additional proof; bond of indemnity.-^TYie Secretary of the Treasury, in a-ny case arising under these regulations, m a y require such additional proof as he m a y consider necessary or advisable in t h e premises; and m a y require a bond of indemnity with satisfactory sureties, or. an agreement of indemnity, in a n y case where he m a y consider such a bond or agreement necessary for t h e protection of t h e interests of t h e United States. SEC. 315.65. Correspondence ahd forms.—Correspondence in regard to any t r a n s actions-in United States savings b o n d s ' u n d e r t h e provisions of these regulations should t)e addressed 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, Merchandise M a r t , Chicago, Illinois. Appropriate forms for use in connection with such transactions m a y be secured from any Federal Reserve Bank or from t h e Division of Loans a n d Currency. S E C . 315.66. Supplements, amendments or revisions.—The Secretary bf t h e Treasury m a y a t any time, or from time to time, prescribe, additional, supplemental, a m e n d a t o r y or revised rules a n d regulations governing United States savings bonds. ' H E N R Y MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 21 Amendments and^s^jLup/plj^meht to,Depo,rtmenUCircular No. .657, prescribing>j:eguI/ati.ons fgoverning agencies for the issue of Uriited States savings bonds of Series E F I R S T A M E N D M E N T , O C T O B E R 2, 1941 TREASURY DEPARTMENT, Washington, October 2, 1941* Treasury D e p a r t m e n t Circular No. 657, dated April 15, 1941, is hereby amended by deleting t h e last p a r a g r a p h of section 3 of t h e circular a n d inserting iri lieu thereof the following: QUALIFICATION OF ISSUING AGENT "(c) Notwithstanding, t h e provisions of subsections (a) and (b) hereof any designated issuing agent which is, and continues to be, insured by the Federal Deposit Insurance Corporation and which files an application-trust agreement on Form 384-A with the,Federal Reserve Bank of its district m a y apply for defense savings bond stock. Series E, sufficient to meet its requirements without the pledge of collateral security therefor. T h e aggregate a m o u n t of stock to be maintained a t any one time, t a k e n a t m a t u r i t y values, shall not exceed 50% of t h e issuing agents' capital a n d surplus or g u a r a n t y fund or reserve for capital purposes or $500,'000f^whichev.er4s t h e smaller a m o u n t ; however,^the Secretary of t h e Treasury, directly or through t h e Federal Reserve Bank of t h e district as fiscal agent, reserves t h e right to regulate t h e a m o u n t of stock which m a y be obtained or maintained b y a n y issuing agent without t h e pledge of collateral security, including temporary increases over t h e limits expressed in this subsection, whenever circumstances m a k e such action necessary or desirable. "(d) Notwithstanding t h e provisions of subsections (a) and (b) hereof, any designated issuing agent which is, and continues to be, insured by t h e Federal Savings & Loan Insurance Corporation, or any other acceptable State insurance corporation, sys.tem or fund, t h e members of which are subject t o Federal or State supervision, examination and liquidation, which files an application-trust" agreem e n t on F o r m 384-A with t h e Federal Reserve Bank of the district in which it is located m a y apply for defense savings bond stock. Series E, sufficient to meet its requirements without t h e pledge of collateral security therefor. T h e aggregate a m o u n t of stock to be maintained a t any one time, t a k e n a t m a t u r i t y values, shall ( not exceed 50% of t h e issuing agents' capital and surplus or g u a r a n t y fund or reserve for capital purposes, or other similar fund or funds, or $50,000, whichever is t h e smaller a m o u n t ; however, t h e Secretary of t h e Treasury, directly or through t h e Federal Reserve Bank of t h e district as fiscal agent, reserves t h e right t o regulate t h e a m o u n t of stock which m a y be obtained or maintained by any issuing agent without t h e pledge of collateral security, including temporary'increase over t h e limits expressed in this subsection, whenever circumstances m a k e such action necessary or desirable. "(e) Upon approval of t h e application and pledge agreement. Form 384, or t h e application-trust agreement. F o r m 384-A, t h e Federal Reserve Bank will issue a REPORT OF THE SECRETARY OF THE TREASURY 263 certificate of qualification t o t h e issuing agent on F o r m N o . 385 or 385-A. T h e Federal Reserve Bank, as fiscal agent of the United States, m a y certify, in whole or in p a r t , t h e qualification applied for. If the' qualification applied for is not certified, appropriate notice thereof will be t r a n s m i t t e d t o t h e issuing agent making application." . H . MORGEISJTHAU, J r . , Secretary of the Treasury, SECOND A M E N D M E N T ; N O V E M B E R 29, "1941 TREASURY DEPARTMENT, Washington, November 29, 1941Treasury D e p a r t m e n t Circular No. 657, dated April 15, 1941, as amended, is hereby further amended by- inserting immediately preceding t h e concluding sentence of t h e last p a r a g r a p h thereof t h e following new sentence: " T h e Secretary of t h e Treasury m a y waive or modify a n y of t h e requirements of this circular whenever he deems such action t o be in t h e public interest." D. W. BELL, Acting Secretary of the Treasury. F I R S T S U P P L E M E N T , J U N E 1, 1942 TREASURY DEPARTMENT, Washington, J u n e 1,1942. D e p a r t m e n t Circular N o . 657, dated April 15, 1941, as amended, is hereby supplemented b y adding t h e following new p a r a g r a p h before t h e last p a r a g r a p h of section 6 (Miscellaneous) o f t h e circular: " W h e r e v e r t h e word 'Defense' is used in this circular or a n y agreement entered into p u r s u a n t thereto, or wherever t h e word 'Defense' is used in a n y form used or required to be used in connection with such circular or agreement, t h e word *War' shall be used in lieu of or interchangeably with t h e word 'Defense', as-the circumstances m a y require, on a n d after t h e d a t e of this supplernent. Issuing agents designated under t h e teriris of this circular, t h e qualifica.tion of which has been a p p r o v e d . a n d now is in full force and effect will not be required to file new formal application-pledge or t r u s t agreements a n d t h e y y^^ill be conclusively presumed to have assented to continue to act as issuing agents under t h e terms of such agreements and this circular, as amended and supplemented, by t h e receipt for sale of war savings bonds of Series E. Likewise, by such receipt, collateral security now or hereafter pledged under t h e t e r m s of such agreements shall be conclusively deemed t o be pledged as collateral security in connection with either or both, defense or war savings bonds of Series E . " H E N R Y M O R G E N T H A U , Jr., Secretary of the Treasury. Treasury certificates of i n d e b t e d n e s s Exhibit 22 Offering of }i percent Treasury certificates of indebtedness of Series A-1942', On April 6, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions for yi percent Treasury certificates of indebtedness of Series A-1942, in t h e a m o u n t of $1,500,000,000, or thereabouts. [Department Circular No. 683. Public Debtl TREASURY DEPARTMENT, . Washington, April 6, 1942. I. OFFERING OF CERTIFICATES 1. The.;Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second Liberty Bond Act, as amended, invites subscriptions, a t p a r a n d accrued interest, from t h e people of t h e United States for ^2.percent certificates of indebtedness of t h e United States, designated Treasury certificates of indebtedness of Series A-1942. T h e a m o u n t of t h e offering is $1,500,000,000, or thereabouts. 2.64 REPORT OF THE SECRETARY OF THE TREASURY II. DESCRIPTION OF CERTIFICATES 1. The certificates will be dated April 15, 1942, and will bear interest from that date at the'rate of 3^ percent per annum, payable on an annual basis at the maturity of the certificates. They will mature November 1, 1942, and will not be subject to call for redemption prior to maturity. 2. The incoine derived from the certificates shall be subject to all Federal taxes, .now or hereafter imposed. The certificates shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United States, or by any local taxing authority. 3. The certificates will be acceptable to secure deposits of public moneys. They will not be acceptable in payment of taxes and will not bear the circulation privilege. 4. Bearer certificates with one interest coupon attached will be issued in denominations of $1,000, $5,000, $10,000, and $100,000. The certificates will not be issued in registered form. ^• 5. The certificates will 'be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States certificates. .• III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their subscriptions, or of the securities which may be allotted thereon, prior to the closing of the subscription books. 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. Subscriptions from banks and trust companies for their own account will be received without deposit. Subscriptions from all others must be accompanied by payment of 10 percent of the amount of certificates applied for. Subscriptions will be entertained from the various classes of subscribers on the following bases: 1. Banks and trust companies for their own account—not to exceed 50 percent of capital and surplus. 2. Mutual savings and Cooperative banks, Federal savings and loan associai ions, trust accounts and investment corporations, pension funds, insurance companies,^ and similar institutions and funds—not to exceed 10 percent of total resources. 3. Corporations organized for profit, and dealers and brokers—not to exceed 50 percent of net worth. 4. Individuals—not to exceed 50 percent of net worth or 100 percent of cash deposited with subscription. 2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of certificates applied for, and to close the books as to any or all subscriptions at any time without notice; and any action he may take in these respects shall be final. Subject to these reservations, subscriptions for amounts up to and including $25,000 will be allotted in full, and subscriptions for amounts over $25,000 wih be allotted on an equal percentap^e basis, but not less than $25,000 on.any. one subscription. The basis of the allotment will be publicly annouriced, and allotment notices will be sent out promptly upon allotment'. IV. PAYMENT 1. Payment at par and accrued interest, if any, for certificaties allotted hereunder must be made or completed on or before April 15, 1942,'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 certificates 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 certificates allotted to it for itself and its customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve Bank of its district. V.° GENERAL PROVISIONS 1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions, to make allotments on the basis and up 265 REPORT O'F T H E SECREITARY OF T H B TREASURY t o t h e a m o u n t s indicated by t h e Secretary of t h e Treasury t o t h e Federal Reserve B a n k s of t h e respective districts, t o issue allotment notices, t o receive p a y m e n t for certificates allotted, t o m a k e delivery of certificates on full-paid subscriptions a,llotted, a n d they m a y issue interim receipts pending delivery of t h e definitive certificates. 2. T h e Secretary of t h e Treasury m a y a t any time, or from time t o time, prescribe supplemental or a m e n d a t o r y rules a n d regulations governing t h e offering, which will be communicated p r o m p t l y t o t h e Federal Reserve Banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 23 Subscriptions and allotments, Treasury certificates of indebtedness of Series A—1942 {from press releases, April 6, 10, and 16, 1942 0 On April 6, 1942, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e offering of }^ percent Treasury certificates of indebtedness of Series A-1942 closed a t t h e close of business April 6. Subscriptions aggregated $3,062,250,000, of which $1,507,083,000 was allotted. Subscriptions in a m o u n t s u p t o a n d including $25,000, totaling about $66,000,000, were allotted in full. Subscriptions in a m o u n t s over $25,000 were allotted 48 percent, on a s t r a i g h t percentage basis, b u t n o t less.than $25,000 on a n y one subscription, with adjustments, where necessary, t o t h e $1,000 denomination. Subscriptions a n d allotments were divided among t h e Federal Reserve districts a n d t h e Treasury as follows: redei:al Reserve district Boston NewYork. Philadelphia Cleveland Richmond A florifq Chicago St. Louis. Subscriptions received Subscriptions allotted $212,414,000 1, 724, 584,000 111, 799,000 150, 548 000 77, 737 000 73, 532,000 368, 055, 000 71,103,000 $104,289,000 832,804,000 55,613,000 75, 369 000 39, 828 000 37, 200 000 185,568,000 37,386,000 Federal Reserve district Minneapolis Kansas City . . . Dallas San Francisco Treasury Total . Subscriptions Subscriptions received allotted $50,052,000 44,.835,000 47, 634, 000 129, 772, 000 185, 000 $27,087,000 23, 541,000 24. 526,000 63, 774, 000 98,000 3,062, 250, 000 1, 507,083, 000 Exhibit 24 Off^ering of y% percent Treasury certificates of indebtedness of Series A-1943 On J u n e 18, 1942, Secretary of t h e Treasury Morgenthau invited subscriptions for y% percent Treasury certi|icates of indebtedriess of Series A-1943, in t h e a m o u n t of $1,500,000,000, or thereabouts. [Department Circular No. 688. Public Debt] TREASURY DEPARTMENT, Washington, J u n e 18, 1942. I. OFFERING OF CERTIFICATES 1. T h e Secretary of t h e Treasury, p u r s u a n t t o t h e authority of t h e Second L i b e r t y Bond Act, as amended, invites subscriptions, a t p a r and accrued interest, from t h e people of t h e United States for Y^. percent certificates of indebtedness of t h e United States, designated Treasury certificates of indebtedness of Series A 1943. T h e a m o u n t of t h e off'ering is $1,500,000,000, or thereabouts. , r» I I . DESCRIPTION OF CERTIFICATES 1. T h e certificates will be dated J u n e 25, 1942, a n d will bear interest from t h a t d a t e a t t h e rate of y% percent per annum, payable on an annual basis at t h e m a t u rity of t h e certificates. T h e y will m a t u r e Februar}^ 1, 1943, a n d will n o t be s u b ject t o call for redemption prior t o m a t u r i t y . 1 Revised June 2,1942. 266 REPORT OF THE SECRETARY OF THE TREASURY 2. The income derived from the certificates shall be subject to all Federal taxes,, now or hereafter imposed. The certificates shall be subject to estate, inheritance,, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or liereafter imposed on the principal or interest thereof by any State, or any of the possessions of the United St'ates, or by any local .taxing^ authority. 3. The certificates will be acceptable to secure deposits of public moneys.. They will not be acceptable in payment of taxes and willnot bear the circulation privilege. • ^ 4.- Bearer-certificates witlvone coupon attached .will be issued in denominatioris: of $1,000, $5,000, $10,000 and $100,000. The certificates will not be issued in registered form. 5. The certificates will be subject to the general regulations of the Treasury Department, now or hereafter prescribed, governing United States certificates. IIL SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington. Subscribers must agree not tosell or otherwise dispose of their subscriptions, or of the securities which may be allotted thereon, prior to the closing of the subscription books. Banking institutions generally may submit subscriptions for account of customers, but only the Federal Reserve Banks and the Treasury Departm'ent are authorized to act as official agencies. Others than banking institutions will not be permitted to enter subscriptions except for their own account. Subscriptions from banks arid trust companies for their own account will be received without deposit. Subscriptions from'all others must be accompanied by payment of 5 percent of the amount of certificates applied for. 2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of certificates applied for, and toclose 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, subscriptions for amounts up to and including $25,000 will be allotted in fulL The basis of the allot,ment on all other subscriptions will be publicly announced, and allotment notices will be sent out promptly upon allotment. IV. PAYMENT 1. Pa3anent at par and accrued interest, if any, for certificates allotted hereunder must be made or completed on or before June 25, 1942, 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 certificates applied for shall, upon, declaration made by the Secretary of the Treasury in his discretion, be forfeited to the United States. An}^ qualified depositary will be permitted to make payment by credit for certificates allotted to it for itself and its' customers up to any amount for which it shall be qualified in excess of existing deposits, when so notified by the Federal Reserve Bank of its district. V. GENERAL PROVISIONS 1. As fiscal agents of the United States, Federal Reserve Banks are authorized and requested to receive subscriptions," tomake 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 certificates allotted, to make delivery of certificates on. full-paid subscriptions allotted, and they may issue interim receipts pending delivery of the definitive certificates. 2. The Secretary of the Treasury may at any time, or from, time to time, prescribe supplemental or amendatory rules and regulations governing the offering, . which will be communicated promptly to the Federal Reserve Banks. HENRY MORGENTHAU, Jr., . Secretary of the Treasury. ' 267 REPORT OF T H E SECRETAR'Y OF THE TREASURY Exhibit 25 Subscriptions and allotments, Treasury certificates of indebtedness of Series A-1943 {from press releases, June 19, 22, and 29, 1942^) On June 18, 1942, Secretary of the Treasury Morgenthau announced that the subscription books for the ofl'ering of Ys percent Treasury certificates of indebtedness of Series A-1943 would close at the close, of business June 19. Subscriptions aggregated $3,114,479,000, of which $1,588,495,000 was allotted. Subscriptions in amounts up to and including $25,000, totaling.about $61,000,000, were allotted in full. Subscriptions in amounts over $25,000 were allotted 50 percent, on a straight percentage basis, but not less than $25,000 on any one subscription, with adjustments, where necessary, to the $1,000 denomination. Subscriptions and allotments were divided among the Federal Reserve districts and the Treasury as follows: F e d e r a l Reserve district Subscriptions received Boston . . $176,940,000 New York. 1, 456, 264, 000 120, 489, 000 Philadelphia _ . . _ _ 168, 022, 000 Cleveland 82, 255, 000 Richmond ^. 111,939.000 Atlanta '477,261,000 Chicago . 96, 925, 000 St. L o u i s . - - Subscriptions allotted $90,177,000 731,525,000 61, 832, 000) 86,448,000 43,124, 000 57,601,000 246,067,000 51,435,000 F e d e r a l Reserve ^district --^ Subscriptions received Minneapolis. Kansas City Dallas San F r a n c i s c o . . . Treasury $49,819,000 $27,992,000 81,697,000 43, 218,000 89, 884, 000 46, 612,000 202, 434,000 o 102,189, 000 550,000 275, 000 Total 3,114, 479,000 Subscriptions allotted 1, 588,495, 000 Treasury bills Exhibit 26 Inviting tenders for Treasury bills dated July 2, 1941 {press release, June 27, 1941) TREASURY DEPARTMENT, Washington, June 27, 1941. The Secretary of the Treasury, by this.public notice, invites tenders for $100,000,000,- or thereabouts, of 91-day Treasury bills, to be issued on a discount basis under competitive bidding. The bills of this series will be dated July 2, 1941, and will mature October 1, 1941, when the face amount will be payable without interest. They will be issued in'bearer form only, and in denominations of $1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000 (maturity value). Tenders will be received at Federal Reserve Banks and branches up to the closing hour, two o'clock p. m., eastern standard time, Monday, June 30, 1941. Tenders will not be received at the Treasury Department, Washington. Each tender must be for an even multiple of $1,000, .and the price offered must be expressed on the basis of 100, with not more than three decimals, e. g.,. 99.925. Fractions may not be used. It is urged that tenders be made on the printed forms and forwarded in the special envelopes which will be supplied by Federal Reserve Banks or branches on application therefor. Tenders will be received without deposit from incorporated banks and trust companies and from responsible and recognized dealers in investment securities. Tenders from others must be accompanied by payment of 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, tenders will be opened at the Federal Reserve Banks and branches, following which public announcement will be made by the Secretary of the Treasury of the amount and price rarige of accepted bids. Those submitting tenders will be advised of the acceptance or rejection thereof. The Secretary of the Treasury expressly reserves the right to accept or reject any or all tenders, in whole or in part, and his action in any such respect shall be final. Payment of accepted tenders at the pi ices offered must be made or completed at the Federal Reserve Bank in cash or other immediately available funds on July 2, 1941. The income derived from Treasury bills, whether interest or gain from the sale or other disposition of the bills, shall not have any exemptions, as such, and loss from the sale or other disposition of Treasury bills shall not have any special treat« Revised .Tuly 25, 1942. 268 REPORT OF THE SECRETARY OF THE TREASURY m e n t , as such, under Federal t a x acts now or hereafter enacted. T h e bills shall be subject to estate, inheritance, gift, or other excise taxes, whether Federal or State, b u t shall be exempt from all taxation now or hereafter imposed on t h e principal or interest thereof by any State, or any of the possessiojis of t h e United States, or by a n y local taxing authority. For purposes of taxation t h e a m o u n t of discount a t which Treasury bills are originally sold by t h e United States shall be. considered to be interest. Treasury D e p a r t m e n t Circular No. 418, as amended, a n d this notice, prescribe t h e terms of t h e Treasury bills a n d govern t h e conditions of their issue. Copies of the circular m a y be obtained from any Federal Reserve .Bank or branch. Exhibit 27 Acceptance of tenders for Treasury bills dated J u l y 2,1941 {press release, J u l y 1, 1941) TREASURY DEPARTMENT, Washington, J u l y 1, 1941. T h e Secretary of t h e Treasury announced last evening t h a t t h e tenders for $100,000,000, or thereabouts, of 91-day Treasury bills, to be dated July 2 and t o m a t u r e OctoJoer 1, 1941, which were offered on J u n e 27, were opened a t t h e Federal Reserve Banks on J u n e 30. T h e details of this issue are as follows: T o t a l applied for $281, 145,000 T o t a l accepted . 100,.880, 000.. Range of accepted bids: , _y ... -• -^-^ Percent High, 99.990, equivalent r a t e approximately !*_ 0. 040 Low, 99.975, equivalent r a t e approximately L . 099 Average price, 99.978, equivalent rate approximately ._ . 087 (35 percent of the a m o u n t bid for a t t h e low price was accepted.) Exhibit 28 Press releases pertaining to Treasury bill issues during the fiscal year 1942 were similar in form to the foregoing a n d are, therefore, n o t here reproduced. T h e 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 1942 B i d s accepted 1941 D a y s to maturity D a t e of ; maturity D a t e of .. issue •- Total amount. " applied for (in thousands) H i g best Price (per hundred) > Lowest Equivalent rate 1 (percent) Price (per hundred) V Average D a t e of press releases Amount (in Equivalent t h ousands) rate 1 (percent) Price (per hundred) Equivalent rate 1 (percent) $100,880 100, 048 100, 337 100,127 100,015 100,232 100,118 100, 227 100, 799 100,369 100, 957 100, 043 100, 742 100, 045 99.978 99.976 99. 975 99. 975 - 99.976 99.973 99. 971 99. 971 99.971 99. 977 99.982 99. 987 99. 991 99. 984 0.086 .097 .097 .098 . 094 .106 .114 .116 .114 .090 .071 .050 .037 .062 1941 :. ... 91 91 91 91 91 91 91 91 91 91 91 91 91 91 $281,145 281, 732 306, 089 292, 758 266, 617 293, 242 288,823 297,444 327, 055 383, 608 439, 541 493,411 404. 215 182, 005 99. 990 99.990 99.990 2 99. 982 100.000 100. 000 100.000 99.980 3 99. 977 . " 99. 986 5 99.990 6 100. 000 100.000 100.001 0.040 .040 .040 .071 99.975 99.-972 99.972 99.974 99. 972 99. 970 99. 969 99.969 99. 970 99. 975 99. 981 99. 985 99.989 99. 975 . 079 .091 .055 .040 • 0.099 .111 .111 .103 .111 .119 .123. .123 :ii9 .099 .075 .059 .044 .099 Jan.7 Jan.14 J a n . 21 J a n . 28 Feb. 4 F e b . 11 F e b . 18 Feb. 2 5 . . . . . . . . Mar. 4 . . . : . . . ' . "Mar. 11 M a r . 18 M a r . 16 Mai'. 17 Footnotes at end of table. J u n e 27 a n d J u l y 1 J u l y '4 and 8 J u l y 11 a n d 15 J u l y 18 and 22 . J u l y 25 a n d 29 . . Aug. 1 and 5 A u g . 8 a n d 12 A u g . 15 a n d 19 Aug. 22 and 26 ... Aug. 27 a n d 30 Sept. 5 a h d 9 Sept. 12 and 16 Sept. 19 a n d 23 Sept. 28 a n d 30 1941 June July July July July Aug. Aug. Aug. Aug. Aug. Sept. Sept. Sept. Sept. 30 7 14 21 28 4 11 18 25 29 8 15 22 29 • 91 91 91 91 91 91 91 91 91 91 91 82 76 100.'003 368, 817 100. 000 217, 616 100. 000 303, 8.52 269, 407 7 100. 000 199, 998 100. 000 313, 335 ' 8 99. 980 439, 350 9 99.980 466, 603 10 99. 977 468,160 100. 000 403,171 100. 000 382, 650 12:99. 950 352, 938 13 99. 966 317, 107 12 99. 961 . .079 .079 .091 -. - .198 .149 .185 99. 999 99.999 99. 989 99.97,3 99.944 99. 938 99. 922 99.926 99.930 99. 917 99. 919 99. 927 99.927 .004 .004 .044 .107 .222 .245 .309 .293 .277 .328 .320 .320 .346 100,433 100, 207 1.50,185 150, 010 150,098 150, 018 200,167 200; 026 200,156 11 149,987 150,040 150,174 150, 004 100. 0 0 0 100. 0 0 0 99. 994 99. 983 99. 962 99. 950 99. 935 99.932 99. 939 99. 926 99. 925 99.933 99. 935 O CO O • •1942 Oct. 8 Oct. 15 Oct. 22 Oct. 29 Nov. 5 N o v . 12 N o v . 19. Nov. 2 6 . . \ . . Dec. 3 ... . D e c . 10 D e c . 17 D e c . 24 .. D e c . 31 o • 1941 '•Oct. 1 .Tuly 2 Oct. 8 . .Tuly 9 Oct. 15 J u l y 16 Oct. 22 J u l y 23 J u l y 3 0 . . . : . . . Oct. 29 Nov. 5 Aug. 6 N o v . 12 Aug. 13 N o v . 19 A u g . 20 N o v . 26 A u g . 27 Dec. 3 Sept. 3 Dec.lO Sept. 10 Sept. 1 7 . . . . . D e c . 17 Dec. 24 Sept. 24 D e c . 31 Oct. 1 D a t e of. closing • .002 Oct. 3 a n d 7..'^ .001 Oct. 8 and 11 .024 Oct. 17.and 21 - . . .087 Oct. 24 a n d 28 .151 Oct. 29 a n d N o v . 1 .200 N o v . 5 a n d 8 .258 N o v . 14 and 18 .267 N o v . 21 a n d 25 .242 N o v . 28 a n d D e c . 2 .293. D e c . 5 a n d 9 . . . . . .295 D e c . 12 a n d 16 .295 Dec. 19 a n d 23 .310 D e c . 26 a n d 30...£'. Oct. Oct Oct. Oct. Oct Nov. Nov. Nov. Dec Dec Dec. Dec. Dec. 6 10 20 27 31 7 17 24 1 8 15 22 29 1-9 W > Ul d K! Summary of information contained in press releases issued in connection wiih Treasury bills offered during the fi.scal year 1942—Con. B i d s accepted E>ate of ' D a t e of ' maturity 1942 1942 Jan. 7 ... Jan.14 Jan. 2 1 . . Jan. 28.--'..-. Feb. 4 F e b . 11 F e b . 18 F e b . 25 . . . . . . Mar. 4 M a r . 11 M a r . 18 M a r . 25 Apr. 1 Apr. 8 A p r . 15 ' A p r . 22 Apr. 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 . 19 . 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 16 -•-.. J u n e 18.. J u n e 19 J u l y 15. J u l y 22 J u l y 29 Aug. 5 Aug. 12 A u g . 19. Aug. 26 Sept. 2 Sept. 9 Sept. 16 Sept. 1 7 . . Total amount D a y s to a pplied maturity for (in thousands) Highest Average Lowest " • D a t e of press releases Amount Price (per hundred) Price Equivalent . (per ratei (percent) hundre.d) (in • Equivalent thousands) rate i (percent) Price (per ^ hundred) Equivalent ratei (percent) . $351, 600 384, 694 35i, 585 371, 501 410, 057 399,966 342. 087 385, 802 510, 228 471, 349 535, 476 51'2, 778 356, 653 333, 669 311, 219 332, 677 375, 372 354, 590 546, 350 567,190 461, 283 496, 574 689, 653 801, 271 709, 632 H 99.952 15 100. OOC 3 99.930 18 99. 975 100. 000 19 99. 950 20 99. 950 : 99.950 22 99. 962 100. 000 23 99. 975 . 24 99. 981 28 99. 967 27 99. 970 29 99. 960 99. 960 30 99. 950 99. 938 32 99. 938 33 99.940 15 99. 940 35 99. 925 99. 925 7 99. 930 99.935 0.243 .079 .099 .198 .198 .198 .150 .099 .082 .152 .150 .158 .158 .198 .245 .245 .237 .237 .297 .297 .277 .275 99. 934 99. 963 99. 942 99. 934 99. 937 99. 932 99. 929 99. 929 99.941 99. 938 99. 947 99.949 99.948 99. 944 99. 922 99.914 99. 910 99.908 99. 905 99. 906 99. 906 99.906 99. 908 . 99. 907 99. 913 0.335 .148 .229 .261 .249 .269 .281 .281 .233 .245 .210 .221 .240 .280 .309 .340 .356 .372 .376 .372 .372 .372 .372 .368 .368 $150, 230 150,047 ,150, 330 17 150,174 IS 150, 094 150, 049 150, 012 21 150, 446 . 150, 477 150,194 150, 273 25 150, 263 150, 435 28 150, 854 150, 073 150, 058 31 150,126 150,400 250, 692 34 251, 735 250, 988 251, 301 36 300, 772 37 301, 048 35 301,109 99.940 99.970 99. 950 99.942 99. 944 99. 937 99.933 99. 933 99. 944 99. 942 99. 951 99. 953 99. 952 99.947 99. 929 99. 920 99.915 99.910 99. 907 99.908 99. 908 99. 908 99. 907 99. 908 99. 914 0.304 .119 .196 .231 .220 .250 .263 .266 .222 .229 .195 .203 .221 .264 .281 .317 .335 .358 .368 .365 .365 .365 .366 .365 . .362 D a t e of closing o 1942 71 91 91 91 91 91 91 91 91 91 91 83 78 72 91 91 91 91 91 91 91 91 91 91 85 to o 1942 J a n . 2 and 6 Jan. 5 J a n . 12 J a n . 9 a n d 13 J a n . 19 J a n . 16 a n d 20 J a n . 26 J a n . 23 a n d 27 Feb. 2 J a n . 30 a n d F e b . 3 F e b . 6 a n d 10 . Feb. 9 F e b . 13 a n d 17 F e b . 16 F e b . 20 F e b . 18 a n d 21 M a r . "2 F e b . 27 a n d M a r . 3 Mar. 9 M a r . 6 a n d 10 M a r . 10 M a r . 13 a n d 17 M a r . 20 aud 24 M a r 23 M a r . 27 a n d 31 •. . M a r . 30 Apr. 3 a n d 7 Apr. 6 A p r . 10 a n d 14 A p r . 13 A p r . 17 a n d 21 A p r . 20 A n r . 27 Apr. 24 a n d 28 M a y 1 and 5 - . -. _ May 4 M a y 8 a n d 12 . M a y 11 M a y 15 a n d 19 •_M a y 13 M a y 22 a n d 28 M a y 25 M a y 29 a n d J u n e 2 June 1 June 8 June 5 and 9 J u n e 12 and 16 . . - . J u n e 15 J u n e 19 and 23 J u n e 22 .o w a > O w> d 1 Bank discount basis. 2 Except for 2 tenders aggregating $250,000.. 3 Except for 1 tender of $200,000. 4 Except for 1 tender of $25,000. 5 Except for 1 tender of $26,000. 6 Except for 2 tenders aggregating $260,000. 'Except for 1 tender of $10,000. 8 Except for 2 tenders aggregating $110,000. 9 Except for 3 tenders aggregating $385,000. 10 Except for 2 tenders aggregating $30,000. 11 Revised Dec. .10, 1941. 12 Except for 2 tenders aggregating $80,000. 13 Except for 2 tenders aggregating $220.000. 14 Except for 2 tenders aggregating $640,000. 15 Except for 1 tender of $300,000. 16 Except for 2 tenders aggregating $105,000. 17 Revised Jan. 28, 1942. ,- •. 18 Revised Feb. 4,1942. 19 Except for 2 tenders aggregating $230,000. 20 Except for 1 tender of $65,000. 21 Revised Feb. 25, 1942. 22 Except for 1 tender of $210,000. 23 Except for 2 tenders aggregating $90,000. 24 Except for 2 tenders aggregating $135,000. 25 Revised Mar. 25, 1942. 26 Except for 2 tenders aggregating $17,000. 27 Except for 1 tender of $20,000. 28 Revised Apr. 8, 194.2. 29 Except for 2 tenders aggregating $150,000. 30 Except for 2 tenders aggregating $55, 000. 31 Revised Apr. 29, 1942. 32 Except for 2 tenders aggregating $15,000. 33 Except for 4 tenders aggregating $98, 000. 34 .Revised May 20, 1942. 35 ExceiDt for 2 tenders aggregating $12,000. 36 Revised June 10, 1942. 37 Revised June 17, 1942. , 33 Revised June 24, 1942. hi O CQ O > U2 to • 272 REPORT OF :THE SECRETARY OF THE TREASURY Miscellaneous Exhibit 29 An act to increase the debt limit of the United States, to further amend the Second Liberty Bond Act, and for other purposes [Public Law 610, 77th Cong., H. R. 6691] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. T h a t this Act m a y be cited as t h e Public D e b t Act of 1942. SEC. 2. Section 21 of t h e Second Liberty Bond Act, as amended, is further amended to read as foliows:' ' S E C . 21. T h e face a m o u n t of obligations issued under the authority of this Act shall not exceed in t h e aggregate $125,000,000,000 outstanding at' any one time." SEC. 3. Section 20 of t h e Second Liberty Bond Act, as amended, is further amended to read as follows: ' ' S E C . 20. (a) Any obligations authorized by sections 1, 5, and 18 of this Act, may be issued on an interest-bearing basis, on a discount basis, or on a combination interest-bearing and discount basis, a t such price or prices and with interest computed in such manner and payable a t such time or times as t h e Secretary of t h e Treasury m a y prescribe; and any such obligations m a y be offered for sale o n . a c o m petitive or other basis under such regulations and upon such terms and conditions as t h e Secretary of t h e Treasury m a y prescribe; and his decision with respect t o any such issue shall be final. "(b) Any obligations authorized b y this Act and redeemable upon d e m a n d of t h e owner or holder may, under such regulations and upon such terms and • conditions as t-he Commissioner of Internal Revenue with the approval of t h e Secretary of t h e Treasury m a y prescribe, be receivable by the United States in p a y m e n t of any taxes imposed by t h e United States. " ( c ) Any obligations authorized by this Act may, under such regulations a n d upon such t e r m s as t h e Secretary of t h e Treasury m a y prescribe, be issu'ed in exchange for any obligations of any agency or instrumentality of the United States which are unconditionally guaranteed b o t h as to principal and interest by t h e United.States, a t or before their m a t u r i t y . " SEC. 4. Section 19 of t h e Second Liberty Bond Act, as amended, is further amended to read as follows: " S E C . 19. Any obligations authorized by^this Act m a y be issued for t h e purchase, redemption, or refunding, a t or before maturity, of any outstanding bonds, notes, certificates of indebtedness. Treasury bills, or savings certificates of t h e United States, and any money received from t h e sale of such obligations or any other money in t h e general fund of t h e Treasury may, under such rules, regulations, terms, and conditions as t h e Secretary of t h e Treasury m a y prescribe, be used • for such purchase, redemption, or refunding." SEC. 5. T h e authority of t h e Postmaster General contained in sectiom 6 of t h e Act of June 25, 19.10, as amended (U. S. C , 1940 edition, title 39, sec. 756), a n d section 22 (c) of t h e Second Liberty Bond Act, as amended, to prepare and issue postal-savings cards arid postal-savings stamps shall terminate on such da.te as stamps issued by t h e Secretary of t h e Treasury p u r s u a n t to t h e authority contained :in section 22 (c) of t h e Second Liberty Bond Act, as amended, are made available for sale to t h e public; and, as soon as practicable thereafter, the Board of Trustees of the Postal Savings System shall pay to t h e Secretary of the Treasury a sum equal to the redemption value of all postal-savings stamps outstanding, and after such p a y m e n t has been m a d e t h e obligation to redeem such stamps shall cease to be a lialDility of t h e Board of Trustees of t h e Postal Savings System but shall constitute a public debt obligation of t h e United States. SEC. 6. Section 4 of t h e P u b h c D e b t Act of 1941 (PubHc, Numbered 7, Seventyseventh Congress, first session), is hereby amended to read as follows: " S E C . 4. (a) Interest upon obligations, and dividends, earnings, or other income from shares, certificates, stock, or other evidences of ownership, and gain froiii .the ^ sale Or other disposition of such obligations and evidences of ownership.issues^ o^ o^ after t h e effective date cf the Public D e b t Act of 1942 by t h e United States or anj^ agency or instrumentality thereof shall not have any exemption, as such, and loss from t h e sale o r other disposition of such obligations or evidences of ownership shall not have any special treatment, as such, under Federal tax Acts now or ' hereafter enacted; except t h a t any such obligations which the United States Maritime Commission or the Federal Housing Administration had, prior t o March 1, , REPORT OF T H E SEICRETARY OF THE. TREASURY 273 1941, contracted to issue a t a future date, shall when issued bear such tax-exemption privileges as were, a t t h e time of such contract, provided in t h e law authorizing their issuance. For t h e purposes of this subsection a Territory, a possession of t h e ICFnited States, and t h e District of Columbia, and any political subdivision thereof, and any agency or instrumentality of any one or more of t h e foregoing, shall not be considered as an agency or instrumentality of t h e United States! "(b) T h e provisions of this section shall, with respect to such obligations and evidences of ownership, be considered as amendatory of and supplementary to t h e respective Acts or p a r t s of Acts authorizing t h e issuance of such obhgations and evidences of ownership, as amended and supplemented. "(c) Nothing contained herein shall be construed to amend or repeal sections 114 and llS.of t h e Revenue Act of 1941." Approved, March 28, 1942. ' Exhibit 30 Title I V of the Second War Powers Act, 1942 {Public Law 507, March 27, 1942), relating to the purchase by the Federal Reserve Banks of Government obligations T I T L E I V — P U R C H A S E BY F E D E R A L R E S E R V E B A N K S OF G O V E R N M E N T OBLIGATIONS / SEC. 401. Subsection (b) of section 14 of the Act of December 23, 1913 (38 Stat. 265), otherwi.se known as t h e Federal Reserve Act, as amended, is hereby amended by striking out t h e proviso therein a n d inserting in lieu thereof t h e following: ^^Provided, T h a t a n y bonds, notes, or other obligations which are direct obligations of the United States or which are fully guaranteed by t h e United States as to principal and interest m a y be bought and sold without regard to maturities either in the open m a r k e t or directly from or to the United States; but all such purchases and sales shall be made in accordance with t h e provisions of section 12A of this Act and t h e aggregate a m o u n t of such obligations acquired directly from t h e United States which is held a t a n y one time by t h e twelve Federal Reserve banks shall not exceed $5,000,000,000." Exhibit 31 Payment or redemption of bonds and other transferable securities of the Uhited States at maturity, or before maturity pursuant to a call for redemption in accordance with their terms [Department Circular No. 666. Public Debt] I M P O R T A N T NOTE.—The provisions of this circular are of general application, and will specifically apply only with respect to any transferable public debt securities of the United States that may mature in regular coarse, or that may bc included in an official call for redemption before maturity in accordance with their terms. TREASURY DEPARTMENT, Washington, J u l y 2 1 , 1941. 307:"0.. Scope of regulations. T h e following rules a n d regulations are hereby prescribed to govern t h e p a y m e n t or redemption of transferable securities of t h e United States, as hereinafter defined. Any provisions of D e p a r t m e n t Circular N o . 300, dated July 31, 1923, as supplemented and amended (31 C F R 306), in confiict with the. provisions of these regulations are hereby superseded.^ SUBPART A. GENERAL PROVISIONS 307.1. Definitions. (a) Securities.-^The t e r m "securities" shall include all bonds, notes, certificates of indebtedness, and. Treasury bills of t h e United States, and similar i n s t r u m e n t s heretofore, or hereafter issued by t h e Secretary of t h e Treasury as evidence of t h e public debt of t h e United States, a n d include those bearing interest a n d those 1 Sees. 307.0 tO;307.22, inclusive, issued under the authority contained in: R. S. 161; 5 U. S. C. 22. Sec. 1,40 Stat. 502, Sec. i; 40 Stat. 844, 46 Stat. 1506, Sec. I4f(a) (1), 48 Stat. 343, Sec. 1, 49 Stat. 20,*'S«;. 1, 52 Stat. 447; 31 U. S. C. 752. Sec. 5 (a) Second Liberty Bond Act as added by 46 Stat. 19; Secs.^:2;and 3,49 Statist?; 31 U. S. C. 754 and Supp. V, 754 (a). Sec. 10, 36 Stat. 817; 39 U. S. C. 760. Sec. 1, 40 Stat. 1309, Sec.-1401, 42 Stat. 321. Sec. (a) (3), 48 Stat. 343, Sec. 4, 49 Stat. 20; 31 U. S. C. 753 (a) and Supp. V, 753 (a). Sec. 14 (a)i (4), 48 Stat. 343; 31 XT. S. C. 754 (a). ' . , • '• 274 REPORT OF THE SECRETARY OF THE TREASURY issued on a discount basis. The word "transferable" shall apply only to securities which are transferable by delivery, or by assignment and delivery, as distinguished from those which by their terms are not transferable, or are transferable only by operation of law, such as United States savings bonds 2 and adjusted service bonds,^ which are not subject to the provisions of these regulations. The word "securities" will hereinafter be used to refer to transferable securities as defined above, unless otherwise indicated by the context. • {b) Payment.—As ordinarily used by the Treasury Department, the term ^'payment" refers to the payment of securities at maturity, while the term "redemption" refers to payment before maturity pursuant to a call for redemption in accordance with the terms of the securities. For the purposes of these regulations, however, the terms are interchangeable, and the term "redemption" may refer to the discharge of a security -by payment either at maturity, or before maturity pursuant to a call for redemption.* 307.2. Other securities affected. . These regulations so far as appropriate also apply to securities of the general governments and various municipal governments of Puerto Rico and the Philippine Islands, and to those securities issued by wholly-owned corporations and other agencies of the Government for which the Treasury Department acts as transfer agency.* 307.3. Payment or redemption. Securities become due for payment at their maturity date, or at such earlier date as they rnay be called for redemption in accordance with their terms, and the owrier thereof, on presentation and surrender of the securities on and after any such date in accordance with the provisions of these regulations, is entitled to receive payment of the principal amount, as hereinafter provided, except as <otherwis,e provided by law or regulations prescribed pursuant to law.* 307.4. Interest. ' Bonds and other, interest-bearing securities will cease to bear interest on the date of their maturity, unless they have been called for redemption before their maturity in accordance yvith their ternis, in which case they will cease to bear interest on the date fixed for redemption in the call. No interest can accrue afte^ a security has become due and payable, whether at maturity or by virtue of a call for redemption before maturity.* ' ' SUBPART B. BEARER SECURITIES 307.5. Presentation and surrender; payment. Coupon bonds, notes, certificates of indebtedriess, Treasury bills, and other bearer securities which have become due and payable, whether at maturity or by virtue of a call for redemption before maturity, are payable in due course to the person presenting and surrendering them for redemption, or to such person as he may designate. Such securities should be presented and surrendered, at the risk and expense of the owner, to any Federal Reserve Bank or branch thereof, or to the'Treasurer ofthe United States, Washington, D. C , accompanied by appror priate written advice. All interest coupons due and payable on or before the date of maturity or date fixed in the call for earlier redemption, as the case may be, should be detached from the securities and collected in regular course.* All coupons bearing dates subsequent to a redemption date should be left attached to the securities. Payment of the principal will be made by check drawn to the order of the person presenting and surrendering the securities and, in the ab.sence of other instructions, mailed to him at his address,, as given in the accompanying advice. Upon appropriate instruction, the check will be drawn to the order of any other person, and mailed to any other address. A Federal Reserve Bank,upon appropriate request, may make payment to a member bank from which bearer securities are received by crediting the amount in the member bank's account. The Secretary of the Treasury may require satisfactory proof of ownership of any bearer security, or any registered security assigned in bla.nk, or otherwise so as to become, in effect, payable to bearer, which is presented and surrendered for redemption after the lapse of more than a reasonable period of time from-the date on which it became due arid payable, whether at maturity or earlier redemption date. In any case in which proof of ownership may be required the Secretary 2 Redemption of United States savings bonds is governed by Department Circular No. £30, Fourth Revision, as amended (31 CFR 31.5). 3 Redemption of 3 percent adiusted service bonds of 1945 is governed by Department Circular No. 560, Revised, as amended (31 CFR 313). < For statutory citations, see note to sec. 307.0. \ REPORT OF THE SECRETARY OF THE TREAStJRY' 275 of the Treasury, in his discretion, may also require a bond of indemnity or such other security as he may deem necessary.* , ,.• '• 307.6. Missirig coupons. If ariy coupons bearing date subsequent to the redemption date of the securities are missing from bearer securities presented for redemption, the securities nevertheless will be redeemed, but the full face amount of any such missing coupons^ will be deducted ,from the payment to be made on account of such redemption, and any amounts so deducted will be held in the Treasury to provide for adjustments or refunds on account of such missing coupons as may subsequently be presented: Provided, however. That if it is proved to the satisfaction of the Secretary of the Treasury that any such missing coupons (bearing dates after the redemption date) have been in fact destroyed the amount of such destroyed coupons will not be deducted from the payment on account of redemption, but in any such case the Secretary of the Treasury may require a bond of indemnity or a guarantee by an incorporated bank or trust company.* SUBPART C. REGISTERED SECURITIES 307.7. Presentation and surrender; payment. Registered securities which have become due and payable, whether at maturity or by virtue of a call for redemption before maturity, are payable in due course upon proper assignment by the registered payees or assignees thereof, or b}'- their duly constituted representatives as hereinafter provided. After such assignment, the securities should be presented and surrendered, at the risk and expense of the owner, to any Federal Reserve Bank or branch, or to the Treasury Department, Division of Loans and Currency, Washington, D. C , accompanied by appropriate written advice. In all cases payment will be made, by check drawn to the order of the person entitled, and, unless otherwise directed, the check will be mailed to the address given in the form of advice accompanying the securities surrendered. The transfer books for registered.securities will close at the close of business one month prior to the date of inaturity of such securities, or the date fixed in the call N for redemption before maturity in accordance with their terms, and such securities when received after the close of the transfer books will be accepted foi; cash redemption only. Final interest due will be covered by payments to be made simultaneously with the payments on account of principal, in accordance with the assignments on the securities surrendered, irrespective of the dates of such assignments: Provided, however. That in the case of a partial call of an outstanding series, for redemption before maturity, final interest will be paid with principal only with respect to those securities included in the last portion called or which mature according to their terms.* 307.8. Assignments in general. A registered security presented for redemption must be duly assigned by or in behalf of the registered payee, and, if assigned to a specified person, it should be. reassigned by such assignee and any subsequent assignees. Except as otherwise provided herein, all assignments must conform with the general regulations of the Treasury Department governing assignments as set forth in Department Circular No. 300, as supplemented and amended. (31 CFR 306.)* 307.9. Witnessing officers. In addition to the officers generally authorized to witness assignments of regis- ' tered securities (including the executive officers of banks and trust companies (and their branches) incorporated under Federal, State, or Territorial laws), assignments of registered securities by registered payees or assignees thereof for redemption fbr their own account may be witnessed by any of the following officers: (1) United States or Canal Zone postmasters or acting postmasters; (2) assistant postmasters, postal cashiers, and money-order cashiers at United States post offices designated to receive Postal Savings deposits; and (3) notaries public in the United States, its organized Territories, or Puerto Rico; provided that the certificates of acknowledgment of any post-office official must bear a legible imprint of his office stamp, and that of a notary public must bear a'legible impression of his official seal and should show the date on which his commission will expire.* 307.10. Form of assignment. If payment is to be made to the registered payee, or to an assignee holding under proper assignment from the registered payee, the securities should be assigned by such payee or assignee, or by a duly constituted representative, to ''The Secretary < For statutory citations, see note to sec. 307.0. 276 REPORT' OF THE SECRETARY OF THE TREASURY of the Treasury for redemption." ^ If it is desired, for any reason, that paymerit be made to some other person, without intermediate assignment, the securities should be assigned to-"The Secretary of the Treasury "for redemption for the account df_ _". (inserting the name and address of the person to whom payment is to be made), but assignments in this form must be completed , before acknowledgment, and not left in blank. A representative or fiduciary may not assign for paymerit to himself individually, unless expressly authorized to do so by court .Qrderuor by the instrument under which he is aqting, but he may assign for payment to himself in his representative or fiduciary capacity. An assignment by-a represeritative or fiduciary tb"The Secretary of the Treasury for redemption" will be deemed to be an assignment for redeinption for his account in his representative or fiduciary capacity.* 307.11., Assignments in blank. Assignments iri blank, or other assignments having similar effect, will be recog^ nized in appropriate cases, but securities bearing such assignments will be paid to the person surrendering the securities or to such person as he may designate, since under such assignment the securities become in effect payable to bearer. Assignments in blank or other assignments having similar effect should be avoided, if; possible, in order not to lose the protection afforded by registration.* 307.12. Detached assignments. Unless otherwise directed by the Treasury Department or a Federal Reserve Bank in any particular case, all assignments should be made on the securities themselves. If the form or forms on the back of a security have been used or spoiled, and an additional assignment.is necessary, a similar form may be written or typed.in any, convenient space on the back of'the security, or such form will be stamped thereon by the Treasury Department or any Federal Reserve Bank, upon presentation for that purpose. If a detached assignment is authorized in any particulair case, an appropriate form will be supplied by the Treasury Department or a Federal Reserve Bank.* 307,13; Assignments by corporations, associations, etc. A security registered in the name of, or assigned to, a corporation or unincorr porated association will ordinarily be redeemed for the account of such corporation or unincorporated association upon an appropriate assignment for that purpose executed on behalf of .the corporation or unincorporated association by a duly authorized officer thereof, without proof of the officer's authority. In all such cases the assigriment should be to "The Secretary of the Treasury for redemption," and payment will be made only by check drawn to the order of the corporation or unincorporated association. If redemption for any other account is desired, the assignment should be for redemption for account of the person or corporation desired and must be supported by appropriate resolution or other authority.* . 307.14. Coowners. A security registered in the names of two or more persons in their own right in any authorized form of registration will be redeemed without assignment by or iri behalf, of all tlie coowners, under the following circumstances and conditions: (a) If the security is registered in the alternative, as, for example, "John Smith or Mrs. Mary Smith," "John Smith or Mrs. Mary Smith or the survivor," or "John Smith and Mrs. Mary Smith, or either of them," it may be assigned by any one of the coowners for redemption for the account of any person or persons ^ desired, and payment will be made accordingly, irrespective of whether or not the Treasury Department has received notice of the death of any coowner who did nbt join in the assignment,, and irrespective of whether or not the form of registration is one in which the right of survivorship is recognized. In any case coming under the provisions of this subsection an assignment to "The Secretary of the Treasury for redemption" will be deemed to be an assignment for redemption for the account of the coowner or coowners executing the assignment. • (b) If the security'is registered jointly, that is, if the names of the coowners are not connected by the word "or," or are not followed by the words "or either of them," or words to that effect, as, for example, "John Smith and Mrs. Mary Smith," " J o h n Srnith, William Smith, and Mrs. Mary Smith, or the survivors < For statutory citations, see note to sec. 307.0. • • ^ 5 In the case of securities other than United States securities, the name of the issuing agency, or the name of the proper ofBcer thereof, should be substituted for the words, "The Secretary of the Treasury" in assignments for.redemption, as, for example, "The Federal Farm Mortgage Corporation", "The Twelve Federal Land Banks," or "The Treasurer of Puerto Rico." REPORT OF THE' SECRETARY OF: THE' TREASURY 277 or survivor," or "O^ohn Smith and.Mary Smith as tenants in common," it may, in the absence of notice of the death of any one of the coowners, be assigned by any one or more of them for redemption for the account of all, and payment will be made accordingly, hy check drawn substantially as the security is inscribed. In any case coming under the provisions of this subsection an assignment to "The Secretary of the Treasury for redemption" will be deemed-to be an assignment for redemption for the account of all the coowners. (c) If the security is registered in any form of registration in which the right of survivorship is recognized, as, for example, "John Smith and Mrs. Mary Smith," or "John Smith and Mrs. Mary Smith or the survivor," and one of the coowners is deceased, it will be redeemed upon assignments by the survivor or survivors for the account of any person or persons desired. The assignment m u s t be supported by satisfactory proof of death and slirvivorship. In any case coming under the provisions of this-subsection an assignment to "The Secretary of the Treasury for redemption" will be deemed to be an assigriment for redemption for the account of the surviving coowner or coowners. In all other cases assignments for redemption must be executed by or on behalf of all the coowners.* 307.15. Minors. (a) A security registered in the name of a guardian, curator, or other duly appointed or qualified representative for a minor, or in the name of a minor for whom such representative has been duly appointed or is otherwise duly qualified, must be assigned by such representative, proof of whose appointment, qualification and incumbency must be furnished. Such proof may consist of a certificate under seal from the court in. which the appointment is made, dated not more than six months prior to the date of the assignment and containing a statement that at the date of certification the appointment is still in full force and effect. {b) A security registered in the name of a natural guardian for a minor mustbe assigned by such natural guardian in the same manner as the security is inscribed unless the minor has attained his majority, in which case proof of that fact must be submitted and the assignment made by the minor himself. (c) A- security registered in the name of a minor for whose estate no representative has been appointed by a court of competent jurisdiction or is otherwise duly quahfied; or a security registered in the name of a minor followed by that of his natural guardian, will be redeemed without assig.nment by a guardian or other duly constituted representative under the following circumstances and conditions: (1) If the' minor's total holdings of registered securities of the issue to be redeemed do ndt exceed $250, the security will be redeemed upon assignment by the minor himself if he is of sufficient competency and understanding to sign his name to the assignment and comprehend the nature of the instrument: Provided, That, where the security is registered in the name of a minor followed by that of his natural guardian, such natural guardian must join in the assignment, if living and competent: Provided further, That, if the mjnor is not of sufficient competency and understanding to sign his name to the" assignment and comprehend the nature of the instrument and the Treasury Department is furnished with satisfactory proof of that fact and of the. identity of his natural guardian, the security may be redeemed upon assignment by his natural guardian alone. If the assignment is executed by the minor himself j the certificate of acknowledgment by the witnessing officer will be taken to be sufficient proof of the minor's competency and understanding. Appropriate forms for execution by the natural guardian and the witnessing officer for the purpose of establishing the necessary facts in connection with an assignment b}^ the natural guardian alone will be furnished on request. In all cases arising under this paragraph, the assigriment should be in favor of "The Secretary of the Treasury for redemption," and payment will be made by check drawn to the order of the minor registered owner. If the assignment is executed by the natural guardian alone, the name of the minor will be followed by the words, "under natural guardianship of " (inserting the name of the natural guardian). (2) If it is established to the satisfaction of the Secretary of the Treasury that the entire personal estate of the minor does not exceed $500 in value and that the proceeds of the security are necessary and are to be used for the support or education of the minor, the security may be redeemed upon assignment in the name of the minor by his natural guardian for the account of any person or persons desired. In any case coming under the provisions of this paragraph an assignmer>t to "The Secretary of the Treasury for redemption" will be deemed ^ For statutory citations, see note to sec. 307.0. 278 REPORT OF THE SEiCRETARY OF THE TREASURY to be an assignment'for redemption for the account of the minor under natural guardianship of his recognized natural guardian. Appropriate forms for the use of the natural guardian in making application for redemption and submitting evidence in support'thereof will be'furnished on request. (If the minor's total holdings of registered securities of the issue to be redeemed do not exceed $250, the security may be redeemed in accordance with the provisions of paragraph (1) above, without complying with the requirements of this paragraph.)' ; . . ••: (3) If the minor's total holdings of registered securities presented for redemption exceed $250, but do not exceed $2,500, and the proceeds are not necessary for his support or education, redemption will be made for the purpose of'having •the proceeds reinvested in other United States transferable securities, or securities guaranteed as to both principal and interest by the United States, in an equal face amount, to be-^registered in the name of the minor in a form of registration showing also the name of his natural guardian: Provided, That iri the event the proceeds of redemption of the matured securities, together with accrued interest thereof, if any, are insufficient to purchase an equal face amount of other securities, there will be collected from the natural guardian any additional amount which may be necessary for the purchase of the securities designated in the application, or if the proceeds, including the final installment of interest and any uncollected interest on the securities presented for redemption, are sufficient to purchase additional securities in any authorized denominations, such purchase will be required. In either case the securities must be assigned by the natural guardian supported by an application on Form PD 1365, and the minor should join in the assignment and application if he is of sufficient competency and understanding to comprehend the nature of the transaction, in which case the certificate of acknowledgment by the witnessing officer will be accepted as proof of the minor's competency and understanding; otherwise the Treasury .Department will require satisfactory proof that the minor was not of sufficient competency ' and understanding for such purpose. The application on Form PD 1365 should be submitted with the securities to be redeemed through the Federal Reserve Bank of the district in which the minor resides, which bank will effectuate the redemption of the matured securities and the purchase of new ones. (4) Tn all other cases appointment of a representative by a court of competerit jurisdiction will be required.* 307.16. Incompetents. A security registered in the name of a person who is under any legal disability other than minority, and for whose estate a guardian, conservator or other representative has been appointed by a court of competent jurisdiction, or a security registered in the name of such representative, must be assigned by the representative, proof of whose appointment and qualification must be furnished unless such representative is named in the registration of the bond. If a security is registered in the name of an incompetent for whose estate no representative has been appointed or is otherwise legally qualified, redemption may, in the discretion of the Secretary of the Treasury, be made upon assignment by a person standing in the position of voluntary guardian for the purpose of having the proceeds invested in other transferable United States securities, or securities guaranteed both as to principal and interest by the United States in an equal face amount to be registered in the name of the person under disability: Provided, however, That redemption upon request of a voluntary guardian will not be made if the incompetent's total holdings of the issue to be redeemed exceed $2,-500, in which case a legal representative will be required. Appropriate forms for use in making application for redemption under these circumstances and conditions will be furnished upon request.* 307.17. Joint fiduciaries. A security registered in the names of, or assignable by, two or more persons acting as joint fiduciaries, such as administrators, executors, trustees, or guardians, may be assigned by any one or more of the joint fiduciaries for redemption for the account of all, without the remainder joining in the assignment. The assignment should be to "The.Secretary of the Treasury for redemption," and payment will < For statutory citations, see note to sec. 307.0. . REPORT OF: THE' SECRETARY OF THE TREASURY 279 be made through a check drawn to .the order of all the ^fiduciaries as such (substituting the names of fiduciaries who are now acting for the names of any fiduciaries who are no longer acting), followed by appropriate reference to the trust instrument or estate. If redemption is to be made for the account of any other person, the assignment should be for redemption for the account of such person and must be executed by all the fiduciaries then acting. Proof of the appointment and qualification of the fiduciaries will be required except in the case of securities registered in the names of those fiduciaries who execute the assignment.* SUBPART D.—MISCELLANEOUS 307.18. Transportation of securities. Securities presented for payment or redemption under these regulations must be delivered to a Federal Reserve Bank or branch, or to the Treasury Department, Washington, D. C , at the expense and risk of the holder. Bearer securities and registered securities bearing assignments in blank, or other assignments having similar effect, should be forwarded by registered mail insured, or by express prepaid. Facihties for transportation of .securities 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 hot agents of the United States under these regulations., Registered securities bearing assignments to "The Secretary of the Treasury for redemption" or to "The Secretary bf the Treasury for redemption for the account of " (the name and address of the person to whom payment is to be made being inserted), may be forwarded by registered'mail uninsured.* 307.19. Time"and place of presentation. In order to facilitate the redemption of securities when due, they should be presented and surrendered in the manner herein prescribed well in advance of (but not exceeding 30 days prior to) the date they will become due and payable. This is particularly \important with respect to registered securities, payment of which cannot be made until registration shall have been discharged at the Treasury , Department. Redemption will be expedited if the securities are presented to Federal Reserve Banks or branches, and not direct to the Treasury Department. Banking institutions generaUy will assist holders in securing the redemption of, their securities when due.* , ' 307.20. Optional exchange offering. If and when other interest-bearing securities are offered, on an optional exchange basis, to the holders of securities which may become due and payable either at maturity or before maturity by virtue of a'^call for redemption, owners of such securi- ^ ties desiring to take advantage of the offering should act promptly and should follow the instructions then given rather than the instructions in these regulations, which apply only to securities presented for payment or redemption, and not to those presented for exchange.* 307.21. Bond of indemnity. . . \ .. '.., In any case arising under the provisions of these regulations the Secretary of the Treasury may require a bond of indemnity, if he considers such a bond of indemnity necessary for the protection of the United States. Such b'ond of indemnity shall be in such form and amount and with siich surety, sureties, or security as the 'Secretary of the Treasury shall require.* 307.22. ReservationSc ' The Secretary of the Treasury reserves the right at any time, or from time to time, to amend, supplement, revise, or withdraw any or all bf the provisions of these regulations.* • : HENRY MORGENTHAU, ' •* For statutory citations, see note to sec. 307.0. Jr. Secretary of the Treasury. . .. ..'. , 280, "REPOiRT O F . T H E ' SECRETARY OF THE TREASURY Exhibit 32 Regulations relating to full-paid interim certificates, October 15, 1941 [Department Circular No. 368, Revised. Public Debtl TREASURY ' ' DEPARTMENT, ^ Washington, October 15, 1941. D e p a r t m e n t Circular No. 368, dated August 16, 1926, as amended by First Amendment, dated August 18, 1937 (Part- 308, Title 31, Chapter I I I , Code of Federal Regulations), is hereby further amended, a n d revised to read as follows: T h e following regulations relating to full-paid interim certificates are hereby prescribed and published for t h e information and guidance of all concerned: 308.1. Issue.—Federal Reserve Banks, as fiscal agents of t h e United States, a n d the Treasury D e p a r t m e n t m a y issue full-paid interim certificates in lieu .of definitive securities, against full-paid allotrrients of subscriptions, when specifically authorized by t h e Secretary of t h e Treasury in connection with t h e issue, hereafter, to the public, of United States securities. I n t e r i m certificates shall be in such form, and in such denominations, as t h e Secretarj^ of t h e Treasury niay determine when an issue is authorized. 308.2. Excharpge for definitive securities.—Upon surrender of a full-paid interim certificate to a Federal Reserve Bank, or to t h e Treasury D e p a r t m e n t , Washington, D. C., the definitive securities described therein, when prepared, will be delivered. Exchanges shall be m a d e on like par a m o u n t basis. 308.3. Exchanges of denominations.—Pending availability of definitive securities, exchanges of authorized denominations of interim certificates, from higher t o lower will be permitted-. 308.4. Applicable regulations.—Except as m a y otherwise be provided, and insofar as applicable, t h e general regulations of t h e Treasury D e p a r t m e n t , as contained in D e p a r t m e n t Circular No. 300, as amended or revised, shall apply to full-paid interim certificates. " „ 308.5. Reservations.—The Secretary of t h e Treasury reserves t h e right to withdraw or amend a t any time or from time to time any or all of t h e provisions of this circular. D . W. B E L L , Acting Secretary of the Treasury. Exhibit 33 Regulations governing exchanges gf interim, certificates of 2y2 percent Treasury bonds of 1967-72 for definitive coupon bonds, December 15, 1941 [Department Circular No. 675. Public Debtl TREASURY DEPARTMENT, Washington, Deceinber 15, 1941. To Holders of full-paid interim certificates of 2y2 percent Treasury Bonds of 1967-72, Banks and Trust Companies incorporated in the United States under Federal or State law, and Any Others Concerned: SEC. 310.0. Scope of regulations.-^T]ie provisions of this circular are hereby prescribed as the regulations t o govern t h e exchange of full-paid interim certificates, issued pursuant to Treasury D e p a r t m e n t Circulars No. 368, Revised, dated October 15,T941 (6 F R 5289), No. 670, dated October 9, 1941 (6 F R 5150), and No. 672, d a t e d December 4, 1941 (6 F R 6257), for definitive 2}^ percent Treasury bonds of 1967-72, dated October-20, 1941, in bearer form with coupons covering interest t o m a t u r i t y attached (which m a y hereinafter be referred to as definitive coupon bonds, definitive bonds, or definitives).^ • SEC. 310.1. .Official agencies.—The official agencies for the exchange hereunder of interim certificates for definitive coupon bonds are t h e Federal Reserve Banks a n d their branches, and t h e Treasury Departrnent; Divisibn of Loans and Currency, Washington, D . C . SEC. 310.2. Exchanges at ofiicial agencies.—Exchanges m a y be effected beginning J a n u a r y 19, 1942. Interim certificates to be exchanged m u s t be presented » The regulations prescribed in this circular apply to full-paid interim certificates the issue of which was incident to the issue of 2}^% Treasury bonds of 1967-72 pursuant to the authority of the Second Liberty Bond Act, as amended. REiPORT OF T H E SECRETARY OF T H E TREASURY 281 a n d surrendered t o an official agency, a t t h e risk and expense of t h e holders, and, unless delivered in person, should be forwarded b y registered mail or prepaid express. E a c h delivery of interim certificates m u s t be accompanied by apprbpriate w r i t t e n advice t r a n s m i t t i n g t h e certificates and giving instructions for t h e delivery of t h e definitives issued in exchange. Exchanges will be m a d e on a like p a r aniount basis, and unless other instructions are given in t h e advice, definitives of t h e highest possible denominations will be delivered. N o charge for the exchange will be m a d e b y t h e United States, a n d deliveries of definitives will be m a d e within t h e United States, its Territories and possessions a t t h e expense and risk of t h e United States. N o deliveries elsewhere will be made, nor will delivery of definitives be m a d e other t h a n t o t h e p a r t y presenting t h e interim certificates. I M P O R T A N T : SEE T H E N E X T FOLLOWING SECTION FOR SPECIAL ARRANGEM E N T S FOR P R E S E N T A T I O N OF I N T E R I M C E R T I F I C A T E S TO F E D E R A L RESERVE BANKS BY BANKS AND TRUST COMPANIES. S E C . 310.3.2 Special arrangements for banks and trust companies.—It is expected t h a t incorporated, banks and t r u s t companies within t h e United States, generally will offer their services t o their customers in eff'ecting exchanges of interim certificates for definitive bonds without expense to t h e holders, and, accordingly, any holders of interim certificates who avail themselves of a n y such offer should, of course, present and surrender their interim certificates through such institutions. Any such bank or t r u s t company m a y arrange with t h e Federal Reserve B a n k of its district for t h e t r a n s p o r t a t i o n of interim certificates t o t h e Federal Reserve Bank by registered mail a t t h e expense a n d risk of t h e United States. Full information concerning such arrangements will be furnished by Federal Reserve B a n k s to incorporated banks and t r u s t companies upon application. T h e interim certificates forwarded b y incorporated b a n k s a n d t r u s t companies t o t h e Federal Reserve Banks for exchange p u r s u a n t to such arrangements must b e , plearly s t a m p e d on t h e face, in indelible ink, with a legend reading as follows: " P r e s e n t e d for exchange for definitive coupon bonds b y " All (Name of bank or trust company) such interim certificates so stamped shall thenceforth be deemed nonnegotiable and will be accepted by t h e Federal Reserve Bank only when presented for exchange by or for account of t h e b a n k or t r u s t company named thereon. S u c h arrangements m a y not be m a d e with^the Treasury D e p a r t m e n t , nor m a y t h e y be m a d e by individuals or institutions except as herein provided. Deliveries of definitive bonds issued upon such exchanges will be m a d e to t h e incorporated b a n k or t r u s t company presenting t h e interim certificates for exchange, and will be m a d e a t t h e expense and risk of t h e United States. Incorporated banks a n d trust, companies, in effecting exchanges p u r s u a n t t o this paragraph, act as agents of the holders of t h e interim certificates and not as agents of t h e United States, and t h e United States will not be responsible for t h e receipt or custody of t h e interim , certificates or for t h e custody or delivery of t h e definitive bonds by t h e b a n k s or t r u s t companies. T h e provisions of this section-niay be extended to private b a n k s doing a recognized banking business and approved by t h e Federal Reserye Bank of t h e district in which located. • , S E C . 310.4. Authority of Federal Reseiye Banks.—Federal Reserve Banks, as fiscal agents of t h e United States, and their branches are authorized t o perform all necessary acts within t h e purview of this circular, and t o carry out such instructions in connection therewith as m a y , from time t o time, be given b y t h e Secretary of t h e Treasury. . , ^ S E C . 310.5. Reservations.—The Secretary of t h e Treasury reserves t h e right a t a n y time or from time t o time-to amend, supplement, or withdraw a n y or all of4^the provisions of this circular. D. W. BELL, Acting Secretary of the Treasury. F I R S T A M E N D M E N T , J A N U A R Y 2, 1942, TO D E P A R T M E N T , C I R C U L A R N O . 675 TREASURY DEPARTMENT, > Washington, J a n u a r y 2, 1942. To Holders of full-paid interim certificates of 2Y2 percent Treasury Bonds of 1967-72, Banks and Trust Companies incorporated in the United States under Federal or State law, .and Any.Others Concerned: Sec.'310.3 of D e p a r t m e n t Circular N o . 675, dated December 15, 1941; is herieby amended to read as follows: ^ , , .. " S E C . 310.3. Special arrangements for banks and trust companies.-—It is expected t h a t iricorporated banks and t r u s t companies within t h e Upited States,' generally 2 Amended, see below. .' . 282 REPORT. OF THE SECRETARY OF THE TREASURY will offer their services to their customers in effecting exchanges of interim certificates for definitive bonds without expense to the holders, and, accordingly, any holders of interim certificates who avail themselves of any such offer should, of. eourse, present and surrender their interim certificates through such institutions. Any such bank or.trust company may arrange with the Federal Reserve Bank of its district for the transportation of interim certificates to the Federal Reserve Bank by registered iriail at the expense and risk of the United States. Full information concerning such arrangements will be furnished by Federal Reserve Banks to incorporated banks and trust companies upon application. The interim certificates forwarded by incorporated banks and trust companies to the Federal Reserve 'Banks fbr exchange pursuant to such arrangements must be clearly stamped on the face, iri indelible ink, with a legend reading as follows: 'Presented for exchange for definitive coupon bonds by ,' or in lieu of (Name of bank or trust company) -such stamp, the^legend may be typed or written in which case it must be signed .by an officer of the remitting bank or trust company. All such interim certificates so stamped or endorsed shall thenceforth be deemed nonnegotiable and will be accepted by the Federal Reserve Bank only when presented for exchange by or for account of the bank or trust company named thereon. Such arrangements = may not be made with the Treasury Department, nor may they be made by individuals or institutions except as herein provided. Deliveries of definitive bonds issued upon such exchanges will be made to the incorporated bank or trust company presenting the interim certificates for exchange, and will be made at the expense and risk of the United States. Incorporated banks and trust companies, in effecting exchanges pursuant to this paragraph, act as agents of the holders of the interim certificates and not as agents of the United States, and the United States will not be responsible for the receipt or custody of the interim certificates or for the custody or delivery of the definitive bonds by the banks or trust companies. The provisions of this section may be extended to private banks doing a recognized banking business and apprbved by the Federal Reserve Bank of the district in which located." . • D. W. BELL, ' ^ . Acting Secretary of the Treasury. ^.•--SECURITIES GUARANTEED BY THE UNITED^STATES Exhibit 34 Offering of 1 percent notes of iSeries W of the Reconstruction Finance Corporation . On June 24, 1941, Secretary of the Treasury Morgenthau, on behalf of the Reconstruction Finance Corporation, invited subscriptions for 1 percent notes of Series W of the Corporation, in the amount of $500,000,000, or thereabouts, and at the same time offered to purchase on July 3, 1941, the outstanding notes of Series N of the Corporation, maturing July 20, 1941, to the extent to which the holders of these notes subscribed to the new issue. In the related press release it .was;stated that approximately $211,000,000 of Series N notes were then out.standing. . . . . ^ [Department Circular No. 664. Public Debtl . ' TREASURY DEPARTMENT, Washington, June 24, 1941. I. OFFERING OF NOTES AND INVITATION FOR TENDERS 1. The Secretary of the Treasury, on behalf of the Reconstruction Finance Corporation, invites subscriptions, at par and accrued interest, from the people of the United States for notes of the Reconstruction.Finance Corporation, designated 1 percent notes of Series W. The amount of the offering is $500,000,000, or thereabouts. 2. The Secretary of the Treasury, on behalf of the Reconstruction Finance Corporation, offers to purchase on July 3, 1941, at par and accrued interest, the outstianding notes pf the Corporation designated Series N, maturing July 20, 1941, to the extent to which the holders thereof subscribe to the issue of Series W notes hereunder. Tenders of Series N notes for that purpose ^re invited. REPORT OF THE- SECRETARY OF THE TREASURY • ' 283II. DESCRIPTION OF NOTES . 1. T h e notes will be dated July 3, 1941, and 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 October 15,^ 1941, and-thereafter on April 15 and October 15 in each year until the principal a m o u n t becomes payable. They will m a t u r e April 15, 1944, and will n o t be subject to cah for redemption prior to m a t u r i t y . 2. T h e notes will be issued under authority of an act of Congress (known as "Reconstruction Finance Corporation Act") approved J a n u a r y 22, 1932, as amended and supplemented. T h e income derived from the notes shall be subject to all Federal taxes, now or hereafter imposed. T h e notes shall be subject to» estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by any Territory, dependency, or possession of the United States, or by any State, county, municipality, or local taxing authority. These notes shall be lawful investments, and m a y be accepted as security, for all fiduciary, trust, and p u b h c funds the investment or deposit of which shall be under the a u t h o r i t y or control of t h e United States or any officer or officers thereof. 3. T h e authorizing act provides t h a t in the event t h e Reconstruction F i n a n c e Corporation shall be unable to p a y upon demand, when due, the principal of o r interest on notes issued by it, the Secretary of t h e Treasury shall pay t h e a m o u n t thereof, which is authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, and thereupon to t h e extent of t h e amounts so p a i d t h e Secretary of t h e Treasury shall succeed to aJl t h e rights of the holders of such' notes. 4. Bearer notes with interest coupons a t t a c h e d will be issued in denominations of $1,000, $5,000, $10,000 and $100,000. T h e notes will n o t be issued in registered form. ' III. SUBSCRIPTION AND ALLOTMENT 1, Subscriptions will be received a t t h e Federal Reserve Banks and branches and a t t h e Treasury D e p a r t m e n t , Washington. Subscribers m u s t agree n o t to sell or otherwise dispose of their subscriptions, or t h e securities which m a y be allotted thereon, prior to t h e closing of t h e subscription books. Banking institutions generahy m a y submit subscriptions for account of customers, b u t only t h e Federal Reserve Banks and t h e Treasury D e p a r t m e n t are authorized to act as oflficial agencies. Others t h a n banking institutions, will n o t be permitted to enter s u b scriptions except for their own account. Subscriptions, from holders of Series N notes tendered for purchase should be accompanied by such notes to a p a r amount^ equal to the p a r a m o u n t of notes of Series W subscribed for. Other subscriptions" from banks and t r u s t companies for their own account will be received without deposit b u t will be restricted in each case to an a m o u n t not exceeding one-half of t h e combined capital a n d surplus of t h e subscribing bank or t r u s t company. Other subscriptions from all others inust be accompanied by p a y m e n t of 10 percent of t h e a m o u n t of notes apphed for. 2. T h e Secretary of t h e Treasury reserves t h e right to reject any subscription, in whole or in part, to allot less t h a n the a m o u n t of notes applied for, and to close t h e books as to any or all subscriptions aD any t i m e without notice; and any action he m a y t a k e in these respects shall be final. Subject to these reservations, subscriptions from holders of Series N notes who tender t h e m for purchase hereunder will be allotted in full. Allotment notices wih be sent out p r o m p t l y upon allotment, a n d the-basis of t h e allotment will be publicly.announced. IV.. PAYMENT 1.. P a y m e n t a t par a n d accrued interest, if any, for notes allotted hereunder m u s t be m a d e or completed on or before July 3, 194!, or on later allotment. I n every case where p a y m e n t is not so completed, t h e p a y m e n t with application up to 10 percent of t h e a m o u n t of notes applied for: shall, upon declaration m a d e by t h e Secretary of the Treasury in his discretion, be forfeited to* the- UnitedStates. • Notes of Series N tendered for purchase m u s t have coupons dated July 20, 1941, attached, a n d p a y m e n t will be m a d e a t p a r and. accrued'interest to-July^ 3, 1941. T h e principal proceeds of t h e Series N notes will be applied in payment.: of t h e Series W notes, a n d accrued interest from J a n u a r y 20, 1941, to July 3, 1941,.; on Series N notes ($3.96409 per $1,000) will be paid following a,cceptance of t.her notes. . , . .. :^ 284 REPO>RT OF T H E SECRETARY OF T H E TREASURY V. GENERAL PROVISIONS , . = • ' . 1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to receive subscriptions, to m a k e allotments on the basis and up to t h e amounts indicated by the Secretary of t h e Treasury to t h e Federal Reserve Banks of t h e respective districts, to issue allotment notices, to receive p a y m e n t for notes allotted, to m a k e delivery of notes on full-paid subscriptions aliotted, and-they may issue interim receipts pending delivery of t h e definitive notes. 2. 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 the offering, which will be communicated promptly to t h e Federal Reserve Banks. H E N R Y MORGENTHAU, , . • ^ Jr., Secretary of the Treasury. ^ Exhibit 35 Subscriptions and allotments. Reconstruction Finance Corporation notes of Series W {from press releases, J u n e 25 and 27 and J u l y 2, 1941 ') On J u n e 24, 1941, Secretary of t h e Treasury Morgenthau announced t h a t t h e subscription books for t h e ofl'ering of 1 percent notes of Series W of t h e Reconstruction Finance Corporation closed a t the close of business J u n e 24, 1941, except for t h e receipt of subscriptions from holders of Series N notes of the Corporation who tendered t h e m for purchase by the Secretary in a par a m o u n t equal to t h e p a r a m o u n t of notes of Series W subscribed for. T h e subscription books for t h e l a t t e r class closed a t t h e close of business J u n e 25. Subscriptions aggregated .•$5,273,618,000, of which $208,668,000 were received from holders of Series N motes. Subscriptions from t h e holders of Series N notes were allotted in full; •and all other subscriptions were allotted 7 percent, b u t not less t h a n $1,000 on .any one subscription. • •Subscriptions and allotments were divided among the Federal Reserve districts a n d t h e Treasury a s follows: Subscriptions received Crom holders of Series N notes (allotted in full) . Federal Reserve district Boston N e w York . Pbiladelnhia Cleveland Richmond Atlanta" Chicaejo St Louis ' Minneapolis' ' Kansas City . .-Dallas S a n Francisco Treasurv Total--.—— -• ---• - --- O t h e r subscriptions Received Allotted Total subscriptions allotted $394, 566, 000 $8,444.000 147.127.000 2,315,704.000 4. 224,000 297,375,000 8, 270,000 342,518,000 1,451,000 156, 694,000 1,372.000 241,502,000 24. 349,000 686,377,000 1,405,000 110,921,000 1,053,000 97, 043,000 4. 741.000 73,002,.000 1,199,000 83.971,000 ^2,386.000 256, 027,000 2, 647.000 * 9, 250.000 $27,839,000 162, 605.000 21,010,000 24, 295,000 11.376.000 21,024.000 48,794,000 8, 584.000 6, 973,000 5, 299,000 6, 249,000 17,999,000 618.000 $36,283,000 309. 732,000 25. 234,000 32, .565,000 12,827,000 22,396,000 . 73,143,000 9, 989,000 8:026;^000 10,040,000 7. 448,000 20,385. 000 3, 295, 000 5,06-4, 950,000 362,695,000 571,363,000 208,668,000 Exhibit 36 Offering of ly^ percent notes of Series G of the Commodity Credit Corporation On July 10, 1941, Secretary of t h e Treasury-Morgenthau, on behalf of the Commodity Credit Corporation, invited subscriptions for 1)^ percent notes of Series G of the Corporation, in the' a m o u n t of $400,000,000, dr thereabouts, and a t t h e same time offered to purchase on July 21, 1941, t h e , o u t s t a n d i n g notes of Series D of.the Corporation, m a t u r i n g August 1, 1941, to t h e extent to which t h e holders of these notes subscribed t o t h e new issue. I n t h e related press release it w a s s t a t e d t h a t $202,553,000 of Series .D notes were t h e n outstanding. 1 Revised July 19,1941. • REPORT OF THE- SECRETARY OF THE TREASURY 285 [Department Circular No. 66.5. Public Debt! TREASURY .DEPARTMENT, Washington, July 10, 1941. I. OFFERING OF NOTES AND INVITATION FOR TENDERS 1. The Secretary of the Tr'easury, on behalf of the Commodity Credit Corporation, invites subscriptions, at par and accrued interest, from the people of the United States for notes of the Commodity Credit Corporation, designated lYs percent notes of Series G. The amount of the offering is $400,000,000,° or there.abouts. 2. The Secretary of the TreasuiT, on behalf of the Commodity Credit Corporation, offers to purchase on July 21, 1941, at par and accrued interest, the outstanding notesvof the Corporation designated Series D, maturing August F, 1941, to the extent to which the holders thereof subscribe to the issue of Series-G notes hereunder. Tenders of Series- D notes for that purpose are invited. II. DESCRIPTION OF NOTES 1. The notes will be dated July 21, 1941, and will bear interest from that date at the rate of IJ^ percent per annum, payable on a semiannual basis on February 15 and August 15 in each year until .the principal amount becomes payable, the first coupon being dated February 15, 1942. They wiU mature February 15, 1945, and will not be subject to call for redemption prior to maturity. 2. The notes will be issued under authority of the act approved March 8, 1938 (52 Stat. 107), as amended. The income derived from the notes shall be subject to all Federal taxes, now or hereafter imposed. The notes shall be subject to surtaxes, estate, inheritance, gift, or other excise taxes, whether Federal or State, but shall be exempt from all taxation now or hereafter imposed on the principal or interest thereof by any State, municipality, or local taxing authority. These notes shall be lawful investments and may be accepted as security for all fiduciary,, trust,.and public funds the investment or deposit of which shall be under the authority or control of the United States or any ^officer or oflficers thereof. 3. The authorizing act provides that in the event the Commodity Credit Corporation shall be unable to pay upon demand, when due, the principal of, or interest on, notes issued by it, the Secretary of the Treasury shall pay to the holder the amount thereof which is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such notes. 4. Bearer notes with interest coupons attached will be issued in denominations of $1,000, $5,000, $10,000 and $100,000. The notes wiU not be issued in registered form. III. SUBSCRIPTION AND ALLOTMENT 1. Subscriptions will be received at the Federal Reserve Banks and branches .and at the Treasury Department, Washington. Subscribers must agree not to sell or otherwise dispose of their subscriptions, or the securities which may be allotted thereon, prior to the closing of the subscription books. 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. Subscriptions from holders of Series D notes tendered for purchase should be accompanied by such notes to a par amount equal to the par amount of notes of Series G subscribed for. Other 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. Other subscriptions from all others must be accompanied by-payment of 10 percent of the amount of notes applied for. 2. 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, 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, subscriptions from holders of Series D notes who tender them for purchase hereunder will be allotted in full. Allotment notices will be sent out promptly upon allotment, and the basis of the allotment will be publicly announced. 286^ REPORT, .OF THE SEiCRETARY OF THE TREASURY .IV. P A Y M E N T r. Payment at par and accrued interest, if any, for notes allotted hereunder must be made or completed on or before July 21, 1941, or on later allotment. In every case where payment is not so completed, the payment with apphcation 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, Notes of Series D tendered for purchase must have coupons dated August 1, 1941. attached, and payment will be made at par and accrued interest to July 21, 1941. The principal proceeds of the Series D notes will be applied in payment of the Series G notes, and accrued interest from February 1, 1941, to July 21, 1941, on Series D notes ($2.93508 per $1,000) will be paid following acceptance of the notes. ^ V. G E N E R A L P R O V I S I O N S 1. As fiscail agents of the United States, Fedei^al Reserve Banks are authorized and requested tp receive subscriptions, to make allo'tments 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. 2. The Secretary of the Treasury may at any time, or from time to time, prescribe supplemental or amendatory rules and regulations governing the offering, which will be communicated promptly to the Federal Reserve Banks. HENRY MORGENTHAU, Jr., Secretary of the Treasury. Exhibit 37 Subscriptions and allotments. Commodity Credit Corporation notes of Series G (from press releases, July 11, 15, and 18, 1941 ^) .•On July 10, 1941, Secretary of the Treasury Morgenthau announced that the subscription books for the offering of 1^ percent notes of Series G of the Commodity Credit Corporation closed at the close of business July 10, except for the receipt of subscriptions from holders of Series D notes of the Corporation who tendered them for purchase by the Secretary in a par amount equal to the par amount of Series G subscribed for. Subscriptions aggregated $5,357,351,000, of which $200,815,000 were received from holders of Series D notes. Subscriptions froni th e holders of Series D notes were allotted in full; and all other subscriptions were allotted 4 percent, but not less than $1,000 on any one subscription. Subscriptions and allotments were divided among the Federal Reserve districts and the Treasury as follows: Federal Reserve district Subscriptions received from holders of Series D notes (allotted • infull) O t h e r subscriptions Received Allotted Boston.. New York P.hiladelphia.Cleveland. Richmond Atlanta ... Chicago..-. St. Louis Minneapolis.'. Kansas C i t y . . Dallas... San Francisco. Treasury $7,883,000 120, 796,'000 5, 433, 000 10, 262, 000 4,612, 000 4, 058, 000 24,321, 000 2, 228, 000 1, 029, 000 12,884, 000 1, 891, 000 5,328, 000 90, 000 $438, 500,000 2,374, 014, 000 282, 515, 000 347, 533, 000 158, 612,000 226, 291, 000 686, 296, 000 124, 770, 000 99, 129,000 76, 930, 000 84, 783, 000 252, 358, 000 4, 805, 000 $17, 688,000 95,250,000 11, 417, 000 14,189, 000 6,690, 000 .9,919; 000 28, 086, 000 5, 915, 000 4,1'23, 000 3,235,000 3,941, 000 10,135,000 193,000 TotaL. ^ 200,815, 000' 5,156, 536, 000 210,781, 000 .' Revised Aug. 14, 1941. Total subscriptions allotted $25,571,000 r216, 046, 000 ^ 16,850,000 24,451, 000' 11, 302, 000' 13,977,000 52,407, 0008,143,000 • 6,152.000: 16,119,000 5,832, 000 15,463, 000 283, 000' 411,596, OOO-. REOPORT OF THE SECRETARY OF THE TREASURY ' 287 Exhibit 38 Partial redemption, before maturity, of 2y^ percent mutual mortgage insurance fund debentures. Series B (Sixth call)_ [Department Circular No. 669. Public Debtl TREASURY DEPARTMENT, Washington, September 27, 1941. To Holders of 2y4 Percent Mutual Mortgage Insurance Fund Debentures, Series B: • I. NOTICE OF SIXTH CALL FOR PARTIAL REDEMPTION, BEFORE MATURITY, OF 2% PERCENT MUTUAL MORTGAGE INSURANCE FUND DEBENTURES, SERIES B The Federal Housing Administrator, with the approval of the Secretary of the Treasury, has issued the following notice of call for partial redemption and offer to purchase with respect to 2^4 percent mutual mortgage'insurance fund debentures. Series B: "Pursuant to the authority conferred by the National Housing Act (48 Stat. 1246; U. S. C , title 12, sec. 1701 et seq.) as amended, public notice is hereby given that 2% percent mutual mortage insurance fund debentures, Series B, of the denominations and serial numbers designated below, are hereby called for redemption, at par and accrued interest, on January 1, 1942, on which date interest on such debentures shall cease: Denomination $50 $100 $500 $1,000 $5,000 $10,000 Serial numbers {All numbers inclusive) . 1 _-_ : ___. .-- 839 to 1, 160 3, 113 to 4, 048 1, 191 to 1,403 4, 000 to 4, 999 248 to 328 31 to 39 "The debentures first issued, as determined by the^serial numbers, were selected for redemption by the Federal Housing Administrator, with the approval of the Secretary of the Treasury. . -"No transfers or denominational exchanges in debentures covered by the foregoing call will be made on the books maintained by the Treasury Department on ' or after October 1', 1941." This does not affect the right of the holder of a debenture to sell and assign the debenture on or .after October 1, 1941, and provision will be made for the payment of final interest due,January 1, 1942, with the principal thereof to the actual owner, as shown by the assignments thereon. "The Federal Housing Administrator hereby offers to purchase any debentures included in this call at any time from October 1 to December 31, 1941, inclusive, at par and accrued interest, to date of purchase. "Instructions for the presentation and surrender of debentures for redemption oil or after January 1, 1942, or for purchase prior to that date will be given by the Secretary of the Treasury." , II. TRANSACTIONS IN SIXTH-CALLED DEBENTURES 1. The debentures included in the foregoing notice of call for partial redemption on January 1, 1942, are hereby designated sixth-called 2Ji percent mutual mortgage insurance fund debentures. Series B, and are hereinafter referred to as sixthcalled debentures. 2. Tra-nsfers and denominational exchanges in sixth-called debentures will terminate at the close of business on September 30, 1941., III. REDEMPTION OR PURCHASE . 1. Holders of sixth-called debentures will be entitled to have such debentures redeemed and paid at par on January 1, 1942, with interest in full to that date,, at the rate of $13.75 per $1,000. ' Interest on sixth-called debentures will cease on January 1, 1942. 2. Holders of sixth-called debentures have the privilege of presenting such debentures at ariy time from October 1 to December 31, 1941, inclusive, for purchase at par and accrued interest, at the rate of $0.074728 per $1,000 per day fromv July 1, 1941, to date of purchase. IV. RULES A N D REGULATIONS GOVERNING REDEMPTION A N D PURCHASE . 1. The United States Treasury Departnient is the agent of the Federal Housing Administrator for the redemption and purchase of sixth-called debentures. In 487543—43 20 288 REPORT OF T H E SECRETARY OF THE TREASURY. accordance with regulations adopted by t h e Federal Housing Administrator and approved by the Secretary of the Treasury, t h e assignment, redemption, a n d purchase of sixth-ca,lleci debentures will be governed by the general regulations of the Treasury D e p a r t m e n t . w i t h respect to United States bonds and notes, so far as applicable,, except as otherwise provided Jierein. 2. Sixth-called debentures presented for redemption On J a n u a r y 1, 1942, or for purchase from October 1 to December 31, 1941, inclusive, m u s t be assigned by t h e registered payee or assignee thereof or by their duly constituted representatives in t h e form indicated in p a r a g r a p h 3 hereof, and should thereafter be presented and surrendered to any Federal Reserve Bank or to the Division of Loans and Currency, Treasury D e p a r t m e n t , Washington, D. C , accompanied by appropriate written advice. (Use Form P D 1717.) T h e debentures m u s t be delivered a t the expense and risk of t h e holders. (See paragraph 8 of this section.) In all cases checks in p a y m e n t of principal and final interest will be mailed to the address given in the form, of advice accompanying the debentures when surrendered. 3. If the registered payee or an assignee holding under proper assignment from t h e registered payee desires t h a t p a y m e n t be made to him, the debentures should be assigned by such payee or assignee or by a duly constituted representative to " T h e Federal Housing Administrator for r e d e m p t i o n " or to " T h e Federal Housing Administrator for purchase," according to whether the debentures are to be presented for redemption on J a n u a r y 1, 1942, or for purchase prior to t h a t date. If it is desired for any reason t h a t p a y m e n t be made to some other person without intermediate assignment, the debentures should be assigned to " T h e Federal Housing Administrator for redeinption (or purchase) for the account of _/_," inserting the name and address of the person to whom paym e n t is to be made. 4. An assignment in blank or other assignment having similar effect will be recognized, but in t h a t event payment will be made to t h e person surrendeMng t h e debenture for redemption or purchase since, under such an assignment, the debenture becomes in effect payable to bearer. Assignments in blank or assignm e n t s having similar effect should be avoided, if possible, in order not to lose the protection afforded by registration. 5. Final interest on any sixth-called debentures, whether purchased prior to, or redeemed on or after J a n u a r y 1, 1942, will be paid with t h e principal in accordance with the assignments on t h e debentures surrendered. 6. All assi2;nments m u s t be made on the debentures themselves unless otherwise directed by t h e Treasury D e p a r t m e n t . Detached assignments will be recognized and accepted in any particular case in which the use of detached assigrm e n t s is specifically authorized by t h e Treasury D e p a r t m e n t . Any assignment not made upon the debenture is considered a detached assignment. 7. A sixth-called debenture registered in the name of, or assigned to, a corporation, will be paid to such corporation on or after Janua.rv 1, 1942, upon dn appropriate assignment fbr t h a t purpose executed on behalf of the corporation by a duly authorized ofPcer thereof. An assignment so executed and dulv attested in accordance, with Treasury D e p a r t m e n t regulations will ordinarily be accepted without proof of the officer's authoritv. I n ' a l l cases coming under this provision p a v m e n t will be made onlv by check drawn to t h e order o,f the corporation. Proof of t h e authority of t h e officer assigning on behalf of a corporation will .be reouired, in accordance with t h e general regulations of .the Trea.sury Department, in t h e case of assignments for purchase prior to Janua.rv 1, 1942, and in case of assignm e n t s for redemption on or after J a n u a r y 1, 1942, for the account of any person other t h a n the corporation. 8. Debentures presented for redemption or purchase under this circidar m u s t be delivered to a Federal Peserve Bank or to the Division of Loans and Currency, T r e a s u r y . D e p a r t m e n t , Washington, D . C , at the expense and risk of the holder. Debentures bearing restricted assignments m a y be forwarded by registered mail, b u t . debentures bearing unrestricted assignm;ferits should be forwarded by registere.d-.mail insured or bv express prepaid. 9; In order to facilitate the redemption of sixth-called debentures on Januat-y 1, 1942, any such" debenture m a y be presented and surrendered in the manner herein prescribed in advance of t h a t date b u t not before December 1, 1941.. Such early presentation by holders will insure p r o m p t p a y m e n t of principal and interest when due. v . GENERAL PROVISIONS 1. Anv further information which m a y be desired regarding the redemption of sixth-called debentures under t h i s circular m a y be obtained from any Federal Reserve Bank or from t h e Division of Loans and Currency, Treasury D e p a r t m e n t , REPORT OF THE' SECRETARY OF. THE TREASURY 289 Washington, D. C , where copies of the Treasury Department's regulations governing assignments may be obtained. 2. As fiscal agents of the United States, Federal Reserve Banks are authorized ' and requested to perform any necessary acts under this circular. The Secretary of the Treasury may at any time or from time to time prescribe supplemental and amendatory rules and regulations goyerning the matters covered by this circular, which will be communicated" prohiptly to the registered owners of sixthcalled debentures. D. W. BELL, Acting Secretary of the Treasury. Exhibit 39 Partial redemption, before maturity, of 2y4 percent mutual mortgage insurance fund debentures. Series B {Seventh call) [Department Circular No. 682. Public Debtl TREASURY DEPARTMENT, Washington, March 27, 1942. To Holders of ^% percent Miitual Mortgage Insurance Fund Debentures, Series B: I. N O T I C E O F S E V E N T H C A L L FOR PARTIAL REDEMPTION, BEFORE MATURITY, OF 2y4 PERCENT MUTUAL MORTGAGE INSURANCE FUND DEBENTURES, SERIES B The Federal Housing Commissioner, with the approval of the Secretary of the Treasury, has issued the following notice of call for partial redemption and offer to purchase with respect to 2% percent mutual mortgage insurance fund debentures. Series B,: "Pursuant to the authority conferred by the National Housing Act (48 Stat. 1246; U. S. C , title 12, sec. 1701 et seq.) as amended, public notice is hereby given that 2^^ percent mutual mortg,age insurance fund debentures. Series B, of the denominations arid serial numbers designated below, are hereby called for redemption, at par and accrued interest, on July 1, 1942, on which date interest on such debentures shall cease: Serial numbers {All numbers inclusive) • Denomination $50 $100 $500_-__ $1,000 $5,000 $10,000..-_ --- - _..__.: -_--' __- - 1,161 to 1,342 4,049 to 4,786 1,404 to 1,592 5,000 to 5,922 _: 329 to 411 40 to 44. "The debentures'first issued, ais'determined by the serial nunibers, wer^selected for redemption by the Commissioner,-Federal Housing Administration, with the approval of the Secretary of the Treasury. . . . "No transfers or denominational exchanges in debentures covered by the foregoing call will be made on the books maintained by the Treasury Department on or after April 1, 1942. This does not affect the right of the holder of a debenture to sell and assign the debenture on or after April 1, 1942, and provision will be made for the payment of final interest due July 1,1942, with the principal thereof to the actual owner, as shown by the assignments thereon. "The Commissioner of the Federal Housing Administration hereby offers to , purchase any debentures included in this call at any time from April 1 to June 30, 1942, 'inclusive, at par and accrued interest, to date of purchase. "Instructions for the presentation and S;i4i:ren,der of debenture$ for redemption on or after; July 1, 1942,:]or for .purchase jprior to that date wilhbe given by. the Secretary of the Treasury." J I I . TRANSACTIONS IN SEVENTH-CALLED DEBENTURES 1. The debentures included in the foregoing notice of call for partial redemption on July 1, 1942, are hereby designated seventh-called 2% percent mutual mortgage insurance fund debentures. Series Bi, and are hereinafter referred to as seventh-called debentures. 2. Transfers and denominational exchanges in seventh-called debentures will terminate at the close of business on March 31, 1942. 290 / . REPO'RT OF THE, SECRETARY OF THE TREASURY .^ III. REDEMPTION OR PURCHASE 1. Holders of seventh-called debentures will be entitled to have such'debentures redeemed and paid at par on July 1, 1942, with interest in full to that date^ at the rate of $13.75 per $1,000. Interest on seventh-called debentures will cease on July 1, 1942. 2. Holders of seventh-called debentures have the privilege of presenting such debentures at any time from April 1 to June 30, 1942, inclusive, for purchase at par and accrued interest, at the rate of $0.075967 per $1,000 per day from January 1, 1942, to date of purchase. IV. RULES AND REGULATIONS GOVERNING REDEMPTION AND PURCHASE 1. The United States Treasury Department is the agent ,of the Federal Housing Commissioner for the redemption and purchase of seventh-called debentures. In accordance with regulations adopted by the Federal Housing Commissioner and approved by the Secretary of the Treasury, the assignment, redemption, and purchase of seventh-called debentures will be governed by the general regulations of the Treasury Department with respect to United States bonds and notes, so far as apphcable, except as otherwise provided herein. . 2. Seventh-called debentures presented for redemption on July 1, 1942, or for purchase from April 1 to June 30, 1942, inclusive,' must be assigned by the registered payee or assignee thereof or by their duly constituted representatives in the form indicated in paragraph 3 hereof, and should thereafter be presented and surrendered to any Federal Reserve Bank or to the Division of Loans and Currency, Treasury Department, Washington,^D. C , accompanied by appropriate written advice. (Use Form PD 1759.) TJfie debentures must be delivered at the expense and risk of the holders. (See paragraph 8 of this section.) In all cases checks in payment of principal and final interest will be mailed to the address' given in the form of advice accompanying the debentures when surrendered. 3. If the regLstered payee or an assignee holding under proper assignment from the registered payee desires that payment be made to him, the debentures should be assigned by such payee or assignee or by a duly constituted representative to "The Federal liousing Commissioner for redemption" or to "The Federal Housing Commissioner for purchase," according to whether the debentures are to be presented for redemption on July 1, 1942, or for purchase prior to that date.. If it is desired for any reason that payment be made to some other person without intermediate assignment, the debentures should be assigned to "The Federal Housing Commissioner for redemption (or purchase). for the account of-_-_-^-_ ," inserting the name and address of the person to whorn payment is to be made. 4. An assignment in blank or other assignment having similar effect will be recognized, but in that event payment will be made to the person surrendering the debenture for redemption or purchase since, under such an assignment, the debenture becomes in effect payable to bearer. Assignments in blank or assignments having similar effect should be avoided, if possible, in order not to lose the protection afforded by registration, ' 5. Final interest on any seventh-called debentures, whether purchased prior to or redeemed on or after July 1, 1942,^111 be paid with the principal in accordance with the assignments on the debentures surrendered. 6. All assignments must be made on the debentures themselves unless otherwise directed by the Treasury Department. Detached a.ssignments will be recognized and accepted in any particular case in which the use of detached assignments isspecifically authorized bj^ the Treasury Department. Any assignment not made upon the debenture is considered a detgiched assignment. 7. A seventh-called debenture registered in the name of, or assigned to, a corporation, will be paid to such corporation on or after J u l y l , 1942, upon an appropriate assignment for that purpose executed on behalf of the corporation by a duly authorized officer thereof. An assignment so executed and duh^ attested, in accordance with 'Treasury Department regulations will ordinarily be accepted; without proof of the officer's authority. In all cases coming under this provision payment will be made only by check drawn to the order of the corporation. Proof of the authority of the officer assigning on behalf of a corporation will be required, in accordance with the general regulations of the Treasury Department, in the case of assignments for purchase prior to July 1, 1942, and in case of assignments for redemption on'-or after July 1, 1942, for the account of any person other than the corporation. ^ '8. Debentures presented for redemption or purchase under this circular must be delivered to a Federal ReserVe Bank or to the Division of Loans and Gurrencyy REPORT OF THE' SECRETARY OF T H E TREASURY. 291 T r e a s u r y D e p a r t m e n t , Washington, D . C , a t t h e expense a n d risk of t h e holder. D e b e n t u r e s bearing restricted assignments m a y be forwarded by registered mail, b u t debentures bearing unrestricted assignments should be forwarded by registered mail insured or by express prepaid. . 9. In order t o facilitate t h e redemption of seventh-called debentures on July 1, 1942, any such debenture msbj be presented and surrendered in t h e manner herein prescribed in advance bf t h a t date b u t not before J u n e 1, 1942. Such early presentation by holders will insure- p r o m p t p a y m e n t of principal and interest when due. V. GENERAL PROVISIONS 1. Any further information which m a y be desired regarding the. redemption of seventh-called debentures under this circular m a y be obtained from any Federal Reserve Bank or from t h e Division of Loans and (5urrency, Treasury D e p a r t m e n t , Washington, D . C , where copies of t h e Treasury D e p a r t m e n t ' s regulations governing assignments m a y be obtained. 2. As fiscal agents of t h e United States, Federal Reserve Banks are authorized a n d requested to perform any necessary acts under this circular. The Secretary of t h e Treasury m a y a t any time or from time to t i m e prescribe supplemental a n d a m e n d a t o r y rules and regulations governing t h e m a t t e r s covered by this circular, which will be communicated promptly to t h e registered owners of seventh-called debentures. D.W.BELL, Acting Secretary of the Treasury. MONETARY .DEVELOPMENTS Exhibit 40 J o i n t statement by ihe Secretary of the Treasury of the United States a h d the Secretary of . t h e Treasury.of Mexico, November 19,1941, announcing the signing of a stabilization agreement and a silver purchase agreement between the United States and Mexico T h e following joint s t a t e m e n t is made b}'' t h e Secretary of t h e Treasury of t h e United States, Mr. Henry Morgenthau, Jr., and by t h e Secretary of t h e Treasury of Mexico, Mr. E d u a r d o Suarez: . " T h e two Governments, as a p a r t of t h e over-all arrangements between Mexico a n d t h e United States, have today entered into a stabilization agreement a n d a silver purchase agreement. These arrangements are practicalevidence of the goodneighbor policy. These agreements are iDased upon the principle t h a t t h e welfare of the two countries is m u t u a l and t h a t common monetary and economic problems can be settled in a spirit of friendly cooperation. T h e two Treasuries are h a p p y t o affirm by these agreements their belief in neighborly cooperatiqn, a t a t i m e when fbrce,rules so large a p a r t of the world's,economy. .1 ' " T h e stabilization agreement, signed t o d a y by t h e Secretary of t h e Treasury of t h e United States, t h e Secretary of t h e Treasury of Mexico, and Mr. Antonio Espinosa de los Monteros, t h e representative of t h e Bank of Mexico, proposes to stabilize t h e United States dollar-Mexican peso rate of exchange. T h e agreement provides t h a t up to $40 millions of t h e United Staties stabilization fund will be used for this purpose. T h e agreement also pl-ovides for-periodic conferences among representatives of t h e two Treasuries and the Bank of Mexico t o discuss monetary, "financial, and economic problems of m u t u a l interest. • . . " T h e silver purchase agreement is a m o n t h to m o n t h arrangement between t h e United States and Mexico, whereby the United States Treasury undertakes to purchase monthly up to six million ounces of newly mined Mexican silver. T h e silver will be purchased directly from the Bank of Mexico on a basis similar to t h e a r r a n g e m e n t s which were in effect prior to 1938. T h e silver purchases are m a d e p u r s u a n t to t h e provisions of t h e Silver Purchase Act of 1934." Exhibit 41 Announcement, February 27, 1942,' of the signing of a stabilization agreement . . between the United States and Ecuador .• Another step was taken t o d a y in'promoting closer relations between t h e United States and, the sister Republics of t h e Hemisphere when Secretary of t h e Treasury H e n r y Morgenthau, Jr., Ecuadoran Ambassador Colon Eloy Alfaro, and Ecuadoran Minister-Counselor E d u a r d o S.alazar signed an exchange. stabilization agreement. 292 REPORT OF TFIE SECRETARY OF T H E TREASURY This agreement between t h e two Governments provides t h a t up to $5 millions of t h e United States stabilization fund will be used for the purpose of stabilizing the United States dollar-Ecuadoran sucre l a t e of exchange. T h e agreement also provides for periodic conferences among representatives of the Secretary of t h e Treasury and of t h e Government of Ecuador to discuss m o n etary, financial, and economic problems of m u t u a l interest. - Exhibit 42 Announcement, M a y 5, 19'42, of the signing of a stabilization agreement between ^ , the United States and Iceland As a further link in t h e closer relations-which have developed between t h e Governments of the United States and of Iceland during the last year. Secretary of t h e Treasury H e n r y Morgenthau; Jr., and Icelandic Minister T h o r T h o r s signed an exchange stabilization agreement today. This agreement between the Government of t h e United States, the Government of Iceland, and t h e National Bank of Iceland, provides t h a t up to $2,000,000 of the United States stabilization fund will be used for t h e purpose of stabilizing t h e United States dollar-Icelandic krona r a t e of exchange. The agreement also provides for periodic conferences among representatives of the parties to t h e agreement to discuss monetary, financial, and economic p r o b . lems of m u t u a l interest. Exhibit 43 Joint statement by the Secretary of the Treasury of the United States and the Minister of Foreign Affairs of the Republic of China, March 21, 1942, announcing the signing of an agreement for financial aid to China The following is a joint s t a t e m e n t m a d e by t h e Secretary of t h e Treasury, Mr. H e n r y Morgenthau, Jr., and His Excellency T. V. Soong, Minister for Foreign Affairs of t h e Republic of China: / " T h e United States and China have today entered into an agreement giving effect to t h e act of Congress unanimously passed by t h e Senate and House of Representatives authorizing.$500,000,000 of financial aid to China. The agreement, approved by t h e President and by Generalissimo Chiang Kai-shek, was signed by Secretary Morgenthau on behalf of t h e United S t a t e s a n d by Dr. Soong ^ on behalf of China. "This financial aid will contribute substantially towards facilitating t h e great efforts of t h e Chinese people and t h e i r g o v e r n m e n t to meet t h e financial a n d economic burdens which have been imposed upon t h e m by almost five years of continuous a t t a c k by J a p a n . "This agreement is a concrete manifestation of t h e desire and determination of t h e United States, without stint, to aid China in our common b a t t l e for freedom. " T h e final determination of t h e terms upon which this $500,000,000 financial aid is given to China, including, t h e benefits t o be rendered t h e United States in return, is deferred until the progress of events after t h e war makes clearer t h e finahterms and benefits which will be in t h e m u t u a l interest of t h e United States a n d China a n d will promote t h e establishment of lasting world peace and s e c u r i t y . " Exhibit 44 Announcement by the Secretary of the Treasury, April 8, 1942, regarding the l e n d leasing of the Treasury's free silver stocks to be used as bus bars in aluminum and magnesium plants The Secretary of t h e Treasury, H e n r y Morgenthau, Jr., announced t o d a y t h a t t h e Treasury D e p a r t m e n t had been asked to work out some means for making t h e -free ^silver^sfocks^ of^.the Treasurp^a^vailabie -for • lilse in connection i#ith^:.W;ar prb'duction and thereby release substantial a m o u n t s of vitally needed' copper. - T h e General Counsel of t h e Treasury^ after study of t h e problem, has concluded t h a t there is legal authority t o lend-lease the free silver stocks of t h e Treasury for this purpose.; T h e Attorney General concurs in this view. REPORT OF THE' SECRETARY OF THE TREASURY 293 Under t h e plan which has been approved by t h e President, t h e silver would be ' m a d e available to Government-owned a n d privately owned plants, engaged in war production, particularly aluminum a n d magnesium plants. Title to the silver would remain in the Treasury. T h e silver would n o t become a p a r t of the products, of the'-war production plants, nor would t h e silver be used up.- T h e silver wouldbe used in the plants (where such articles as bus bars are now m a d e of copper) so as to permit substantially all of t h e silver to be returned to t h e Treasury after t h e terinination of t h e war. - There are a t present over 1,360,000,000 ounces of free silver in t h e Treasury which can be used for this purpose. I t s use will release more t h a n 40,000 tons of .copper for other war production requirements. Exhibit 45 ^Title X I I of the Second War Powers Act, 1942 (Public Law 507, March 27, 1942), relating to the coinage of 5-cent pieces T I T L E X I I — C O I N A G E OF 5 - C E N T PIECES SEC. 1201. Notwithstanding any other provision of law, t h e Director of t h e M i n t shall cause the metallic content of all 5-cent pieces coined after the effective date of this title and prior to December 31, 1946, to be one-half silver and one-half copper: Provided, T h a t t h e .Director of t h e Mint, with t h e approval of the Secret a r y of t h e Treasury and the Chairman of t h e War Production Board, is authorized to vary t h e proportions of silver and copper and to a d d other metals if such action would be in the public interest. Such 5-cent pieces shall be deemed to be minor coins or coinage and not silver coins, subsidiary silver coins, silver coinage, or subsidiary silver coinage within t h e meaning of t h e monetary laws of the United States. , ^SEC. 1202. For t h e coinage of-such 5-cent pieces t h e Secretary of t h e Treasury is hereby authorized to allocate to t h e .Director of t h e Mint, a t such times a n d in such a m o u n t s as t h e Secretary deems necessary, any silver bullion in t h e m o n e t a r y stocks of the United States not then held for redemption of ariy outstanding silver certificates. Silver so allocated shall be accounted for by entries in the fund established for the purchase of metal for minor coinage: Provided, T h a t t h e value of any silver bullion accounted for in said fund shall not be considered for t h e purpose of determining t h e s t a t u t o r y limit of said fund: Provided further, T h a t t h e gain from t h e minor coinage provided for by this title shall be accounted for by entries in t h e minor coinage profit fund. SEC. 1203. No silver-copper ingots shall be used for t h e minor coinage provided for by this title which differ from t h e legal standard by more t h a n ten-thousandths. I n adjusting t h e weight of such minor coins there shall be no greater deviation allowed t h a n four grains for each piece. SEC. 1204. For the purpose of section 3529 of t h e Revised, Statutes,.(U. S . . C , title 31, sec. 341), t h e 5-cent pieces provided for by this title shall be deemed to be copper. •SEC. 1205. Upon redemption any 5-cent pieces coined in accordance with t h e provisions of this title shall after December 31, 1946, be allocated to t h e Director of t h e M i n t for melting arid for subsidiary silver coinage. Any 5-cent pieces coined in accordance with t h e provisions of this title b u t not issued by t h e Mint m a y after December 31, 1946, be allocated, in such a m o u n t s and a t such times as t h e Secret a r y of t h e Treasury in his discretion m a y determine, to t h e Director of t h e M i n t for melting and for subsidiary silver coinage. All 5-cent pieces allocated to t h e Director of t h e Mint in accordance with this section shall be accounted for by entries in t h e fund established for t h e purchase of silver bullion for subsidiary silver coinage. Upon coinage irito subsidiary silver coins of t h e metal contained in t h e 5-cent pieces so allocated, t h e gain shall be accounted for by entries in t h e silver-profit fund. S E C . T206. This title shall become effective sixty days after approval. 294 REPO!RT OF THE SEICRETARY OF: THE .TREASURf ^ -FOREIGN FUNDS CONTROL, E T C i' " Exhibit 46 Executive orders relating to the control of foreign funds ^and foreign-owned property EXECUTIVJJ ORDER N O . 8832, JULY 26, 1941 ^ A M E N D M E N T O F E X E C U T I V E O R D E R N O . 8389 OF APRIL 10, 1940, AS AMENDED By virtue of the authority vested in me by section 5 (b) of the act of October 6, 1917 (40 Stat. 415), as amended, and by virtue of all other authority vestedan me, I, Franklin D. Roosevelt, President of the United States of America, do hereby amend Executive Order No. 8389"of April'10, 1940, as amended, by changing the period at the end of subdivision (j) of section 3 of such order to a semi-colon and adding the following new subdivision thereafter: (k) June 14, 1.941— China,' and , Japan. FRANKLIN D . ROOSEVELT. T H E WHITE HOUSE, JwZ?/^<?,'^^4^EXECUTIVE ORDER No. 8963, DECEMBER 9, 1941 AMENDMENT OF EXECUTIVE ORDER NO. 8389 OF APiRIL 10, i940, AS AMENDED By virtue of the authority vested in me by section 5 (b) of the act of October 6, 1917 (40 Stat. 415), as amended, g,nd by virtue of all other authority vested in me, I, Franklin D. Roosevelt, President of the United States of Arrierica, do hereby amend Executive Order No. 8389 of April 10, 1940, as amended, by changing the period at the end of subdivision (k) of. section 3 of such order to a semi-colon and adding the following new subdivision thereafter: (1) June 14, 1941— , ' ' Thailand. FRANKLIN D . ROOSEVELT. T H E WHITE HOUSE, Deceniber 9, 1941. '. EXECUTIVE ORDER N O . 8998, DECEMBER 26, 1941 , . . A M E N D M E N T O F E X E C U T I V E O R D E R N O * 8389 O F A P R I L 10, 1940, A S A M E N D E D . Bv virtue of the authority vested in me by sections 3 (a) and 5 (b) of the Tradng With the Enemy Act of October 6, 1917 (40 Stat. 415), as amended by Title I I I ofthe First War Powers Act, 1941,(Public No. 354, 77th Congress), and by virtue of all other authority vested in me, I, Franklin D. Roosevelt, President of the United States of America, do hereby amend Executive Order No. 8389 of April 10, 1940, as amended, in the following respects: ' o ; (1) By changing the period at the end of subdivision (1) of section 3 of such order to a semi-colon and adding the following new subdivision thereafter: (m) June 14, 1941—. ; , . Hong Kong. (2) By amending paragraph B of section 5 of such order to read as follows: "B. The term 'United States' means the United States and any, place subject to the jurisdiction thereof, and the term 'continental United [States' means the States of the^ United States, the District of Columbia, and the Territory of Alaska; provided, however, that, for the purposes of this order the term 'United States' shall not be deemed to include any territory included within the term Toreign country' as defined in paragraph D of this section." (3) By substituting the following in lieu of subdivision (iii) of paragraph D of section 5t "(iii) Any territory which on or since the effective date of this order is controlled or occupied by the military, naval or police forces or other authority of such foreign country; , ' "(iv). Any person to the extent that such person is, or has been, or to the extent that there is reasonable cause to believe that such person is, or has REPORT OF THE' SECRETARY OF i?HE TREASURY 295 • been, since such effective date, acting or purporting t o act directly or indirectly for t h e benefit or on behalf of any of the foregoing." H o n g Kong shall be deemed to be a foreign country within t h e meaning of this subdivision. . ' FRANKLIN D . ROOSEVELT. T H ^ WHITIS B.OVSB, December 26, 1941. Exhibit 47 Amendment, J u l y 26, I 9 4 I , to regulations of the Secretary of the Treasury relative to the cohtrol of foreign funds and foreign-owned property TREASURY DEPARTMENT, . . ^ Washington, J u l y 26, 1941. T h e Regulations of April 10, 1940, as amended (sections 130.1 to 130.7), are hereby amended so t h a t reports on Form T F R - 3 0 0 shall be filed with respect t o all property subject to the jurisdiction of the United States on the opening of business on July 26, 1941, as well as with respect to all property subject to t h e jurisdiction of the United States on the opening of business on J u n e 1, 1940, a n d with respect to all property subject to the jurisdiction of the United States on t h e opening of business on J u n e 14, 1941, in which on the respective dates China or J a p a n or any national thereof had any interest of any n a t u r e whatsoever, direct or indirect. Such reports shall be filed by the persons specified in section 130.4 of t h e regulations and in t h e mianner prescribed in the regulations. E. H. FOLEY, Jr., Acting Secretary of the Treasury. Approved: J u l y 26, 1941. FRANKLIN D . ROOSEVELT * 1 Exhibit 48 Proclamation, J u l y 17, 1941, authorizing a proclaimed lisf of certain blocked nationals and controlling certain exports I, Franklin D . Roosevelt, President of the United States of America, acting under and by virtue of the authority vested in me by section 5 (b) of the act of October 6, 1917 (40 Stat. 415) as amended and section 6 of t h e act of July 2, 1940 (54 Stat. 714) as amended and by virtue of all other authority vested in me, a n d by virtue of the existence of a period of unlimited national emergency and finding t h a t this proclamation is necessary in t h e interest of national defense, do hereby order and proclaim t h e following: ^ SECTION 1. T h e Secretary of State, acting in conjunction with t h e Secretary of t h e Treasury, t h e Attorney General, t h e Secretary of Commerce, the Administ r a t o r of Export Control, and the.Coordinator of Commercial and Cultural Relat i o n s between t h e American Republics, shall from time t o time cause to be prepared an appropriate list of • . ' (a) certain persons deenaed to be, or to have been acting or purporting t o act, directly or indirectly, for t h e benefit of, or under t h e direction of, or under t h e jurisdiction of, or on behalf of, or in collaboration with Germany or I t a l y ^ or a national thereof; and ' , ' ,(b) certain persons to whom, or on whose behalf, or for whose account, t h e exportatiori directly or indirectly of any article or material exported from t h e United States, is deemed to be detrimental t o t h e interest of national defense. I n similar m a n n e r and in t h e interest of national defense, additions to a n d deletions from such list shall be made from time to time. Such l i s t a n d any additions thereto or deletions therefrom shall be filed p u r s u a n t to t h e provisions of t h e •Federal Register Act and such list shall be known as " T h e Proclaimed List of Certain Blocked Nationals." SECTION 2. Any person, as long as his name appears in such list, shall, for t h e purpose of section 5 (b) of the act of October 6, 1917, as amended, arid for t h e purpose of this proclamation, be deemed to be a national of a foreign country, a n d shall be treated for all purposes under Executive Order No., 8389, as ametfded, as though he were a national of Germany or Italy. All t h e terms and provisions of Executive Order No. 8389, as amended, shall be applicable to any such person s a 296 REPORT OF THE SECRETARY OF THE TREASURY long as his name appears in such list, and to any property in which any such person has or has had an interest, to t h e same extent t h a t such terms and provisions are applicable to nationals of Germany or Italy, and to property in which nationals of Germany or Italy have or have had an interest. SECTION 3. The exportation from t h e United States directly or indirectly to, or on behalf of