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Annual Report
of the
Secretary of the Treasury
on the
State of the Finances
For the Fiscal Year Ended June 30, 1953
TREASURY DEPARTMEN f
DOCUMENT NO. 3187
Secretary
U N I T E D STATES G O V E R N M E N T P R I N T I N G O F F I C E , W A S H I N G T O N
:
1954
For sale by Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C.
Price $2.00 (Paper)
CONTENTS
Page
Transmittal- and statement by the Secretary of the Treasury
REPORT ON FISCAL OPERATIONS
• 1
Summary of fiscal operations
,9
Budget receipts and expenditures
.
._
.
11
Budget receipts in 1953...
.
11
Estimates of receipts in 1954 and 1955
15'
Budget expenditures in 1953.
o 21
Estimates of expenditures in 1954 and 1955__
23^
Trust account and other transactions
...
24;
General fund
:
25
Verification of gold and silver bullion and other Treasury assets..
27
Public debt operations and ownership of Federal securities
^._
29
Public debt operations
.
30
Ownership of Federal securities
41
Corporations and certain other business-type activities of the Governmenti ._
.
47
Se(jurities owned by the United States-Go ver nment
:
51
Taxatiori developmerits
.._!
...
.
'
51
International financial and monetary developments
55
ADMINISTRATIVE REPORTS
Summary of progress in management improvement
Comptroller of the Currency, Bureau of the
Customs, Bureau of__i
Engraving and Printing, Bureau of
Fiscal Service^_
Internal Reyenue Service
...
.
Internatioriai Finance, Office of
Legal Diyision..
^
.
Mirit,' Bureau'of t h e .
1
Narcotics, Bureau of_.
.
United States Coast Guard...
-^-^United.States Savings Bonds Division
^
United States Secret Service
.
.
._.._
.
'.
_.
^..
;__.
..
...
...
73
.77
80
95
105
130
138
140
141
145
148
162
164
EXHIBITS
PUBLIC DEBT OPERATIONS
Treasury certificates of indebtedness, Treasury notes, and
Treasury bonds
I-..
-
.
"
-
.
'
.
.
'
.
'
,
•
-•
,
••
.
•
•
.
«
[1. .-Offering pf 2.percent certificates qf Series C-1953
171
2. De tails of ce rtifi eate, iss ue s a n d allotme nts
. . . . . . . . . . . . ^ . 172
3. Offering bf 2J^ percent Treasury riotes of Series A-1953 and allotments.
174
4v ''Allotments of 2% percent Treasury bonds of 1958 due June 15, ,1958
(dated July 1, 19.52)
:..
.___._..
L....
.' 175
,5: '.Offering of 2H percent ..Treasury bonds of 195.8 and allotments
....
175
6. Call, February 13, 1953, for redemption on June 15, 1953, of 2 percent
Treasury bonds Of 1953-55, dated October 7, 1 9 4 0 _ : L J : . . . ' _ _ _ _ . . _
177
7. Offering of 3% percent Treasury bonds of 1978-83 and allotments.,
• 178..
..•-.Ill,'
IV
CONTENTS
Treasury bills
Page
8. Inviting tenders for Treasury bills dated July 3, 1952...
9. Acceptance of tenders for Treasury bills dated July 3, 1952
10. Inviting tenders for the Tax Anticipation Series of Treasury bills dated
June 3, 1953
.
...
11. Acceptance of tenders for the Tax Anticipation Series of Treasury bills
dated June 3, 1953
......^.
12.. Summary of Treasury bill informatiori contained in press releases
13. Seventh amendment, January 12, 1953, to Department Circular No.
418, relating to Treasury bills
183
184
185
187
187
190
United States savings bonds and savings notes
14. Second amendment, July 7, 1952, to Department Circular No. 750,
Revised, regulations governing payments by banks and other financial institutions in connection with the redemption of United States
^savings bonds
15. First amendment, April 6, 1953, to Department Circular No. 530,
Seventh revision, regulations governing United States savings bonds.
16. Revision, April 8, 1953, of Department Circular No. 888, regulations
governing the special endorsement of United States savings bonds
of any series and the payment of matured Series F and G bonds by
eligible paying agents
•
17. Offering of Treasury savings notes of Series B
^_..
190
191
192
195
OBLIGATIONS GUARANTEED BY THE UNITED STATES
18. Partial redeniption, before maturity, of 2% percent mutual mortgage
insurance fund debentures. Series E (tenth call).
...
19. Summary of information contained in circulars pertaining to calls for
partial redemption, before maturity, of insurance fund debentures
201
203
TAXATION DEVELOPMENTS
20. Message from the President, May 20, 1953, transmitting recommendations for tax legislation
.
.
21. Statement of Under Secretary of the Treasury Folsom before Subcommittee No. 2 of the Select Committee on Small Business, House
of Representatives, May 21, 1 9 5 3 . . .
.
...
...
22. List of topics considered by the House Ways and Means Committee in
hearings on general revenue revision
23. Statement of Secretary of the Treasury Humphrey before the House
Wavs and Means Committee, June 1, 1953, on extension of the excess
profits tax
.
24. Letter of Under Secretary of the Treasury Folsom, June 12, 1953, to
Representative Thomas B. Curtis,.member of the House Ways and
Means Comniittee on extension of the excess profits tax
25. Letter of Secretary of the Treasury Humphrey, April 13, 1953, to the
Chairman of the House Ways and Means Committee urging corrective legislation for abuses of the exemption for iricome earned abroad
by United States citizens..
•.^......
..
•.
26. Memorandum of disapproval by the President, August 6, 1953, with
respect to H. R. 157, to exempt moving pictures from the admissions
tax
27. Letter of Under Secretary of the Treasury Folsom March 31, 1953, to
the Chairman of the House Ways and Means Committee on H. R.
1215, extending the bonding period for distilled spirits
28. Miscellaneous revenue legislation enacted during the fiscal year 1953,
Eighty-third Congress, First Session
204
208
213
214
219
220
220
221
223
INTERNATIONAL FINANCIAL AND MONETARY DEVELOPMENTS
29. Communique, March 7, 1953, on economic and financial discussions
between representatives of the United States and the United Kingdom
^
224
CONTENTS
30. Statement by Secretary of the Treasury Humphrey before the Joint
. . Session of the Senate Foreign Relations Committee and the House
Foreigri Affairs Committee, May 5, 1953, on extension of the Mutual
Security Program__.,
31. Press release, June 9, 1953, on the signing of a Stabilization Agreernent
between the United States and Mexico
32. Press release and notice, May 6, 1953, on countervaihng duties on
imports of wool tops from Uruguay
^—.-.33.: Agreement, February 27, 1953, relating to the indebtedness of Germariy
' for awards made by the Mixed Claims Commission, United States
and Germany, and a discussion of the agreement
34. Letter of Secretary of the Treasury Humphrey, May 26, 1953, to the
Chairman, Foreign Relations Committee on the agreements relating
to arrangements for the German external debt settlement
35. Statement, September 10, 1953, by W. Randolph Burgess, Temporary
Alternate Governor for the United States, at the discussion of tbe
Annual Repprt ofthe International Monetary Fund
.
V
225
226
227
228
234
234
ADDRESSES AND S T A T E I ^ E N T S BY THE SECRETARYi'OF THE TREASURY
' AND OTHER TREASURY OFFICIALS
36. General statement by Secretary of the Treasury Humphrey, March 10,
1953, before the Subcommittee of the House Committee on Appropriations
.
37. Address by Secretary of the Treasury Humphrey before members of
the Associated Press, New York City, April 20, 1953
.
38. Address by Secretary of the Treasury Humphrey at the Governors'
Conference, Seattle, Wash., August 3, 1953
39. Address by Secretary of the Treasury Humphrey before the^ American
Bankers Association, Washington, D. C , September 22, 1953
40. Address by Secretary of the Treasury Hurnphrey before the Investment
Bankers Association of America, Hollywood, Fla., December 1, 1953.
41. Statement by Secretary of the Treasury Humphrey, April 13, 1953, on
the 30-year 3K percent Treasury bonds
42. Statement by Secretary of the Treasury Humphrey, June 24, 1953, on
the Federal Reserve reduction of reserve requirements
43. Statement by Secretary of the Treasury Humphrey, August 3, 1953, on
the postponement of action on increasing the debt limit
44. Address by Under Secretary of the Treasury Folsom before the Special
Tax Conference of the National Industrial Conference Board, New
. York City, Aprh 16, 1953
45. Address by Deputy to the Secretary Burgess before the National
Association of Mutual Savings Banks, Washington, D. C , May 12,
1953.."
.
.
46. Address by Deputy to the Secretary Burgess before the American
Bankers Association, Washington, D. C , September 23, 1953
47. Address by Deputy to the Secretary Burgess before the National
Foreign Trade Convention, New York City, November 10, 1 9 5 3 . . .
48. Statement by Deputy to the Secretary Burgess before the Senate
Banking Committee, May 20, 1953, on loans to small business
237
239
242
246
250
255
255
255
256
260
262
266
270
ORGANIZATION AND PROCEDURE
49. Treasury Department orders relating to organization and procedure..
270
MISCELLANEOUS
50. Treasury Department and General Accounting Office Joint Regulation
No. 4 issued June 30, 1953, under the Budget and Accounting
Procedures Act of 1950
51. Regulation, approved June 30, 1953, governing the establishment and
maintenance of disbursing officers'checking accounts
52.. Regulation, approved June 24, 1953, with respect to fiscal internal
audit in the Treasury Department
53. Regulations, approved November 21, 1952, governing the withholding
of State and Territorial income taxes from the compensation of
Federal e m p l o y e e s . . . . .
306
307
308
310
yi
CONTENTS
•,:V.*!.C5'':'
Page-
54. Letter of the .Postmaster .General, to. .the Secre tar^^^^^
Treasury .
certify ihg eitraordiriar y e Xpenditures. coritributing to tlie, deficiencies,'' ' '
of postal revenue for the fiscal year' 19,53—..-^;--.- ;,- _-_ . ^:.i 1.,-^,.'^1 i,- 313
55./. Secretiaries, Under Secretaries, and Assistant Secretaries pf the Treasury;
' "'^ Departnient from September U,;1789, to January 20, ,1^53,; aind'the > t Presiderits urider whorii they sfeved.l*-^^^
' 314
•r^>,
''
' '••''''"-' • •' ' '••^'TABLES..;^ . . , ' / - • • . ; . ; ;":.V'.:"''' .Z.:-].^{ ' •^'",
Bases o|;.tables-..-...._:_-_--.:.._----_iV-^.---^-^----.-'-^
x 321
Treasury fund.structure..^.-..•..-..V-^
32-4
i..;:
. .^ ^ _.. .._. ^.^
... : . -FiscAX'o^PERATioNs' •' = '•"-['[ ''••' ;•''' '...','"''. .
1. Sumniary of fiscal operations, 1932-53 arid monthly 1953-U..-£i:i:.l.
V:.' •.'. ••••.•
••• :.' • RECEIPTS . ' A N D / E X P E N D I T U R E S . •• '..-.•
326
• -.:•:
j2., Re6eipt^ and expenditures, 1789^1953-,:-l-i-_-':.,..--^l.-_----^;,_^-/ 328
3. Budget receipts 'an(S experiditures, iri detail, nionthly for 195^ arid'
totals for 1952 and-1953.^.-—:-—.^,..-:,^-.-^-^^.^._..,,—^-_t_^->.^,
334
4. Trust account arid other transactions) in detail, rrionthly for li953 and
totals for 1952 and 1953- — — - - - - - - - T - - . . . . . . 356
5. Budget receipts and expenditures by rriajor. classifications, 1945^53:.: -366
6. Trust account and other transactions by major classifications, 1945-53 ^- 369
7.:Internal revenue collections, by tax sources,. 1929-53
L.-^Ui^'^i 371
8. Customs collections and refunds, 1952-and 1 9 5 3 - - - - ^ : - . . J - J J - : . _ ' . . _ . '-i^: 376'
-.9;•'Postal receipts and expenditures,. 1911-53.:__».! . . . . - . : . . . _ . :
:
377
10. Treasury cash income and outgo, 1944-531---• .-•^' -.^_.— - - - - - ' 378
PUBLIC DEBT, GUARANTEED OBLIGATIONS, E T C .
'
Outstanding public debt, guaranteed obligations, etc,
11. Statutory limitation on the public debt and guaranteed obligations,^
JuneSO, 1 9 5 3 . . . . - ^ . .
..___.:......L_-.-.__:_-.r.::_...
382
12. Debt outstanding subject to statutory debt lirnitation as of selected
. , dates...-..•..__
—-----—-^
-.-_-_l_J —..--^-___ — . .
383
13. "Pubhc debt and guaranteed obligations, June 30, 1934-53...
"383
14. Principal of the public debt, 1 7 9 0 ^ 1 9 5 3 . . . . . . . . . . ; . — _ _ . _ - : . . . . . —384
15. Public debt by security classes, June 30, 1 9 4 3 - 5 3 . - . . . . . : . - - — ' - - ,. 386
16. Guaranteed obligations held outside the Treasury, classified by
issuing Government corporations and other business-type activities,
June 30, 1943-53
-..
..-__-•
i . . . . . . . . . . 388
17. Contingent liabilities, June.30, 1 9 4 3 - 5 3 . . . : - . . . . _ . . . . : . . . . . . . . . : _ . . '389
18. Maturity distribution of marketable, interest-bearing public^ debt
and guaranteed obligations, June 30, 1943^53
--.--^^..-_:—
389
19. Summary of public debt and guarariteed obligations by security
classes, June 30, 1953.
...L....J.S.'J.'1.....................
390
20. Description of public debt issues outstanding June 30,! 1 9 5 3 - . - !__
392
21. Description of guaranteed obligations held outside the Treasury,
, JuneSO, 1953-.-.
......:.._.....:.._.:....:__._.:..!:..._
406
22. Description of contingent liabilities outstanding June 30, 1 9 5 3 . . .
408
Operations in the public debt, etc.
23. Issues, maturities, and redemptions of interest-bearing public debt
securities, excluding special issues, July 1952-June 1953
24. Certificates of indebtedness, special series, issues and redemptions,
1953..
.
..
........
-.. — 25. > Public debt receipts and expenditures by security classes, monthly for
1953 and totals for 1952 and 1953
---__-_,-:._--^..
26. Changes in public debt issues, 1 9 5 3 - — - - - - ,
^....^,
..
27. Public debt increases and decreases, and balances in general fund,
1916-53
- .
.----:..
28. Statutory debt retirements, 1 9 1 8 - 5 3 - - - - - - - - . . .
..
...
29. Cumulative sinking furid, 1921-53
._...-........._
-.._..
30. Transactions on account of the cumulative sinking fund, 1953
...
409
427
428
436
453
454
455
455
CONTENTS
^Vn
i
United States savings bonds and T r e a s u r y savings notes
::-yi.
,•
,..;...:.-• ••'-r^^; ,. ^;?";-:-;: ;.„: ! v:.'::l.;„irPagtf
31. Surrirriafy bf sales arid redemptions of savings bpnds by. series,, 1935-53 -; | . n
},'• [ arid ridorithly' 1 9 5 3 _ . , - ^ , . _ : . : . . . L , — ^ ; . . ; : , J.,J.-l;;:_-.i.,-j--^.-^^^
/ r 454
32. Sales a n d redemptions of Series E t h r o ^ ^ h K savings bonds\ by^ seriesj / , 1.:;^
1941-53= and: nionthly 1953:jj.-i:^....:^::^-.L^-.:.-.J.>-,.^-:;..-^^^^
33. Sales 4f Series E t h r o u g h K.^savinga bonds ,by denominations, .i.941-53.
.r>
ajid'rii6nthly.;1953^,^._^-_,_..;-^:_V.li--^-f^----4-—
461
34. Redeniptions of Series E througH K savings bonds by denominations,
1 9 4 1 T ^ 3 a n d m o n t h l y 1953^^2-1 - : : :;i---- ; - LL _- . . .;.- s i r — . ^ i ^ . i o > 463
35. Sales of Series E t h r o u g h K, sayings :bonds by States, 1953 a n d cumulative
.
^_.
,
;-r-^-.
^
• .-^ 46,5
36. Percent of • Savings •borijds' sold in -'eaeh - year' ^redeeiried Wrorigh' "ealeH ' ' ^ '-'
yearly period thereafter, by denbniinatibnsi _ _ : _ - _ - - - J- JV-1 - - - - - 466
37. Sales'land redemptioris of Treasury savings notes, August i941-Jurie
y-.''
1953..-.-.-^.-.-_--.-__---^-.---.-.,--;-..__^Y----"-----r-^--^
" '
Iiiterest on public debt and g u a r a n t e e d obligations
38. Am.ount-of interest-bearing public d e b t outstanding,, t h e computed;.. I annual.interest, charge, a n d t h e computed r a t e of interest, J u n e ' 3 0 , .
191.6T53„ a n d . a t end of,each m o n t h during 1 9 5 3 - - _ _ . : : ' _ J : _ - - . i : i : _ - .1 4.71'
39. Cornp^uted a n n u a l : interest charge-arid : computed a n n u a l .'interest r a t e ;
' ..- on tlie public d e b t by security classes, J u n e 30, 1939^53--_i.:-•.;_'2' 472
40. I n t e r e s t on tthe public, d e b t becoming ..due. and. payable by security- '.) J'%
classes,; 1 9 5 0 T - 5 3 : ^ - ^ - ^ . - _ _ . - ; _ _ - ^ ; . . i - . r - . . r i . . . : . - _ . _ . . - : - _ - - - ^ _ . :
474
41.;Tnterest paid on t h e public ..debt, a n d guaranteed obligations by 'tax'
status; 1 9 4 0 - 5 3 : . - - - — L : : i i - - - : : , : , - : : . : - - u i - - - - - . - . - - - - . - - J - - . „L^_i-.--i.: ..475;
!.'•••:•
: • Prices and yields of securities
r ••>
''•
, '
42. Average yields of lorigrterrri. T r e a s u r y borids by months, J a n u a r y ..:-\
. :;: l S 3 0 - J u n e 1 9 5 3 . . _ - ' . . . . _ _ . - > . _ . . J . . , j _ . . : . . _ . . : . — J . . . - . . ; - . . . - _
476
43r"Prices"arid yields of m a r k e t a b l e public debt issues,.June 30, 1952 and • ;
;
1953, and price ranges since first t r a d e d . - . . - — ^ - _ .__^_._v_
477
GiOLD, SILVER, AND GENERAL FUND ASSETS AND LIABILITIES
44. Assets arid liabilities of t h e Treasury, J u n e 30, 1952 a n d 1 9 5 3 . . - . . .
TRUST FUNDS AND CERTAIN OTHER ACCOUNTS OF THE
..,./'....,...
-FEDERAL GOVERNMENT ,
•
. '
479
V.' ;.-.
45. Holdings of Federal securities b y Government agencies a n d accounts,
June-SO, 1943-53
....
...
-.----..
480
46. Adjusted service certificate fund
.---.
.
'.
482
47. Ainsworth Library fund, Walter Reed Gerieral H o s p i t a l - — - - - - - 482
48.: Alien p r o p e r t y .trust fund
-._.
'..: : . . . . .
^ . _ _ . - J . . . ^ ^ 483
49. Ciyil service, retirement a n d disability fund. . _ ^ . _ .
. . _ . . . 483'^
50. District of Columbia teachers' retirement a n d annuity, f u n d ^ A s s e t s
• \ held b y t h e T r e a s u r y D e p a r t m e n t . . . - _ : - :----.....^
'485
51.; D i s t r i c t o f Columbia water furid—Investments held by t h e Treasury
D e p a r t m e n t - --:
- — - —'- .....-'
'_.-:-'- - - .
. . . __
485:
52.. Assets held by t h e T r e a s u r y D e p a r t m e n t under relief and rehabilitation, AVorkmen's Compensation Act within t h e District of C o l u m b i a .
486
53. Federal old-age a n d survivors insuran ce t r u s t fund
486
5.4. Foreign service retirement a n d disability fund^
.
.
^
488.
55. Library of Congress t r u s t f u n d . .
:
....
,..
.._...._._489.
56. Relief and rehabilitation, Lorigshoremen's a n d .Harbor Workers!.
Compferisation Act, as amended-^Assets held by t h e Treasury
Department.
...
.
...._-^^__--...
491
57. - National Archives gift f u n d . .
.
.
.-.
_.._.
491'
58. Natipnal p a r k t r u s t fund
_.
.^.
^._
..
492
59. Natiorial service life insurance fund
__.._..__
493
60. Pershing H a h Memorial fund
...__.
,..__....__...
494
61. Public H e a l t h Service gift f u n d s - ^ I n v e s t m e n t s held by t h e Treasury
Departrnent...',
._ . .
...^
........
- - _—: — . . . .
494
VIII
CONTENTS
. . .
62.
63.
64.
65.
66.
:;^;:;-^Eage
Railroad retirement account
.
. 495
Unemployment trust fund
.
^ :
'496
U. S. Government life insurance fund—Investments
.
500
U. S. Naval Academy general gift fund. ._
.__-500
Special trust account 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, status June 30, 1953
-- , 501
CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES OF
THE GOVERNMENT
67. Borrowing power and outstanding issues of Government corporations
and certain other business-type activities whose obligations are
guaranteed by the United States or issued to the Secretary of the
Treasury, June SO, 1953
501
68. Treasury holdings of bonds and notes issued by Government corporations and other business-type activities, June SO, 1943-53
503
69. Description of Treasury holdings of bonds and notes issued by Government corporations and other business-type activities, June 30,
1953
^•:^r^^...-1:^^-504:
70. Treasury holdings of bonds and notes issued to Government corporations and other business-type activities, and related current year
transactions, 1953^ - -.
-^
506
71. Comparative statement of the assets, liabilities, and capital of Government corporations and certain business-type activities, June 30,
1944-53
508
72. Balance sheets of Government corporations and certain other businesstype activities, June 30, 1953
510
73. Income and expense of Government corporations and certain other
business-type activities, 1953
^
522
74. Source and application of funds of Government corpprations and
certain other business-type activities, 1953--_..
532
75. Restoration of capital impairment of the Commodity Credit Corporation, June 30, 1953
----......
543
76. Reconstruction Finance Corporation notes canceled and recovered
through June SO, 1953
.
.
.....
543
77. Securities owned by the United States Government (other than World
War I and World War II foreign government obligations), June SO,
1953, and changes during 1953
544
78. Dividends, interest, etc., received by the Treasury from Government
corporations and other enterprises, 1953
..
548
STOCK AND CIRCULATION OF MONEY IN THE UNITED STATES
79. Stock of money, money \n the Treasury, in the Federal Reserve Banks,
and in circulation, by kinds, June SO, 1953
.
80. Stock of money, money in the Treasury, in the Federal Reserve Banks,
and in circulation, June SO, 1913-53
81. Stock of money, by kinds, June SO, 1913-53
82. Money in circulation, by kinds, June SO, 1913^53
83. Paper currency issued and redeemed during 1953, and outstanding
June SO, 1953, by classes and denominations.
549
551
552
553
554
CUSTOMS STATISTICS
84. Summary of customs collections and expenditures, 1953
85. Customs collections and payments, by districts, 1953
86. Values of dutiable and taxable imports for consumption and estimated
duties and taxes cohected by tariff schedules, 1952 and 1953..
87. Value of dutiable imports and amounts of duties collected at specific,
ad valorem, and compound rates, 1938-1953
.
88. Estimated customs duties, value of imports entered for consumption
and ratio of duties to value of imports, calendar years 1942-52 and
monthly January 1952-June 1953
89. Estimated customs duties, value of dutiable imports, and ratio of
duties to value of imports, by tariff schedules, calendar years
1942-52 and monthly January 1952-June 1953
555
556
558
559
560
561
CONTENTS
IX
Page
90. Value of dutiable imports and estimated duties collected, by countries,
1952 and 1953.1
-91. Entries of merchandise, 1952 and 195S-—
_-.
92. Vehicles and persons entering the United States, 1952 and 1953 . .
93. Airplanes and airplane passengers entering the United States, 1952
and::195S--...-- — - - . - - - ---_-.--..
94. Drawbaick transactions, 1952 and 1953.--.
95. Principal commodities on which drawback was paid, 1952 and 1953.96. Seizures for violations of customs laws, 1952 and 1953
97. Seizures for violations of customs laws, by agencies participating,
1953
---98. Investigative and patrol activities, 1952 and 1953
--
565
,566
566
. 567
567
568
568
569
569
FEDERAL AID TO STATES
99. Expenditures for Federal aid to States, individuals, etc., 1930, 1940,
1950, and 1953
100. Expenditures made by the Government as direct payments to States
under cooperative arrangements and expenditures within States
which provided relief and other aid, 1953
570
—
576
GOVERNMENT LOSSES.IN SHIPMENT
101. Status June SO, 1953, of the revolving fund established under author^
ity of the Government Losses in Shipment Act
102. Value of shipments made under coverage of the Government Losses
in Shipment Act, as amended, 1938-53
.
103. Estimated amounts of insurance premium savings under coverage of
the Government Losses in Shipment Act, as amended, 1938-53
104. Agreements of indemnity issued by the Treasury under authority of
the Government Losses in Shipment Act, as amended, August 10,
19S9-June 30, 1953
105. Number and amount of claims made and settled under authority of
the Government Losses in Shipment Act, as amended, August 15,
19S7-June SO, 1953
591
591
592
592
592
INTERNATIONAL CLAIMS
106. Status of the Mexican claims fund, June SO, 1953
107. 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, the amount paid, and balance
due, through June SO, 1953
593
594
GOLD AND CURRENCY TRANSACTIONS AND FOREIGN GOLD AND
DOLLAR HOLDINGS
108. United States net gold transactions with foreign countries, 1951-53..
109. Estimated, gold and short-term dollar resources of foreign countries,
June SO, 1952 and 1953
...
110. Assets and liabilities of the exchange stabilization fund, June SO,
1952 and 1953
111. Foreign currency transactions during 1953 and balances June SO,
1952 and 1953
.
596
597
599
601
INDEBTEDNESS OF FOREIGN GOVERNMENTS
112. Indebtedness of foreign governments to the United States arising
from World War I, and payments thereon, July 1, 1953
113. World War I indebtedness of Germany to the United States and
amounts paid and not paid, June 30, 1953
114. Summary of amounts billed, collected, and balances due the United
States under lend-lease and surplus property repayment agreements (W^orld War II), June 30, 1953
115. Outstanding indebtedness of foreign countries on United States
Government credits, June SO, 1953, by area, country, and type
603
604
605
608
X
CONTENTS
OWNERSHIP OF GOVERNMENTAL SECURITIES
Page
116. Estiniated ownership of all interest-bearing governmental securities •
' outstanding, classified-by type of issuer, June 30, 1941-53....^
610
117. Estimated distribution of interest-bearing governirieritar securities
outstanding, June 30, 1941-53, classified by tax status arid type of •
-• issuer.i--.-.^_I._._: .....'^l.^^..sL2^.^
:......:^:i.:
:^--:._--_- • 612
•118. Summary of Treasury survey of owriership of interest-bearing public
debt and guaranteed obhgations, June 30,- 1952 and 1 9 5 3 . . . . . . . . . ^ 614
. BUDGET, E S T I M A T E S ' .
jll9. Budget receipts and expenditures, actual for 1953 and estimated
. ;
for 1954and 1955:..-- —— - ; . . . - :
- . . _ - . : . . . . . _ _ - - — . - — --120. Trust accourit and other transactions, actual fbr 1953 and estimated
for 1954 and 1955-..- — _ _ . - _ - . - - - . - - . - : - .
121. Effect of financial operations on the public debt, actual for 1953 and
estimated for 1954 and 1 9 5 5 — . . . J .
-:_....._..__..^.-....
iNDEx^....^..-.._-_._,........._,_..i.....__...--.,._.-:-,:..
•
•
'
•
•
•
'
'
•
•
N
O
j
E
'
' . •.
616
619
620
,621
" ' ; ; • • , . ' • • ' , . • ' ; , '
In tables where figures have been rounded to a specified unit and where calculations have been made from unrounded figures, the details may not check' to
the totals shown.
SECRETARIES, UNDER SECRETARIES, AND ASSISTANT SECRETARIES
OF THE TREASURY DEPARTMENT FROM JANUARY 20, 1953, TO
NOVEMBER 15, 1953,I AND THE PRESIDENTS UNDER WHOM THEY
SERVED" • ' ;
Served under—
Term of service
Official
From
To
Secretary of the Treasury
President
Secretary of tlie Treasury
Jan. 21,1963
George M. Humphrey, Ohio
Eisenhower.
Under Secretary
Jan. 28,1963
Marion B. Folsom, New York
Humphrey
Eisenhower.
W. Randolph Burgess, New York . . Humphrey
Eisenhower.
Deputy to the Secretary
Jan. 21,1963
Assistant Secretaries
Jan. 24,1952
Jan. 28,1963
Andrew N . Overby, District of
Columbia.
H. Chapman Rose, Ohio
Mar. 16,1946
Edward F . Bartelt, Illinois
Aug. 2,1960
William W. Parsons, Califomia
Snyder, Humphrey..._... Truman,
Elsenhower.
Eisenhower.
-,.
Humphrey
Fiscal Assistant Secretary
Administrative Assistant Secretary
Morgenthau, Vinson,.
Roosevelt,
Snyder, H u m p h r e y . . . . — Truman,
Eisenhower.
Snyder, Humphrey
Truman,
Eisenhower.
» For officials from Sept. 11,1789, through Jan. 20, 1953, see exhibit 55.
XI
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS OF THE
TilEASURY DEPARTMENT AS OF NOVEMBER 15, 1953
SECRETARY
GEORGE ,M. H U M P H R E Y
/
Marion B. Folsom
Willis D. Gradison, Jr
Dan Throop Smith
..
Under Secretary of the Treasury.
1
Assistant to the Under Secretary.
Assistant to the Secretary and Supervisor, Analysis
Staff.
Eugene E. Cakes...
. - . Chief, Tax Division, Analysis Staff.
Robert P. Mayo.
Chief, Debt Division, Analysis Stafl.
Kenneth W. Gemmill
Assistant to the Secretary and Head, Legal Advisory
; •, • • ,:
Staff.
William W. Parsons..^
Administrative Assistant Secretary of the Treasury.
Willard L. Johnson.:
'.
Budget Officer.
Howard M. Nelson.-„
—'
Assistant Budget Officer.
James H. Hard III
.,.Director of Personnel.
Joseph A. Jordan
._ Assistant Director of Personnel.
Paul McDonald
L
Director of Administrative Services.
Edward E. Bemey_.
Chief, Buildings Surveys and Maintenance Division.
Henry L. Merricks
._
Chief, Office Services Division.
W. Randolph Burgess. _--L..--^
Deputy to the Secretary.
Andrew N . Overby....
_ Assistant Secretary.
Theodore W. Braun._L.
Assistant to the Secretary.
David M . Kennedy._,
:.._ Assistant to the Secretary.
Frank A. Southard, Jr^
Special Assistant to the Secretary.
Edward F . Bartelt
Fiscal Assistant Secretary of the Treasm-y.
William T. Heffelfinger
Assistant to the Fiscal Assistant Secretary.
Hampton A. Rabon, Jr
Technical Assistant to the Fiscal Assistant Secretary.
Martin L. Moore
.
Technical Assistant to the Fiscal Assistant Secretary.
Frank F. Dietrich.
Technical Assistant tothe Fiscal Assistant Secretary.
George.F. Stickney
Head, Fiscal Service Operations and Methods Staff.
H. Chapman liose...!
.
Assistant Secretary of the Treasury.
•Capt. Ernest iR. Feidler, U. S. C. G
Aide and Assistant to the Assistant Secretary.
John P. Weitzel
•_
Assistant to the Assistant Secretary.
Elmer T. Acken
Assistant to the Assistant Secretary.
Nils A. Lennartson...
_
Assistant to the Secretary (for public affairs).
Malachi L. Harney...L
__
Technical Assistant to the Secretary for Enforcement.
Elbert P. Tuttle.Acting Personnel Security Officer.
OFFICE OF T H E
Elbert P . Tuttle
...^
Eltiug Arnold
-John K. Carlock...::
Charles R. McNeilL-Daniel A. Taylor.-..
Kenneth W. Gemmill
Raphael Sherfy
:.
Frederick C. Lusk^
Robert F. Magill
Hugo A. Ranta
-..
George Bronz
Lawrence Linville
_..
Kenneth S. Harrison
Trevor v . Roberts
--Robert Chambers
EdwLQ F. Rains
Daniel A. Taylor
Elting Arnold-Alfred L. Tennyson
Wiley M . Fuller
George F. Reeves
GENERAL COUNSEL
GeneralCounsel.
Assistant General Coimsel.
Assistant General Counsel.
Assistant General Counsel.
Assistant General Counsel.
Head, Legal Ad visor^'- Staff (Assistant to the Secretary).
Associate Head, Legal Advisory Staff.
Assistant Head, Legal Advisory Staff.
Assistant Head, Legal Advisory Staff.
Assistant to the General Counsel.
Special Assistant to the General Counsel.
Special Assistant to the General Counsel.
Chief Counsel, U. S. Coast Guard.
Chief Counsel, Office of the Comptroller of the Currency.
Chief Coimsel, Bm'eau of Customs.
Chief Counsel, Foreign Assets Control.
Chief Counsel, Intemal Revenue Service.
. - - . Chief Counsel, Office of Intemational Finance.
Chief Comisel, Bureau of Narcotics.
Chief Counsel, Bureau of the Public Debt.
Chief Counsel to the Fiscal Assistant Secretary.
.'.^
...
-
OFFICE OF I N T E R N A T I O N A L FINANCE
Director.
Deputy Director and Secretary, National Advisory
Council.
Assistant Director.
_
- . Acting Director, Foreign Assets Control.
George H. Willis
Charles Dillon Glendinning
William L. Hebbard
Elting Arnold
OFFICE OF THE COMPTROLLER OF THE CURRENCY
Ray M . Gidney
L, A. Jennings
W. M. Taylor
G. W. GarwoodW. P. Folger
-.._:
-.
--.'
-
Comptroller of the Currency.
First Deputy Comptroller of the Currency.
._ Second Deputy Comptroller of the Currency.
Third Deputy Comptroller of the Currency.
Chief National Bank Exammer.
Xin
XIV
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
BUREAU OF CUSTOMS
Commissioner of Castoms,
.
Assistant Commissioner of Customs.
Special Assistant to the Commissioner.
-_-.-;11J-'—-i^--'
'_ Administrative Officer.
'
./
,;
,
^^1, Deputy Commissioner of Appraisement Administra-
Vacancy
D. B. Strubinger
W. R. Johnson
Burke H, Flinn.
Walter G. Roy
•
C. A. Emerick
Lawton M. King
G. H. Griffith
W. E. Higman
J. W. Gulick
J.F.Williams
•
•
•
ii
.
.
•
:__-
^
.'.
•
•
t i o n .
'?
' • - - ; •
Deputy Commissioner of Investigations.
s . . . Deputy Commissioner of Mana^euieiityand 'Controls.
Chief, Division of Drawbacks, Penalties, and Quotas.
Chief, Division of Classification, Entry, and Value.
Chief, Division of Marine Administration.
Chief, Division of Technical Services.
BUREAU OF ENGRAVING AND P R I N T I N G
'
'
...'......
.
Director, Bureau of Engraving ahd Printing.
Associate Director.'
BUREAU OF ACCOUNTS (IN T H E FISCAL SERVICE)
Robert W. Maxwell.
'..
Commissioner of Accounts.
', •. .
Gilbert L. Cake
Associate Commissioner. '.''.-'• v''.'T ; ,;•,
Harold R. Gearhart
---.
Deputy Commissioner—Central Accounts.
Boyd A. Evans
i--.Deputy Commissioner—ApcouritingvSystGms.
Samuel J. Elson
-.._^
Deputy Commissioner—CentraVBeports.''
Edmund C. Nusse.ar....
.....
Deputy Commissioner—D.eposits and Inyestrnents.
Wallace E. Barker, Jr
Assistant Commissioner for Aamihistration."'
Stephen P. Gerardi
-..Executive Assistant to the Commissioner.
Paul D. Banning
-_
Chief Disbursing Officer.
Julian F. Cannon
.1
Assistant Chief Disbursing Officer.
Charles 0 . Bryant
'
-.
Assistant Chief Disbursing Officer.
George Friedman
_:
Technical Assistant to the Commissioner.'
Alvin W. Hall
Henry J. Holtzclaw
• BUREAU OF T H E PUBLIC D E B T (IN T H E FISCAL SERVICE)
Edwin L. Kilby
1
Commissioner of the Public Debt.
Donald M. Merritt
-,.
Assistant Commissioner.
Ross A. Heffelfinger, Jr
Deputy Commissioner in Charge, Washington Office.
Charles D. Peyton...
.
...1
Deputy Commissioner in Charge, Chicago Office.
OFFICE OF T H E TREASURER OF T H E U N I T E D STATES (IN T H E FISCAL SERVICE)
Ivy Baker Priest—.
.
Treasurer of the United States.
Catherine B. Cleary..
Assistant Treasurer.
Edmund Doolan..:.Deputj'-and Acting Treasurer. . , .
William T. Howell
:
Assistant Deputy Treasurer..
.INTERNAL
T. Coleman Andrews
O. Gordon Delk
'...i..'.
Harrell T. Vance
.Harry J. Trainor
Justin F. Winkle
'
Thomas C. Atkeson
Norman A. Sugarman
-Leo Speer..
'..-.
-_'Daniel A. Taylor....--_.
i...
_.
I . W . Carpenter
-.-
R E V E N U E SERVICE.
Coramissioner of Internal Revenue.
Deputy Commissioner.
Assistant Commissioner (Administration).
- - . Acting Assistant Commissioner (Inspection).
- - . Assistant Commissioner (Operations).
Assistant Commissioner (Planning).
_._ Assistant Commissioner (Technical).
Technical Advisor to the Commissioner.
- Chief Counsel.
Director of Practice.
BUREAU OF T H E M I N T
Vacancy
Leland Howard
..
Harry J. Anslinger
'
George W. Cunningham
Benjamin T. Mitcliell
'..i
Director of the Mint.
Assistant Director.
BUREAU OF NARCOTICS
_-_ Commissioner of Narcotics.
- Deputy Commissioner.
Assistant to the Commissioner.
U N I T E D STATES COAST GUARD
Vice Admiral Merlin O'Neill...--.
- Commandant, U. S'. Coast Guard.
Rear Admiral Alfred C. Richmond
-.Assistant Commandant and Chief of Staff.
Captain Ira E. Eskridge
1 Deputy Chief of Staff.
flear Admiral Kenneth K. Cowart
. . Engineer in Chief.Rear Admiral Halert C. Shepheard
Chief, Oflice of Merchant Marine Safety.
Rear Admiral Henry C. Perkins...-.
Chief, Office of Operations.
Rear Admiral James A. Hirshfield
Chief, Office of Personnel.
Captain Charles B. Arrington
_ Comptroller.
U N I T E D STATES SAVINGS BONDS DIVISION
Earl 0 . Shreve...-.-..-,--.l..-l--..--r--.-._.
National Director.
Jame^ J. Newman..----...--.
Assistant National Director.
, -;
PRINCIPAL ADMINISTRATIVE AND STAFF OFFICERS
U. E. Baughman
.i
Carl Dickson...
-_._.__
Harry E. Neal
_._:
..
George W. Taylor
_.....:
U N I T E D STATES SECRET SERVICE
Chief, U. S. Secret Service.
Assistant Chief.
:
Executive Aide to theUhief.
.__
Administrative Officer.
• TREASURY AWARDS C O M M I T T E E
•Willard L. Johnson..
.__!
.
..Chairman.
James H. Stover....
.
Vice Chairman.
James H. Hard I I .
.
.
Member.
Leland Howard
...
:
_.— Member.
Henry J. Holtzclaw..
^
: . . ! _ . . Member.
Captain I. E. Eskridge, U. S. C. G
Member.
John K. Carlock
._._
Member.
William T. Heffelfinger
Member.
Malachi L. Harney
1
Member.
Harrell T. Vance
.
.
Member.
Lawton M . K i n g
Member.
James H. Hard II
i
Willard L. Johnson....
William T. Heffelfinger—1-1—
Edward F. Bartelt
.
WAGE BOARD
Chairman.
Member.
__._ Member.
I N T E R D E P A R T M E N T A L SAVINGS BOND C O M M I T T E E
_
Chairman.
FAIR E M P L O Y M E N T OFFICER
Maurace E. Roebuck.
XV
•ORGANIZATION OF THE DEPARTMENT OF THE TREASURY-
November 15 J953
THE SECRETARY
OF THE TREASURY
DEPUTY T O T H E SECRETARY
K
\\,I
\ ofm )
THE UNDER SECRETARY
OF TME TREASURY
\\
\
\Secr0f0fr'
ASSISTANT
SECRETARY
ASSISTANT
SECRETARY
\ ,...,..
ASSISTANT
TO THE
SECRETARY
FISCAL
ASSISTANT
SECRETARY
\
SPEC ASST
TOTHE
SECRETARY
i
ASSISTANT
TO THE
SECRETARY
ASSISTANT
TOTHE
SECRETARY
ADMINISTRATIVE
ASSISTANT
SECRETARY
ASSISTANT
TO THE
SECRETARY
Office of Inter- 1
notionol Finance
Director.
Tech Asst
to the Secretory
for Enforcemenfil
Office of
Personnel
Director.
Operating \
Bureaus j
Office of the
Treasurer
of the U.S.
Office of the
Comptroller of
the Currency
Chief Counsel.
Internal Revenue
Sei vice
Treosurer.
Bureau of
the Public Debt
Internal Revenue
Service
Commissioner.
Bureau of
Accounts
PERSONNEL
SECURITY
OFFICE
U.S. Savings
Bonds Division
O f f i c e o f AdminJstrofive Services
Director,
Office of Budget
Budget Officer.
Bureauof
Engraving and
Printing
U.S.
Coast Guard
Director.
Commandant.
Bureau of
Customs
Bureau of
the Mint
U.S. Secret
Service
Bureau of
Narcotics
Commissioner.
CHART
1.
1 The General Counsel serves as legal advisor to the Secretary, his associates, and heads of bureaus.
<1
2 The Technical Assistant for Enforcement coordinates enforcement activities of the U. S. Secret Service, U. S. Coast Guard, Bureau of Customs, Bureau of Narcotics, and
http://fraser.stlouisfed.org/
Internal Revenue Service.
Federal Reserve Bank of St. Louis
ANNUAL REPORT ON THE FINANCES
. TREASURY DEPARTMENT,
Washington^ D. C , January 29^ 1954.
SIRS : I have the honor to report to you on the finances of the Federal
Government for the fiscal year ended June 30, 1953. I will also comment on certain significant developments during the calendar year
1953 as a whole and review the fiscal and debt management programs
of the present administration during its first full year of oflBice.
A year ago, in his first State of the Union Message, President
Eisenhower stated that the purpose of the Treasury and the Federal
Reserve System should be '^to serve the whole Nation by policies
designed to stabilize the economy and encourage the free play of our
people's genius for individual initiative.'^ Specifically, the President
stated that the immediate tasks of fiscal and economic policy should
be to:
'^(1) Reduce the planned deficits and then balance the budget,
which means among other things, reducing Federal expenditures to
the safe minimum;
'^(2) Meet the huge costs of our defense;
''(3) Properly handle the burden of our inheritance of debt and
obligations;
'^(4) Check the menace of inflation;
'^(5) Work toward the earliest possible reduction of the tax burden;
*'(6) Make constructive plans to encourage the initiative of our
citizens.''
These are the objectives which have guided the Treasury during the
past year as we have worked with the Congress, with representatives
of other executive agencies and of the Federal Reserve System, and
with responsible groups of citizens to put the finances of the Government on a sound basis. Our joint efforts have resulted in real progress.
The downtrend in the value of the dollar which had taken place during
the past twenty years has stopped. We have made definite progress
toward the broad goals of the fiscal-monetary objectives outlined by
the President a year ago.
The expenditure budget
The first step toward budget balance was to bring planned expenditures under control. The fiscal year 1953 was already half over, and
expenditures during the remaining months were largely determined
by prior commitments. However, the most careful examination of all
Government spending programs, both military and civilian, was
undertaken immediately. Our objectives were to eliminate waste and
extravagance, to reduce costs wherever this could be done without
1
273013—54—2
2
1953 REPORT OF THE SECRETARY OF THE TREASURY
endangering national security or the essential functioning of the
Government, and to increase efficiency of operations so that the
taxpayer would receive full value for every dollar spent by the;Government. .
.
• This program was ofthe greatest importance. / P e o p l e had seen the
yalue of their incomes and savings dwindling away while inflation was
constantly stimulated by huge Government expenditures and ineffective monetary policy. They had seen the-size and cost of the
Governmeht growing year by year. In the fiscal year ending June 30,
1953, budget expenditures had amounted to $74^ billion, while budget,
receipts had been only $65 billion, leaving a deficit of $9K billion to be
financed by new borrowing. This compared wijbh expenditures of
$66 billion and a deficit of $4 billion the year before. Planned
expenditures were on their way up.
. The situation reflected in these figures could not, of course, be
remedied all at once. Within six months after the new administration
took office, however, its joint efforts with the Congress to put the
finances of the Government on a sound .basis had important results.
By August 1953, planned expenditures for the fiscal jeSiT 1954 had
been cut by $6^ billion below the spending estimates of $78K billion,
in the budget submitted to the Congress the preceding January.
Since the previous administration had. apparently overestimated
income by more than a billion dollars, the prospectiye defi.cit ;was;cut
from" more than $11 billion to less than $4 billion. Possibly even
more significant for future operations than the cut in estimated,
expenditures was the reduction of $13 billion in requests for new
appropriations.
• .
The change in direction accomplished by the new administration
was evidenced by the fact that the new budget estimates called for
less spending in the fiscal year 1954 than in the preceding year. The
upward trend was checked. I t was significant also that, for the first
time since 1948, the authority granted Government agencies to make
new expenditures was substantially less than the total amount of
spending budgeted for the fiscal year. This meant that the carryover
of accumulated commitments from one year to the next would decline
during the new-fiscal year instead of growing larger.
The carryover of these prior authorizations to spend is still very
large. They amounted to over $81 billion on June 30, 1953. I t will
take time to pay off these inherited obligations; and we shall have to
recognize that during this period budget balance will be that much
more difl&cult.
.- ;
.
Taxrevenue-
;
One of the important goals set by the new administration was the
earliest possible reduction in our heavy tax burdens. However, the
I R E P O R T . O N T H E FINANCES '•••
3
steps we can safely take to reduce taxes have to be linked to our
progress in getting Government expenditures under control. At the
request of the President last May, the Congress extended the corporation excess profits tax for six months beyond the original expiration
date of June 30, 1953. By the niiddle of the calendar year it was felt
that progress already made would also warrant, the reduction of 10
percent in personal income taxes to take effect on January 1, 1954.
These two tax cuts resulted in savings of $5 billion to the taxpayers.
Other recoramendations to the Congress for legislation in 1953 were
made, pending the completion of a thoroughgoing study of our tax
system which the,Treasury has carried on during the past year in close
cooperation with the appropriate congressional committees and staffs,
and particiilarly with the Committee oh Ways-and Means in the
House of Representatives. This study, which has now been completed, is the basis for the recommendations on tax legislation outlined
by the President in his Budget Message on January 21, 1954.
the debt limit
As the President noted at the beginning of his term of offlce, the
Government faced another difficult problem growing out of the budget
situation in 1953. ; This was the problem of the public debt limit.
The fact that Goyernment borrowing had to. be kept within the
a-uthorized limit of $275 billion has had a restrictive effect on the
ability of the Treasury to iinproy.e' the. structure of the' debt. The.
debt had already moved up to ^^267 .billion, wheii this admihistratioh
took office. This was before any provision had been made for financing future deficit operations growing out of the obligations which we
inherited. For this reason the President in his first State of the Union
Message immediately after he took office called attention to the
probable necessity at some later date for appropriate action to increase the limit and before Congress adjourned in August he asked
that it be enacted promptly.
This request was granted by a large majority in the House of Rep-,
resentatives but the necessary legislation was not reported out by.the
Senate. Finance Committee. Since then the, need for funds to meet
current expenditures has reduced the.Treasury cash balance to levels,
which are too low to provide adequaite elasticity to the Treasury in
planning a prudent financing program. The problem will, continue
to grow even more acute and, consequently, the President in his
State of the Union Message on January 7, 1954, renewed his request,
to Congress for an increase in the statutory debt limit.
Debt management
In addition to the foregoing needs for action on-the fiscal front, a
program for improving the management of our huge public debt was
4
1953 REPORT OF THE SECRETARY OF THE TREASURY
urgently required when the present administration took office.
Inflationary forces which doubled the. price level and cut the buying
power of the dollar in half between 1939 and 1952 were stimulated
by financing too much of the national debt through short-term
securities sold mainly to commercial banks.
The extent of the problem inherited from the previous administration is. evidenced by the fact that, in the calendar year 1953, the
Treasury had to finance maturities and redemptions of over $60
billion as well as a deficit of almost $10 billion, amounting in all to
one-fourth of the entire national debt. This necessitated going to the
market nine times during the course of the year for refunding or
raising cash, exclusive of regular weekly offerings of Treasury bills.
This illustrates the need for the improved prograni of debt management outlined by the President a year ago. The specific objectives
are to reduce the volume and maturities of bank financing to manage-able size and form and to get more of the debt into the hands of longterm investors. These objectives will in themselves aid economic
stability, and will at the same time provide greater freedom of action
for the Federal Reserve System t o . perform its necessary public
functions in the monetary and credit field without interference from
the Treasury.
I t is recognized, of course, that unportant changes in the debt
structure as well as in other programs affecting the fiscal situation will
have to be undertaken gradually. Because the Government is such a
large borrower, the size and the timing of its financing operations have
far-reaching consequences which must be carefully evaluated before
decisions are made.
The need for caution has thus been kept in mind, but the Treasury
nevertheless took steps immediately to put the new program into effect
and will contintie with it.
In February 1953, owners of $9 billion of maturing certificates were
given the opportunity to exchange their holdings for a bond of approximately 6 years' maturity, if they preferred it to the usual one-year
certificate offered at the same time. In April, the Treasury offered a
30-year marketable bond to attract long-term investment funds, the
first long-term marketable bond issue since 1945. During September,
holders of the bonds maturing September 15 were offered a 3K-year
note as well as a one-year certificate; and a new cash off ering of 8-year
bonds was made during October. Again, in November, holders of
Treasury notes maturing IDecember 1 were offered a choice between
notes running a little over a year and Treasury bonds of approximately 5 years' maturity (an additional offering of bonds first issued
the preceding February). Thus, the Treasury took steps to lengthen
the debt on five of the niiie occasions when it had to borrow money in
REPORT ON T H E
FINANCES
the market in 1953. At appropriate times during the year, the
Treasury also provided corporations and similar investors outside the
banks with Treasury bills and tax anticipation certfficates which
would meet their needs for the investment of short-term funds.
The net result of the Treasury's debt management operations during
the calendar year 1953 was to finance the year's huge deficit with
minimum reliance on bank financing. Ownership of Government
securities by private investors outside the banks, in fact, increased by
$4 billion during the calendar year, while the holdings of commercial
and Federal Reserye Banks rose by only $1^ billion.
As an important part of its program for improving the structure of
the debt, the Treasury took every occasion to encourage wide ownership of savings bonds. This not only helped widen the distribution of
the debt, but also promoted the objective of encouraging saving iii all
its forms. Returning confidence in the sound dollar appears to be one
factor, in raising sa;les of Series E and tH sayings bonds in the calendai'
year 1953 to higher levels than in any other year since 1946.
International activities
The Treasury has been guided in this field by the emphasis
given by the President in his first State of the Union Message tb
profitable arid equitable world trade, and to the need for broader
markets and sounder currencies, so as tb increase the exchange of
goods and services aniong nations. In its internatibnal activities
the Treasury advocated constantly the iniportance of sound monetary
and fiscal policies, efficient production, and nondiscriminatory trade
practices. It believed these essential to the building of econoinic
strength abroad, to the enduig of oiir emergency economic aid programs, and to the i*estoration of the convertibility bf currencies and an
increasing volume of trade. The Treasury also emphasized the
importance to international morietary stability of niaintaining the
strength and value of our United States dollar as a stable point of
reference for the other currencies of the world.
In order to reduce procedural obstacles to foreign trade, and to
promote the more efficient operation of the Customs Serviqe, the
Treasury Departmerit supported the Customs Siniplificatibn Bill,
which was enacted by the Congress. The Corigress also extended the
Reciprocal Trade Agreemerits Act arid provided for the establishment
bf the Commission on Foreign Econbinifc Policy. This cbrriiriission
has now submitted a comprehensive study of United States iriternational trade, foreign irivestments, and other important" matters in
the area of internationai economic policy.
The policy of promoting sound practices in the intemation^al monetary and financial field was implemented directly and through the
National Advisory Council on International Monetary and Financial
Q
1 9 5 3 REPORT .OF .THE SECRETARY^^ OF THEl-^TREASURY
Problems, bf; which, the Secre^tiary of; :the , Treasury' is chairman.
The foreign lending' activities of the Government were scrutinized in
terms of their effect ori: ouf fiscal problein and bn the health of competitive priyate enterpi-ise, Jnterest rate's.on United States,Government
foreign loans were adjusted to.reflect the realities of the priyate money
.market and to facilitate greater private participation in foreigii lend,ing, ,Atsettteirient'of.,Germ
arid public debts was recom:mended by the executive branch and ratified by the Senate. The
United States Treasury, provided support' to the stable and fully cbnvertible Mexicaii. peso through an enlarged stabilizatiori agreernent.
.: During the September meetiiigs. of the International Monetary
Fund arid the International; Bank for Reconstruction and Deyelopment the Treasury .Departrrierit stated the administration's pblicy of
mairitairiiiig the price of gold at its currerit level as ari important, contribution to the financial.stability of the world. Throughout the year
the Treaskry held ext;iensiye consMM^ions;with rei)resentatives ofHhe
United Kingdom, France, Gennany, Japan, and other countries on
mutual problems.
The reorganization plan w;hich created the Foreign Operations
Administration, and brought under one head the mutual security
activities of the Gover*nment made the Secretary of t h e . Treasury
responsible for advice on the finaricial and.morietary aspects of these
activities, and for reviewing mutual assistance plans arid!policies to
jnsure that the}^^ are consistent with the monetary arid financ
objectives of-the United States.
.r.,
\
/
In developing the -Mutual Security Prograrn the admihistratipii
sought the best possible balance between our part in the effo'rt tb
strengthen the security of the free world and'the iieCessity formauitaihing bur own ecpnomic strength and stabilityl Proposed assistanbe
prbgrairis were studied i^^^
of the'administration's corii.^^
to a program' of sound ihoiiey,* a
budget, and the,.earliest
possible reduction of taxes. The size arid probable effectiveness of the
programs were considered carefully in the light of these objectives.
At nieetings of the North Atlantic Treaty Organization, close
attention was given to the econoraic and firiancial factors aftecting the
defense eflForts of the friendly ,nations. I t was agreed in the North
Atlantic Council that the goal of "sound national economies should be
pursued concurrently with^ that of improving the effectiveness of
inilitary forces. . '
\
^..
*
.
.
G. .M.
.
•
HUMPHREY,. .
Secretary of the Treasury.
To THE PRESIDENT OF T H E SENATE.
•'Tp.^:T&t:Si9!iA;^ER^:>0F::^i?eE''J^
'.'.,,
R E P O R T ON FISCAL O P E R A T I O N S
O.
Q
SEmmary of Fiscal Operations
Budget expenditures of the Federal Govemment exceeded net
budget receipts by $9.4 billion in the fiscal year 1953. This deficit
was the highest in history except for certain years during the two
World War periods. I t was more than double the deficit of $4.0
billion in 1952. The magnitude of the budget deficit in 1953, in
spite of record breaking Govemment revenues, illustrates the difficult
task of putting the Government's fiscal house in order.
The $9.4 billion budget deficit was financed by an increase in the
public debt of $7.0 billion, a reduction in the general fund balance of
$2.3 billion, and an excess of receipts in trust account and other
•^wtrans(a^tions#f^$0^1:^bilhon/ v ^
to $4.7 billion on June 30, 1953, in comparison with $7.0 billion a year
earlier. The public debt outstanding on June 30, 1953, amounted to
$266.1 billion compared with $259.1 billion at the end of the fiscal
year 1952.
Net budget receipts in 1953 reached an alltime high of $65.2
billion, compared with $62.1 billion in 1952, the previous record total.
1953 marked the third year in a row of record-breaking budget
receipts. Budget expenditures in 1953 amounted to $74.6 billion
compared with $66.1 billion in 1952. The 1953 expenditure total was
thefhighestoiirrecordv.aside irom the World War Ilvyears of 1943,
1944, and 1945.
Federal fiscal operations in the past two years, on the basis of
daily Treasury statements, are summarized in the following table.
Chart 2 shows receipts, expenditures, and the budget surplus or
deficit by years for the period 1950 through 1953. Aimual figures
for 1932-53 and monthly for 1953 are contained in table 1 in the
tables section of this report.
1952
1953
In billions of dollars
Budget results:
Net receipts
Expenditures
Less:
,
Budgetdeficit
..
62.1
66.1
._.
_
Trust account and. Other,.transactions, .excess of receipts, or expenditures (—) C _..-'
"......'.
.
KQuals: Increase in p n b l i c d e b t
9.4
4.0
.4
R e d u c t i o n in general fund balance ,
•
65.2
74.6
, .,
-.3
2.3
.1
.1
3.9
2.4
7.0
, 1 Includes net trust account transactions, etc.; net investments of trust accounts and Govemment agencies
in public debt securities; net sales or redemptions of obligations of Goverhment agencies in the market;
and clearing account for outstanding checks and interest coupons, and telegraphic reports from Federal
Reserve Banks.
9
10
1953 REPORT OF THE SECRETARY OF THE TREASURY
FEDERAL BUDGET PICTURE
$Bil.
$Bil.
Expenditures
90
60
80
50
_
Receipts
40
+10
Surplus or Deficit
Pf|
IM
-10
1950
1951
!952
1953
-Fiscal Years
(Surplus)
~~
(Deficit)
1950
1951
J
1952
L
1953
^
C H A R T 2.
In both 1952 and 1953 budget receipts and expenditures were considerably greater in the secohd half of the fiscal year than in the first
six months. On the receipts side this was due to prior year tax
increases becoming fully effective, especially in the second half of
1952, a general rise in tax liabilities growing out of rising incoioaes,
and statutory requirements for payment of income and excess profits
tax liabilities. The acceleratibn of corporate tax payments^ added
to receipts in the Jantiary-June periods of each of the years. The
greater proportion of budget receipts in the first half of fiscal 1953
compared with the same period in 1952 was due mainly to the fact"
that in the earlier year certain corporations were permitted by law
to postpone the date of filing returns and paying income and excess
profits taxes.
Budget expenditures increased steadil}^ on a quarterly basisthroughout e^ch of the last two years, as the defense program continued its
growth. The distribution of net budget receipts and expenditures,,
together with the budget surplus or deficit, by. quarters, half-years,
aiid fiscal years is shown for 1952 and 1953 in the following table.
1 By a provision of the Revenue Act of 1950 a corporation paying taxes on a calendar year basis.paid 60
percent of its 1950 liability in the period Jahuary-June 1951, instead of 50 percent as in previous years. The
percentage paid within ©months after the end of the taxable year increased to 70 percent for 1951, 80 percent
for 1952, and will increase to 90 percent for 1953 and 100 percent for 1954 and subsequent (calendar) years.-
11
EEPORT- ON:.'EISCAL, QBERATIONS.
Jr.?.-:-,i,;';.,v-i
•
. : - - - ^ . > . - : • . • •
:')::/
••••:•.'
•••'^:^i^^^'^-":'-'^-'--lc:
• • • - ' -
• : • . • . • -
- i ' r ^ - i
N e t b u d g e t , •*' B u d g e t
e x p e n d i t u r e s ."•.surplus,,Gr..
* deficit C-^) \
Net budget
receipts i
. X - ' • • t f vrV C
! . • : • • '
,
, .
, . V-. |i . I n billiprfs of dollars ' !^L--. / .
i ; i s c a l y e a r 1952:
- .. - , .-.,
• .-^-^ ; . . , , . . ^ , , ; , . . ' . , . ;
' '
1 2 . 4 ' •^••'" • ' • 1 5 . 0 ' " ^ '•• • ^ 2 : 6
'
Jiily-Septenibei', 1951.'... 1 , . : . . . 1
. 1 . -V.l—..::. 1—...
.• . ; - . 1 1 . 4 . . j v:•:.^l6.3:; .,. .^-••. V . ' — 4 . 0
.- .,. O c t o b e r - D e c e n i b e r ; 1951 i ; ^ . . . _ . i . . . . . . . . . • - „ ^ : . r — — . . . . .
. :
Total,.first h a l f . : . - . _ I . . . . . . . . . . . . . . - ^
-..,....^.:•..:.
Jahuai-y-Mfirch, 1 9 5 2 - : : . . . . l . . l _ . _ : l - . _ „ „ . i J „ . — ' — : . ' .
.,.; A p r i l - J u n e , ; 1952-^ .•._.. j ; i . . . . ; _ u-'^_ . . . . - - J _ - _
23.8
20.4
.
j;
,..
^ . •>.,.,. .
^': : . . ' . _ . . : ' L l _ _ ' .
^
-r
. .
-—--,T
. T o t a l , first half
,
'38..3 :. •..,'•.•. r34.9. • ;
62.1
"'
66.1
•
,
-'•'^••'17:8-'
13.3
......
Jaiiuafy-Marcli. 1 9 S S L . . . I . ^ . . . ^ ' : . . L . ; : ^ . : . . : : J ^ . . : . : . .
A p r i l - J u n e , 1953. _•
^ . . , 3 1 . 3 , :•:.•.••.., • . . . . . - 7 . 5
16.3
'••:
: T o t a l , second h a l f . ' - . v - - - - ^ - : — i - - — - - — - - - w — — . . - . . - . • - . , . . .
' ' T o t a l , fiscal-year 1 9 5 2 ' . . : . . . .
: . . . I : . . 1.1 _. 1 . . . : .'^ _'..
Fiscal y e a r 1953:
J u l y - S e p t e m b e r , 1952.
,
. O c t o b e r - D e c e m b e r , 1952
:
..- ^/j
_
'
.27.2 .
:'.,2i:;0'
17.0 . . .
38,0
• ".,v.--65.i2 -.-:
.. .. . T o t a l , second h a l f . . . .
.1 ;:,>] Totai;.jascal.year 1 9 5 3 - . i i . i . „ . L i . j . - - ^ - , : j ^ . . - : L . : : i _ ^ : L L ' .
'•••••
.-^ / : " • • ?
.•:
'
^^''•".
.•4-3.6
• — 4.0
2 1 ^ ^
g
.- 18.7
-5.4
36.5
•-9.3
-3. 6
20.6
, 38.1
' ,
.-.1
.••^•-•:7^.6;,;
BUD,GET._RE.CEIPTS AND .EXPENDITURES. . .
[
BUDGET R E C E I P T S IN 1953
Net .budget receipts (total receipts less the appropriation to the
Federal 'old-age and survivors insurance trust fund and returns of
overpayments) amounted tb $65.2 billion in the fiscal year 1953 and
were $3.1 billion above receipts in 1952. Net receipts in 1953 were
$l7.1 billion higher than those in 1951 arid $28.2 billion above the;
postwar Ibw of $37.0 billion in 1950.
f; Receipts by major souixes i n t h e fiscal years 1952 a i d 1953,; on the
daily Treasury statement basis, are compared in the following table.
Increase
.
t
. . -.; - ?
'.'
' Source • .
• -. •'
..'
1952 .
• .1953
Amount
' "
I n billions of dollars
I n d i v i d u a l i n c o m e t a x i_..._.___._
.:.-.^-.'l.'„._....—_:_ :
C o r p o r a t i o n i n c o m e a n d excess profits'taxes
._ . ' J . . a .
29.9
2i. 5
32.6
21.6
'
'
2.6
.1
8.7
.6
54.1 ' •
2.7
10.9
1.1
5.0
.4
.6
.1
1.9
" -1
5.3
"11.8
9.3
11.2
'5.5
Totail i n c o m e a n d excess profits taxes '...
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 2
__
Custoras
-.-i_._. . - - . - ^
--_
Miscellaneousreccipts
...
_•
.
- 61.3
9.7
4.6
.6
1.8
T o t a l receipts
'"
. _ . _ _ _ _ .
Deduct: .
, .
•
A p p r o p r i a t i o n t o F e d e r a l old-age a n d s u r v i v o r s i n s u r a n c e
t r u s t fund
^
•
_•
.__.,
R e t u r n s of o v e r p a y m e n t s .
.....l
^._
68.0
72.5
4.5
6.6
3.6
2.3
4.1
3.2
.5
-.8
14.5
36.9
62.1
65.2
3.1
5.0
N e t b u d g e t receipts
-
.
•
1 Beginning in January 1951, receipts from individual income-taxes and the Federal Insurance Contribu-,
tions Act, a component part of employment taxes, were combined. For piurposes of historical comparison,
estimated amounts are shown for the two components.
. ' . , . • .
2 Includes Railroad Unemployment Insurance Act'receipts.
12
1953 REPORT OF THE SECRETARY OF THE TREASURY
All sources of receipts increased in the fiscal year 1953 as compared
with 1952, most of the expansion stemming from the individual
income tax and the excise taxes which are the major components of
miscellaneous internal revenue. The individual income tax remained
the most important source and showed the largest absolute increase:
Expanded receipts from this source were partially offset by a rather
substantial rise in returns of overpayments of individual income
taxes. Receipts from the second most important source of revenue,
corporation income and excess profits taxes, rose negligibly in 1953.
B eceipts from income and excess profits taxes
Income and excess profits taxes totaled $54.1 billion in 1953, $2.7
billion above receipts in 1952. The individuaL income .tax. provided
virtually all of this increase.
Individual income taxes.—Details of the individual income tax yield
are shown in the following table.
Increase, or
decrease (—)
1952
1953
Source
Amount
I n millions of dollars
W i t h h e l d (daily T r e a s u r y s t a t e m e n t basis) *
N o t w i t h h e l d (collection basis) i
Adjustmenfcto d a i l y ;T.reasui:y-.st.ate.rQen:t.vbasis
N o t w i t h h e l d (daily• T r e a s u r y ^tMement" basis)
T o t a l ' i n d i v i d u a l income taxes
.i
18,521
11,345
. -hl4
' 11,359 '
29,880
21,172
2,651
11,404
59
-97. . , -111
11,306
•' - 5 3
14.3
.5
2, 599
8.7
32,478
„ . -
1 Beginning in January 1951, receipts from individual income taxes and the Federal Insurance Contributions Act were combined. . For purposes of historical comparison, estimated amounts are shown.
Receipts from withheld individual income taxes increased in the
fiscal year 1953 as a result of the full-year effect of higher withholding
rates instituted by the Revenue Act of 1951, effective in November
1951, and expanding salaries and wages subject to withholding.
Receipts from taxes not withheld did not differ significantly in the
two years despite the higher rates of tax affecting fiscal year 1953
receipts.
Corporation incoine and excess projits taxes.—Receipts from this
source were $21,595 million in the fiscal year 1953, $128 million above
receipts in 1952. This small increase was the result of offsetting
factors. Influences'tending to raise revenue in comparison with
receipts in the fiscal year 1952 were provisions of the Revenue Act of
1951, which reduced the excess profits credit under the income
method, raised the maximum effective rate limitation on the excess.
profits tax, and increased the total income tax rate.
13
REPORT ON FISCAL. OPERATIONS
The primary factor tending to reduce receipts in the fiscal year 1953
was the substantial drop in corporate profits in the calendar year 1952.
Corporation income tax receipts in the fiscal year 1953. reflected
incomes of the calendar years 1951 and 1952, with 1952 the more
important because of the continued acceleration of quarterly payments under the provisions of the Revenue Act of 1950.
Receipts from all other 5oi^rc65.—Miscellaneous internal revenue
receipts from the groups of taxes comprising this category are shown
in the following table.
Increase •
1952
1953
Source
Amount
Percent
I n millions of dollars
E s t a t e a n d gift taxes
:
Excise taxes:
L i q u o r taxes
.-.
Tobacco taxes
.-.
-S t a m p taxes
_
M a n u f a c t u r e r s ' excise taxes ^
R e t a i l e r s ' e x c i s e taxes
..
• Miscellaneous excise taxes (including repealed) 2
--
T o t a l excise taxes ^ 2
_
A d j u s t m e n t t o daily T r e a s u r y s t a t e m e n t basis
..
833
891
58
6.9
2,549
1,565
85
2,335
'•475
1,947
2,781
1, 655
90
2,846
496
2,061
232
90
5
511
20
114
9.1
5.7
6.3
21 9
4.3
5.9
8,957
-65
9,929
4-49
972
-fll4
10.9
Total.excise taxes ^ 2!
...:....
8,893
9,978
1, 086
12.2
T o t a l miscellaneous i n t e r n a l r e v e n u e ^ ^
..
9,726
10,870
1,144
11.8
-
•" Revised.
1 Excludes taxes collected on firearms, shells, ahd cartridges and fishing rods, creels, etc.'
3 Excludes collections of the hydraulic mining tax.
Estate and gift taxes amounted to $891 million in the fiscal year
1953, an increase of $58 million in comparison with those in 1952.
Excise tax receipts rose to $9,978 million, $1,086 million or 12.2 percent
above the $8,893 million collected in 1952. Increases occurred in all
the major categories of excise taxes as a consequence of expanded
sales and, in some cases, the full-year effect of the Revenue Act of 1951.
Manufacturers^ excise taxes accounted for approximately half of
the increase in excise tax collections in the fiscal year 1953. The
rate of increase (21.9 percent) was more than twice that of all other
excise tax receipts (8.8 percent). The striking increase in manufacturers' excise tax receipts derived largely from taxes on passenger
automobiles;, and' on .gasoline. The increase in these two taxes was
partially due to the full-year effect of rate increases under the Revenue
Act of 1951. Part of the increase in receipts from the tax on automobiles was the result of the alleviation of materials shortages which
had reduced receipts in the previous year—a factor affecting receipts
from taxes on other consumer durable goods as well.
.
14
1 9 5 3 REPORT OF T H E SECRETARY OF T H E TJEIEASURY
Collections from liquor taxes amounted to $2,781 million; in the
fiscal year 1953, an increase of $232 million bver those in the previous
year. The tax on distilled spirits at $1,841 million was $251 million
higher than in 1952, which had, however, been affected adversely by
heavy inventory accumulations in 1951. The full-year effect of the
rate iacreases imposed by the Revenue Act of 1951 also contributed to
increased distilled spirit taxes in 1953.
.
/
Tobacco tax collections increased by.$90 million in 1953, which was
more than accounted for by receipts from the tax on small cigarettes
which rose as a result of the full-year effect of the rate increases under
the Revenue Act of 1951. Retailers' excise taxes rose by $20 million
and stamp taxes increased by $5 million. Miscellaneous excise tax
receipts were $114 million higher than in 1952, priacipally because of
increased receipts from taxes on transportation of property and communication services. Receipts from the tax on admissions, exclusive
of cabarets, roof gardens, etc., alone in the miscellaneous excise group
showed a significant decline in 1953. The decrease in receipts from
this tax in 1953 continued the downward trend of the past few years.
Collections from retailers' excise taxes and the miscellaneous excise
taxes were not affected appreciably by tax rate changes.
Employment taxes.—The yields of the various employment taxes,
on the daily Treasury statement basis, are shown in the following
table.
Increase, or
decrease (—)
1952
1953
Source
Amount
I n millions of dollars
Federal Insurance Contributions Act i
Federal Unemployment Tax Act
Railroad R e t i r e m e n t T a x Act
Railroad U n e m p l o y m e n t Insurance Act 2
__
_.
_-.
.
_
T o t a l employment-taxes- "
D e d u c t : A p p r o p r i a t i o n to F e d e r a l old-age a n d survivors, insurance t r u s t fnnd
' N e t e m p l o y m e n t taxes
_
3, 569
259
735
10
4,086
276
626
10
4,573
4, 998
• 425
9.3
3,569
4, 086
518
14:5'
1,004
912
-92
- 9 . 2'
518'
17
-109
(*)••,
•
14. 5:
6. 5
-14. 8
-2.6
*Less than $500,000.
'
. , . . . '
1 Beginning in' January 1951, receipts from the Federal Insurance Contributions Act and individual
income taxes were combined. For purposes of historical comparison, an estimated amount is shown- for
the Federal Insurance Contributions Act.
3 Not classified as an employment tax Under the Internal Revenue Code.
:'
.Total receipts from emplojmient taxes amounted to $4,998 million
in the fiscial year 1953, an increase of $425 million over such taxes in
the fiscal year 1952. Higher levels of taxable wages were responsible^
for this increase in receipts from the Federal Insurance Contributions
Act and the Federal Unemployment Tax Act. Receipts from the
rjiv:
::
REPOIIT ON FISCAL OPERATIONS
• ;:
' :
15
Railroad Retirement Tax Act would have expanded also, had it not
been for a change in collection prociedure resulting in a doubling-up
of receipts in the first quarter of the fiscal year 1952.
Customs.—^Customs receipts amounted to $613 million in the
fis'cal year 1953, an increase of $62 million over the-$551 million
derived from this source in 1952.
Miscellaneous receipts.—Miscellaneous receipts of $1,902 million in
the fiscal year 1953 were $99 million above the $1,803 million received
in 1952.
Returns of overpayments.—Returns of overpayments amounted to
$3,151 million in the fiscal year 1953, an increase of $849 miUion over
the previous year. This rise, principally in refunds of individual
income taxes, may be attributed to unemplo3raient caused by the
steel strike in the calendar year 1952 and to a more rapid processing of
i-efund claims in the fiscal year 1953 than in 1952.
ESTIMATES OF RECEIPTS IN 1954 AND 19551
. The estimates of receipts from taxes and customs for the current
and ensuing fiscal years are prepared in December of each year by the
Treasury Department. In general, the estimates of miscellaneous
receipts are prepared by the agency depositing the receipts in the
Treasury. Estimates in the following discussion are based on existing
legislation in accordance with standard budget practice and do not
take into account the reverse effect of proposed legislation. The
estimated effect of this legislation is included in table 119 which shows
the details of actual and estimated receipts. The estimates assume
that busiaess activity, personal income, and corporate profits will'
continue at substantially their present high levels.
Actual budget receipts amounted to $64,593 million in the fiscal
year 1953. Receipts are expected to increase by $2,846 million in the
fiscal year 1954 because-of the higher levels of income reflected in
receipts for t h a t fiscal year. However, a very sharp decline is estimated for the fiscal, year 1955 as tax-^rate reductions already effective
become more fully reflected and because of the effect of additional tax
reductions, scheduled under present law. Estimated receipts under
present law are $61,470 million in the fiscal year 1955 or $5,970 million
less than the estimate for 1954 and $3,123 million less than the level
1 The treatment of certain budget receipt and expenditure items will be changed in the fiscal year 1954.
Receipts from the Railroad Retirement Tax Act will be deducted from total receipts in arriving at net
budget receipts. This is the present practice with respect to receipts from the Federal Insurance Contributions Act. All receipts from the Railroad Unemployment Insurance Act will be treated as trust fund
receipts. Previously a part of such receipts was included in budget receipts.
•
These two changes will reduce the amount of net budget receipts, but since budget expenditures will be
correspondingly reduced there is no change in the net budget surplus or deficit. Other changes have also
been made ia classifications withia net budget receipts which affect component amounts but not net budget
receipts.
•
',
. '
"
.•
,.
:
. .
For comparative purposes actual 1953 receipts,and expenditu.res shown in table 119 have been adjusted
for these changes-i(except'for receipts linder-the'Railroad Unemployment Insurance Act) and will differ •'
frdm those appearing in other tables and text.
16
1953 REPORT:^ oil THE SECRil^ARY. OF THE iTREASlEmY ?
of actual receipts in 1953. If proposed legislation is taken into
account, the estimated receipts for 1955 are $62,642 million.
Fiscal Year 1954
Actual receipts in the fiscal year 1953 and estimated receipts in the
fiscal year 1954 are compared by major sources in the following table.
Source
1953 actual
1954 estimate
Increase, or
decrease (—)
In millions of dollars
Individual income tax
Corporation income and excess profits taxes.-..
Excisetaxes
Employment taxes
Estate and gift taxes
Customs
Intemal revenue not otherwise classified
Miscellaneous receipts
.-
Totalreceipts
Deduct:
(a) Appropriation to Federal old-age and survivors insurance
trustfund
.
(b) Appropriation to railroad retirement account
(c) Refunds of receipts.
Adjustment to daily Treasury statement basis
32,478.3
21, 594. 6
9,942. 7
4,998. 2
891.3
612.6
49.0
1, 828.3
33,433.0
22,809.0
10,038.3
5, 530.0
955.0
590.0
2,312. 6
954.7
1, 214. 5
95.6
531.8
63.7
-22.6
—49.0
484.3
72,394.9
75,667.9
3,273.0
4,086.3
625.1
3,119.8
4,600.0
640.0
2, 988. 2
613.7
14.9
-131.6
67,439.7
2,846.4
+29.5
Budget receipts
64, 593.3
—29.5
Budget receipts in the fiscal year 1954 are estimated to reach an alltime high despite the part-year effects of reduced tax rates affecting
receipts, particularly the individual income tax, and several excise
taxes. All major sources of receipts with the exception of customs
are expected to contribute to the increase.
Individual income tax.—The yield of the individual income tax is
shown in the following table.
1953 actual
Source
1954 esti.
mate
Increase, or
decrease ( - )
In millions of dollars
Individual income tax:
Withheld
„
_._
Not
withheld
. ^
Total individual income tax
_. . . .
..
.
21,171.8
11,306.6
22,284.0
11,149.0
1,112.2
—157 5
32,478.3
33,433.0
954 7
Receipts from the income tax withheld are estimated to increase in
the fiscal year 1954 since the higher levels of salaries and wages subject
to withholding are expected to more than offset the Ibwer withholding
rates effective January 1, 1954. Individual income taxes not withheld
are estimated to decline slightly as a result of the effect on quarterly
17
REPORT ON FISCAL OPERATIONS
declaration payments of the lower tax rates applicable to calendar
year 1954 incomes.
Corporation income and excess profits ^aa;6s.—Revenue from corporate
income and excess profits taxes amounted to $21,595 million in the
fiscal year 1953. Collections from this source are expected to iacrease
to $22,809 million: in the fiscal year 1954. A major portion of the
estimated rise of $1,215 million is due to the higher level of profits in
the calendar year 1953 as compared with the calendar year 1952.
Excise taxes.—Receipts from this source by major groups are listed
in the table which follows.
Source
•
1954
estimate
1953
actual
Increase, or
decrease ( - )
I n millions of dollars
Alcohol taxes
_
•
T o b a c c o taxes
_ ._ __
s t a m p taxes
M a n u f a c t u r e r s ' e x c i s e taxes
,
R e t a i l e r s ' excise taxes
Miscellaneous excise taxes
T o t a l excise taxes
._
.
2,780.9 . . . 2, 795.0
1,654. 9
1,568.0
90.3
91.0
2, 859. 4
2, 955.8
495.9
• 513.0
2,061.2
2,115. 5
.
9, 942. 7
_
._
10,038. 3
14.1
-86.9
.7
96.4
. 17.1
54.3
.95.6
Although the rates of certain excise taxes, principally in the alcohol,
tobacco, and manufacturers' excise tax groups, are scheduled to be
reduced as of April 1, 1954, total excise tax receipts are estimated to
increase in 1954, reflecting the higher expeuditure levels for taxable
goods and services in fiscal 1954.
Collections from the tobacco excise taxes are expected to decline
because of the scheduled termination of the tax increase made by the
Revenue Act of 1951, and reduced cigarette sales. The alcohol and
tobacco taxes affected by the scheduled rate decreases are paid by
stamp, and collections in 1954 will immediately reflect the April 1,
1954, reduction. Collections from the manufacturers' excise taxes
and miscellaneous excise taxes are estimated to increase, although
certain of the tax rates in these categories also will be reduced. Because
of the timing of payment of these tax liabilities, the effect on collections will lag behind the April 1 effective date of the tax reduction.
Employment taxes.-—The yields of the employment taxes are shown
in the table on page 18.
Emplo3nnent taxes are estimated to increase in the flscal year 1954,
principally as a result of the increased rates under the Federal Insurance Contributions Act effective January 1, 1954. .Other taxes
show relatively minor changes.
Estate and' gift taxes.—Receipts from estate and gift taxes are estiniated to increase froih $891 million in the fiscal year 1953 to $955
million in 1954.
273013—54
3
18
1 9 5 3 REPORT OF T H E SECRETARY OF T H E
TREASURY
1954 .,
estimate
1953
actual
Source
•^Increase, or
decfea'se (—X
I n millions of dollars
4,086.3.
275.8
626.0
10.0
F e d e r a l I n s u r a n c e C o n t r i b u t i o n s Act
F e d e r a l U n e m p l o y m e n t T a x Act
•Railroad R e t i r e m e n t T a x A c t .
^Railroad Unemployment Insurance A c t .
Total employment
Deduct:
(a) A p p r o p r i a t i o n to
t r u s t fund
(b) A p p r o p r i a t i o n t o
taxes
4,600.0
290.0
640.0
(0
.
F e d e r a l old-age a n d survivors insurance
.
--.
.
railroad retireraent account
513.7
14.2
14..0
^10.0
.
4,086.3
625.1
N e t e m p l o y m e n t taxes..
5,530.0
531.8
4, 600.0
640.0
513.7
14.9
290.0
1 l a t h e fiscal year 1954, collections u n d e r t h e Railroad U n e m p l o y m e n t I n s u r a n c e A c t will be t r e a t e d as
t r u s t fund receipts.
Customs.—Customs receipts are estimated to be $590 million in the
fiscal year 1954, a decrease of $23 million from actual receipts of
$613 million in 1953.
Miscellaneous receipts.—Miscellaneous receipts are estimated to
amount to $2,313 million in the fiscal year 1954, an increase of $484
million over actual receipts of $1,828 million in 1953. This increase
arises from a change in accounting for expenditures for foreign currencies which in 1954 are treated as budget items and affect both
receipts and expenditures in equivalent amounts.
Refunds of receipts.—Refunds of receipts are estimated to be $2,988
million in the fiscal 3^ear 1954, a decrease of $132 million from the
actual refunds of $3,120 million in 1953.
Fiscal Year 1955
Estimated receipts in the fiscal 3^ears 1954 and 1955 are compared
by major sources in the following table.
1954
estimate
Source
1955
estimate
Increase, or
decrease (—)
I n millions bf dollars
I n d i V i d u a l i n CO m e tax
Corporation income a n d excess profits taxes
Excise t a x e s . . E m p l o y m e n t taxes
F s t a t e a n d gift taxes
Customs...
......^
.Miscellaneousreccipts
....
:
-.
T o t a l receipts
.
Deduct:
(a) A p p r o p r i a t i o n to Federal old-age a n d s u r v i v o r s iusurance
trustfund
(b) A p p r o p r i a t i o n to 7-ailroad r e t i r e m e n t account
.(c) R s f u n d s of receipts
B u d g e t receipts
'33,^433.0
22,809.0
10, 038.3
5, 530.0
'
955.0
590.0
2,312.6
"30,908.0
19,694.0
9, 221.3
.6, 301. 0
955.0
• 590.0
2,453.0
-2,525.'0
- 3 ; 115.0
-817.0
771.0
75, 667.9
70,122. 4
-5,545.5
4,600..0
640.0
2, 988. 2
5.369.0
640.0
2,643.6
-344.6
67,439. 7
61,469.8
-5,969.9
140.4
769.0
19
REPORT ON FISCAL OPERATIONS
Budget receipts in the fiscal year 1955 are estimated to decline
sharply. The decline results primarily from the full year effects of
tax rate reductions already operative and the additional impact of
further reductions scheduled under present law.
Individual income tax.—The yield of the io dividual income tax is
shown in the following table.
1954
estimate
Source
1955
estimate
Decrease (—))
I n millions of dollars
I n d i v i d u a l iacome tax:
Withheld
Not withheld
.
.:.
T o t a l i n d i v i d u a l income tax .
22,284. 0
11,149. 0
20, 750.0
10,158.0
-1,534.0
-991,0
33, 433.0
30, 908. 0
-2,525.0
Receipts from income tax withheld are estimated to decline i.n the
fiscal year 1955 principally as a result of the full-year effect of the
lower withholding rates effective January 1, 1954. Receipts from
income tax not withheld will also decline as a result of the lower tax
rates applicable to 1954 incomes.
Corporation income and excess profits taxes.—Revenue from corporate
income taxation is estimated to amount to $19,694 million in the fiscal
year 1955, decreasing $3,115 million in comparison with receipts in the
fiscal year 1954. The principal causes of this decline are provisions of
existing law which provide for the termination of excess profits taxation on December 31, 1953, and a reduction in the corporate normal
tax rate effective April 1, 1954.
Excise taxes.—Receipts from this source by major groups are listed
in the following table.
•
1954
estimate
Source
1955
estimate
Increase, or
decrease (—)
I n millions of dollars
Alcohol taxes
Tobacco taxes
starap taxes. .
...
M a n u f a c t u r e r s ' excise taxes
.
R e t a i l e r s ' excise taxes i
^
Miscellaneous excise taxes
.
T o t a l excise taxes
-. .
.. .
-.
2, 795. 0
1, 568. 0
91.0
2, 955. 8
' 513.0
2,115.5'
2, 697. 0
1, 464.0
91.0
2,318. 3
521.0
2,130.0
10,038. 3
9, 221. 3
—98 0-104.0—637.5
•
8.a
14. 5
—817. a-
Excise tax receipts are expected to decrease substantially in the
fiscal year 1955 as a result of reductions in tax rates schediiled under
preserit law. In particular, the alcohol, tobacco, and manufacturers'
excise tax receipts decline markedly as a result of tax rate decreases.
The other major excise tax categories show either no change or slight
increases.
20
1953 REPORT OF THE SECRETARY OF THE TREASURY
Employment taxes.—Th.e details of the yields of the employment
taxes are shown in the following table.
1954
estimate
Source
1955
estimate
Increase
In millions of dollars
Federal Insurance Contributions. Act
Federal Unemployment Tax Act
Railroad Retirement Tax Act
.--.
-Total employment taxes
Deduct:
(a) Appropriation to Federal old-age and survivors insurance
trustfund
(b) Appropriation to railroad retirement account
Net employment taxes
—
4,600.0
290.0
640.0
5, 369.0
292. 0
640.0
769.0
2.0
5, 530.0
6,301.0
771.0
4, 600.0
640.0
5,369. 0
640.0
769.0
290.0
2.0
Employment taxes are estimated to increase in the fiscal year 1955
priacipally as a result of the full-year effect of the rate increases under
the Federal Insurance Contributions Act effective January 1, 1954.
Other employment taxes are relatively unchanged.
Estate and gift taxes.—Receipts from estate and gift taxes are estimated to be $955 million in fiscal year 1955, the same amount as ih
1954,
Customs.—Customs receipts are estimated to be $590 million in
fiscal year 1955, unchanged from those in 1954.
Miscellaneous receipts.—Miscellaneous receipts are estimated tb
amount to $2,453 milhon ia the fiscal year 1955, an increase of $140
million over 1954 receipts.
Refunds of receipts.—Reiunds of receipts are estimated to be
$2,644 million iii the fiscal year 1955. The decrease of $345 miUion
from those in the fiscal year 1954 results principally from the lower
individual income tax withholding rates eff'ective January 1, 1954.
Revenue from proposed legislation contained in the Budget Message
of the President, January 21, iP5.4-—The effects of recommendations
for both tax reform and the maintenance of the existing corporate
income tax rate and the total revenue from excise taxation are shown,
separately for iadividual income, corporation income, and excise
taxes in table 119. The recommended tax reforms are estimated to
involve a loss of $585 million in revenue from individual income taxes
in fiscal 1955. The combined effect of ref orm and continuation of the
tax rate on corporations is estimated to involve a net gain of $570
million in fiscal 1955 over the amount which would be received in the
absence of both reforra and rate maiatenance. The rescission of the
April i.reductions in excise taxes, as recommended id the tax program,
is estimated to involve a gain of $189 million in fiscal 1954 and $1,018
inillion in fiscal 1955.
REPORT ON FISCAL
21
OPERATIONS
BUDGET EXPENDITURES IN 1953
Budget expenditures during the fiscal year 1953 were $74.6 billion;
larger than in any other year since World War I I and nearly double
the average for the four years (1947-50) between the cessation of
hostilities and the outbreak of the hostilities in Korea. Expenditures
during the fiscal years 1953, 1952, and 1951, and the postwar averages
bf 1947-50, on a daily Treasury statement basis, are shown in the
following table. Details for these and earlier years are shown in
tables 2 , 3 , and 5 of the tables section of this report.
National
defense i
Year
International
finance
and aid
Interest
on the
public
debt
Veterans'
Administration
Other
Total
In billions of dollars
1947-50 average
1951
1952
1953
_
13.2
20.0
^39.0
44.6
4.9
'4.9
5.8
5.3
5.6
5.9
6.5
6.8
'•5.3
'5.0
4.3
8.1
••9.3
'11.4
13.4
38 3
44.6
66.1
74.6
' Revised.
. 1 Includes activities related to the defense program.
I t was not possible for the results of the fiscal year 1953, which
was more than half gone when the new administration took office, toshow in any appreciable degree the economy efforts that are being
carried out. To a very great degree, spending in the fiscal year 1953^
represented payments under obligations incurred before January 20^
1953. Substantial reductions in expenditures can be made only
gradually because of prior commitments and the present world
situation.
Expenditures in 1953, as in the two previous fiscal years, were dominated by spending for national security and certain related functions.
Expenditures for national defense, international finance and aid, interest, and veterans' services and benefits aggregated $61.2 billion in
1953 and accounted for 82 percent of total expenditures as compared
with 83 percent in 1952 and 79 percent in 1951.
Although expenditures for national defense during 1953 were $5.6
billion larger than in 1952, the ratio of defense expenditures to total
expenditures was virtiially the same in both years; 60 percent in 1953
and 59 percent in 1952.
Significantly, however, while monthly defense spending rose from
an average of less than $2.9 billion in the first quarter of the fiscal
year 1952 to nearly $3.8 billion in the fourth quarter, defense expenditures leveled off considerably during 1953 when the average monthly
defense expenditures in the four quarters of the fiscal year were $3.6,
$3.7, $3.6, and $3.9 billion. The increase over 1952 defense expendi-
22
195 3 REPORT OF THE SECRETARY OF THE TREASURY
tures reflects for the most part the continued rise in major military
procurement and construction. Smaller increases were made in
spending for military personnel and research and development, while
there was some decrease in the cost of operation and maintenance of
the military establishment.
Interest on the public debt, which is reported on the basis of inter.est payments becoming due and pa^^able, exceeded, as it had in 1951
;and 1952, spending for either international aid and finance or for veterans' services and benefits. The 1953 interest total was $6.5 billion,
.an increase of $0.6 billion over 1952. Although this increase resulted
mainly from an increase of over $7 billion in the total amount of interest-bearing Federal securities outstanding and from a general rise
in interest rates on new issues during the year, a considerable increase
w^as also attributable to an unusual situation involving timing of
interest payments during the fiscal year 1953. Over $15 billion of
certificates of indebtedness, on which nearh^ a A^ear's interest was
paid at maturity in. 1953, were refunded during the fiscal 3^ea,r into
securities on which interest payments for 6 months or more were made
in June 1953. Consequently about 20 months' interest on this considerable portion, of the debt was paid in the 12 months of 1953.
Except for this change in timing of certain short-term marketable
public debt issues, interest pa37ments in 1953 would have been about
$200 million less.
Expenditures of $5.8 billion for international finance and aid in
1953 were $0.9 billion larger than in 1952. The increase resulted principally from a net increase in spending for two programs under the
Mutual Security Act: $3.8 billion for military assistance compared with
$2.2 billion in 1952; and $1.7 billion for economic and technical aid
compared with $2.2 billion in 1952.
Veterans' services and benefits cost $4.3 billion in 1953, $0.6 billion
less than in 1952, a continuation of the downward trend of the preceding three fiscal 3^ears. An increase of $0.2 billion in pension and
compensation benefits was more than offset b}^ the decline in readjustment benefit pa3^ments from $1.5 billion in 1952 to $0.7 billion in
1953. I t is interesting to note that since 1940 the number of veterans
has increased from 4,300,000 to about 20,000,000.
Details of the expenditures for the fiscal 3^ear 1953 other than those
discussed in the preceding paragraphs are shown in the following table.
These include the running expenses of the Government, costs of other
domestic programs, and of some programs closel}' related to the
national securit}^ for whicli the detailed, statistics are not readil}^
23
REPORT ON FISCAL OPERATIONS
separable from the routine operating expenses of various agencies
and departments. The 1953 total of $13.4 billion compares with
$11.4 billion in 1952 and $9.3 billion in 1951. Practically all of the
net increase related to expenditures for agriculture, which rose from
$1.2 billion in 1952 to $3.1 billion in 1953. This resulted from increased
crop price support activities of the Coinmodity Credit Corporation
following the decline, begun in the summer of 1952, in prices of
agricultural commodities.
The Corporation's net expenditures
amounted to $1.9 billion in 1953 compared with net receipts of $0.1
billion in 1952. The classification ^^all other" expenditures includes
the expenditures of executive departments and agencies not classified
elsewhere, as well as those of the legislative and judicial branches
of the Government.
Year
Agriculture
Housing
and
home
finance
Public
works
Social
security
Atomic
energy
Postal
deficiency
All
other
Total
In millions of dollars
1947-50 average
1951
1952......
1953...
1,913
635
1,219
3,063
-66
. 460
614
382
1,228
1, 458
1,515
1,655
1,587
2,027
2,203
2,253
446
908
1,648
1,802
417
624
740
660
2,557
3,151
3,445
3,576
8,083
9, 263
11,384
13.393
ESTIMATES OF EXPENDITURES IN 1954 AND 1955
Actual expenditures
fiscal years 1954 and
Further details will be
upon figures submitted
for the fiscal year 1953 and estimates for the
1955 are summarized in the following table.
fbund in table 119. The estimates are based
to the Congress ia the Budget for 1955.
24
1953 REPORT OF THE SECRETARY OF THE TREASURY
Actual budget expenditures for the fiscal year 1953 and estimated expenditures for
1954 and 1955 i
[In millions of dollars.
O n basis of 1955 B u d g e t d o c u m e n t ]
Actual,
1953
Agriculture D e p a r t m e n t (including C o m m o d i t y Credit Corporation)
Atomic Energy Commission.
Civil Service Commission
:.
Commerce D e p a r t m e n t
.
Defense D e p a r t m e n t :
M i l i t a r y functions 2
._
.:
Civil functions
^
E c o n o m i c Stabilization Agency
E x p o r t - I m p o r t B a n k of W a s h m g t o n (net)
Federal Civil Defense A d m i n i s t r a t i o n
General Services A d m i n i s t r a t i o n
.
H e a l t h , E d u c a t i o n , a n d Welfare D e p a r t m e n t . . .
....
H o u s i a g a n d H o m e F i n a n c e Agency
Interior D e p a r t m e n t
Labor Department
F u n d s appropriated to the President
P o s t Office D e p a r t m e n t
Railroad R e t i r e r a e n t B o a r d
R e c o n s t r u c t i o n F i n a n c e Corporation (net)
state Department
Tennessee Valley A u t h o r i t y
Treasury Department:
I n t e r e s t on t h e p u b l i c d e b t
Other
Veterans' Administration
R e s e r v e for contingencies
All other
-Total budget expenditures
:..
Deduct:
A p p l i c a b l e receipts 3
A d j u s t m e n t t o daily T r e a s u r y s t a t e m e n t basis..
N e t budget expenditures
—..
Estimated,
1954
Estimated,
1955 .
4.710.2
1,790.9
345.6
1,197.8
6,364.5
2,200.0
51.3
1,148.5
4, 759. 6
2, 426.0
48.3
1,028.3
47, 564.6
945.0
64.5
562.5
77.1
1,108. 5
1,919.9
1,893.7
623.5
303.0
2,131.1
2, 775. 3
33.0
516.2
271.1
315.7
45,750.4
• 736.7
2.4
548.6
73.6
939.0
1,950.9
2,105.7
582.9
301.0
1,885.7
2, 774.7
34.9
349.0
159.2
365.8
41,850.4
654.0
6, 503.6
1.038.3
4,384.5
2,433.6
6, 525.0
1,091.3
4,250.8
75.0
2,628.3
6,800.0
853. a
4,236.2
160.0
2,811.7
83,499.2
82,895.2
76,656. a
9, 225.0
291.9
11,992.7
11,085.1
73,982.3
70,902.6
66, 670.1
474.0
66.8
763.2
1, 788. 5
1,712.3
661.7
361.8
1,622.8
2, 776.1
270.0
214.1
439.6
' 1 T h e s e figures are derived from t h e 1956 B u d g e t d o c u r a e n t . D e t a i l s of a c t u a l figures for t h e fiscal year 1953
are based u p o n t h e T r e a s u r y ' s Combined Statement of Receipts, Expenditures and Balances.
2 Includes m i l i t a r y assistance u n d e r t h e M u t u a l Security P r o g r a m .
3 R e c e i p t s of certain G o v e r n m e n t corporations, t h e postal service, a n d other revolving funds t h e r e c e i p t s
of w h i c h come p r i m a r i l y from outside t h e G o v e r n m e n t .
TRUST ACCOUNT AND OTHER TRANSACTIONS
Financial transactions of Federal agencies, other than those affecting
the budget receipts and expenditures of the Government and those
relating to the public debt, are classified in the daily Treasury statement under three constituent groups: (1) Trust accounts, etc., (2)
investments of Government agencies in public debt securities (net),
and (3) sales and redemptions of obligations of Government agencies
in the market (net).
The first group includes the trust accounts maintained in the Treasury, pursuant to law, for the benefit of individuals or classes of individuals. The Government's payments from general fund appropriations to certain trust accounts are included as receipts under the
respective accounts. The receipts and expenditures of trust accounts
REPORT ON FISCAL OPERATIONS
25
are reported in the daily Treasury statemerits on a gross basis. Also
included in this group are deposit fund accounts covering principally
deposits with the Treasurer of the United States which are subject
to refund or withdrawal by the depositor, and unidentified receipts of
Government agencies held until an appropriate disposition can be
made. Activity in deposit fund accounts is reported on a net basis.
During the fiscal year 1953, the trust and deposit account transactions
resulted in an excess of credits or net receipts in the amount of $3,763
million.
,
The second group shows the net investments in public debt securities
by Government agencies and funds. During the fiscal year 1953, the
net purchases of securities amounted to $3,301 inillion. The third
group reports the net of market sales or redemptions, in the face
amounts, of securities issued by Government corporations and
agencies. During the fiscal year 1953, the excess of redemptions
amounted to $25 million.
Monthly details of the three groups for the fiscal year 1953 and
comparative figuries for the fiscal year 1952 will be found in table 4.
Table 6 shows trust account and other transactions from 1945 through
1953 by major classifications.
GENERAL FUND
The general fund of the Treasury consists of moneys of the United
States'Government in Federal depositaries or deposited with and held
by the Treasurer of the United States. The assets which are in the
accounts of the Treasurer of the United States consist of certain gold,
silver, paper currency, coin, unclassified collection items, and balances
in Federal Reserve Banks and other depositary banks. The habilities
consist of outstanding Treasurer's checks, balances to the credit of
the Post Office Department, the Board of Trustees of the Postal
Savings System, postmasters' disbursing accounts, etc., and uncollected items, exchanges, etc. The difference between the assets* and
liabilities is the general fund balance. On the basis of the daily
Treasury statement, the balance at the close of the fiscal year 1953
amounted to $4,670 million, a decrease of $2,299 million during the
fiscal year.
26
195 3 REPORT OF THE SECRETARY OF THE TREASURY
The net change in the balance of the general fund during the fiscal
year was accoimted for as follows:
[In raillions of dollars]
Balance June 30, 1952
Add:
Budget receipts, net
Trust accounts, etc., receipts
Net increase in gross public debt
6, 969
65,218
8, 932
6, 966
81, 116
TotaL __.
^
. Deduct:
Budget expenditures, including those" of wholly owned
Government corporations
74, 607
T r u s t accounts, etc., expenditures
5,169
Investments of Government agencies in public debt
securities, n e t
3, 301
Sales and redemptions of obligations of Government
agencies in market, net
25
Clearing account for outstanding checks and interest
coupons, and telegraphic reports from Federal Reserve B a n k s ; excess of expenditures
312
88, 085
83, 414
Balance J u n e 30, 1953
.
4, 670
A comparative analysis of the assets and liabilities in the accounts
of the Treasurer of the United States, comprising the general fund,
as of June 30, 1952, and June 30, 1953, is shown in table 44.
The balance in the general fund as of the end of each month during
the fiscal year ranged from a high of $7,925 million on July 31, 1952,
to a low of $3,582 million on April 30, 1953. The largest item in
general fund assets was the amount, termed Treasury tax and loan
accounts, on deposit in Treasury accounts with commercial banks
designated as special depositaries. Balances in these accounts, as of
the close of the inonth, were highest on July 31, 1952, with a total of
$6,027 million, and lowest on April 30, 1953, with a total of $1,859
million. On June 30, 1953, the balances in the tax and loan
accounts totaled $3,071 million.
Funds deposited in tax and loan accounts consist primarily of the
proceeds of sales of public debt oblifatiDris issued for cash, except
regular issues of Treasury bills. A large part of the proceeds of
Avithheld taxes and most quarterly tax payments of $10,000 and over
b}^ individuals and corporations also are carried in these accounts.
REPORT ON FISCAL OPERATIONS
27
VERIFICATION OF GOLD AND SILVER BULLION AND OTHER TREASURY
ASSETS
Shortly after the present administration assumed office there was
c6hdu<3iEed a thorough audit of the gold and silver bullion and other
assets of the Treasur}^' Department. The audit established an aggregate value of $30,442,418,073.41^ for gold and silver bullion, bank
deposits, and other, assets included in the accounts of the Treasurer
of the United States as of Januaiy 27, 1953, and confirmed the accuracy
of the Treasury records of these assets. In addition, the audit verified
the accurac}^ of Treasury records in respect to: (1) Securities and
other items amounting to $69,985,218,759.92 % in value held by
various Treasury offices in a custodial capacity for the accounts
of individuals, Government agencies, and Government trust funds;
and (2) unissued stocks of savings bonds and reserve stocks of unissued
currency in the aggregate amount of $3,149,489,315.00.
The audit was performed in accordance with procedures which
were recommended by an advisory committee of consultants appointed
jointly by the present Secretar}?- and his predecessor in office. Members of the advisory committee were W. L. Hemingway, Chairman of
the Executive Gommittee of the Mercantile Trust Company, St. Louis,
chairman; Wm. Fulton Kurtz, Chairman of the Board, Tbe Pennsylvania Company, Philadelphia; Sidne.y B. Congdon, President, National Cit}^ Bank of Cleveland, Cleveland; and James L. Robertson,
Member, Board of Governors, Federal Reserve System, Washington.
As had been suggested by the advisory committee, the audit was
conducted under the general supervision of a continuing committee
representing both incoming and outgoing Treasury officials. Representatives of the Comptroller General of the United States observed the
audits at each of the various audit sites.
Individual special settlement committees designated by the Director
of the .Mint conducted, the verification ofasset values of each of the
mint institutions. The personnel of each settlement committee was
carefully selected from Bureau of the Mint employees normally
employed at mint institutions other than the particular mint institution to whicii the}^ were assigned for the conduct of the audit settlement.
In accordance with a recommendation of the advisory committee^
the special settlement committee at the Fort Knox depositary opened
three gold compartraents, or 13.6 percent of the total of twenty-two
sealed compartments at that institution containing 356,669,010.306
fine ounces of gold valued at $12,483,415,360.28. All of the gold
contained in the thi-ee sealed compartments opened, amounting to
34,399,629.685 fine oimces valued at $1,203,987,038.94 or approxi1 Excludes $37,217.59 in transit from mint institutions.
28
1953 REPORT OF THE SECRETARY OF THE TREASURY
mately 88,000 bars, was counted by members of the settlement
committee and found in exact agreement with the recorded contents
of the compartments. Slightly in excess of 10 percent of the total
gold values so counted, or some 9,000 bars weighing approximately
130 tons, was further verified through weighing upon special balance
scales indicating exact weights to the 1/100 part of a troy ounce. , All
gold weighed was found in exact agreement with the recorded weight
thereof. Further, test assays were made of 26 gold bars selected at
random from the total gold counted. The reported results of the
test assays indicated, that all gold tested was found to be of a fineness
equal to or in excess of that appearing in the mint records and stamped
on the particular gold bars involved. Gold samples used for test assay
purposes were obtained through drilling from both the top and bottom
of each representative gold bar. In final confirmation of the verification of the gold bullion asset values held in the Fort Knox depositary
the special settlement committee reported in part as follows:
*'0n the basis of assays, your committee can positively report that
the gold represented, according to assay, is at the depositary. We
have no reason, whatsoever, to believe other than, should all melts
be assayed, the results would be the sarae.^^We, the undersigned, found the assets verified, to be in full agreement with the assets as indicated by the joint seals affixed to the
respective compartments.on January 26, 1953.
*Tt is the opinion of this committee that the same agreement would
be found should all of the compartments be verified."
, Special settlement committee operations at the other mint institutions closely paralleled those employed at the Fort Knox depositary
and confirmed the accuracy of the Treasury records relating to the.
monetary asset values held by these institutions. The General
Accounting Office confirmed the adequacy of the procedures employed
and the propriety of the manner in which asset verification was,
accomplished by the special settlement committee at each of the
mint institutions.
The total monetary asset values held by the several mint institutions
as of January.27, 1953, were found to be $24,881,671,267,73,^ including
gold buUion in the amount of $23,035,947,570.94 and silver bullion
in the amount of $1,621,531,937.58.
An audit of cash, reserve currency, unissued securities, and securities
in safekeepiag which were in the direct custody of the former Treasurer
of the United States at the close of business on January 27, 1953, and
were transferred to the present Treasurer of the United States on
January 28, 1953, was conducted by a special committee of seven
1 Includes $37,217.59 in trarisit from mint institutions.
•--•-
REPORT ON FISCAL OPERATIONS/
29
members which had been selected from personnel of the Treasury
Department and of which five members were not employees of the
Office of the Treasurer. The grand total of the items covered by this
audit (minor shortages amounting to $36.71 having been discovered and
made good at the time of the audit) amounted to $32,410,260,668.69 2/3,
and was identical to the total for'these items appearing on the books
of the Treasurer.
The special committee which audited the items in the direct custody
of the Treasurer also verified the accuracy of Treasury.records pertaining to securities and other items held in a custodial capacity
by offices other than that of the Treasurer of the United States for
the accounts of individuals, Government agencies, and Government
trust funds.
i As part of the audit of Treasury assets, special confirmations
obtained by the General Accounting Office from Federal Reserve
Banks and other bank depositaries verified deposit balances carried
in the accounts of the Treasurer of the United States as of January 27,
1953, which together withitemsin transit amounted to $4,914,662,484.838
PUBLIC DEBT OPERATIONS AND OWNERSHIP OF FEDERAL
SECURITIES
There was a net increase of $7.0 billion in the public debt and
guaranteed obligations during the fiscal year 1953. This increase
brought the debt to a level of $266.1 billion on June 30, 1953. The
debt was larger than on any other June 30 since 1946 and was only
$13,6 billion less than the all-time peak of $279.8 billion reached in
February 1946.
'
The increase in the debt was brought about by special issues of
$2.8 billion to Government investment accounts and a net increase
of $4.3 billion in interest-bearing public issues.
Nonmarketable
public issues decreased by $2.6 billion, whereas the public marketable
issues increased by $6.9 billion. The increase in the public marketable
issues was primarily in Treasury bonds, which rose significantly for
the first time since the end of World War I I financing. 'Changes in
the debt during 1953 are summarized in the accompanying table.
The total Federal debt outstanding since January 1946 is shown
in chart 3 and the composition of the debt as of June 30, 1953, is
shown in chart 4. Detailed information on the debt outstanding,
operations, and ownership is give in the tables section of the report.
Operations in the pubhc debt and changes in its ownership during
the fiscal year 1953 are outlined in the two sections which follow.
30
1953 REPORT OF THE SECRETAEY OF THE TREASURY
-TRENDS IN THE FEDERAL DEBT 1946-'53.
CHART 3.
•
Class of debt
June 30,
1952
June 30,
Increase, or
1953 ^ 'decrease (—)
In billions of dollars
Public debt:
Interest-bearing:
Public issues:
Marketable .
Nonmarketable
Total public issues .
Special issues to Government investment accounts
Total interest-bearing public debt
Matured debt on which interest has ceased
Debt bearing no interest
Total public debt
..
•Guaranteed obligations not held bv Treasury.
Total public debt and guaranteed obligations
*Less than $50 million.
140.4
78.7
219.1
37.7
147.3
76.1
6.9
-2.6
223.4
40.5
4.3
2.8
256.9
.4
1.8
263. 9
.3
1.8
7.1
—.1
(*)
259.1
266.1
.1
(*)
(*)
259. 2
266.1
7.0
7.0
PUBLIC DEBT OPERATIONS
During 1953, for the first time since the autumn of 1945, the Treasury made cash issues of marketable securities in addition to weekly
Treasury bills and Treasury bills, tax anticipation series. These
•offerings for ''new money," consisting of two issues of Treasury bonds,
brought in more than $5.4 billion. Together with the net proceeds
of Treasury bills, borrowing of ''new money" totaled $7.9 billion.
Marketable issues
The net increase of $6.9 billion in the marketable interest-bearing
•debt brought the total to $147.3 bilhon on June 30, 1953, compared
REPORT
ON FISCAL
31
OPERATIONS
with $140.4 billion on June 30, 1952. The amounts of the security
classes of marketable issues outstanding on June 30, 1952 and 1953,
with changes during.the year, are,shown in the following table.
JuneSO,
1962
Class of security
June 30,
1953
Increase, or
decrease ( - )
In billions of dollars
Treasury b ills _
Certificates of indebtedness
Treasury notes
Treasury bonds:
Bank eligible
..;
Bank restricted
other-
'.
._
Total interest-bearing marketable securit ies
17.2
28.4
19.0
19.7
15.9
30.4
48.2
27.5
.1
140. 4
64.0
17.2
.1
147.3
2.5
— 12 6
11.6
15 8
-10.2
(*)
6.9
* Less than $50 million.
Bonds, notes, and certificates of indebtedness.—Tres^^surj bonds and
certificates of indebtedness in the amount of $34.1 bilhon matured or
were called for redemption during the fiscal year 1953. Of this total,
the securities exchanged for new issues amounted to $32.0 billion,
while the remainders of the issues turned in for cash redemption or
carried to the matured debt totaled $2.1 billion.
On February 13, 1953, the 2 percent Treasury bonds of 1953-55,
dated October 7, 1940, due June 15, 1955, were called for redemption
STRUCTURE OF THE DEBT JUNE 30,1953.
CHART 4,
1 Partially tax-exempt bonds to earliest call date
32
1953 REPORT OF THE SECRETARY OF THE TREASURY
on June 15, 1953, in the amount of $0.7 billion. The bonds of this
issue were called because of the partially tax-exempt attributes they
carried./ Five issues of Treasury bonds were not called for redemption
when they reached their first and subsequent call dates during the
fiscal year. These were the 2 percent bonds of 1951-53, the 2 percent
bonds of 1951-55, the two issues of 2 percent bonds of 1952-54, and
the 2M percent bonds of 1952-55.
Bank restricted bonds, which commercial banks may not acquire
for their own account prior to specified dates, decreased by $10.2
billion to a total of $17.2 billion. Three issues of bank restricted
bonds, the 2}^ percent bonds of December 15, 1959-62, the 2M percent
bonds of'December 15, 1963-68, and the 2}^ percent bonds of June 15,
1964-69, outstanding in the amount of $10.1 billion, became bank
eligible on December 15, 1952, December 1, 1952, and April 15, 1953.
The following tables show the results of the public offerings of
bonds, notes, and certificates of indebtedness during the fiscal
year 1953.
Public offerings of bonds, notes, and certificates of indebtedness, fiscal year 1953 ^
[In mOlions of dollars]
Issued
for
cash
Description of security
D a t e of issue
Issued in
exchange
for other
securities
Total
issued
M a r k e t a b l e issues
J u l y l , 1952
A u g . 16, 1962
F e b . 16,1953
J u n e l , 1953
Apr.
Oct.
Apr.
Oct.
1,1952
1, 1952.._
1, 1953
1,1962 . .
J u l y 1, 1962.
F e b . 16, 1953
M a y 1,1953
Certificates of i n d e b t e d n e s s :
1%%, Series B-1953,'due J u n e 1,1953
2%, Series C-1963, d u e A u g . 16,1963
2M%, Series A-1954, d u e F e b . 15, 1954
2^/i%, Series'B-1954, d u e J u n e 1,1954
T r e a s u r y notes:
i y i % . Series EA-1957, d u e A p r . 1,1967
_
13^%, Series EO-1967, d u e Oct. 1, 1957
1^2%, Series EA-1958, d u e A p r . 1, 1958
_
2 H % , Series A-1953, d u e D e c . 1,1953
Treasury bonds:
_
2 % % o f 1958, d u e J u n e 16, 1958 _
2 ^ . % of 1958, d u e Dec. 16, 1958.
3 H % of 1978-83, d u e J u n e 16, 1983
_ _
Total, marketable issues. _
_
4.963
2,882
8,114
4,858
• 4.963
• 2, 882
8,114
4,858
20
824
77
10,542
20
824
77
10, 542
1,188
620
2 418
4,246
620
3 1,606
5,433
3 33, 318
38, 750'
_
_..
4,245
_..
N o n m a r k e t a b l e issues
Various
T r e a s u r y savings n o t e s :
Series A . . .
Series B
S u b t o t a l , T r e a s u r y savings notes
Do.
U n i t e d States savings b o n d s :
Series E
SeriesH
Series F a n d G
Series J a n d K
1,464
2,760
1,464
2, 760'
4,224
4,224
4 4, 821
360
} 4 608
S u b t o t a l , savings b o n d s .
4 5. 788
T o t a l , n o n m a r k e t a b l e issues
T o t a l , issues
_
10,013
16,446
4 4,821
360"
2 \f • 4108
4 502
2
4 5, 791
2
33,320
10,016
48, 765-
>'Exclusive of special series of certificates of indebtedness; depositary bonds; special notes of the United
States: International Monetary Fund sei 1 s; United States savings stamps; and guaranteed obligations.
> Includes $950,675 cash differences paid on exchange of Series F and G savings bonds.
»Includes $14 raillion m deferred subscriptions.
* Includes accruals.
33
REPORT ON FISCAL OPERATIONS
Disposition of maturing or redeemable public issues of honds, notes, and certificates of
indebtedness, fiscal year 1953^
[Dollars in millions]'
D a t e of
refunding
or redemption
1952
July 1
Aug. 16—
Do....
Oct. 1
Dec. 1 . . 1953
Feb. 15-. _
June 1
J u n e 15
"Description of security
M a r k e t a b l e issues
Oertificates of indebtedness:.
l } i % , Series B-1952, m a t u r i n g
J u l y 1,1952.
1 1 ^ % , Series C-1962, m a t u r i n g
A u g . 15, 1952.
1 % % , Series D-1952, m a t u r i n g
Sept. 1, 1952.
1 % % , Series E-1952, m a t u r i n g
Oct. 1, 1952.
1 ^ % , Series F-1952, m a t u r i n g
D e c . 1, 1952.
1 % % , Series A-1953, m a t u r i n g
F e b . 16, 1963.
1 % % , Series B-1953, m a t u r i n g
J u n e 1, 1953.
2 % T r e a s u r y b o n d s of 1953-55,
. called J u n e 15,1953.
D a t e of issue
Various...
Series E
Series H —
Series F
—
-
Series G
SeriesJ
Series K . . . . . . . . x
T r e a s u r y tax a n d savings n o t e s —
Do.—
23^% T r e a s u r y b o n d s , i n v e s t m e n t
series:
Series A—
.. .
Series B
Subtotal, Treasury bonds,
i n v e s t m e n t Series.
T o t a l , n o n m a r k e t a b l e issuesT o t a l , issues - . .
.
Percent
exchanged •.
253
4,963
6,216
Sept. 15, 1951
150
434
583
74.4
Oct. 1, 1951
258
1,675
1,832
86.0
Oct. 15, 1 9 5 1 . . . . . . .
319
10, 542
10, 861
97.1
D e c . 15, 1951
190
873
1,063
82.1
98.5
95.1
M a r . 1, 1952
134
8,734
8,868
J u l y 1,1952
653
4,410
4,963
88.9
Oct. 7, 1940
277
448
725
• 61.8
2,132
•31, 979
34, 111
93.7
2
4,032
Mar.
1935-Apr.
31
1941.
M a y 1941 on con4,030
t i n u o u s sale.
J u n e 1952 on con6
t i n u o u s sale.
May
1941-Apr.
1962.
[ 1,128
do
M a y 1962 on con2
t i n u o u s sale.
do.. :
" 6
6,202
S u b t o t a l , savings b o n d s
Do-
Total
A u g . 1,1961
T o t a l , m a r k e t a b l e issues
N o n m a r k e t a b l e issues
U n i t e d States savings b o n d s :
Series A - D
Redeemed
Exfor cash changed
or car- for n e w
ried to
m a t u r e d security
debt
A u g . 1941 o n cont i n u o u s sale.
Oct. 1, 1947
A p r . 1, 1952
31
6
j
256
417
1 1,289
2
6
419
6,621
2 6,388
2 6,388
3
1
921
3..
922
6
921
925
11, 595
13, 727
1,339
33,318
12, 935
47,045
1 Marketable issues in this table are exclusive of special series of certificates of indebtedness; postal savings
bonds, and other debt items. Nonmarketable issues are exclusive of armed forces leave boads; depositary
bonds; excess profits tax refund bonds; special notes of the United States: International Moaetary F u n d
series; United States savings stamps; and guaraateed obligatioas.
„ 2 Includes tax and savings notes in the amount of $2,082 million surrendered in payment of taxes.
The matured and caUed securities consisted of one issue of 2 percent
Treasury bonds, and seven issues of 1% percent certificates of indebtedness—four of 11 months maturity and three of 1IK months maturity.
These issues were refunded into one issue of 5-year, 10-month bonds,
one issue of 14-month notes, andfiveissues of certificates of indebtedness—one of 11 months maturity and four of one-year maturity.
273013—54
4
34
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Table 15 shows the amounts outstanding, by classes of securities, at
the end of the fiscal years 1943-53.
The first financing operation of the fiscal year 1953, announced on
June 10, 1952, was the offering for cash.on June 16, 1952, of an intermediate bond in the amount of $3.5 billion, or thereabouts. Proceeds
from the sales of this bond, the announcement stated, might be
deposited inTreasury tax and loan accounts. This was the first offering
of Treasury bonds for cash since the Victory Loan in the fall of
1945. The bonds carried an interest rate of 2% percent and were
dated July 1, 1952, with maturity on June 15, 1958. Nonbank subscriptions were accepted without limit and allotted in full. Subscriptions from commercial banks for their own account were restricted in
each case to an amount not exceeding the combined capital, surplus,
and undivided profits, or 5 percent of the total deposits as of Deceniber
31, 1951, whichever was greater, of the subscribing bank. Such subscriptions from commercial banks were allotted in full up to and
including $100,000; subscriptions for amounts over $100,000 were
allotted $100,000. The subscriptions received totaled $11,693 million, and $4,245 million of the new bonds were allotted: 85.7 percent
of the total issue was allotted to nonbank investors, 11.9 percent to
commercial banks, and 2.4 percent to Government investment
accounts.
At the same time there was offered a new 11-month V/i percent
certificate of indebtedness, thus continuing the interest rate of 1%
percent per annum which the, certificate issues had carried since June
15, 1951. . These certiticates. Series B-1953, dated July 1, 1952, were
offered to holders of the 1% percent certificates of indebtedness. Series
B-1952, maturing July 1, 1952, in the amount of $5,216 million.
Exchange subscriptions to the new certificates totaled $4,963 million,
leaving $253 million of the maturing certificates to be paid in cash.
The short-term rate was changed, however, in the refundings of
August-September 1952 announced b}^ the Secretary of the Treasury
on July 30. The announcement stated the Treasury would offer
a new one-year 2 p'ercent certificate. Series C-1953, on August 4, in
exchange for the two outstanding issues of 1% percent certificates of
Series .C-1952 and Series D-1952, which matured on August 15 and
September 1, respective^, in the total amount of $2,416 million.
Exchanges of the maturing certificates amounted to $2,008 million.
On September 12, 1952, it was announced that on September 15 a
14-moDth 2% percent Treasury note. Series A-1953, Avould be-offered
in excbange for the 1% percent certiticates of indebtedness, Series
E-1952, maturing October 1, 1952, in the amount of $10,861 million.
Exchanges of tbe maturing certificates fdr the now notes amounted
to $10,542 million, leaving $319 million for cash redemption.
REPORT ON FISCAL . OPERATIONS
35
On November 17, 1952, the offering on that date was announced of
an additional amount of the one-year 2 peixent certificates of Series
C-1953 in exchange for the 1% percent certificates of Series F-1952,
maturingwDecember 1, 1952, in the amount of $1,063 million. The
new certificates, like others of the series, were dated August 15, 1952,
and were exchanged at par and accrued interest to December 1 for
the maturing certiticates. Subscriptions to the new certificates
amounted to $873 million, leaving $190 million of the maturing certificates to be paid in cash.
. The next refunding, which was the first financing of the new administration, was announced on January 27, 1953. The Secretary of the
Treasury announced the offering on February. 2 of the one-year
2}^ percent certificates of indebtedness, Series A-1954, and the fiveyear, ten-month 2 ^ percent Treasury bonds of 1958 for the exchange
of $8,868 million outstanding 1% percent certificates of Series A-1953,
maturing February 15, 1953. A total of $8,734 million of the maturing certificates were exchanged, $8,114 million for the new^ certificates
and $620 million for the new bonds, leaving $134 m.illion to be paid
in cash.
. On April 8, 1953, the Secretary of the Treasury announced an
offering on April 13 for cash subscription of $1.0 billion or thereabouts of 25-30-year 3}^ percent Treasury bonds. This bond offering was made available also for exchange of Series F and G savings
bonds maturing from M a y 1 through December 1953. Holders of
these savings bonds were given the privilege during the period before
M a y 1 of exchanging them for the new marketable bond at par, with
interest adjustments to May 1. The new bond was the longest issue
of the Treasury since October 1941.
Cash subscriptions received for the new bonds aggregated about
$5,250 million, and a total of $1,188 million of the new bonds were
allotted, including $118 million allotted to Government investment
accounts. Cash subscriptions from commercial banks for their own
account were restricted in each case to an amount not exceeding 5
percent of their time deposits as of December 31, 1952. Subscriptions
could be paid for by credit i n Treasury tax and loan accounts. Payments at par and accrued interest from May 1, 1953, could be deferred
over a period of three months but had to be completed not later than
July 31. Subscriptions ia amounts up to and including $5,000 were
allotted in full; all other subscriptions were allotted 20 percent,
adjusted to the next higher $500, but not less than $5,000 on any one
subscription. Holders of Series F and G bonds maturing M a y
through December 1953 who elected to take. advantage of the exchange offering were allotted $417 million of the new bonds.
36
195 3 REPORT OF THE SECRETARY OF THE TREASURY
The final financing operation of the year was announced by theSecretary of the Treasury on May 18, 1953, to take place on May 20,
A one-year 2% percent certificate of indebtedness. Series B-1954,.
dated June 1, 1953, was offered in exchange to holders of the $4,963
million 1% percent certificates of indebtedness. Series B-1953, maturing June 1, 1953, and the $725 million of 2 percent Treasury bonds of
1953-55, called for redemption on June 15, 1953. Exchanges weremade par for par for the maturing certificates and at par plus accrued
interest to June 15, 1953, on the new certificates in the case of the
called bonds. A total of $4,858 million in new certificates was issued,
$4,410 million in exchange for maturing certificates and $448 million
for the called bonds.
Treasury 91-day bills.—Offerings of bills were made in each week
of the fiscal year; 44 of the year's issues were for maturity in 91 days,,
4 were for 90 days, and 4 were for 92 days. The new issues in the
first three quarters of the year refunded in approximately equivalent
amounts the maturing issues. Duriug the last quarter, beginning on
April 23, when the maturity was less than $1.5 billion, in every week
but one the amount of the offeriag was increased to $1.5 billion. In
the last quarter the issues exceeded the maturities by $1.7 billion.
The 13 issues outstanding at the close of the fiscal year 1953 totaled
$18,906 million, compared with $17,219 million last year.
The rates of discount on new issues had an appreciable upward
trend during the year, with generally higher rates during each succeeding quarter of the year, ranging from a low of 1.635 percent per
annum in the first quarter to a high of 2.416 percent per annum in the
last quarter. The average rates on weekly bill offerings duriug the
year are shown in exhibit 12.
Noncompetitive bids of $200,000 or less from any one bidder were
accepted in full at the average price of accepted competitive bids.
These bids averaged a total of $224 million a week and in the aggregate represented 16.5 percent of all the bids accepted.
Treasury bills, Tax Anticipation Series.—The fiscal technique of
issuing these bhls, employed by the Treasury periodically since
October 1951, was continued during 1953. As before, the bills were
offered to meet anticipated cash requirements, to increase the volume
of receipts when tax collections were seasonally low, and to provide
corporations with a medium for investing their funds accumulated for
paying income taxes. Like 91-day bhls, these bills are issued on adiscount basis.
- There were three issues of tax anticipation bhls, totaling $5.3
billion in fiscal 1953, compared with two issues, totaling $2.5 bhlion.
hi 1952. .The 1953 issues were as follows:
37
REPORT ON FISCAL OPERATIONS
Amount of
Days to tenders ac- Average
rate of
niaturity cepted (Iii discbunt
billions)
Maturity date ..
Issue date
Oct. 8, 1952—.
Nov. 21, 1952-.
J u n e s , 1953...
Mar. 18, 1953.
June 19, 1963..
Sept. 18, 1953-.
161
210
107
$2.5
2.0
1.720
1.846
2.383
The October issue was acceptable at face value in payment of
income and profits taxes due March 15, 1953; the November issue was
Acceptable in payment of such taxesi due June 15, 1953; and the June
. issue was acceptable in payment for such taxes due September 15,
1953. To the extent the bills were not presented in payment of
taxes, they were redeemed for cash on their maturity dates.
Like the bills offered in fiscal 1952, each offering was for cash with
piayment on the date of issue, except that any qualified depositary
could make payment for the bills by credit in its Treasury tax and
loan account up to any amount for which it was qualified in excess of
•existing deposits.
Additional information on these issues is contained in exhibits 10
through 12.
Nonmarketable issues
Nonmarketable public issues of securities during the fiscal year
1953 totaled $10.4 billion and redemptions, $13.1 billion. The decrease of $2.6 billion in the nonmarketable interest-bearing securities
oiitstanding was due mainly to the decrease of $2.2 billion in Treasury
savings notes, but also to the decrease of $0.8 billion in Treasury
bonds, investment series, which were exchanged for the marketable
5-year IK percent Treasury notes.. The table following shows the
changes in the amounts of the nonmarketable interest-beariag classes
of securities outstanding at the end of 1952 and 195,3.
Increase, or.
June 30,1952 June 30,1953 decrease
(-)
Class of security
In billions of dollars .
United States savings bonds
Series E
Series F and G....
Series H . .
_
_.
Series J and K . .
.
.
_
•
Subtotal, savings bonds.-.
Treasury savings notes
_ _.. _
Treasury bonds, investment series
Depositary bonds
.
(*)
•1:.
57.7
_ .
.1
. _
Total interest-bearing nonmarketable issues
34.9
22.7
.._ .
._. . _.. _
.
35.7
21.2
.4
.6
• '.
0.8
—1.6
.4
.5
67.9
.2
.6.6
14. 0,
.4
4.6
13.3
.4
-2.2
-.8
.1
78.7
76.1
-2.6
*Less than $50 million.
United States savings bonds.—Receipts from sales of savings bonds
of all series during the fiscal year 1953 were $4.6 billion (compared
with $3.9'billion for 1952) and accrued discount charged to the interest
account and credited to the savings bond principal account amounted
to $1.2 billion, making a total of $5.8 billion.
38
195 3
REPORT
OF T H E
SECRETARY
OF T H E
TREASURY
Disbursements on account of savings bonds redeemed, including
matured bonds, amounted to $5.6 billion compared with $5.1 billion
last year. The total redemptions of $5.6 billion included $0.4 billion
of maturihg Series; F-1941 arid; Series G-1941 bonds •which .-Were
exchanged for the 3}^ percent Treasury bonds of 1978-83 offered to
E AND H BONDS, FISCALYEARS 1950-53.
CHART 5
NOTE.—Figures are rounded and do not necessarily add to totals.
1 Less than $60 millions.
holders of the savings bonds of these series maturing from M a y
through Deceniber 195,3•
Since 1935, when savings bonds were first sold, the amount of all
series of savings bonds issued, including accrued discount, has totaled
$110.9 billion, while redemptions, including matured bonds, have
totaled $52.9 billion. On June 30, 1953, the redemption value of the
savings bonds outstanding was $58.0 billion, over 52 percent of the
amount issued. The sales and redemptions of savings bonds and
the amounts outstanding for, the years ended June 30, 1950-53, are
shown in chart 5.
Sales of Series E and H bonds together totaled $4.1 billion in 1953,
issue price, an increase of $0.8 billion over sales in 1952. Series E
and H sales were 89 percent of all savings bonds sold in 1953. R e demptions of Series E and H bonds amounted to $4.0 billion in 1953,
an amount practicaUy the same as that in 1952. The amount outstanding on June 30, 1953, was $36.0 billion, an increase of $1.1
REPORT
ON FISCAL
39'
OPERATIONS
billion during the year. Owners of approximately 75 percent of the
amount of Series E bonds thus far matured have continued to hold,
their matured bonds under the optional extension plan. This per^
cent-age of the matured E bonds retained has:helcbalmost steadily"
for the past two years. The volume of E bonds which has matured
has increased from $1.1 billion during 1951- to about $7.4 billion at
the end of June 1953.
Sales of Series J and K bonds combined (which replaced the Series
F and G bonds beginning M a y 1, 1952) totaled $501 million, issue
price, in 1953 compared with sales of Series F, G, J, and K bonds
combined in 1952 totaling $629 milhon. Redemptions of Series F, G,
J, and R bonds during the year totaled $1,552 million compared with
$1,012 million the previous year. The total of $1,552 million redeemed
in 1953 included $417 million in F and G bonds exchanged for marketable bonds.
The redemptions of savings bonds as a percentage of the total sold,,
by yearly series, are summarised in the fdllowing table.
Percent of Series E, F , and G savings bonds sold i n each year redeemed through each
yearly period thereafter i
[On basis of Public Debt accounts, see p. 323]
Redeeraed b y e u d of~
Series a n d calendar year
in which issued
1
year
2
4
11
12
3
10
5
6
7
.8
9
years years years years years years •years years years years yearS;
Series E 2
E-1941
E-1942
E-1943
E-1944.
E-1945.
E-1946
.
E-1947
E-1948
E-194.9
E-1950...-:.--.
E-1951
E-1952
...
.
.
.
3
8
15
19
28
23
21
20
22
26
29
29
6
15
24
33
38
34
30
30
34
•36^
38
10
21
34
41
45
40
37
39
40
4]
14
29
41
47
50
45
43
44
44
18
35
47
62
54
51
47
47
23
40
51
56
58
64
50
.27
44
55
60
61
66
30
48
58
62
63
34
52
61
64
40
58
65
62
68
67'
18
24
29
28
27
20
28
33
31
24
31
36
27
34
68-
Series F a u d G
F-1941 a n d
F-1942 a n d
F-19^3 a n d
F-1944 a n d
F^1945'.and
F-1946 a n d
F-1947 a n d
F-1948 a n d
F-1949 a n d
F-1950 a n d
F-1951 a n d
F-1962 a n d
G-1941
G-1942
0-1943..
G-1944
G-1945- . .
0-1948: - . .
G-1947.
G-1948
G-1949
G-1950
G-1951..
G-1962.
.
1
1
2
2
2
3
3
2
3
3
4
6
3
• 4
6
6
7
• 7
8
5
9
9
9
6
7
10
10
11
12
12
9
13
11
7
10
14
19
18
14
18
14 • 20
' 15
21
17
13
11
17
ll
13
18
22
21
21
23
24
15
21
26
25
24
27
NOTE.—The percentages shown in this table are the proportions of the value of the bonds sold in a n y
calendar year which are redeemed before July 1 of the ne.'ct calendar year, and before July 1 of succeeding;
calendar years. Both sales and redemptions are taken at maturity value.
1 Percentages by denominations may be found in table 36.
2 Similar detail for Series A through E savings bonds may be found in the 1962 annual report, p. 77.
40
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Detailed information on savings bonds from March 1935, when this
security was first offered, through June 30, 1953, is given in tables 31
through 36..
Treasury savings noises.—Sales of Treasury savings notes amounted
to $4.2 billion (face amount) in 1953 compared with $5.0 billion in the
year before. Redemptions in 1953 totaled $6.4 billion, of which $2.1
billion was applied to payment of taxes and $4.3 billion redeemed for
cash: Unmatured savings notes outstanding on June 30, 1953, totaled
$4.5*billion compared with $6.6 billion a year earlier.
. On M a y 11, 1953, announcement was made by the Secretary of the
Treasury of a new series of Treasury savings notes, designated Series B,
which became available for purchase on May 15, 1953. Interest rates
on the new notes range from 2.16 percent per annum for the first six
months to 2.47 percent per annum if held to maturity in two years, as
compared with the rates on the old notes ranging from 1.44 percent for
the first six months to 1.88 percent if held to maturity in three years.
The new notes, supplanted the Series A notes which were on sale from
May 15, 1951, through May 14, 1953, and are sunilar to the A notes in
all respects except as to interest and maturity. A table showing the
tax-payment or redemption values and investment yields is contained
in the official circular which gives the terms of the offering in full.
(See exhibit 17.)
Special short-term certificates of indebtedness.—Thirteen issues of
special short-term certificates of indebtedness were sold directly to the
Federal Reserve Banks during the year to cover overdrafts on Treasury
balances at the Banks in anticipation of the receipt of quarterly payments of income taxes. The sales of these certificates, aggregating
nearly $2.6 billion were made in September 1952 and March and June
1953, and prompt redemption was made, varying from four to twelve
days from issue date, with redemption in full on June 19,1953. Interest
was paid on the certificates at the rate of }{ percent per annum*
Special issues to Government investment accounts.—Outstanding
interest-bearing securities issued by the Treasury for the investment
of trust and other funds deposited in the Treasury increased $2.8
billion during the year. The most significant increases were credited
to the civil service retirement fund, the Federal old-age and survivors
uisurance fund, and the unemployment trust fund. (See table 26.)
Interest on the public debt.—Interest paid on the debt during the year
amounted to $6,508 million compared with $5,859 million in 1952, and
with $5,613 million in 1951, daily Treasury statement basis. The
increase reflects both a rise in the total debt and in the average rate of
interest on the debt.
The computed average annual interest rate on the interest-bearing
public issues of the debt was 2.381 percent per annum on June 30, 1953,
REPORT ON FISCAL OPERATIONS
41
compared with 2.270 percent per annum the previous year; the average
rate for the total interest-bearing debt, which includes the special
issues, was 2.438 percent per annum compared with 2.329. percent per
annum on June 30, 1952. Exchanges of matured or called securities
for new issues bearing higher rates of interest, as well as higher rates
on new issues sold for cash, were largely responsible for these higher
average rates.
Sinking fund.—Credits accruing to the cumulative sinking fund in
1953 amounted to $620 million which, added to the unexpended
balance of $8,438 million brought forward from the previous year,
made available $9,057 million. This unexpended balance was carried
forward to the fiscal year 1954. Tables 29 and 30 show the transactions on account of this fund since July 1, 1920.
Statutory limitation.—Section 21, Second Liberty Bond Act, as
amended (31 U. S. C. 757b), limits the face amount of obligations
issued under authority of that act, and the face amount of obligations
of Government corporations guaranteed ais to principal and interest
by the United States (except such obligations held by the Treasury),
to $275 billion outstanding at any one time. For this purpose the
current redemption value of any obligation issued on a discount basis
which is redeemable prior to.maturity at the option of the holder
shall be considered as its face value. As of June 30, 1953, the unused
borrowing authorization was $9.5 biUion. An analysis of obligations
outstanding on June 30, 1953, as affected by the debt limitation is
shown in table 11, and for earlier years in table 12.
OWNERSHIP OF FEDERAL SECURITIES
Owners of United States Government securities may be classified
into three main groups. T h e first group, generally designated as
^^private nonbank investors,'^ consists of all owners of Government
securities outside the commercial banking systeni, with the exception
of United States Government investment accounts. The second
broad category of owners consists of the commercial banks and the
Federal Reserve Banks, which may be grouped together as the -^commercial banking system.'' Finally, there are the Government's own
investment accounts—social security funds, retirement funds, etc.—
which have constituted an important segment of demand for Government obligations during recent years. Chart 6 shows the major
categories of owners of the Federal debt.
Private nonbank investors include individuals, financial institutions
other than commercial banks, corporations, pension and trust funds
other than those of the Federal Government, State and local government accounts, foreign balances, etc. This is by far the most numerous and diversified group of holders of Federal Government securitie^.
42
1 9 5 3 REPORT OF T H E
SECRETARY OF T H E - T R E A S U R Y
.OWNERSHIP OF THE DEBT, JUNE 30J953.
TOTAL
Govt. Invest.
Accounts
Nonbank Investors
Banks
$Bil.
^m
r.47'/2;.
ln$fifutiot)$
200
J266||
IOO
Corps, a n d /
Misc.
Individuals
ComI
^
Federal
Reserye
E;^;59 ^;
/
;:24^;;
C H A R T 6.
I t is also the most significant, since one of the important principles of
sound debt management is to encourage the widest possible ownership
of the Federal debt outside the banking system.
During the fiscal year 1953, private nonbank owners of Federal
securities increased their holdings by $4.2 billion. Ownership of the
debt on the part of this group at the end of the year amounted to $135
billion, an amount which represented over one-half of the total debt
outstanding on June 30, 1953.
This increase was particularly significant since it followed declines
in the holdings of the private nonbank group during each of the two
previous fiscal years. The increase resulted mainly from demand for
Government securities by individuals and various short-term investors,
notably State and local operating funds and balances owned by
foreigners. There was little net change in the holdings of financial
institutions other than banks; a development which contrasted, however, with the liquidation of Federal securities by this group during
recent prior years.
Holdings of Federal debt by the banking system, that is, commercial banks and the Federal Reserve Banks, dropped by $0.5
billion during the year; for commercial banks alone the decline was
i$2.3 billion.
REPORT ON FISCAL
43
OPERATIONS
The following table presents figures on bank and nonbank owner:ship together with pertinent detail on the holdings of Federal securities
b y the various investor classes.
Ownership of Federal securities, hy investor classes, for selected dates, 1941-53 ^
June 30,
1941
\
Feb. 28,
1946 2
Jime 30,
1952
June 30,
1953
Change
during
fiscal year
1953
Araounts in billions of dollais
JEstimated ownership by:
Private nonbank investors:
individuals 3
Insurance companies
Mutual savings banks
Corporations''
State and local governmeiats
iVliscell.^.neons investors ^
Total pnvate nonbank investors . . . - Federal Government investment accomits
Banks:
Coramercial banks
Federal Reserve -Banks
+1.7
11 2
7.1
3.4
2.0
.6
.7
64.1
24.4
11.1
19.9
6. 7
8.9
03.9
15.7
9.6
19.7
10.4
11.6
65.6
16. 9
9.5
19.2
12.0
12.8
25. 0
8.6
19.7
2.2
135.1
.28.0
130.8
44.3
136.0
47.6
+4.2
+3.2
93.8
22.9
61.1
22.9
58.8
24.7
-2.3
4-1.8
n+-^
-.5
+1.7
+1.2
Total banks.- . . , .
21.8
116.7
84.0
83.6
-.5
Total gross debt outstanding.
55. 3
279.8
259.2
266.1
+7.0
Percent of total
.Percent owned by:
Private nonbank investors:
Individuals.
other
....
20
26
23
25
25
26
25
26.
Total ..
Federal Government investment accounts... .
B anks
46
15
39
48
10
42
51
17
32
51
,18
31
100
100
100
100
Total grossdebt outstanding
*Less than $50 million.
1 Gross public debt and guaranteed obligations of the Federal Government held outside the Treasury.
2 Peak of debt.
3 Licludes partnerships and personal trust accoimts. Nonprofit institutions and corporate pension trust
iunds are included under "Miscellaneous investors."
* Exclusive of banks and insurance companies.
* Includes savings and loan associations, nonprofit institutions, corporate pension trustfunds, dealers and
brokers, and investments of foreign balances and international accounts in this country.
Individuals (including partnerships and personal trust accounts)
continued to constitute the largest single investor group in Federal
debt ownership. . During the fiscal year 1953, individuals' holdings
of Federal securities increased by approximately $1.7 billion, the
largest fiscal year increase since 1947. In contrast, individuals'
holdings fell off by $0.8 billion in 1952 and by $2.3 billion in 1951.
Series E and H savings bonds held by individuals increased by $1.1
billion during the year. This increase was more than enough to
offset a decrease in the other series, and at the end of the year individuals' holdings of all savings bonds were up by $0.3 billion. The
major demand for Federal securities b}^ individuals was in marketable
securities, which increased by $1.4 billion; and all of this demand was
44
195 3 REPORT OF THE SECRETARY OF THE TREASURY
in the last half of the. fiscal year as evidenced by the January-June
increase of $1.5 billion. Individuals' holdings of Federal securities
amounted to $65.6 billion on June 30, 1953, the largest amount since
1950, and well above the peak of their holdings during World War I I
financing.
Holdings of Federal securities by insurance companies on June 30,
1953, amounted to $15.9 billion, an increase of about $0.2 billion and
the first such increase since 1946. Nearly two-thirds of the total was
held by life insurance companies, with investments predominately in
long-term securities. Life insurance companies continued to reduce
their holdings during 1953, following the trend which began 7 years
ago as new investment opportunities appeared in the form of an
increased supply of mortgages and corporate securities. In the fiscal
year 1953, however, they reduced their holdings by less than one-half
billion dollars, indicating that a point of balance is being reached
between the volume of new savings flowing into life insurance and
private investment opportunities. The Federal security portfolios of
fire, marine, and casualty insurance companies increased by one-half
billion dollars in 1953, the largest increase for these investors in
seyeral years.
Mutual savings bank holdings of Federal securities on June 30,
1953, totaled $9.5 billion. These holdings were primarily in longterm bonds. Like the life insurance companies, mutual savings banks
also have been engaged actively in increasing their mortgage and
corporate security portfolios since the end of World War II, although
the activity has been on a smaller scale. Again, like the life insurance
companies, their expansion of mortgages and corporate security
holdings during 1953 was accomplished with less hquidation of Federal
securities than had been true during earlier years. Mutual savings
bank holdings declined by less than $50 million in 1953, as compared
with a decline of $0.7 billion in the preceding year.
The long-term upward trend in holdings of Federal securities b y
corporations other than banks and insurance companies appears to be
leveling off, and there was a decline of about one-half billion dollars in
their holdings of Federal securities during the fiscal year 1953. The
Revenue Act of 1950 has the effect of increasing the proportion of
corporate income (and excess profits) taxes to be paid during the first
half of each calendar year. The increasing burden of corporate tax
payments in March and June in comparison with the rest of the year
has a direct effect on the corporations' Government security portfolios, which are tending more and more to be drawn down during
these months and then built up again during the period from July
through February. Corporation holdings of Federal securities
amounted to $19.2 billion on June 30, 1953, about $2.6 billion below
REPORT ON FISCAL OPERATIONS^
45
i/he seasonal peak reached in February 1953, which was, incidentally,
only $1 billion short of the alltime peak for corporation holdings of
Government securities reached in 1945.
Miscellaneous investors held approximately $12.8 billion of Federal
securities on June 30, 1953. Private pension trusts accounted for
about $2)^ billion of the total, showing some increase during the year.
Almost all of the increase of over one billion dollars in the holdings of
miscellaneous investors during the year came about as a result of
expanded investment of foreign balances in the United States in
Federal securities. These investment balances, together with securities held by various international organizations, made up about, $5K
billion of the miscellaneous investors' total on June 30, 1953. The
remaining investor classes in the miscellaneous category included
savings and loan associations, nonprofit institutions, dealers and
brokers, and certain smaller institutional groups.
Holdings of Federal securities by State and local governments
on June 30, 1953, amounted to $12.0 billion. The growth of over
$1K bihion during the year was the largest annual increase
since World War I I when the postponement of capital outlays effected
an expansion of reserve funds. About one-third oif their Federal
security holdings are in State and local pension reserves and the
remainder in sinking funds, operating funds, and various special funds.
Government investment accounts increased their holdings of Government securities by $3.2 billion during the fiscal year 1953, continuing their net growth which has characterized each year during
the last two decades with the exception of 1950. On June 30, 1953,
Government investment accounts held $47.6 billion of Federal
securities or one-sixth of the entire debt. Of this total, $40.5 bilhon,
or approximately 85 percent, was in the form of special issues, that is,
securities placed only with these accounts. Details of the ownership
of securities by these Government investment accounts, mostly
social security, veterans' life insurance, and Government employees'
retirement funds, are shown in table 45.
Commercial banks held $58.8 billion of Federal securities at the end
of the fiscal year 1953, a decline of $2.3 biUion from June 30, 1952.
Over half of this total was invested in bank eligible bonds, nearly
three-fourths of them reaching final maturity within five years (to
first call for the partially tax-exempt issues). Commercial banks
also held about $21K billion in bills, certificates, and notes.
• ^'^ '
An analysis of the estimated changes in bank versus nonbank
ownership of Federal securities during the fiscal year 1953 is shown
by type of issue in the following table.
46
1953 REPORT OF THE SECRETARY OF THE TREASURY
Estimaied changes, i n ownership of Federal securities hyfype ofissue, fiscal year 1953 ^
[In billions of dollars]
Change accounted for b y Total
changes
Marketable securities:
Treasury bills __ ._
Certificates of indebtedness •
Treasury notes
Treasury bonds.
Total marketable
Nonmarketable securities, etc.:
United States savings bonds
_.
Treasury savings notes._
_
Special issues to Govermnent investment accounts
Treasury bonds, investment series
Other
Total nonmarketable, etc
Total change
-
Private
nonbank
investors
Government
investment
accounts
2.6
-12.6
11.5
5.6
2.6
-3.0
3.1
3.6
0.1
6.9
6.2
.2
-2.2
.2
-2.1
2.8
-.8
(*)
7.0
(*)
-.1
Banks
Total
Commer- Federal
cial
Reserve
.4
-0.1
-9.5
8.3
1.6
-1.2
-2.7
.1
1.5
—6 8
82
.4
.3
-2.3
2 6
(*)
-.1
2.8
(*)
1.1
.1
(*)
-.1
-.7
.1
-.7
.1
-2.0
2.8
-.7
(•)
4.2
3.2
-.6
-2.3
— 7
1.8
•Less than $50 million.
1 Gross public debt, and guaranteed obligations of the Federal Government held outside the Treasury,
As discussed in the preceding section on public debt operations,
marketable securities as a whole increased b}^ $6.9 billion during the
year. Virtuall}^ all of the $2}^ billion increase in Treasury bills during
the year was taken by private nonbank investors. The liquidation of
bills by commercial banks was just about equal to the net purchases
by the Federal Reserve Banks. Private-nonbank investors as a whole
increased their holdings of marketable bonds b}^ approximately $ 3 ^
billion during the 3^ear. This was the first increase in their holdings
of inarketable bonds since 1946. Neaii}'- three-fourths of the increase
reflected their acquisition of new issues of mWketable bonds and the
remainder represented net market puixhases of $1 billion of older, issues
from the commercial banks. The movement in the major investor
classes from certificates into notes during the year largei}^ reflected the refunding into a note of the certificate that matured on October 1, 1952.
Private nonbank. investors, principally corpprations, redeemed ap->
proximately $2.1 billion of savings notes (net) during the year. Meanwhile Federal Reserve Banks exchanged $0.7 billion of their holdings
of investment bonds for five-year Treasur}^ notes during the same
period. The major changes iuAsavings bonds are described in the
preceding discussion of individuals' holdings of Federal securities.
REPORT ON FISCAL OPERATIONS
47
CORPORATIONS AND CERTAIN OTHER BUSINESS-TYPE ACTIVITIES
OF THE GOVERNMENT
Government corporations and similar type activities finance their
lending operations either by borrowing from the Treasury or in the
inarket through issuance of securities as specified by law. When they
borrow from the Treasury, these agencies issue their securities to the
Treasury, which raises the required funds through public debt operations. The Secretary of the Treasury is authorized not only to purchase obligations of many of the agencies, but also, subject to executive
and congressional specifications, to fix the terms and conditions of
such obligations. Other agencies, by statutory requirement or custom,
consult with the Secretary of the Treasury in adyance. regarding the
terms and conditions of their issues.
,
In addition, under the Government Corporation Control Act (31
U. S. C. 867, 868), most agencies must obtain the prior approval of
the Secretaiy of the Treasury for sale or purchase of United States
securities and guaranteed securities in the niarket in;amounts which
total more than $100,000 at au}^ one time. Others must consult with
the Secretary of the Treasur}^ before making such transactions.
Under the same law, most Government corporations are required to
keep their checking accounts with the Treasurer of the United States,
although, with the approval of the Secretary of the Treasury, such
accounts ma^^ be kept with Federal Reserve Banks, or with private
banks designated as depositaries or fiscal agencies of the United
States.
In 1953, in order to suppl}^ the funds required by the Government
agencies authorized to borrow from the Treasury for their operations, the Treasury made cash advances of $9.1 billion. Repajmients
and refunding of $6.2 billion, with cancellations of indebtedness, as
authorized b}^^ law, amounting to $0.3 billion, resulted in net advances
by the Treasury of $2.6 billion during the year. The Treasury held
$12.2 billion of bonds and notes issued b}^ Government corporations
and certain business-t^^pe activities as of June 30, 1953.
Capital
Total net investment of the United States in Government corporations and business-type enterprises at the end of fiscal 1953 amounted
to $34.3 billion, consisting of paid-in capital and expended appropriations, compared with $26.5 billion a year eariier.
Assets and liabilities
Assets of the corporations and activities at the year-end totaled
$51.3 billion, of which $32.2 billion was in net loans receivable, $2.2
billion (net) in commodities, supplies, and materials, and $7.9 billion
(net) in land, structures, and equipment. Liabilities of the agencies
48
1953 REPORT. OF ..THE: SECRETARY OF THE TREASURY
amounted to $18.3 billion. Bonds, debentures, and notes payable
totaled $15.7 billion, of which the Treasury held $12.1 billion. The
amount and type of assets, liabilities, and Government capital of the
various corporations and activities are shown on their balance sheets.
The capital is segregated to show that which is owned by the United
States Government and that which is privately owned, and an.analysis of the investment of the United States is included. The balance
sheets as of June 30, 1953, will b e found in table 72 of this report.
A comparative statement of the combined net investment of the
United States in Government corporations and certain business-type
activities as of June 30, 1944-53, is shown in table 71. The income^
expense, and changes in unreserved surplus or deficit for the fiscal
year 1953 appear in table 73. A statement pertaining to the source
and application of funds of the Government corporations and certain
business-type activities during the fiscal year 1953 is shown in table 74.
Advances by the Treasury
Total advances by the Treasury during the year amounted to $9.3
billion.^ The cash advances of $9.1 billion represented an increase of
$3.9 billion during the year. Increases in advances to the Commodity
Credit Corporation amounted to $3.2 billion and the aggregate of the
several housing programs to $1.2 billion. All others which received
cash advances, except one relatively small in amount, together de^
creased by more than $0.5 billion. The largest single decrease, which
was $342 million, occurred in advances to the Export-Import Bank.
Repayments and refunding, totaling $6.5 ^ billion in 1953, were $2.3
billion more than in 1952. In 1953, as in the Treasury advances,
the largest amounts came from the Commodity Credit Corporation
and the next largest from the housing programs. Table 70 gives
details by agency on advances and repayments, and Treasury holdings
of obligations.
Interest on borrowings by agencies
I n determining the interest rates on borrowings by corporations
and activities', the Secretary of the Treasury, as directed by several
laws enacted since January 1947, takes into consideration the average
rate on outstanding marketable obligations of the United States.
During 1953, the Treasury continued to review and adjust the rates
to keep them in line with the interest cost to the Treasury on its
borrowings. Rates of interest charges are stated in terms of multiples of one-eighth of one percent. As interest rates increased generally, the Secretary of the Treasury, keeping in. view the several
directives of Congress, fixed somewhat higher rates on borrowings
by the agencies during the second half of the fiscal year. Thus on
1 Including a noncash exchange of notes ofthe Public Housing Administration in the amount of $273
million.
REPORT ON FISGAL OPERATIONS
49
June 30, 1953, a few corporations were charged an interest, rate of
2K percent, which approximated the current rate of interest paid
by the Treasury on one-year borrowings. This exceeded the computed average rate of 2.207 percent on marketable obligations outstanding as of that date.
.
;
Repayments on capital stock
Two Government agencies made cash repayments on capital stock
holdings during 1953 which amounted to $7,804,000. This compared
with repayments in 1952 of $24,716,000. Of the 1953 repayments,
the Federal Savings and Loan Insurance Corporation deposited
$7,529,000 into miscellaneous receipts of the Treasury^ ah^^^^^^
Department of Agriculture, for the production credit corporations,
deposited $275,000 into a revolving fund maintained in the Treasur
Table 77 includes details on repayments of capital funds. niVfT
Other payments to tlie Treasury
v
,-
:^'
Interest, dividends, and hke payments received by the Treasury
during the year from Government corporations and other enterprises in which the Government has a financial interest amounted to
$295.9 million. The agencies made similar payments in 1952 in the
amount of $230.0 million. Table 78 shows detailed information on
such payments to the Treasury in 1953.
...
Borrowing authority and obligations outstanding
The net increase during the fiscal year 1953 in the corporations
and activities' obligations outstanding was $2,848 million. The
amount outstanding on.June 30, 1953, was $15,736 miUion, of which
the Treasury held $12,100 million. Table 67 shows the maximum
borrowing authority of the Government corporations and businesstype activities and the amounts of outstanding borrowings by these
agencies as of June 30, 1953. Unused borrowing power of the corporations and activities as of June 30, 1953, as authorized by various
statutes, was $17,467 million. This was $1,320 million less than a
year earlier.
•The borrowing power of agencies authorized to borrow from the
Secretary of the Treasury was increased by $1,240- miUion, net, during. 1953. For agencies authorized to borrow from the Secretary of
the Treasury, all the increases in borrowing power, except one of
$57 mUlion for the Rural Electrification Administration, were in
connection with the housing programs, which totaled $1,282 million.
The borrowing power of aU others in this group, was decreased by
$99 mUlion.
In a different category are agencies authorized to issue obligations
only in/^payment of defaulted and foreclosed insured mortgages.
While, any such obligations issued are guaranteed by the Secretary of
the Treasury, the authorizations represent the maximum limit of
273013—54
5
50
1953 REPORT OF THE SECRETARY OF THE TREASURY
authority to insure mortgages. In 1953 the authority of the Federal
Housing Administration to insure loans and mortgages was increased
by $1,000 mUlion, in accordance with new legislation and allocations
by the President during the year under the National Housing Act,
as amended (12 U. S. C. 1701-1750g). The changes are itemized
as follows:
Title
National Housing Act, as amended:
Title I, Section 2:
Insurance of loans made to finance alteration,
repair, and improvement of existing structures, and loans for construction of new
nonresidential structures.
Title II:
Insurance of mortgages on 1- to 4-family structures, and multifamily housing projects.
Mortgages may cover new and existing properties, both for rent and for sale, includhig
nonprofit cooperative housing.
Title VI:
Insurance of,short-term loahs for manufacture
and purchase of prefabricated houses, insurance of loans to purchase certain Government-owned housuig, insurance of loans to
finance construction, by modern site-fabrication methods, of groups of 25 or more
single-family dwellmgs, and insurance of
loans to finance purchase of these dwellings.
Title VII:
Insurance of yields on equity iavestment in
rental projects. Title provides for uisurance of an annual return of 2% percent and
a minimum annual amortization of 2 percent on equity investments in rental housing.
Title IX:
Insurance of national defense housing mortgages. Housing must be withui limits of
housing needs in defense areas designated
by the President. Mortgages are required
to be acceptable risks in view of needs for
national defense.
Authorization
Increase, or
decrease ( - )
In millions
Public Law 5, 83d Cong., approved March 10,1953.
$500
Section 217 df the National Housing Act as amended, and letters
of the President dated Aug. 20,
1952, and June 16,1953.
1,900
Section 217 of the National Housing Act as amended, and letters
of the President dated Aug. 20,
1962, and June 16,1953.
-690
Section 217 of the National Housiag Act as amended, and letter
of the President dated Aug. 20,.
1962.
-900
Section 217 of the National Housing Act as amended, and letters
of the President dated Aug. 20,
1952 and June 16,1953.
190
1,000
The act approved July 14, 1952 (66 Stat. 601), increased the
insurance limitation of Section 217 to $1,900 million, and provided
that the President may apply the additional $400 millipn only to
mortgages for military, defense, or disaster housing not insured or
committed for insurance before June 30, 1952. This act stipulated
that unused authorizations, except those under the Title I-Insurance
Fund, could be transferred between funds, provided that Title VIWar Housing Insurance Fund authorization was not increased. As
of June 30, 1952, there was an unallocated balance of $100 miUion
of the original authorization of $1,500 million. The net increase
during the fiscal year 1953 in mortgage insurance authority amounted
to $500 million and is included in the preceding table. Unused insurance authorizations for all titles amounted to $1,086 miUion at the
end of the fiscal year 1953. Public Law 94, 83d Congress, approved
REPORT ON FISCAL OPERATIONS
51
June 30, 1953, authorized an increase of $1,500 million in the amount
of mortgages that could be insured pursuant to Section 217 of the
National Housing Act, as amended (12 U. S. C. 1715 h).
SECURITIES OWNED BY THE UNITED STATES GOVERNMENT
Securities owned by the United States Government on June 30,
1953, consisted principally of capital stock, bonds, and notes of Government corporations and business-type activities; securities evidencing loans to farmers, railroads, home owners, foreign governments,
and others; and notes showing United States subscriptions to the
Internatiohal Bank for Recohstruction and Deveiopment and to the
International Monetary Fund. The net face value of these securities
as of June 30, 1953, amounted to $22,478 million. A statement showing the securities owned as of June 30, 1953, other than foreign government obligations of World War I and World War II, appears in
table 77 with aii explanation of each increase or decrease during the
year.
Taxation Developments
The major tax activity of the Treasury since January 20, 1953,
has been a comprehensive review of the whole tax structure. This
review, which is being carried out in close cooperation with the
congressional tax staffs, was called for by the President in his first
State of the Union IVIessage, on February 2, 1953, in which he said:
' ' W e must develop a system of taxation which will impose the least
possible obstacle to the dynamic growth of the country. This includes
particularly real opportunity for the growth of small businesses.
Many readjustments in existing taxes will be necessary to serve these
objectives and also tp remove existing inequities. Clarification and
simplification in the tax laws as well as the regulations will be undertaken."
On M a y 20, 1953, the President again referred to the long-term
objective of tax revision in a message to the Congress in which he
emphasized the importance of the removal of inequities, simplification,,
and a better balance in the tax structure. The President asked the
Secretary of the Treasury to present recommendations to accoraplish
these objectives by the end of the calendar year. (See exhibit 20.)
Following these Presidential directives, the Treasury, in cooperation Avith the congressional tax staffs, has been studying a wide
variety of proposed tax revisions ranging from basic policy changes
to modifications of the language of the tax laws. (See exhibit 21.)
The public hearings of the House Committee on Ways and Means
which ran from June 16, 1953, to August 14, 1953, produced a large
number of suggested tax changes which are of material assistance in
the work on general tax revision.. (See exhibit 22.)
52
1953 REPORT OF THE. SECRETARY OF THE TREASURY
The President, in his message of May 20, 1953, also recommended
the postponement of certain scheduled tax reductions in order to
avoid increasing the budgetary deficit. His recommendations included the postponement from June 30, 1953, to December 31, 1953,
of the expiration date of the excess profits tax as weU as the rescission
of both the reductions in the regular corporate tax rate and in certain
excises scheduled for April 1, 1954.
The President supported the 10 percent reduction in individual
income taxes scheduled for January 1, 1954, indicating his belief that
such reduction would be justified on the basis of anticipated budgetary
economies. He recommended also that the increase from 1)^ to 2 percent in the old-age insurance payroll taxes scheduled for January 1,
1954, be postponed for a year.
Excess profits tax extension
The extension of the excess profits tax for a 6-month period was
recommended by the President in spite of the fact that he believed
it to be'' an undesirable way of taxing corporate profits." In his message of May 20 he stated:
''Though the name suggests that only excessive profits are taxed,
the tax actually penahzes thrift and ejEficiency and hampers business
expansion. Its impact is especiaUy hard on successful smaU businesses
which must depend on retained earnings for growth. These disadvantages of the tax are now widely recognized. I would not
advocate its extension for more than a matter of months. However,
under existing circumstances the extension of the present law is
preferable to the increased deficit caused by its immediate expiration
or to any short-term substitute tax."
The House Committee on Ways and Means held public hearings on
the proposed 6-month extension of the excess profits tax early in
June 1953. Secretary of the Treasury Humphrey presented a statement in support of extension on June 1, 1953, and Under Secretary
Folsom appeared before the Committee on June 5, 1953. (See
exhibits 23 and 24.)
Subsequently, H. R. 5898, providing for a 6-month extension of the
excess profits tax, was introduced on June 23, 1953. The bill was
reported by the Committee on Ways and Means on July 8, 1953,
and was passed by the House on July 10, 1953. The Senate Finance
Committee reported the biU without amendment on July 14, 1953:
Passage by the Senate followed on July 15, 1953. The President
sighed the biU on July 16, 1953 (Public Law 125).
Technical Changes Act of 1953
The Technical Changes Act of 1953 (H, R. 6426), introduced on
July 21, 1953, incorporated a number of technical amendments to
•' '' ^ -
'"-' RiEPORT ON' FISCAL" OPEiEiATIONS - ^
^
•
53
the Internal Revenue Code. The bill was reported by the House
Committee on Ways and Means on July 21, 1953j and passed the
House on July 22, 1953. It was reported with amendments by the
Senate Finance Committee on July 28, 1953, and passed the Senate
as amended on August 3, 1953. The House agreed to the Senate
version of the biU on the same day and the President signed it on
August 15, 1953. The principal provisions of the act (Public Law 287)
are as follows:
Amortization deduction for grain storage facilities {Section 206).—
A new section 124B was added to the Internal Revenue Code to
permit taxpayers to deduct over a period of 60 months the costs of
construction or adaptation of grain storage facilities completed after
December 31, 1952, and on or before December 31, 1956.
Earned income from sources without the United States {Section 204)-—
Section 116 (a) (2) of the Internal Revenue Code which provides
that a citizen who during a period of 18 consecutive months spends
at least 510 full days in a foreign country or countries may exclude
from gross income without limitation the income he earns abroad
during that period, was amended to provide a limitation of $20,000
for an enthe taxable year. This amendment carried out the suggestion
made on April 13, 1953, by Secretary of the Treasury Humphrey to
the Chairman of the House Committee on Ways and Means that
corrective legislation be adopted to curtail abuses of this exemption.
(See exhibit 25.)
Extension of period of abatement of income taxes of members of Armed
Forces upon death {Section 10.^).—In the case of a member of the
Armed Forces who dies after June 24, 1950, and before January 1, 1954,
as a result of service in a combat zone. Section 154 of the Internal
Revenue Code provides that any unpaid income tax liabUity at date
of death shall be abated.. It further provides that any tax paid for
the taxable year in which he dies and for prior taxable years ending
after the first day he served in a combat zone after June 24, 1950,
shall be credited or refunded. The Technical Changes Act of 1953
extends these provisions to January 1, 1955.
Extension of period for exemption from additional estate tax of members
ofthe Armed Forces upon death {Section 106).—Section 106 extends to
January 1,1955, the exemption from additional estate tax for members
of the Armed Forces dying as a result of service in a combat zone.
Extension of temporary provisions relating to life insurance companies
{Section 105).—The temporary provisions for taxation of life insurance
companies which have been applicable to 1951 and 1952 are extended
through 1953.
Other provisions.—Section 101 of the Technical Changes Act extends
through 1953 the privilege of election in connection with certain
54
1953 REPORT OF THE SECRETARY OF THE TREASURY
corporate liquidations which can be made without imposing a tax on
the stockholders. Section 102 extends through 1954 the privilege of
election with respect to property as to which excessive depreciation
has been allowed in past years. Section 103 extends through 1953 the
privilege of election regarding the method of computing taxes arising
from recoveries of war loss properties. Section 201 amends the law
relating to collection of State cigarette taxes on interstate shipments
by changing the place where the offense occurs. Section 202 liberalizes the rules regarding deductions for interest and expenses payable
to related taxpayers. Section 203 grants a stepped-up basis on death
for property transferred in trust with the right reserved to change
beneficiaries.
Section 205 provides the same period for carryover of net operating
loss deductions for taxpayers with fiscal years beginning in 1947 and
ending in 1948 and those whose first fiscal year began in 1949 and
ended in 1950 as is now allowed calendar year taxpayers. The section
also extends the carryover period for net operating losses of certain
successor railroad corporations.
Section 207 exempts from estate tax certain retained life income
trusts created prior to 1931 by decedents dying prior to February 11,
1939, and similar trusts created by decedents dying after 1950. Thus,
the same treatment will be provided for decedents dying before 1939
and after 1950 as is now provided for decedents dying between 1939
and 1950.
Section 208 exempts from estate tax certain trusts created by the
decedent where the decedent was mentally incompetent to release a
retained power over the trust and thereby remove the trust from his
gross estate.
Section 209 exempts from the estate tax the proceeds of life insurance as to which the decedent had a reversionary interest not in
excess of 5 percent of the value of the policy after January 10, 1941,
for decedents d}ang between January 10, 1941, and October 22, 1942,
where such insurance would not have been taxed had the decedent
died after October 21, 1942.
Section 210 extends the marital deduction to the estates of certain
decedents who died between January 1, 1948, and April 3, 1948, the
date of enactment of the Revenue Act of 1948, which established the
marital deduction. In these cases the deduction could not be claimed
because the power of appointment provided under the will did not
meet certain technical requhements and death occurred before the wUl
could be amended so as to conform with the new law.
Section 211 provides for additional chcumstances under which the
bar of statute of limitations may be lifted to cover cases where deductions h^ve.been claimed,in,the wrong year or by;the-wrong taxpayer
REPORT ON FISCAL OPERATIONS
55
in a related group or where the Government has included an income
item in the wrong year or in the income of the wrong taxpayer in a
related group.
Other revenue legislation considered
. Admissions tax on motion pictures.—^H. R. 157, introduced on
January 3, 1953, proposed that motion picture theater admissions be
exempted from the tax on admissions. The House Committee on
Ways and Means held hearings on this measure on April 20, 1953, at
which a large number of industry and congressional witnesses appeared
in support of its adoption.
The House passed H . R. 157 on July 20, 1953, and the Senate approved it on July 24, 1953. The President released a memorandum
on August 6, 1953, stating that he was withholding approval of H . R.
157 because the Govermnent could not afford the loss of revenue
involved and because it would be unfair to single out one industry for
relief. (See exhibit 26.) However, the President indicated that he
would recommend a reduction in the admissions tax in his proposals
for a modified system of excise taxation.
Extension of bonding period on distilled spirits.—H. R. 1215,
providing for an extension from 8 years to 12 years of the tax-free
bonding period on distUled sphits in storage on the date of enactment,
was introduced on January 7, 1953. The House Committee on Ways
and Means held public hearings on the bill on March 31, 1953, and
April 1, 1953. Under Secretary Folsom submitted a report on H. R.
1215 for the Treasury on March 31, 1953, indicating that the Department took no position on the measure. (See exhibit 27.)
On June 5, 1953, the House Committee on Ways and Means reported H. R. 5407, a redrafted version of H. R. 1215, introduced on
M a y 26, 1953. H. R. 5407 was passed by the House on July 7, 1953,
and referred to the Senate Committee on Finance on July 8, 1953.
The committee did not report the bUl during the first session.
A summary of other tax legislation enacted by the first session of the
83d Congress is contained in exhibit 28.
International Financial and Monetary Developments
There was considerable progress toward international financial
stabUity in the twelve-month period ended June 30, 1953. Evidence
of this progress was the reduction of balance-of-payments deficits, the
relative stabUity of world prices, and the maintenance of high levels
of production and trade. I n most countries internal prices varied
only slightly in the course of the year, with some tendency toward
a small decline. With the exception of a few countries in Latin
America and Asia, the money supply in the form of note issues and
bank credits increased only moderately over the preceding year.
56
1953 REPORT OF THE SECRETARY OF THE TREASURY
In many countries budgets came closer to balance, whUe credit and
monetary measures checked the expansion of bank loans. The total
of world trade declined somewhat from the preceding, twelve-month
period, when the volume and value of trade were still aff'ected to a
large extent by speculation and the accumulation of inventories. The
prices of many internationally traded commodities, such as wool,
cotton, copper, and tin, declined in the period. As a result of various
factors in the world balance-of-payments situation a number of
countries were able to increase their monetary reserves considerably.
United States balance of payments and gold movements
The total export of goods and services from the United States
amounted to $21.1 billion in the fiscal year, compared with $21.3 ^
billion in the preceding year, while iriiports increased from $15.0
billion to $16.4 billion. These figures for gross exports of goods and
services, however, included military grant aid amounting to $4.2
billion in the fiscal year 1953, compared with $1.8 billion in the preceding year. Thus, the United States current account surplus,
excluding military aid, was reduced to $0.5 billion, compared with a
surplus of $4.5 billion in the preceding year.
The reduction of the deficit of the rest of the world with the United
States is important evidence of progress toward international stabUity.
I t is, of course, difficult to determine the extent to which the improved
situation can be expected to continue in the future. I t resulted in
.part from extraordinary expenditures of the United States abroad,
including offshore procurement, troop pay, and other expenditures
related to defense. While sound fiscal and monetary policies abroad
played an important part in reducing the balance-of-payments deficits
of foreign countries, the reduction also resulted in part from intensified
.restrictions on trade and payments in some, important areas.
The United States Government extended gross economic aid, including defense support assistance, relief grants, and loans under
various programs, in fiscal 1953 to the amount of $2.8 bUlion, a reduction of $400 million from the preceding year. These forms of aid
supplemented the military aid program ($4.2 billion), which was predominantly in the form bf mUitary end-items. Changes in private
hivestments, dhect and portfolio, represented a net outflow of longterm private capital of about $525 mUlion. The outflow of capital in
direct investments was maintained, but was in part offset by repayments of portfolio capital to investors. Travel expenditures added a
net of $315 million to the receipts of foreign countries. Offsetting
these and other United States payments abroad were receipts of about
$1.9 billion by private investors and the United States Government as
earnings on investments and interest on loans previously made. The
' Revised.,
' REPORT ON FISCAL OiPERATIONS
57
United States Government also received $530 mUlion in repayments
of principal of loans, hicluding loans of the Export-Iniport Bank and
the loan under the Anglo-American Financial Agreement and related
transactions.
Payments abroad by the United States, the extension of loans and'
credits, and. the geographic distribution of payments and receipts
resulted in a net transf er of $1.0 billion in gold from the United States
to foreign accounts. Foreign short-term dollar balances also increased.
On June 30, 1953, the gold and short-term dollar holdings of foreign
countries amounted to $21.1 bUlion, an increase of $2.1 biUion over
the preceding year. International organizations ^ increased their gold
and dollar holdings by $250 mUlion to a total of $3.9 billion.
The gold holdings of foreign countries (exclusive of the U. S. S. R.)
increased by about $1.1 billion to a total of $11.8 bUlion, and international organizations gained $135 miUion in gold. The estimated
increase in official foreign and international institutional gold holdings
was, therefore, not greatly in excess of net purchases from the United
States. Since new foreign gold production (excluding the Soviet bloc)
in this fiscal period is esthnated at $785 mUlion, it is apparent t h a t the
greater part of newly mined foreign gold moved into industrial and
hoarding channels, although the amount was less than in the preceding
year. I n the United States industrial use of gold exceeded annual
production.
;:
United States gold holdings at the end of the year were $22.5 biUion,
compared with $23.5 billion in the preceding year. United States gold
holdings were about 62 percent of the world total official holdings,
exclusive of the U. S. S. R.
Consultations with foreign governments
Shortly after the new administration took office in January 1953,
various European countries and regional organizations proposed to
send representatives to Washington for exploratory exchanges of
views on matters of mutual interest. Secretary of the Treasury
Humphrey, W. Randolph Burgess, Deputy to the Secretary, and
Andrew N . Overby, Assistant Secretary, discussed financial
questions with these missions. There were generaUy paraUel political
discussions with the Department of State, and in some instances joint
meetings.
. A British delegation headed by the Foreign Secretary and Chancellor
of the Exchequer visited Washington in March for discussions with the
Treasury and State Departments. This visit foUowed the Conference
of Commonwealth Prime Ministers held in London in December 1952
1 International Monetary Fund, International Banklfor Reconstruction and Development, Bank for
International Settlements, and European Payments Union.
58
1953 REPORT OF THE SECRETARY OF THE TREASURY
to devise means of improving the sterling area's balance of payments
and of stabilizing its trade. The Conference looked to the progressive
removal of import restrictions imposed for balance-of-payments
reasons and looked toward the restoration of convertibUity of sterling
as an integral part of a program for a multilateral system of trade and
payments. The Conference concluded that the achievement of these
ends would require concerted action by the countries of the sterling
area, the United States, and continental Europe.
At the Washington meeting the British representatives reported on
the work of the Commonwealth Conference. The discussions included
a review of the economic and financial situation of the United Kingdom
and of the United States. While it had been agreed in advance that
the conversations would be exploratory and that neither Government
would be committed to specific action, the communique issued at the
conclusion of the Anglo-American conversations (see exhibit 29) noted
that the Governments concurred that sound internal policies both on
the part of debtor and creditor nations were essential for the ultimate
achievement of freer trade and currencies and that both Governments
looked toward the eventual convertibility of sterling "and other currencies and the relaxation of trade restrictions and discrimination. I t
was recognized that both debtor and creditor countries should follow
policies furthering international investment and the development of
natural resources. I t was further agreed that both Governments
should continue to give study to the questions raised and to the
ways and means of bringing about the desirable conditions. After the
discussions were concluded the President appointed Lewis W.
Douglas as Special Deputy to the Secretary of State to be in charge
of a review of the problems raised in the British discussions. Mr.
Douglas' report to the President was published after the close of the
fiscal year and was referred to the Commission on Foreign Economic
Policy.
In March a French delegation, including the Prime Minister and
the Ministers for Foreign Affahs, Finance, and for the Associated
States, came to Washington for a series of conferences on the economic,
political, and mUitary situations in France and Indo-China and for an
exchange of views on the broad problems confronting the United
States, France, and their allies.
Also hi the month of March, the Belgian Foreign Minister and the
Governor of the National Bank of Belgium came to Washington.
Greek missions, including the Minister of Economic Coordination
and the Governor of the Bank of Greece, discussed Greek problems.
In AprU the Chancellor of the Federal Republic of Germany headed
a delegation of political, economic, and financial experts to discuss a
wide range of problems affecting the United States and Germany,
REPORT ON FISCAL OPERATIONS
59
and in July the Firiance Minister, and subsequently the Minister for
Economic Affairs, came to Washington for a further exchange of views
on financial problems.
There were also important consultations with international organizations representing the European states. The Secretary General
of the North Atlantic Treaty Organization visited Wasliington in
March for conversations with the President and the Cabinet members
normally attending meetings of the NATO Ministerial CouncU. In
April Secretary Humphrey, accompanied by Assistant Secretary
Overby and other Treasury officers, attended the Tenth Meeting of
the Ministerial CouncU of NATO in Paris. Following the CouncU
meeting the Secretary of State, the Secretary of the Treasury, and
the Director of the Foreign Operations Administration met with
British and French representatives to carry forward discussions
which had been initiated in the Washington meetings.
In AprU a delegation of the Organization for European Economic
Cooperation, headed by the Secretary General, also came to Washington to explore economic and financial trends in the United States
and Europe. In June the President of the High Authority of the
European Coal and Steel Community headed a delegation which
came to Washington for conversations with the President, members
of the Cabinet, departmental officials, and Members of Congress
on matters relating to the implementation of the Schuman Plan.
In April the President announced that a mission, headed by DrMilton S. Eisenhower, would visit Latin American countries to
convey the President's greetings and good wishes to them and to
study and observe conditions there. Assistant Secretary of the
Treasury Overby was designated a member of this party along with
the Assistant Secretary of State for Inter-American Affairs and the
Assistant Secretary of Commerce for International Affairs. The
mission visited ten South American countries between June 23 and
July 29, 1953. In the course of its visits the mission discussed various
problems of mutual interest with the Presidents, Finance Ministers,
and other officials of these republics. I t also met with groups of
representative-American and local businessmen'to ob tain .their views. ^
Mutual Security Program
In the spring of 1953 the administration began a careful review of
the proposed legislation affecting the Mutual Security Program and
the organization appropriate to its administration. The program, as
submitted to the Congress in May 1953, marked a further shift in
emphasis from economic to mUitary and defense activities, including
•
o
•
.
> Dr. Eisenhower's "Report to the President on United States-Latin American Relations" was submitted November 18.1953.
60
1953 REPORT OF; THE; SECRETARY OF THE TREASURY
an expanded program for offshore procurement of mUitary-end items.
The Secretary of State, the vSecretary of Defense, the Director for
Mutual Security, arid their staffs discussed the political and mUitary
aspects of the program. The Secretary of the Treasury, in his statements to the congressional committees, emphasized the economic
and financial aspects. He pointed to the importance of reducing
economic aid in the light of the degree of recovery attained, and the
value of the military program as means of securing needed defense
activities at lowest costs. He stressed the importance of attaining
budgetary balance at the earliest possible date, and the reconciliation
of defense objectives with budgetary considerations and orderly
financial procedures (see exhibit. 30).
The enabling legislation and the appropriation act were passed
after the close of the fiscal year. Appropriation of new funds for
fiscal 1954 for military assistance and defense financing amounted to
$4 biUion, and for technical assistance, economic aid, and related
programs to $531 mUlion. In addition, Congress reappropriated
$2.1 billion from unobligated balances outstanding; Thus, the
appropriations available for expenditure in fiscal 1954 were about
equal to the amount for the preceding year, although the functional
allocation differed in its greater emphasis on defense.
In June the President submitted Reorganization Plan No. 7, which
estabhshed the Foreign Operations Administration, whose Director
was given the functions of the former Director for Mutual Security
and the Administrator for Technical Cooperation. These activities,
including the Institute of Inter-American Affairs, were transferred to
the Director of FOA. This reorganization, effective in August, concentrated the foreign aid operations of the Government in one agency.
The Dhector was given responsibility for the administration of the
program, but receives pohcy guidance on foreign pohtical matters
from the Secretary of State; on mihtary policy from the Secretary of
Defense; and on monetary and financial matters from the Secretary
of the Treasury. The President directed these officers to review
programs so as to facilitate coordination. The Office of Special
Representative in Europe was abohshed, but a new United States,
mission to NATO and the European Regional Organizations was
estabhshed for deahng with regional economic and defense problems,
but without operational responsibihty for country programs or
supervisory authority over country missions. The new mission
includes representatives of the Secretary of Defense, the Secretary
of the Treasury, and the Director of FOA, who also serve as mihtary,
financial, and economic advisers, respectively, tofthe Chief of the
mission.
I
.
- .::^ "^ ' •
REPOftT ON FISCAL OPERATIONS
:c>;: ^
61
National Advisory Council on International Monetary and Financial Problems
The iriembership of the Council was changed by Reorganization
Plans No. 5 and No. 7, which terminated the membership of the
Chairman of the Board of the Export-Import Bank and replaced the
Director for Mutual Security by the Dhector of the Foreign Operations Administration.
The Council submitted two reports to the President and to the
Congress which gave a full discussion of the Council's actiyities in the
fiscal year (83d Cong., 1st sess., H. Doc. 60; H. Doc. 214). These
activities included a reexamination of United States lending policy as
well as matters arising in connection with the International Bank and
the International Monetary Fund. Among the most important
decisions was one to adjust the rates of interest on both short-term
and long-term lending by the Export-Import Bank and other agencies
of the Government to reflect market conditions so as not to discourage private investment and to facilitate private participatiori iri
foreign lending activities.
Export-Import Bank
. The President's Reorganization Plan No. 5, submitted to the
Congress on April 30, 1953, replaced the former Board of Dhectors
and the President of the Bank by a Managing Dhector and Deputy
Managing Dhector, appointed by the President and confirmed by
the Senate. The Managing Dhector was given administrative authority in the Bank, subject to guidance by the National Advisory Council
on "general lending and other financial policies." While the Managing Dhector is not a member of the Council, he attends meetings of
the CouncU and his representatives attend sessions of its subordinate
organs when matters affecting the Export^Import Bank are under
consideration.
In the course of the fiscal year the Export-Import Bank extended
new loans of $571 miUion. These included loans for the development
of uranium resources, cotton credits, and other projects, as weU as a
credit to BrazU to assist in the liquidation of past-due dollar accounts;
The Bank also acted as the agent for the extension of credits under
the mutual security legislation and the Defense Production Act of
1950, as amended.
At the close of the year the Bank had loans outstanding and funds
committed amounting to $3,338.4 million, and had an uncommitted
lending authority of $1,061.6 mUlion. It received payments of
principal and interest amounting to $433.7 mUlion. Since the Bank
borrows from the Treasury to cover expenditures in excess of its
current receipts, its debt to the Treasury increased by $139 mUlion
in the course of the fiscal year, to that extent adding to the budgetary
62
1953 BEPORT OF THE SECRETARY OF THE TREASURY
deficit. At the close of the year the Bank's notes to the Treasury
amounted to $1,227.1 mUlion in addition to its capital stock of $1
bUlion, all held by the Treasury.
Capehart Committee
By Senate Resolution No. 25, agreed to on June 8, 1953, the Senate
Committee on Banking and Currency, under the chairmanship of
Senator Capehart, was directed to make a study of the functions of
the Export-Import Bank and the International Bank in relation to
the expansion of international trade. The committee began discussions
after the close of the fiscal year.
International Bank for Reconstruction and Development
I n the period under review the International Bank fpr Reconstruction and Development made new loan commitments aggregating
$178.6 mUlion. Of the total disbursements on loan account in the
course of the year, 63.5 percent was made in the United States, 30.1
percent in Europe, and the balance in other countries.
On June 30, 1953, the Bank had loans of $1,416.9 mUlion outstanding in a total of 29 countries. The Bank has secured its funds from
the capital subscriptions of its members and the sale of its securities.
Since the entire amount of the United States subscription has been
lent, the Bank must obtain additional dollar funds from the sale of
securities to private investors. These operations do not affect the
United States Government's budget. The United States, however,
has a contingent lia;bility, proportioriate to its stbck in the Bank, to
meet obligations of the Bank if it can not do so from its resources.
During the year the Bank issued $60 mUlion of bonds in the United
States, and the equivalent of $11.6 mUlion in Switzerland. On
June 30, 1953, the Bank had a funded debt of $556.4 mUlion, of
which $500 million was the principal of bonds issued in the United
States market.
International Monetary Fund
j
In the period under review the Federal Republic. of Germany,
Japan, and Jordan were admitted to membership in the Fund and
Bank, and applications for membership by Haiti and Indonesia were
approved. The Fund approved initial par values for Germany,
Austria, and Japan, and agreed to changes in the exchange systems
of Bolivia, BrazU, Finland, Greece, Iceland, and Thailand. The
Fund also approved the continuation of the 17 percent tax on foreign
exchange in the Philippines. (Under our trade agreement with the
Philippines, this also required approval by the President of the
United States, whose consent was made effective at the same thne.)
Throughout the period the Fund's staff, with a review of its findings by the Executive Board, continued consultations with members
REPORT ON FISCAL OPERATIONS
63
retaining exchange restrictions under Article X I V of the Agreement.
These cbhsultations were directed toward an examination of the
reasons fpr the continuance of restrictions and the suggestion of
modifications of policies which might lead to their eventual elimination. I n the course of these discussions considerable attention was
given to the problem of "retention quotas," a device used by some
of the member countries, particularly in Europe, to stimulate dollar earnings.
The policy of stand-by credit arrangements between the Fund and
member countries was generalized in October 1952. Under this
arrangement countries whose situation is such as to justify drawhigs
upon the Fund's resources are given advance assurance, on payment
of a'charge, that they wUl be permitted to draw during an ensuing
period of six months. I n this way they can assume that the Fund's
resources in appropriate amounts wUl be avaUable to them as a
secondary reserve during the agreed period if it becomes necessary
for them to draw. Finland, which concluded a stand-by arrangement with the Fund, fxUly exercised drawing rights under the credit.
Belgium, which also has a stand-by arrangement, did not draw
during this year.
During the period under review the Fund sold $70.8 million in doUars
to members in exchange for their currencies, and in the same period
member countries repurchased with gold and dollars theh own currencies from the Fund in the amount of $157.8 million. These repurchases were made in accordance with the Fund Articles and policies,
and reflected the improved monetary reserve positions of the members. Some repurchases were voluntary, others resulted from undertakings by the members, assumed at the time of drawing, to repurchase according to an agreed schedule, while other repurchases were
automatically required by the Articles for members whose reserves
had increased.
As of June 30, 1953, the Fund held $1.7 biUion in gold, $1.3 bUhon
in United States doUars, and $300 million in other convertible currencies. Total currency sales since the inception of the Fund aggregated $923 million, and total repurchases by members, $266 million.
Since the United States subscription to the Fund was paid in entirety
at its inception, the Fund's operations do not directly represent a current budget cost nor add to the United States public debt. Fund net
drawings, however, result in the reduction of the outstanding amount
of noninterest-bearing debt and the use of cash which, in a period of
budgetary deficit, increases the outstanding interest-bearing debt.
Conversely, net repurchases from the Fund result in a Treasury cash
receipt and an increase in the issue of noninterest-bearing notes of the
Treasury.
64
1953 REPORT OF THE SECRETARY pF THE TREASURY
United States-Mexican Stabilization Agreement
On June 9, 1953, the Secretary of the Treasury and representatives
of Mexico signed a new stabUization agreement between the two
countries (see exhibit 31). Under this agreement the United States
Exchange Stabilization Fund agrees to purchase Mexican pesos up to
,the equivalent pf $75 mUlion for the purpose of stabilizing the dollarpeso,rate, of exchange, if the occasion for such use should arise. The
new agreement increased the amount from $50 million to $75. mUlion
in view of, the increase in trade and financial transactions between
.Mexico, and the United States. The agreement continues in effect
.arrangements which have been renewed from time to time since 1941.
European currency questions
One of the riaajor issues under general discussion in this period was
the problem bf currency convertibihty. In the postwar period a
considerable measure of regional currency convertibility had been
attained by the sterling area and the European countries, but these
systems were based on continued incpnvertibihty with the dollar
and the mairitenance of discriminatory restrictions on doUar trade
and paymerits. The countries in the European Payments Union had
liberalized theh trade restrictions for other members and agreed upon
the settlement of their balances through E P U . WhUe E P U from
time to time had to face the problem of persistent creditors and persistent debtors on Europeari account, the mechanism of partial gold
payments and credit extension by creditor Countries had worked
i a h l y well. Similariy, the sterling area currencies have been practicaUy inter conviertible (except for certain wartime accumulation of
sterling), and continental trade with the sterling area has been financed
through the United Kingdom's meriibership.in E P U .
When in 1952, the Coriimonwealth cbuntries gave intensified consideration to the problem of. sterling convertibility with the dollar,
it became apparent that steps in this dhection would have dhect
repercussions on the E P U couritries and the continuance of United
Kingdorii membership. At the samel time the dollar positiPn of
seyeral of the continental members had improved considerably.
Thus was emphasized the need for reconsideration of the relatidnship
between regional payments arrangements and global convertibility,
which had always been regarded as the ultimate objective.
, The British views on these issues were stated in March to the
niembers of, the Organization for European Economic Cpbperation
by the Chancellor of the Exchequer and the Foreign Secretary: T h e
United States Treasury was represented at this naeeting. Th6 problems were not resolved and it was decided to continue study; I t was
also' agreed to continue E P U arrangements for an additional :year>
pending resolution.
.
•
REPORT^ ON FISCAL;..OPERATIOl!^S.-
65
Trade.and tariff policy
The new admhiistration early in the year considered various
questions of United States policy in the field of hiternational trade
and tarhf duties in the light of overall considerations of the United
States position in the world economy, its aid programs, and mutual
defense. It was clear that any major modifications of legislation
arid policies in effect should be attempted only after mature consideration of all of the implications. Accordingly, the President on
April 7, 1953, requested the Congress to extend the Reciprocal Trade
Agreements Act for another year, and suggested the establishment
by Corigress of a conimission to make a comprehensive study of these
problems. The Congress, after the close of the fiscal year, passed the
Trade Agreements Extension Act of 1953, which authorized the President to enter into foreign trade agreements untU June 12, 1954, and
created a bipartisan Commission. on Foreign Economic Policy composed of seventeen members; seven appointed by the President, five
by the Vice President, and five by the Speaker of the House of Representatives. This commission was dhected to study and report on
the laws, regulations, and practices of the United States relathig to
international trade, the relation of economic policies to total foreign
policies, the effect of foreign aid and mUitary defense programs on
international trade and balances of payments, foreign investments,
hiternational organizations in the area pf international economic
policy, and other related matters.
As a second step, the Congress enacted the Customs Simplification
Act of 1953 in the closing days of the first session of the 83d Congress.
This act amends the Tariff Act of 1930 in an attempt to simplify
customs operations, to reduce expense and delay incident to customs
administration, and to eliminate inequities which add to the difficulty
of customs enforcement. The law ot customs administration and
prpcedure, as distinguished from the rate structure, as contained in
the Tariff Act of 1930, had been generally revised only once, by the
Customs Administrative Act of 1938. Since that time many changes
have occurred in industry and commerce and the Customs Simplification Act of 1953 wUl, to a significant extent, modernize the administrative and procedural laws with the objective of giving improved
service to the importing public at the least possible cost to the taxpayer.
On May 6, 1953, Secretary Humphrey approved an order levying
countervailing duties on imports of wool tops from Uruguay. The
Bureau of Customs had been satisfied that this commodity, upon
being exported from Uruguay, receives a bounty within the meaning
of Section 303 of the Tariff Act of 1930. Therefore under the law
the Ti'easury had no option but to issue such an order. Collectors of
273013—54
6
66
1953 REPORT OF THE SECRETARY. OF THE TREASURY
customs were ordered to collect cpuntervailing duties of 18 percent on
all dutiable imports of Uruguayan wool tops, in addition to all other
applicable duties and charges. This order became effective June 6,
1953 (see exhibit 32).
Settlement of international debts
In the course of the year significant steps were taken to restore
the credit of various countries whose foreign obligations had been in
default as the result of the war, exchange difficulties, or other reasons.
I n the case of Japan and several Latin American countries the settlements of dollar debts affected, and were negotiated principaUy by,
private investors, while the German debt settlements involved the
claims of the United States Government as well.
Japan.—After a series of conferences with representatives of the
bondholders which ended September 26, 1952, the Japanese Government agreed to resume service on its outstanding dollar and sterling
obligations beginning December 22, 1952. The terms of settlement
conformed as closely as possible to the original contractual terms and
conditions, adjusted for nonpayment durhig the war and immediate
postwar period. Maturities on all dollar bonds and all sterling bonds
not having a currency option were extended exactly ten years, while
sterling bonds having a currency option were extended fifteen years.
Interest arrears for an approximate ten-year period were also extended
exactly ten years and will be paid simultaneously with interest currently due. Both wUl be paid at contractual rates.
Sinking funds are being resumed pursuant to the original contracts,
beginning in 1953, with adjustments to give effect to the reduced
amount of bonds outstanding resulting from the conversion of certain dollar and sterling bonds into yen bonds, which were not subsequently eligible for revalidation. Seven city and twelve corporate
issues have been fully assumed by the Government of Japan.
I n the case of sterling loans containing a dollar clause the question
of when and whether the dpllar obligation wUl be fulfilled is yet to
be decided between Japan and Great Britain. Without prejudice to
any agreement which might be reached between these two Governments, the dollar option wUl be recognized by payment of the full
sterlhig equivalent.
Service on two relatively small French franc loans has not yet been
resumed since the Japanese and French Governments have been unable
to agree on the terms of settlement.
Germany.—^Agreements with the Federal Republic of Germany
providing for settlement of German external debts estimated to
amount to the equivalent of nearly $5.5 billion were signed in London
on February 27,1953. The debts involved in this settlement included
an estimated $1,640 inillion of dollar bonds and other types of prewar
REPORT ON FISCAL OPERATIONS
67
claims held by private United States nationals as well as $3,200
jnUlioh of Uriited States Governhieht clairns on account of postwar
economic assistance and surplus property furnished to Germany. The
terms of settlement established by these agreements had been worked
o u t under the auspices of the Tripartite Commission on German
External Debts, at the London Conference of February-August 1952.
During the period of more than two years involved in the preparation and negotiation of the arrangements for this settlement of German
debts, the Treasury Department was represented on an informal
interdepartmental committee on clahns against Germany, and through
this medium furnished advice to the Department of State regarding
financial pblicy aspects of the. .settlement arrangements. In addition
to this' generial interest, the Treasury was also concerned with the
treatment to be accorded under the settlement to its holdings of
German bonds issued in connection with awards of the Mixed Claims
Commission, United States and Germany.
On April 10, 1953, four of the agreements signed by the United
States in connection with the London Settlement were submitted to
the Senate for its advice and consent to ratification. These included
the general intergovernmental agreeinent on German external debts,
•establishhag the overall framework for settlement of the private prewar
claims, and three bUateral agreements between the Wriited States
a n d the-Federal Republic dealing, respectively, with the United States
claim for postwar econoiriic assistance other than surplus property,
the indebtedness of Germany for Mixed Claims Commission awards
to United States nationals (see exhibit 33), and the validation of
German dollar bonds in connection with the debt settlement. Two
executive agreements, dealing with the United States claim for surplus
property and with procedures for the validation of German dollar
bonds, were submitted to the Senate for its information at the same
time.
Secretary Humphrey gave his endorsement to the settlement
a,greements and recommended theh early approval in a letter
(see eAibit 34), addressed to thp. Chairman of the Senate Foreign
Relations! Committee on May 26-, 1953. [The settlement agreements
w^ere approved by the Senate on July 13, 1953; and went into effect
on September 16, 1953, following the exchange of ratifications with
the Federal Republic of Germany.]
Other.—During the year under review Costa Rica and Ecuador took
steps toward resuming service on privately held external long-term
debt. Costa Rica reached agreement with the Foreign Bondholders
Protective Council whereby new bonds would be issued with maturity
in 1973 in exchange at face value for the outstanding dollar bonds
(esthnated not to exceed-$8.6 million), and interest in arrears on most
68
1953 REPORT OF THE SECRETARY OF THE TREASURY
outstanding issues is to be settled by new bonds valued at 10 percent
of interest iri arrears. The Costa Rican Legislative Assembly ratified
the agreement in May 1953. Debt to British and French bondholders
remains in default.
Ecuadoran representatives and the British CouncU for Foreign
Bondholders reached agreement in May 1953 on a plan for the resumption of service on bonds denominated in dollars with a face value of
about $10 million, largely held in Britain. No settlement of interest
in arrears was provided for, but Ecuador agreed to pay a bonus of 5
percent of principal as compensatipn for the reduction in the rate of
future hiterest. The agreement was subsequently ratified by the
Ecuadoran Congress.
Korean financial agreement
Progress toward stabilizing and developing the Korean economy
came to an abrupt halt with the Communist invasion in 1950. The
principal focus shifted to' military operations, and finaricial and
monetary problems took on a new character. The almost inevitable
inflationary consequences of conducting large-scale military operations
were compounded by the limitations of the Korean economy and
resources.
With the approach of the fiscal year 1953, important steps were
taken, in addition to continuing Uriited States aid, to lay the framework of a financial and monetary stabilization program. This program
was also designed to form the basis of an eventual reconstruction
program for the war-devastated economy. An agreement on economic
coordination between the Republic of Korea and the United States
in its capacity as Unified Command was concluded in May 1952.
This provided for the establishment of a Combined Economic Board
in Korea, which was to be the focal point of a stabilization program.
A related agreement was also negotiated to provide for a lump-sum
settlement for a part of previous local currency drawings of the Uriited
States military forces in Korea. Additional monthly payments were
also provided for in this agreenaent on a continuing basis. It was
hoped that as a result of these two agreements satisfactory progress
could be made toward the stabilization goal.
Further steps were taken in February 1953 with settlement and
paymerit for all outstanding drawings of local currency by the United
States mUitary forces. Provision was also made for settlement at
the end of each month for local currency drawn. At about this time
it was decided also to send a special representative of the President
to investigate ways and means of strengthening the Korean ecoriomy
in the light of United States security interests. The mission of the
REPORT ON FISGAL OPERATIONS
69
Special Representative reported its findings in June, and with the
signing of the truce, a long-range program for rehabilitation of the
Korean economy was begun..
Foreign Assets Control
The Division of ForeignAssets. Control administers both the Foreign
Assets Control Regulations issued on December 17, 1950, under
Section 5 (b) of the Trading With the Enemy Act, and certain other
orders issued under this act. The Foreign Assets Control Regulations
are intended to deprive Communist China arid North Korea of foreign
exchange which could be used in support of Communist aggression
in Korea. The Regulations block all property in the United States
in which there exists any Communist Chinese or North Korean interest and prohibit all trade or other financial transactions with those
countries.
In order tp effectuate this policy, the Control has found it necessary
to prohibit the unlicensed importation of various types of merchandise
historically imported from China, regardless of the alleged place of
origin of the merchandise. These restrictions have been imposed
because of the extent to which products of Communist China have
been misdescribed as the growth or product of some other country in
an effort to evade the Regulations. It is the Control's policy not to
issue licenses authorizing the importation of Chinese-type merchandise
except upon submission by the importer of satisfactory proof that
particular merchandise sought to be imported is actually of nonChinese origin. Because importers of such merchandise found it
extremely difficult to obtain satisfactory proof, the Control, beginning
in January 1953, entered into agreements with the Governments of
Hong Kong and Japan, China on Formosa, and the Republic of Korea
under which those Governments undertake to certify, pursuant to
agreed standards, the non-Chinese origin of particular commodities.
Such commodities, when appropriately certified, can now be imported
into the United States under general licenses contained in the Regulations.
Rigorous enforcement measures have been applied to cases of violations of the Regulations. Illegal remitters of funds to Communist
China have been prosecuted, as have persons who have attempted to
evade the import restrictions. Further, foreign bank accounts in
the United States which have been utUized in financing dollar transactions hivolving a Communist Chinese interest have been blocked
to the extent that such interests have existed.
In addition to administering the Foreign Assets Control Regulations,
the Control has responsibilities with respect to a steel mUl located in
70
1953 REPORT OF THE SECRETARY OF THE TREASURY
the United States and belonging to Czechoslovakian interests which
was blocked on January 17, 1952, by a Treasury Department order
under the Trading With the Enemy Act. The Control also administers regulations issued by the Secretary on June 29, 1953, which
prohibit persons in the United States from purchasing, selling, or
arranging the purchase or sale of strategic commodities outside the
United States for ultimate shippaent to the Soviet blPc. These
regulations supplement the export control laws administered by the
Department of Commerce.
ADMINISTRATIVE
REPORTS
Summary of Progress in Management Improvement
The Treasury's management improvemeni: program was accelerated
during the fiscal year 1953 to achieve greater efficiency and sharp
reductions in Government expenditures. Although mariy improvements made by the Treasury had intangible benefits not measurable
in dollars and cents, the identifiable savings related to improvements
during the year amounted to approximately $12.4 million on a
recurring annual basis and over $2.6 million on a nonrecurring basis.
These savings contributed substantially toward attaining the $44
mUlion reduction in appropriations for operating expenses of the
Treasury for the fiscal year 1954.
At the departmental level, the Secretary made extensive use of the
authority granted him under Reorganization Plan No. 26 of 1950, as
shown in the Treasury Department orders relating to organization
and procedure. (See exhibit 49.)
Several organizational improvements were made in the Office of the
Secretary, includhig the realignment of top supervisory responsibilities
(see the exhibit on p. 280, Treasury Department Order No. 148,
Revision No. 1); the creation of an Analysis Staff which combined
some of the functions of the former Office of the Technical Staff and
Tax Advisory Staff; the consolidation of certain activities in the Office
of Administrative Services; the consolidation of Treasury library
facilities; and the consolidation in one officer, the Director of Practice
of the internal Revenue Service, of functions formerly carried on
separately by the Committee on Practice and the Attorney for the
Government.
Departmental action was taken to strengthen a number of programs
designed to increase efficiency and economy of operations. Treasury
bureaus were encouraged to undertake more extensive executive
development and supervisory training programs. A number of the
bureaus have developed and conducted such training sessions and
others are studying the requirements for this type of instruction. I n
the budget and accounting field, a series of bureau surveys was begun
to appraise the effectiveness of accounting support for budgetary data.
Other department-wide surveys were conducted to reduce Treasury
space requirements and the cost of printing. Space surveys are
being made in all major cities in an effort to reach a goal of one mUlion
square feet to be released during the next fiscal year.
Regulations were issued with respect to fiscal internal auditing to
provide adequate reviews and inspections to insure: (a) Observance of
laws, regulations, policies, and procedures pertaining to fiscal matters;
(b) maintenance of safeguards and controls with respect to money and
securities for which the Treasury is responsible; and (c) maintenance of
adequate accounting systems in all bureaus and offices in accordance
with the provisions of law.
I n the overall direction of fiscal activities, the integration of procedures relating to Treasury functions performed by Federal Reserve
Banks with procedures of the Fiscal Service bureaus continued to be a
field of worthwhile exploration. The utilization of electronic equipment in the further development of mechanized procedures in the
Fiscal Service is another highly important field in process of explpration and study.
^
73
74
1953 REPORT OF THE SECRETARY OF THE TREASURY
I n the safety field, the Treasury Department Fire and Safety
Council published and distributed two reports in booklet form containing charts and graphs depicting safety progress. The charts
reveal a steady decline in the accident rate in the Treasury's three
bureaus which have industrial-type operations.
The records management program was accelerated by special
surveys and the establishment of additional schedutes for the disposal
of record material. During the calendar year 1952 file equipment
valued at $844,000 was released for reuse by the Treasury and other
governmental agencies, rental space valued at $278,800 was released
for other use, and proceeds from the sale of waste paper amounted to
$48,700.
The incentive awards program received its principal departmental
stimulus through an analysis of each bureau's program and a series of
meetings with bureau representatives to discuss improvements, by
accelerating the processing of suggestions, and by publishing results
and statistics on the program in the Department's "Management
Newsletter." Subsequently, reporting procedures were revised and
additional authority delegated to the bureaus for making awards.
During the fiscal year 1953 the Department received 2,931 and
compileted consideration of 2,853 suggestions, of which 527 were
adopted. Cash awards to employees totaled $13,010, with estimated
annual savings of $211,115. Salary increases for superior accomplishment were granted to 62 employees. The Department also granted
3 individual and 3 group efficiency awards to 23 employees under
"Title X , " amounting to $1,735 based upon demonstrable savings of
approximately $45,000. I n addition, seven meritorious civilian
service awards were granted.
The Bureau of the Comptroller of the Currency designed new and
improved forms for use by national bank examiners in reporting upon
investigations incident to applications for branch bank authorizations.
Also, the forms used in making regular examinations of national banks
have been supplemented to include a questionnaire designed to
strengthen internal controls utilized by the banks. The Bureau is
participating in an interagency school established during the year to
expedite and broaden the training of newly appointed assistant examiners in the three Federal bank supervisory agencies.
In the Customs Service identifiable savings on a recurring annual
basis are estimated at $524,500. Most of these savings, $378,000,
resulted from the reduction of weighing and gauging operations and
elimination of roll call for port patrol officers at the Port of New York,
and certain improvements in the Hawaii and North Dakota Districts,
all of which were brought about by field office inspections. Also
contributing to the savings were the adoption of new procedures for
the clearance of tourists' unaccompanied purchases, $75,000; a change
in method of printing annual publications, $30,500; and a revised system for the sampling of alcoholic beverages for label approval and
examination purposes, $21,000. Other actions not susceptible to
estimation of savings include permission granted collectors to designate
less than 10 percent of packages for examination when the contents
are uniform or identical; revised procedures for control of imports
subject to quota limitations; elimination of customs supervision of
the lading of bonded fuel oil into exporting vessels; and the adoption
ADMINISTRATIVE REPORTS
75
of a statistical reporting system for appraisers' forces to control manpower utilization and distribution more effectively.
The Bureau of Engraving and Printing reported annual recurring
savings of $4.2 million in the fiscal year 1953. By the close of the
fiscal year, the program to convert the printing of currency from 12subject to 18-subject sheets had progressed to a point where 60 percent of the currency plates in use were of the larger size. A new
nonoffset black intaglio ink was in use which made possible the
installation of automatic takeoff and delivery devices on all currency
face presses. These improvements made it possible to increase production by 50 percent on presses converted to the 18-subject size.
In addition, there were a considerable number of improvements in
plate making, currency examination, postage stamp processing, and
administrative practices. Research and development were carried on
extensively with respect to automatic feeders for use on plate printing
presses, a single sheet drying device, a web-fed rotary press for postage
stamp production, a sheet-fed rotary intaglio press, and other labor
saving devices. Safety training included a series of conferences for
superintendents, chiefs and their assistants, and 140 supervisors, and
the issuance of a monthly bulletin to stimulate interest in the accident
prevention program.
The Fiscal Service reported improvements during the year which
resulted in estimated annual savings of nearly $3.6 million. The most
significant of these were: Consolidation of accounting functions previously performed in the Division of Bookkeeping and Warrants and
the Division of Disbursement, $98,100; reduction of printing costs in
the daily Treasury statement, $38,000; installation of improved
addressograph equipment elhninating the manual key punching of
amounts and other data into card checks, $192,681; extension of the
combined voucher-schedule to all agencies, $148,376; continuous
appraisal of efficiency and regulation of monthly personnel ceilings by
means of production control and cost reports resulting in a reduction of
44 positions in the field service of the Division of Disbursement,
$124,300; conversion from paper to card checks by 35 large checking
accounts, $327,000; decentralization of the verification and deistruction
of unfit United States currency to the Federal Reserve Banks, $615,000;
revision of the redemption procedure relating to the processing of
United States savings bonds, $700,000; transferof the function of processirig stock credit and recovery cases relating to savings bonds to
Federal Reserve Banks, $144,000; and release of 38 rented business
machines during the year thi-ough the periodic review of machine
utilizatiori reports, $64,476.
The reorganization of the Internal Revenue Service was pursued
vigorously during the year with the establishment of regional headquarters offices, realignment of internal responsibilities, decentralization of functions, and revision of procedures. Improvements effected
during the year made possible recurring annual savings of over $3.8
million in operating costs, plus $2.5 mUlion savings in interest payments as a result of accelerating tax refunds by production-line
methods and uniform procedures fPr processing returns. I n addition,
action started during the year to reduce the number of regional
pffices from 17 to 9 and the decentralization of operating functions
to the'field will result in savirigs estimated to be in excess of $6 million.
76
1953 REPORT OF THE SECRETARY OF THE TREASURY
Some significant actions in the Revenue Service resulting in savings were: Modification of the program for sampling information
returns in the Processing Branch in Kansas City, $1,700,000; change in
requirement for filing excise tax returns from a monthly to a quarterly
basis and utilizing the depositary receipt system for collection,
$1,430,000; inclusion of a second notice in original notice assembly
rather than as part of the warrant assembly, $100,000; use of inexpensive printed special tax stamps in continuous form assemblies,.
$150,000; and decentralization of selection process for statistical
sample of corporation income tax returns, $100^000. Other significant
actions on which savings are not identifiable in monetary terms b u t
which have improved operations, increased production, and increased
collection of revenue, include: Development of a system for the
review of all standard taxpayer forms, letters, and other communications; development and conduct of intensified public relations program;
development of a financial management program to improve and
modernize the budgeting, administrative accounting, and allotment
control functions; revision of procedure for reducing the number of
distraint warrants; development of a simplified system for sorting,
classifying, and selecting tax returns for audit; revision and decentralization of offer in compromise procedures; adoption of a new policy
of examining, wherever practicable, all Federal tax returns filed by a
business taxpayer at the same time that the income tax examination
is made; and an attempt to reduce the number of cases brought before
the Tax Court by intensifying the review by supervisory officers
of nonsettled cases. Substantial progress was made in the study
of ways to eliminate the filing of approximately 35 mUlion income
tax returns which would save 20 to 25 million dollars annually.
Other improvements are being readied for adoption based on the
outcome of a review of revenue accounting methods which was
conducted under the joint accounting improvement program.
I n the Bureau of the Mint, improvements in methods and devices
resulted in annual savings of $84,000. They included: Use of a new
type folding conveyor for lifting and stacking silver bars, $14,000;
mechanization of coin blank reviewing operations, $12,000; revised
:coin counting methods, $16,000; improvements in handling coin
blanks from blanking presses, $11,000; and a more efficient method
of feeding blanks to coinage presses, $12,000. Also, through the use
of motion pictures and discussion sessions, officials and supervisors
were instructed in modern production techniques and safe operating
practices.
The Bureau of Narcotics took several important steps with respect
to the handling and disposition of narcotic drugs which included:
Provision for direct shipment of surplus stocks held by Government
agencies to the stockpile instead of to the Bureau; disposition of 33
tons of material held in storage vaults; and revised accounting and
security measures for salvaged drugs. In addition, a revised procedure
expedited the disposition of seized automobUes and resulted in a
reduction in storage costs.
The United States Coast Guard installed numerous technological
improvements including: Improved methods in construction of 40'
boats, $22,725; use of cathodic protection to reduce maintenance
costs of underwater steel structures; design, fabrication, and issue
ADMINISTRATIVE REPORTS
77
of trainable mounts for high altitude flare mortar to all ocean station
vessels; simplification of the method for securing counterweights on
tubular buoys, $2,500; development of automatic equipment to
eliminate the need for continued manual monitoring of loran synchronization between stations; and design and conversion of direction
finders to permit homing on marine radiotelephone transmissions.
Among the nontechnical iinprovements reported were: Publication
of a manual containing procedures on accounting, payments, supply,
and statistical reporting; further utUization of punched cards to
facilitate record-keeping; adoption of an indefinite term commission
for reserve officers; and development of new fiscal and supply instructions and procedures. These improvements resulted in identifiable
nonrecurring savings of $23,000 and recurring annual savings of
$30,000.
The United States Savings Bonds Division completed the reorganization of Class 1 and 2 field offices on a geographical basis in order to
increase coverage and effectiveness of sales effort. Field offices were
formerly organized on the basis of specialized promotional programs
such as payroll savings, banks, etc.
The United States Secret Service was able to reduce the number of
security transportation guards as a result of the substitution of check
pa3nnents for cash payrolls in Government agencies, and by revising
the method for protecting securities in transit. Time-saving reporting procedures were devised for use in check forgery cases, and two-way
radio equipment was installed in Detroit, Mich., adding considerably
to the efficiency of operations. Total economy nieasures taken
resulted in identifiable savings of $42,000 annually.
Bureau of the Comptroller of the Currency ^
The Bureau of the Comptroller of the Currency is responsible for
the execution bf laws relating to the supervision of national banking
associations. Duties of the office include those incident to the formation and chartering of new national banking associations, the examination twice yearly of all national banks, the establishment of branch
banks, the consolidation of banks, the conversion of State banks into
national banks, recapitalization programs, and the issuance of Federal
Reserve notes.
Changes in the.condition of active national banks
The total assets of the 4,881 active national banks in the United'
States and possessions on June 30, 1953, amounted to $103,711 million,
as compared with the total assets of 4,932 banks amounting to $101,542
million on June 30, 1952, an increase of $2,170 million during the year.
The deposits of the banks in 1953 totaled $94,749 million, which was
$1,759 mUlion more than in 1952. The loans in 1953 were $36,537
million, exceeding the 1952 figure by $3,367 million. Securities held
totaled $41,536 mUlion, a decrease of $1,550 million during the year.
Capital funds of $7,239 miUion were $343 mUlion more than in the
preceding year.
The assets and liabilities of the active national banks are shown iri
the following statement.
1 More detailed information concerning the Bureau of the Comptroller of the Currency is contained in
the annual report of tho Comptroller.
Abstract of reports of condition of active national hanks on ihe dates of each report from June ,
195^, to June 30, 1953
00
[In thousands of dollars]
June 30,1952
(4,932 banks)
Sept. 5,1952
(4,927 banks)
Dec. 31,1952
(4,916 banks)
Apr. 20,1953
(4,890 banks)
June 30,1953
(4,881 banks)
ASSETS
Loansand discounts, including overdrafts
U. S. Government securities, direct obligations
Obligations guaranteed by U. S. Government
Obligations of States and political subdivisions.
pther .bonds, notes, and debentures
_
.Corporate stocks, including stocks of Federal Reserve Banks
-
-..
-.
-
Total loans and securities...
_
_
.
Cash, balances with other banks, including reserve balances, and cash items in process of collection
Bank premises owned, furniture and fixtures _
_
._.
Realestate owned other than bank premises
_
Investments and other assets indirectly repi-esenting bank premises or other real estate
Customers' liability on acceptances
_
_
Income accrued but not yet collected
Otherassets
-._
Totalassets
._
-
33,170,408
34,678,113
16,427
5,810,343
2,393, 571
187, 240
33, 782, 046
34,971, 610
11, 761
5,988,324
2,344, 284
188,113
36,119, 673
35,921,239
15,203
5, 982, 753
2.176,230
196,860
36,566,806
33,449,868
21, 283
6,314,550
2,068, 282
199, 290
36, 537,355
33, 025,310
23,744
6, 218, 789
2, 066,785
200.901
76,256,102
77,286,138
80,411,958
78,620,079
78,072,884
23,991, 529
717,394
19,986
58,036
141, 522
196,424
160,571
23, 553, 507
727,839
21, 210
58,394
138, 049
239,444
149,127
26,399,403
747,912
22, 555
57,876
,169, 263
190, 542
133,234
23,980,820
769, 024
22,123
58, 539
146,341
186, 200
155,474
24,343, 646
776, 291
23, 775
58,911
122,472
183,772
129,525
101,541, 564
102,173, 708
52,234,586
20, 720,190
3, 681, 910
6,231, 989
8, 587,305
1, 533, 710
53, 075, 645
20, 905, 423
2,817,219
5,875,435
8, 657,187
1,172,936
108,132,743
103,938,600
o
CQ
O
103,711,276
LIABILITIES
Demand deposits of individuals, partnerships, and corporations.-^_
Time deposits of individuals, partnerships, and corporations. _
Deposits of U. S. Govemment and postal savings
Deposits of States and political subdivisions...
_
_
Deposits of banks
.'
Other deposits (certified and cashiers' checks, etc.)...
__
._
Total deposits
. Demand deposits...
—
THme deposits
_
—
Bills.payable, rediscounts, and other liabilities for borrowed money
Mortgages or other liens on bank premises and other realestate.
Accep.tances outstanding '.,
Incdme collected but not yet eamed
_
-
_
56,.682, 902
21,;517,160
3, 251, 638
6, 27I5 676
9, 920, 522
1, 613,878
53, 713,797
21,881, 788
2,389, 701
6,451, 277
8,428, 765
1,470,809
19, 257, 776
53,369,383
22, 285,848
2,486,392
6,627, 528
8, 596, 634
1,383,168
92,989. 690
92, 503,845
94,336,137
94, 748,953
70,71^2,199
22,247, m
70,055,745
22,448,100
76,1S9,288
23,118,488
70,843,146
23,492,991
70,774,840
23,974,113
1,069,238
242
145,359
246,314
75,921
238
179, 294
279,843
626,840
253
158,487
312,622
45, 510
206
133, 223
314, 745
42, 046
230
147, 053
219, 212
O
>
CO
d
Expenses accrued and impaid
Otherliabilities
_.._
359,499
887,771
449,355
791,584
434,.672
845,778
448,576
877,995
389,395
840, 520
94,645, 501
95,205,937
101,073,'522
96, 760,910
96,472,552
r 2,203.466
3,175,879
r 1,252,544
264,174
2,207,921
3,197,085
1,296,349
266.416
:
Totaliiabilities
,
CAPITAL ACCOUNTS
Capital stock
Surplus
Undivided profits.-.-_
Reserves and retirement account for preferred stock
Total capital accounts
Total liabilities and capital accounts
' Revised.
2, 224,-852
3,334,218
1,225, 731
274,^20
2,254,842
3,357,960
1,300,877
264,011
6,896,063
6,967, 771
7, 059, 221
7,177, 690
101, 541.564
102,173,708
108,132, 743
103,938,600
2,264,629
3,410,122
1, 296, 655
267,318
7,238,724
103, 711, 276
>
CQ
1
<
oo
^
o
80
1953 REPORT OF THE SECRETARY OF THE TREASURY
Summary of changes in number and capital stock of national banks
The authorized capital stock of the 4,884 national banks in existence
on June 30, 1953, consisted of common stock aggregating $2,264
million, an increase during the year of $67 miUion, and preferred stock
aggregating $6 mUlion, a decrease during the year of $1 million. The
total net increase of capital stock was $66 million. During the year
charters were issued to 17 national banks having an aggregate of $3
mUlion of common stock. There was a net decrease of 50 in the number of national banks in the system by reason of voluntary liquidations, statutory consolidations, and conversions to and mergers or
consolidations with State banks under the provisions of the act of
August 17, 1950 (12 U. S. C. 214).
More detaUed information regarding the changes in the number
and capital stock of national banks in the fiscal year 1953 is given in
the following table.
Organizations, capital stock changes, and liquidations of national hanks, fiscal year:
1953
Number
of banks
4,934
Charters in force June 30,1952, and authorized capital stock i
Increases:
Charters issued...
Capital stock:
142 cases by statutory sale
.
_ .
238 cases by statutory stock dividend
12 cases by stock dividend under articles of association
18 cases by statutory consolidation
1 case by conversion of preferred stock
.
17
_
.
'
Total decreases
Net change
Charters in force June 30,1953, and authorized capital stock»
$2,197,498,975
Preferred
$6,512,830
3,400,000
143,000
17
74,757,838
143,000
34
18
3
12
3,540,000
825,000
2,975,000
188,000
411,250
_
.-
Common
26, 702,850
38,990, 030
897,550
4, 681,408
86, 000
.
Total increases
Decreases:
Voluntary liquidations
.. _
Statutory consolidations
Conversions into State banks
_
Merged or consolidated with State banks..
Capital stock:
1 case by statutory reduction
4 cases by statutory consolidation
.
26 cases by retirement
Capital stock
987,630
67
7,939,250
987,630
-50
66,818,588
—844,630
4,884
2,264,317,563
6,668,200
1 These figures differ from those shown in the preceding table. June 30,1952, figures include 1 bank in
process of going into voluntary liquidation and 1 bank in process of merging or consolidating with a State
bank imder provisions of the act of Aug. 17,1950. Jime 30,1953, figures include 1 newly chartered bank not
yet open for business; 1 bank in process of merging or consolidating with a State bank under provisions of
the act of Aug. 17, 1950; 2 banks in process of going into voluntary liquidation, and exclude 1 bank consolidated with another national bank at close of business June 30,1953, under provisions of the act of Nov. 7,
1918, as amended (12 U. S. C. 33, 34).
Bureau of Customs
The principal functions of the Bureau of Customs are to assess and
collect duties and taxes on imported merchandise and baggage; prevent smuggling, undervaluations, and frauds on the customs revenue;
apprehend violators of the customs and navigatipn laws; enter and
clear vessels and aircraft; issue documents and signal letters to
vessels of the United States; admeasure vessels; collect toimage taxes
ADMINISTRATIVE REPORTS
.
81
on vessels engaged in foreign commerce; supervise the discharge of iiriported cargoes; inspect international traffic; control the customs
warehousing of imports; determine and certify for payment the amount
of drawback due upon the exportation of articles produced from dutypaid or tax-paid imports; enforce the antidumping and export control
acts; regulate the movement of merchandise into and out of foreign
trade zones; and enforce the laws and regulations of other Government
agencies affecting imports and exports.
Collections by Customs Service
Total reyenue collected by Customs in the fiscal year 1953 was
over $829 million as compared with $748 million in 1952 and $809
mUlion in 1951, an increase of 10.9 percent over the previous year
and of 2.5 percent over 1951 when collections by Customs were higher
than in any previous year. The total includes items collected for
other governmental agencies, such as internal revenue taxes for the
Internal Revenue Service, and some items for the Immigration and
Naturalization Service, Public Health Service, and other agencies.
Customs collections alone amounted to $619 million, an increase of
11.7 percent from the previous year's total of $555 million, but a decrease of 1.6 percent from the $630 million collected in 1951, when customs collections were the highest ever recorded in customs history.
They consisted of collections of duties, tonnage taxes, fines and penalties for the violation of customs and navigation laws, etc. The increase in total revenue collected by Customs in 1953 over that collected
two years before but accompanied by a decline in customs collections
was due entirely to increased collections of internal revenue taxes on
imported liquors, wines, perfumes, etc., which amounted to almost
$210 million in 1953, over 18 percent more than the $177 million
collected in 1951.
Of the customs collections, all but a little more than $6 million were
derived from duties (including import taxes) levied on imported merchandise. Customs collections other than duties included over $1
mUlion of head taxes paid by immigrants and previously deposited
to the credit of the Department of Justice. The collectipn of this tax
was discontinued by Public Law 414, 82nd Congress, enacted June
27, 1952, and effective December 24, 1952. The source of the duty
collections by type of entry is shown in table 8 and by tariff schedule
in table 86. Since the data in the latter table are restricted to commercial importations, the totals shown are somewhat smaller than the
duties collected on all kinds of dutiable merchandise and correspond
roughly to duties collected on consumption entries and on warehouse
withdrawals.
In 1953, more than one-half of all imports into the United States was
duty free and included some commodities authorized by special acts of
Congress for free entry although dutiable under the Tariff Act of 1930,
or taxable under the Internal Revenue Code, such as copper, zinc,
lead, etc. The 44 percent which was dutiable constituted the basis of
customs duties on imports.
.
Customs duties after remaining almost stationary at a level of
around $44 million a month during the last six months of the fiscal
year 1952, increased rapidly during the earl}^ months of the fiscal
year 1953, reachirig the high level of $64 million in October and
averaging above $50 ihillion during the succeeding eight months. The
273013—54
7
82
1953 REPORT OF THE SECRETARY OF THE TREASURY
high-water mark in October was due largely to heavy withdrawals of
w o o l i n the expectation of the imposition of a tax on imported raw
wool which did not materialize. The October duty collections exceeded those for any single month in customs history with the single
exception of June 1930, when a very large quantity of goods was withdrawn from customs bonded warehouses to avoid paying the higher
rates prescribed by the Tariff Act of 1930, which became effective on
June 18, 1930.
Collections by customs districts.—Of the 44 customs districts.in which
collections are covered into the Treasury of the United States, 28
reported larger customs collections and only 16 collected a smaller
amount of customs revenue than in the previous year. All of the
west coast and Mexican border districts and all but two of the northern border districts, Buffalo, and Minnesota, had increased customs
revenue. On the other hand, in eight of the Atlantic coast districts,
customs revenue declined, with only New York, Maryland, and South
Carolina revenue increasing. The largest increase in customs revenue, 54 percent, was in the Ohio district, whUe Laredo, Los Angeles,
Kentucky, Montana, and Dakota all reported increases of more than
40 percent. New York, with $265 million of customs revenue, collected almost 43 percent of the total for the entire country, and 11
other districts collected more than $10 million each. The collections
for each customs district are shown in table 85.
Collections by comrnodities.—Twelve of the fifteen schedules in which,
dutiable commodities are listed in the tariff' act showed increases in
duty collections, and ten of these also showed increases in the value
of the commodities imported. In addition, the group of free-list
commodities taxable under the Internal Revenue Code, consisting
mostly of petroleum products in 1953, showed a considerable increase
in the value of imports, but a smaller duty yield as a result of the
reduction in rates of duty under the trade agreement with Venezuela.
I n 1953, as in the preceding year, imports of metals and manufactures
were the largest single source of revenue. The chief items were watch
movements, machiner}'", iron alloys, automobiles, lead, aluminum,
and zinc, each of which yielded considerably greater revenue than in
1952. The agricultural schedule ranked second as a source of revenue
and the wool schedule third in each year. Imports of unmanufactured
wool declined sharply in value as compared with the preceding
year, leaving the duties collected slightly greater than in 1952, since
the number of pounds imported was slightly in excess of the previous
year's total.
Table 86 gives the value of dutiable and taxable imports for consumption and the duties collected thereon for the fiscal years 1952 and
1953. Tables 88 and 89 show the value of imports for consumption
anci the duties collected thereon for the calendar years 1942 to 1952
and monthly from January 1952 to June 1953.
The trends in value and duty yield for goods dutiable at.specific
rates, at ad valorem rates, and at compound rates are shown in
table 87.^
. Collections by countries of origin.—The increased value of imports
and the greater yield in duties, noted in the case of commodity groups,
was also exhibited for most of the leading countries sending imports
to the United States. The United Kingdom again outranked Canada
ADMINISTRATIVE REPORTS
83
as the largest source of customs revenues. Collections on iinportsfrpm
each of these countries were considerably larger than in. 1952. J a p a n
replaced Cuba as the third country in importance as a source of customs revenue, with Switzerland remaining as the fifth mpst important
country and Germany rocketing to sixth place.
The decline in the price of raw wool caused a sharp decline in the
value of imports from Australia, New Zealand, and the Union of South
Africa. Lower rates pf duty under the Venezuelan trade agreement
caused reduced revenue on imports from Venezuela and Colombia.
Table 90 shows the value of imports for consumption and the duties
collected thereon by the principal countries for the fiscal years 1952
and 1953.
Extent of operations
Movement of persons.—For the twelfth successive year, more persons
crossed the land borders of the United States or entered this country
by sea or air in 1953 than in the previous year, continuing the upward
trend which began in 1942 and which continued at an accelerated
rate in the years following World War I I . The total number of persons entering the coimtry by all methods of travel was almost 118
million, an increase of almost 13 million persons over the previous
year, when for the first time more than 100 million persons entered
this country. More than two-thirds of those entering the country
crossed the borders in automobiles and busses, and more than a
miUion and a half arrived by air, both grPups setting a new record
for the use of these methods of transportation. Fewer passengers
arrived by ocean vessels and by passenger trains than in 1952. The
use of airplanes in international travel again set a new record. For
the third successive year in airplane history, the number of passengers
arriving from abroad exceeded the million mark, and for the fourth
successive year, the number of passengers arriving at the New York
City international airports exceeded those arriving at the Miami
airports. Passengers returning from the Orient caused Hawaii to
displace Boston as the third port in importance for the arrival of
airplane passengers.
Table 92 shows the various types of vehicles and their passengers
arriving in the United States during the past two fiscal years, and
table 93 shows the number of airplanes and passengers arriving in
each of the customs districts for which this type of travel was important.
Entries of merchandise.—The volume of entries handled by customs
officers continued at an even higher level than in 1952, as shown in
table 91. All of the important types pf entries except baggage entries
increased in number, the increase in the number of consumption
entries reflecting the increase in customs duties already noted.
Drawback transactions.—Drawback, usually amounting to 99 percent of the custoins duties paid at the time the goods were entered,
is allowed on the exportation of merchandise manufactured from imported materials and for certain other export transactions. The total
drawback allowed in 1953 was $6,398 thousand as compared with
$5,924 thousand in 1952, an increase of 8 percent. Slightly more than
94 percent of the drawback allowed in 1953 was due to the export of
products manufactured from imported raw materials. The principal
imported materials used in the manufactured exports in 1953 were
84
1953 REPORT OF THE SEGRETARY OF THE TREASURY
tobacco, lead ore, petroleum, sugar, watch movements, cotton cloth;
and aluminum.
' Tables 94 and 95 show the drawback transactions for the fiscal
years 1952 and 1953. Because of a change in procedure some of the
items listed in 1952 in table 94 are not entirely comparable with the
data for the current year.
Appraisement of merchandise.—-Importations of foreign merchandise
have increased steadily during recent years and reached a new peak
during the fiscal year 1953. During the year, there were 704 thpusand
packages examined in appraisers' stores and 1,507 thousand invoices
received, as compared with 628 thousand packages examined and
1,409 thousand invoices received during the fiscal year 1952. New
problems in determining both advisory classification and appraised
value continued high as shown by the fact that appraising officers
requested 1,180 foreign inquiries, which require an investigation in
the country of production in order to obtain the technical information
needed, as compared with 1,093 foreign inquiries requested during
1952.
As an indication of the steady rise in workload and technical difficulty during recent years, the increase in 1953 over 1949 was approximately 50 percent in the number of packages examined, 36 percent
in the number of invoices received, and 88 percent in the number of
foreign inquiries requested.
Customs Information Exchange.—The activities of the Customs
Information Exchange, as shown by the number of reports received
and disseminated to appraising officers during the fiscal year and during
recent years, have greatly increased. Appraisers' reports of value and
classification, which are required to be forwarded to the Customs Information Exchange covering a cross section of importations of merchandise received at each port, totaled 60 thousand during the fiscal
year 1953 as compared with 54 thousand during the fiscal year 1952.
The reports of value and classification received during the fiscal year
1953 exceeded by approximately 93 percent the number of such reports received during 1947. The number of classification differences,
which indicated the relative number of new commodities received,
totaled 5,025 during 1953 as compared with 4,329 "^ during 1952. Price
changes and changes in marketing methods continued high as indicated by 6,135 differences in value during 1953 as compared with
6,509 "• differences in value during 1952.
. Technical services.—On May 13, 1953, the Division of Laboratories
and the office of the Special Assistant to the Commissioner for Engineering were" abolished and a new Division of Technical Services
established. I t is the responsibility of the new division to furnish
chemical, engineering, and other scientific and technical information
to the Commissioner of Customs, to provide proper weighing and
gauging equipment, to design and oversee the construction of border
inspection stations, and to direct field operations of customs laboratories.
' Revised.
' :
ADMINISTRATIVE REPORTS
85
A new program aimed at helping the laboratories prepare accurate
and concise laboratory reports was initiated this year. Under the'^
program, reports will be periodically reviewed in the headquarters
office anci constructive criticisms and methods of improvement will be
suggested to the field offices- A: new chapter in the Customs' Gauging
Manual on the procedure for gauging olives in brine was prepared and
issued for the guidance of field officers.
Contracts were awarded for the construction and installation of an
automatic recording beam scale at the Philadelphia Belt Line Railroad;
for the restoration, remodeling, and reconstruction of 23 customs
scales at customs ports; and for the construction of a. customs-immigration inspection station at Falcon Dam, Tex.
Customs laboratories analyzed 99,738 samples during the fiscal year...
This is over 5,000 mpre samples analyzed than in 1952 and exceeds
the number of samples analyzed during any postwar year. In addition to ^^import" merchandise samples, the laboratories analyzed 3,230
samples taken from various customs seizures, mostly narcotic drugs
and other prohibited articles; 135 samples from merchandise to be
exported from the United States with benefit of drawback; 689 samples
of new types of merchandise, to develop facts on which to base thetariff classification of such new goods intended for shipment to the
United States for the use of prospective importers or foreign exporters;
and 3,952 samples tested for other Governmerit agencies. Of the,
latter, 3,539 were samples of critical and strategic materials representing Government purchases for stockpile purposes to determine whether
or not the materials met United States contract specifications.
Statistical (juality control on sample weighing operations was provided by making analyses Pf the cargo sample weighing data to assure
that accuracy and precision were within the control.limits. There;
were 1,039 silch weighing operations, including 664 cargoes of raw
sugar, 96 cargoes of refined sugar, 52 shipments of wool, 54 cargoes
of rayon, 161 cargoes of cigarette tobacco, and 12 cargoes of other
merchandise.
Protests and appeals.—More protests were filed in 1953 by importers
against the rate and ampunt of duty assessed and other actions by the^
collectors than for any year since 1941. The large increase over 1952'
was due, mainly, to speeding the clearance of unliquidated entries
at New York City which made available to impprters and their
attorneys a larger number of entries than usual for examination to
determine protestable items. I n connection with cases pending with,
the United States Customs Court, importers, in order to protect their
interests, continue to submit a protest for each importation until the
decision on the test case is rendered so that one case decided by the
Customs Court may result in settling the issue on many hundreds or
^ven thousands pf protests. Appeals for reappraisement filed by importers who did not agree with the appraisers as to the value of the
merchandise continued the previous year's trend with a further
decline.
86
1953 REPORT OF THE SECRETARY OF THE TREASURY
The following table shows the number of protests and appeals filed
and acted upon in the fiscal years 1952 and 1953.
, r
Protests and appeals
Protests:
Filed with collectors by importers. _.._.
Allowed by collectors
-._...-..
Denied by collectors and .forwarded to customs
courtAppeals for reappraisement filed with collectors.....
1952 -
1953
Percentage*
increase, or
decrease ( - )
19. 534
1,060
32,549
1,960
66.6
84.9
14,259
14,129
20,387
9.244
42.9
-34.6
Marine documentation activities.—United States vessels engaged in
trade with foreign countries are required to have a maritime document which is valid until surrendered. Vessels engaged in coastwise
trade or fishing are licensed and. such licenses must be renewed each
year. In addition, the mortgaging or change of ownership of vessels
requires the certification and issuance of various documents by custoriis officers.
The decrease in the number of documents issued and renewed
indicated a greater degree of stability of ownership and operation of
vessels than during previous years.
The following table shows the volume of marine documentation
activities during the fis(3al years 1952 and 1953.
.Activity
Number of documents issued..
. . .
Number of licenses renewed
:
_
Number of mortgages, bills of sale, and abstracts of title
' recorded.
_
Number of abstracts of title issued
._
Number of navigation fines imposed..
__. . .
1952
1953
Percentage
increase, or
decrease ( - )
13,756
24,835
11, 592
22,220
—15.8
-10.6
10,134
2,063
2,847
9,618
2,166
2,337
-5.1
4.9
—18.0
Other marine activities.—In cooperation with the Departments of
the Navy and Air Force, additional designations as customs officers
were granted to certain naval and air force officers to facilitate shipments on merchant vessels of cargoes in which the Department of
Defense has an interest.
, Only one waiver of the navigation laws under the act of December 27, 1950 (64 Stat. 1120), was granted. That waiver was to
permit the shipment on a foreign-flag vessel of certain heavy equipment for the construction of an Air Force base.
An interesting decision was made when the statutory restriction
(46 U. S. C. 251) upon the use of foreign-flag fishing vessels in the
American fisheries was held inapplicable to such vessels arriving in
ports or places in Guam and American Samoa.
Several tankers operating as vessels of the United States were
seized and the cases referred to the Department of Justice for prosecution to enforce forfeiture penalties under allegations of a controlling
interest by aliens rather than citizens.
In admeasurement work, the work of translating foreign admeasurement rules was continued. When finished, this translation wiU
ADMINISTRATIVE
87
REPORTS
^fPrm the basis for a review of foreign rules to determirie their cPmpatibility. with United States rules. Of interest .in this regard wab
the adoption of the United States rules by the Liberian Governmerit
as a standard for determining tonnage of Liberian-flag vessels.
. The admeasurement of vessels of the Uriited States for Suez Canal
purposes was facilitated by direct contact with an office of the Compagnie Universelle du Canal Maritime de Suez established during the
year iri New York. The availability of such a contact will in all
probability result in a closer liaison with Suez. Canal authorities.
There has been a steady increase in the number of vessels documented as vessels of the United States. On Jariuary 1, 1953, there
were 41,819 vessels documented as such vessels of a total gross tonnage
of 30,682,488 as compared with a total on January 1, 1952, of 41,075
vessels of 30,553,136 gross tons, an increase in the year of 744 vessels
and 129,352 tons. The estimated figures for June 30, 1953, show a
total of 42,228 vessels of 30,805,589 tons, a further iricrease during
the six months' period of 409 vessels and 123,101 tons. In the
riionth of June 1953 alone, there was an iricrease of 165 vessels and
.22,266 tons over the previous month.
The following tabulation shows the status of the merchant marine
as of January 1, 1953, classified by vessels engaged in the foreign
trade, vessels by major rigs, and vessels by the five major services.
1953
Vessels
Number
Total documented vessels (including yachts)
Vessels engaged in foreign trade
1
Vessels by major rigs:
steam
Motor....
Sail
J
...^
Unrigged
.
Vessels by 5 major services:
Freight
Fishing.
Passenger
.
Tanker........
.
1
Towing
_
Gross tons
Number
Oross tons
41,075
6.289
553,136
289,052
41, 819
6,636
30, 682,488
19,007,081
4,432
25, 757
249
6,951
356,002
103,461
66.150
890, 726
4,339
26,452
.. 238
7,043
25,376. 917
2,130,409
54, '895
2, 983,927
9,994 22, 556,448
14, 211
498, 618
4,300
828.034
I, 784
451, 223
4,302
504. 476
10,006
14,561
4,436
1,813
4,445
22, 605,356
509, 984
871,176
5,477, 940
509,931
' Revised.
Classification, valuation, and marking of imported merchandise.—Ari
expanding number of new problems with respect to the tariff classification, valuation, and marking of imported merchandise to indicate
the country of origin continued to develop owing to the great volume
and variety of importations. The program of placing rates of duty
and marking requirements on a firm basis upon which importers can
rely in making contracts for the purchase and sale of imported merchandise has been intensively continued.
Under the provisions of Sections 5 and 11 of the Trade Agreements
Extension Act of 1951 (65 Stat. 72), many difficult and important
questions arose with respect to the country of origin of imported
merchtodise in order to determine whether the merchandise must pay
tJie statutory rate of duty or may obtain the benefit of a trade agreement rate and whether it is prohibited from entry into the cPmmerce
of the United States.
88
1953 REPORT OF THE SECRETARY OF THE TREASURY
Legal problems and ^roceecZm^s.—^Consideration was given by the
Office of the Chief Counsehto a large variety of legal problems relating
to such matters as the classification and appraiseinent of imported
merchandise, interpretation of administrative and enforcemerit proVisions of the customs and navigation laws, the drafting of proposed
legislation and preparation of reports on pending legislation, and the
preparation of customs regulations. Special consideration was given
to certain questions as to information that can be required lawfully
to be shown on vessel manifests; authority to accept at customs stations entries for merchandise arriving in bond; the situations in which
merchandise is entitled to exemption from duty as having been
acquired as an incident of a foreign journey; the avaUability of export
control apprppriations for purchasing information and evidence; the
authority of collectors of customs to refund internalrevenue taxes;
and authority of collectors to accept uncertified cheeky in payment
of customs duties and charges. Regulations were prepared embodying
a method of calculating a dutiable quantity of clean wool contained
in imports of greasy and burry wool, to refiect the ruling of the Court
of Customs and Patent Appeals in United States v. Fred Whitaker,
Inc. (1952, C. A. D. 492). A concentrated effort was made in cooperation with the Department of Justice to bring to trial all remaining
legal issues involved in the customs inspectors' overtime cases arising
out of the decisions in the cases of United.States. v. Meyers, 320 U. S.
561, 321 U. S. 750 and United States v. O'Rourke, 109 Ct. Cls. 33;
and intensive preparation went forward for an early trial of representative cases involving the claims of former customs border patrol
employees to overtime compensation under the Federal employees'
pay acts.
i
Law enforcement dnd investigative activities.—Investigations coriducted by the Customs Agency Service during the fiscal year were
in excess of 18,000 and exceeded by 86 the number of investigations
made during the previous fiscal year. There were substantial increases over 1952 in the number of investigations for undervaluation
and false invoicing, and character investigations. There were slight
increases over the fiscal year 1952 of investigations involving market
value and the smuggling of diamonds, jewelry, narcotic drugs, and
other commodities. Substantial reductions under those in 1952
resulted in investigations involving drawback applications, classification, navigation, customs brokers' records, personnel derelictions,
customs procedures, collections of duties and penalties, and pilferages
and shortages. The increases and decreases do not indicate any
special trend but appear to be customary fiuctuations.
There were 1,762 cases in which representatives of the Customs
Agency Service cooperated with Federal, State, and local agencies,
and foreign governments.
Major enforcement problems involved the smuggling into the
United States of diamonds, narcotic drugs, psittacine birds, and
cattle; and the smuggling out of the country of gold and arms, ammunition, arid implements of war. Of particular interest was the development on the southern border of large-scale smuggling operations
involving psittacine birds, the importation of which is prohibited by
the Public Health Service because of the danger of psittacosis, a fever
which is transmitted by the birds to humans; and cattle, the importa^
ADMINISTRATIVE REPORTS
89
tion of which was prohibited at the time by the Bureau of Animal
Industry because of the danger of hoof-and-mouth disease. The
value of seizures by the Customs Agency Service of psittacine birds,
was considerable whUe the value of seized cattle was in excessof
pne million dollars.
Preliminary steps were taken to create a special squad in NewYork for the specffic purpose of dealing with the narcotic smuggling
traffic.
Overseas operations were extended by the expansion of the Hong
Kong office of the Treasury representative, and the opening of a new
office of the Treasury representative in Milan, Italy.
Although a slightly smaUer number of seizures were made in 1953
than in the previous year, the value of these seizures showed a very
substantial increase. A large number of boats, automobUes, and air• craft were seized and the value of the seizures of each of these means
of transportation was greater than in 1952. In the case of the seized
boats, however, both the number and value are somewhat misleading.
In certain cases, the law specifies the imposition of a penalty for
certain violations and also the seizure of the offending vessel. In
actual practice, few such vessels are detained, as the seizure is made
technically without interfering with the sailing of the vessel to its
next destination.
There were fewer seizures of narcotics than during the previous
year, although the quantity seized was considerably greater than in
1952. There were 3,736 ounces of raw opium and 851 ounces of
smoking opium seizeci in 1953 as against 482^ ounces of raw opium
and 331 ^ ounces of smoking opium during the previous year.
Seizures of bulk marihuana continued at a high level, 23,763 ounces
being seized in 1953, and 21,613 ** ounces in 1952. Most marihuana
seizures of any size were made along the Mexican border despite the
efforts of the Mexican authorities to control the production and
traffic of this narcotic.
Seizures of liquors and wines were fewer and of much smaller volume
and value than in 1952.
A slightly larger number of merchandise seizures were made in 1953,
many of them representing the age-old effort on the part of returning
residents tP evade the paymentjof duties on foreign purchases.
In addition to seizures made for customs violations, 19,615 seizures
were made for other agencies of which 19,512 were for the Department
of Agriculture. In addition, 25 persons were apprehended and
delivered to the Immigration, Secret Service, military, or municipal
authorities.
Of the 391 persons arrested for narcotic violations, 222 convictions
were secured, with total penalties of 465 years' imprisonment and
over $13 thousand in fines.
Seizures for the violation of customs laws are shown in tables 96 and
97, while table 98 summarizes the investigative activities of the Customs Agency Service during the past two years.
Foreign trade zones.—'DMving the 16th year of its existence. Foreign
Trade Zone No. 1 on Staten Island continued its successful operation
but at a slightly lower level than during the previous year. The
tonnage and value of goods entering and leaving the zone, as weU as
'Revised.
90
1953 REPORT OF THE- SECRETARY OF THE TREASURY
the number of entries of merchandise into customs territory were
smaller than in 1952, but the amount pf duties collected exceeded that
of the previous year. The completion of an improved fence and the
installation of additional lights made possible considerable reduction
in the customs personnel assigned to the zone to protect the revenue.
Operations at Foreign Trade Zone No. 2 in New Orleans were also
at a slightly lower level than in 1952. A great deal of the work at
this zone involves the handling of merchandise for subsequent export
sP that a comparatively small portion of the total volume enters
customs territory for consumption in the United States.
Foreign Trade Zone No. 3 at San Francisco showed a sharp increase
both in the number of entries, tonnage received and delivered, and
duties collected on merchandise enteririg customs territory, a reversal
in most respects of the trend duririg the previous year.
Operations at Foreign Trade Zone No. 4 at Los Angeles greatly
exceeded those of 1952 and were even larger than during the first year
of this zone's operations in 1951.
Foreign Trade Zone No. 5 at Seattle had a slightly larger tonnage
and value of receipts and deliveries than during the previous year,
but showed a decline in the number of entries into customs territory
and in the duties collected thereon.
Foreign Trade Zone No. 6 at San Antonio showed a smaller tonnage
but an increased value of receipts and deliveries. This zone is located
at an airport and most of the foreign goods received and the goods
shipped abroad are handled by plane.
The following table contains a brief summary of foreign trade zone
operations.
Number
of
entries
Trade zone
New York
New Orleans
San Francisco
Los Angeles
Seattle .
San Antonio
...
6,842
478
6,598
625
498
194
Eeceived in zone
Long
tons
Value
45.685 $30, 854, 886
26,405 14,010, 356
26, 241 5, 333, 941
16,143
8, 956, 266
5,905 3,269,890
1, 220 2, 584,003
Delivered from zone
Long
tons
Value
58, Oil $59,439, 512
22.231 11,546,719
7,609,930
18,917
6, 685, 504
11,915
5,743 3. 389,189
1,360,055
1,101
Duties and
internal
revenue
taxes
collected
$4,204.129
167,519
371,004
145,683
841,239
111,011
Changes in customs ports and stations.—The name of the port of
entry at Fernandina, Fla., was changed to Fernandina Beach, Fla.,
and the port limits of Los Angeles, Calif., Portland, Oreg., and
Minneapolis, Minn., were extended to include areas not previously
covered.
The customs stations at Raeford, N. C , Rhodhiss, N. C , and
Lopeno, Tex., were abolished and a station at Boundary, Wash., was
established during the year.
Cost of administration
Despite the higher level of customs transactions in 1953, the level
of regular customs personnel was lower than during the previous year.
There was a small increase in the number of export control employees
because of the continued emphasis placed upon the enforcement of
91
ADMINISTRATIVE REPORTS
export control laws. The following table shows the average employriient in the Customs Service for the past two fiscal years.
Operation
Regular customs operations:
Nonreimbursable..
Reimbursable' _
.
Total regular customs employment
Export control
Total employment
1952
_
1953
Percentage
increase, or
decrease ( - ) •
.'.. '
•'
7,937
373
7,866
351
-0.9
-5.9
...
__ __
•
8; 310
299
. 8, 217
324
-1.1
8.4
8,609
8. 541
-^0.8
» Salaries reimbursed to the Government by those private firms who received the exclusive services of
these employees.
The expense of operating the Customs Service in 1953 was
$40,753,207, excluding the expense of enforcing the export control
regulations. This was only $324,284 more than in 1952, despite the
regular within-grade raises provided under the Mead-Ramspeck Law.
These expenses, moreover, do not include salaries paid to customs
personnel for overtime and other services authorized by law for which
reimbursement was made to the appropriation by those for whom
the services were rendered. The increased collections accompanied
by the very small increase in expenditures caused a drop in the cost of
collecting $100 of revenue from $5.40 in 1952 to $4.91 in 1953. A
summary of the collections and expenditures will be found in table 84.
Management program
Field inspection.—The intensified inspection of field offices of the
Bureau of Customs, which was begun in the fiscal year 1952, continued
in the fiscal year 1953. During the year, 76 offices of collectors of
customs, appraisers of merchandise, and customs laboratories were inspected. These inspections as in 1952, resulted in the installation of
Iriany simplified procedures, the streamlining of functions, and the
reassignment of personnel to make more effective use of manpower.
Legislative action {Customs SimpliUcation Act).—In order to give
the Treasury Department the legislative authorization necessary to
make possible the institution of modern and more economical procedures for the administration of the customs laws, and also to remove
from the statutes many obsolete customs requirements which impose
unduly harsh burdens on American importers and unreasonably
impede foreign exporters, the Congress enacted the Customs Simplification Act of 1953. Under this act, the Customs Service may give
improved service to the American public without increasing the cost
to the taxpayer. The act makes no changes in the tariff rate structure. All the provisions of the act will contribute to some extent to
the more effective and economical administration of the procedural
laws governing imports. Some of the more important provisions
directed at accomplishing this purpose are:
(1) The repeal of restrictive statutory provisions relating to internal
accounting in the various Customs ports which will permit the
inauguration of modern accounting practices without in any way
relaxing safeguards to protect the revenue. Since the enactment of
the new law, comptrollers' verifications of collectors' liquidations have
been reduced by more than 80 percent.
92
1953 REPORT OF THE SECRETARY OF THE TREASURY
(2) A number of sections will dispense with the need for the filing
and processing of numerous documents which are not necessary to
protect the interests of the public or to safeguard the collection of the
revenue. For example, it will no longer be possible for importers to
amend their entry documents filed after September 7, 1953. At the
port of New York alone the former amendment procedure required the
processing of thousands of papers every month. Complicated records
and docuirients formerly requiried for transfers of goods in bonded
warehouse have been reduced substantially. The consideration of
applications for extension of a variety of time limitations have beeri
reduced by extension of the time periods to meet the needs of modern
business practices.
(3) Another part of the act relieves the Customs Seryice of the
collection of many duties, the amount of which was not commensurate
with the time and labor required. For example, the increase of the
permissive free entry limit for gifts from one dollar to ten dollars
relieves a tremendous burden on the Customs Service, particularly
during the Christmas season.
Important provisions which also ease procedural requirements and
inequities for importers include:
(1) Elimination of so-called ^^undervaluation duties" which have
been penal in nature and which have been required to be imposed even
though the importers have accounted in good faith and without any
intent to deceive Customs officers;
(2) Provisions designed to relieve the importer from supplying
complicated documentation in connection with imports of small value
and the elimination of the notarization of Customs documents;
(3) Elimination of special and discriminatory marking requirements
which frequently take inexperienced exporters and importers by
surprise and cause them heavy financial loss. All these imports will
continue to be subject to the general marking requirements which
require adequate inciication to purchasers of the origin of the imported
goods; and
(4) Provisions permitting the correction of admitted inadvertent
errors and mistakes by Customs personnel adverse to the irhporter
which, under the prior law, were sometime impossible to correct without resort to a congressional private relief bill.
Other provisions of the act of more special application permit the
immediate importation of various search and rescue equipment in
cases of fires, floods, and other disasters and ehminate the various
bonds and touring permits requhed in connection with nonresident
automobiles.
Administrative actions.—The customs clearance of automobiles
owned by nonresidents of the United States which are imported for
a temporary period in excess of 90 days has been facilitated and
simplified by permitting the entry of such automobiles to be made
with informal entry documents. This simplification has modified the
inconvenience and delay which formerly were experienced by the noriresident in cPmplying with formal entry requirements.
With the cooperation of Canadiari customs officials, procedures
were developed and put into effect, permitting the use of a common
seal for both Canadian arid United States customs purposes on carload
VaU shipments of merchandise moving between ports of one couritry
•
ADMINISTRATIVE. REPORTS ,
v
.93
^through territory of the other. The expense and time previously
required for carriers to affix separate seals for the two couritries to
each shipment has been eliminated.
A reduction of overtime costs to private firms has been made
possible by the adoption of a new form of control over the lading of
bonded fuel oil from oil barges onto exporting vessels in lieu pf physical
customs supervision of these transactions. Some savings in customs
manpower were also effected by this improvement.
In order to provide importers with a greater degree of security in the
importation of merchandise, the effective date of changes in tariff
classification rates of duty has been extended from 30 days after the
date of publication in the, weekly Treasury. Decisions to 90 days following such publication. This extended advance notice of change in
rates of duty will permit importers to make more accurate estimates
of future landed costs of imported merchandise.
^ Significant savings in cartage costs are being realized at certain
ports by using one sample of alcoholic beverages for both label approval
and appraisement purposes. Previous to this change, cases of alcoholic beverages were transported to the appraisers' stores for appraisement purposes, in addition to the sample drawn for label approval
.purposes. Further studies are beirig made of this procedure in an
effort to effect additional savings.
Savings in customs manpower and handling costs are being realized
as a result of establishing a list of commodities that may be weighed
.on a spot-check basis. The instructions issued with the list prescribe
the frequency with which importations are to be weighed in order to
check the accuracy of the spot-check weighing methods. In addition
-to the savings to customs, the spot-check weighing permits a more
expeditious release to importers of the commodities on the list.
A procedure for the primary segregation, at the port of arrival in
the United States, of mail parcels from Armed Forces stationed
abroad, which was put into effect on a pilot stucly basis at San Francisco, Calif., last'year, has been installed at t h e port of Seattle, Wash.,
and is now being studied for possible application at the port of New
York. This procedure reduces' postal handling and transportation
charges and expedites the movement of mUitary maU.
The method of computing fees for recording certain instruments of
vessel title, and related instruments, under the Ship Mortgage Act
has been changed to provide for a fixed fee where the instrument is
on a printed form, and an estimated fee in other cases. Previously, it
was necessary for customs officers to make an actual count of the
words in each instrument in order to cPmpute the fee.
The requhement that a special bond be posted before granting
permission for a vessel to discharge cargo at a port other than that
.shown, on the vessel manifest has been eliminated.
, Also, as an added service to vessel operators, advance notices of
.the expiration dates of vessel licenses are now given at least 21 days
before the expiration date. This notice has eliminated numerous
.petty penalty cases arising out of inadvertent failures of owners to
comply with the statutory requirement for renewing the licenses of
their vessels annually.;
,
.. A significant change has been.made in the organizational structure
.of appraisers of merchandise which is expected to produce benefits.in
94
/ 1953 REPORT OF THE SECRETARY OF THE TREASURY
appraising and examining operations. Urider the change, five
^^appraisers' district's" have been established with headquarters located
at major ports of entry. Appraisers at the smaller ports, who are
under the administrative supervision of collectors of customs, have
beeri brought under the technical supervision of the appraisers at the
headquarters ports, who are widely experienced in appraisement and
examining functions. The appraisers at the smaller ports now receive assistance in appraisement problems through the technical
advice and supervision of more experiericed appraising pfficers.
In an effort to reduce the backlog of examiners' value reports at
the Customs Information Exchange in New York, modified requirements for such reports have beeri adopted. The new requirements
permit less frequent value reports to be made when the amount of
duty on any importation is apparently less than $100 or is imported
into only one customs collection district. A study of the new reporting requirements reveals that they provide ample protection of the
revenue and, at the same time, expedite the appraisement operation.
In the field Pf air activities, certain arrangements made with
Mexican and Cuban Governnient officials have materially improved
service to operators of private aircraft. Under these arrangements,
flight plans filed with the foreign goyernments serve as advance
notices of arrival to United States Customs and Immigration officers.
This is an extension of similar arrangements coriipleted with Canadian
officials in the fiscal year 1952. Operators of private planes which
were not equipped with adequate radio equipmerit to give advance
notice of arrival were previously subjected tP penalties for technical
violations arising from failure to give the advance .notice.
Other management improvements.—^Increased activity in the application of sound management principles in field offices was indicated by
reports received of several noteworthy lo cah improvements in procedures, public relations, and eriiployee morale.
Early in the year, a comprehensive schedule was issued to certairi
field officers to provide for the disposition of obsolete, useless, arid
inactive records. In the fiscal year 1953, 40,556 cubic feet of customs
records were sold, destroyed, or transferred to Federal records centers.
The dispositipn'of these recPrds released 1,260 drawer type filirig
cabinets and 20,936 square feet of floor space for reuse.
During the year, many forms were revised, several were combined,
and others were abolished in the continuing program to simplify
forms and reduce printing costs. Iiriportant savings in the cost of
printing marine publications will be reahzed in future years from
special office equipment obtairied for the Division of Marine Administration.
i n order to provide a more effective coritrol over manpower utilization and to assure equitable manpower distribution in accordance
with workload needs, a new statistical reporting system for appraisers'
forces has been installed. The hew system provides an accurate
index of the work being performed at the various pprts, arid permits
a comparison of the performance of appraisers' offices with one
another. The coriiparisons a;re based upon units of work performed
in a given period of time. A new workload reportirig system for
coUectors' officjes wiU be put into effect in the coining year'. The two
hew systeriis are expected' to produce more accurate arid reliable
:
ADMINISTRATrVE REPORTS '
r .-•
95
information for budget,. mariageirient, arid other administrative
purposes.
Several steps were taken to incre,ase employee interest in the
Incentive Awards Program, which has contributed many ideas for
improvements in procedures and practices. As a memento of his
contribution, each employee who submitted a suggestion which was
adopted was given a certificate of appreciatiori. Moreover, in order
to assure timely consideration of all suggestions, action was taken in
the headquarters office and in the field to expedite consideration of
suggestions by the local committees. Seventy-one cash awards,
totaling $1,640, were paid in the fiscal year.
Additional delegations of authority = were made to field officers to
facilitate the handling of customs transactions at the field level.
Under these delegations, principal field officers may now: (1) Release
to the owners, under certain conditioris, property which was stolen
in Canada and seized in this country by United States customs
officers; (2) designate subordinate employees to admiriister oaths in
the performance of their official duties; and (3) attest certificates of
registry of United States vessels.
Bureau of Engravipg and Prmtmg
The Bureau of Engraving and Printing designs, engraves, and prints
currency, securities, postage and revenue stamps, Govemment checks,
military comniissions and certificates, and other engraved work for
the various Government agencies, the Board of Governors of the
Federal Reserve System, and insular possessions of the United States.
A statement of income and expense for the fiscal year 1953 and
comparative balance sheets as of July 1, 1952 and 1953 follow:
Statement of income and expense for the fiscal year 1953
Engraving and printing delivered:
. .Income
-...
Cost:
:
.
Finished goods inventory, June 30, 1952
Add: Costof goods completed during the fiscal year 1953
'......
$35,018,709.80
$735, 741.92
35,283,588.51
Total cost of goods available
36,019,330.43
Less: Finished goods inventory, June 30, 1953
1,330.742.04
Costof goods delivered....!.
Incinerating mutilated currency:
Income
."...
Cost...
..—I...
Maintenance of space occupied by other Treasury activities:
Income
Cost.-..
Card checks:
Income
Cost
Other services rendered:
Income..
Cost-.-.
Net profit
u.....^.-..
...
19,029.15
19,029.15
235,447.78
235,447.78
-.
......^..-..
•
34,688,588.39
,
--..
660,043.12
660,043.12
.-.-
-33,467.42
33,467.42
1330,121.41
I The profit of $330,121.41 was due primarily to billing for proaucts delivered at predetermined.unit cost
rates prior to the development of actual costs. Of this total, $154,003.42 will be applied to restoring the
impairment to the fund resulting from an operating loss sustained during the fiscal year 1952; the remaining
$176,117.99 will be deposited into the general fund of the Treasury in accordance with the provisions of
Public Law 656, approved Aug. 4, 1950, which recognizes that there will be variations between the prices
charged for work and services and the amoimt determined to be the actual cost of performing such work
or services.
96
1953 REPORT OF THE SECRETARY OF THE TREASURY
.Comparative halance sheets, July 1, .1952 and 1953
A s df opening of business
J u l y 1, 1952
C u r r e n t assets:
Cash:
W o r k i n g capital fund-.
Imprest fund...
$3,065, 522.05
A s of close of business
J u n e 30, 1953
$4,140, 571. 95
500.00
$3,065, 522.05
A c c o u n t s receivable:
G o v e r n m e n t a l agencies..
Unbilled
Other
$4,141,071.95
3,462,799.51
380,103.43
13,632.v.94.
2,168, 706. 92
161, 596:34
10,841.09.
3; 856; 53.5.8,8,
Inventories:
Finished goods..
W o r k in process,
stores
2,341,144.35
735,741.92
2, 726,439. 60
2,453,028.15
1,330, 742.04
3,074,452.80
2,284,109.65
5,915,209.67
P r e p a i d expenses:
A d v a n c e s to g o v e r n m e n t a l agencies..
Perforator servicing
Other
.....
6,689,304.49
8,700.00
63, 235.44
11,408.33
• 46, 642.33
1, 692. 28
71,935.44
59,742.94
12,909,'203.04
13,231, 263.73
Total current assets.
F i x e d assets:
^
Plant machinery and e q u i p m e n t . .
Less: Reserve for d e p r e c i a t i o n . . .
13,071,652.46
1,037,989.44
14,258,116. 44
2, 663,031.49
12,033,663.02
M o t o r vehicles
Less: Reserve for d e p r e c i a t i o n .
67,031.97
4, 536; 16
52,495.81
Office m a c h i n e s
Less: R e s e r v e for d e p r e c i a t i o n .
100,678.70
11,979.59
F u r n i t u r e a n d fixtures..
Less: Reserve for d e p r e c i a t i o n .
433,977.67
141,098.84
Dies, rolls, a n d plates
Building appurtenances
Less: Reserve for d e p r e c i a t i o n .
Fixed assets—work in progress..
T o t a l fixed a s s e t s . .
Deferred charges:
P l a n t alterations' e x p e n d i t u r e s . .
E x p e r i m e n t a l e q u i p m e n t costs.,
stores
T o t a l deferred charges..
Totalassets
18,599.11
292,878.83
3,965,"961.25
59,494. 25
1,409.08
11, 595; 084.95
'
56,630;68
10,4.50.00
46,180.68
113,379.28
23, 504.02
89.875.26
463,890.05"
167,444.83
306,445.22
3,955,961. 25
278, 786.87
25, 671.30
58,085.17
252,54:8.52
253,115.57
407,397.83
16, 734, 231. 71
16,654,060. 76
21,413.88
45,418.18
50, 749.29
' 101,364.08
369.84
66,832.06
162,473.21
29, 710, 266.81
30,037,797. 70
-
'
'
97
ADMINISTRATIVE REPORTS
Comparative halance sheets, July 1, 1952 and 1953-—Continued
J,
Liabilities and investment of the
United States
Current liabilities:
.
Accourits payable:
Governmental agencies
Other.
Unaudited..
Accrued liabilities:
Payroll
Leave . . . . .
Other..
As of opening of business
July 1,1952
$1,153.79
79,550.64
506, 716.69
.... ..
.—._
1, 7,65, 247.33
1. 565. 062. 75
. 54,937. ,41
. Special deposit liabilities:
Federal taxes withheld . •
..
Savings bond deductions withheld...
784, 711.14
17,532.32
OXher liabilities: .
Due to estates of deceased employees.:
Due to U. S. Treasury and others
435.99
.458. 72
.
• Total current liabilities
Investment of the United States:
Capital:
Appropriated
Donated _
.
$587,421.12
3,385; 247; 49
802, 243.46
894. 71
As of close of business
June 30,1963
$1,752.79
112,889.28
381, 624.65
$496,266.72
1,495, 261. 22
1.683, 914.80
. 33.581:05
3,212,757.07
865,933. 62
35.084.63
901,018.15
570.69
137.07
707.76
4. 775,806. 78
3, 250,000. 00
. . . _ . 21,838,463.45
Surplus:
Operating surplus, or deficit (—)
' Nonoperating surplus J' . . . .
Less:^!Returned.to Treasury..
. 10,537.81
10,537.81
Net investment of the United
States
...:
Total liabilities and investment
• of theUnited States. . . .
.
25,088,463.45
-154,003.42
4,610,.749. 70
3, 250,000.00
22, 000.930.01
25, 250,930.01
1176,117.99
18.329.42
18,329.42
24,934,460.03
25,427,048. 00
29,710,266.81
30,037,797 70
1 Net surplus to be returned to the general fund of the Treasury durmg the fiscal year 1954.
Improvements in organization and management
Organizdtidnal ^changes.'—A number of.organizational changes were
made in the Bureau during the fiscal year 1953. The principal
changes are described briefly in the following paragraphs.
Several, years ago the General Accounting Office proposed transferring to this Bureau the auditing activities of the Bureau of the
Public Debt. Acceptance of the plan was deferred at that time;
However, upon establishment of the internal audit program in this
Bureau, the recommendation was again considered and this time it
was approved. The transfer was effective on June 7, 1953, in accordance with Treasury Department Order No. 174. (See exhibit on
p. 305.)
During 1953 this Bureau and the Secret Service jointly recommended the transfer of the guard service of the Bureau^s facilities from
the United States Secret Service to the Bureau of Engraving and
Printing. The purpose of this recommendation was to transfer the
cost of certain guard force activities to the B^ureau of Engraving and
Printing. Responsibility for annual inspections to determine the
adequacy of the guard force was retained in the Secret Service. The
recommendation was approved and put into effect on July 1, 1953, in
accordance with Treasury Department Order 'No. 15 as revised on
M a y 14; 1953; (See exhibit on p. 270.)
The most extensive reorganization involved the formation of a new
273013—54—8
98
1953 REPORT OF THE. SECRETARY OF THE TREASURY
staff office entitled, ^'Office of Administrative Services.'' Although
the changes were announced during the fiscal year 1953 they were to
be-effected during-the period from July 1 through September 1953.
Transferred to the^newly created office are: Materials management,
guard force, mail and files, tours for visitors, elevators,.messengers,
reports and correspondence, plate vault, transportation, buildiiigs and
grounds, telephones, lockers, records management, duplicating services, .and the incinerator and waste paper baling forces. This reduces
the number of divisions which have been reporting dhectly to the
Associate Director; and centralizes the management of parchasing,
storage, transportation, and housekeeping activities of the Bureau.
Other organizational changes involved the consolidation of. the
former Orders Division into the Ofiice of Planning, the placement of
the Press Register Division under the Internal Audit Section in the
Office of Budget and Accounts, and the renaming of the Ink Making
Division, the ^^Ink Manufacturing and Testing Division.'^
Establishment of committees.—Three committees, representing administrative managemeat, production planning, and employees, were
formed during the fiscal year 1953. ' These committees provide a
means of maintaining a review of operations and of developing recommendations for improvements.
The Management Advisory Committee, consisting of the chiefs of
the staff offices, was established in September 1952. This committee
studies overall management problems and develops reconimendations
for their solution. Some projects in which the committee participated during the year include: (1) The 18-subject currency program
and its implications in relation to manpower, savings, and equipment
requirements; (2) long-range planning for maintenance and replacement of equipment; and (3) reorganizatiori of the Bureau.
Shortly after the issuance of the Secretary's memorandum of
February 4, 1953, curtailing appointments, an Employee Advisory
Committee was established. Members represent union, employee,
and supervisory groups. The committee was assigned to review the
Bureau's manpower practices and to recoirimend iinprovements in
employee utilization. One adopted suggestion was the staggering of
working hours, which enables employees who prepare work for others
to report for work ahead of those they serve. Consequently the full
time of each is used to greater advantage. .
The Production Advisory Committee, comprising division superintendents, was formed during June 1953 primarily to provide maxiinum
coordination of production activities. Ari expected by-product is a
greater spirit of teamwork among division heads as they gain understanding of problems crossing division lines and appreciation of theh
contribution to the overall management.
Operational improvements
18-subject currency program.—The prograin to convert printing of
currency from 12 to 18 subjects per sheet (described in last year's
annual report) has been the focus of the Bureau's development program^ throughout 1953. By the end of this year, 60 percent of the
currency printing presses were equipped with. 18-subject plates. In
addition, the machinery used in related operations (wetting, trimming,
sizing, and overprinting) had been cpriverted to accommodate the
larger size of sheet. Printing of 12-subject sheets will stop altogether
ADJVHNISTRATrVTE REPORTS
99
in September 1953 and complete conversion of all associated mechanical equipment wUl be completed by January 1954. Reductions in
force of riearly 1,380 employees began in AprU 1953 and wUl be comr
pleted early in 1954. Savings during the fiscal year 1953 from this
program amounted to $454,000. On an annual basis, the total savings
resulting from this program are estimated to amount to $4,085,000.
The only machines which could not be adapted to accomriiodate
the larger sheets were the overprinting presses. Early in 1953 new
rotary typographic presses were designed to operate at greatly increased rates of speed. Since theh use by the Bureau would lead to
further economies, a contract was awarded for 16-sheet-fed, 2-color
presses of this t^ype for delivery in 1954i When the rotary presses
become available, the flatbed overprinting presses used in the meantime ,wUI be diverted to other printing.
In addition to the overprinting presses, a number of other items
had to be procured for the 18-subject programi One employee was
assigned to spend full time expediting contracts for this equipment.
Requisitions for paper-cutting machines and currency-numbering
machines were processed and machinery delivered in 20 days, a procedure which ordinarUy would take six to eight weeks. The takeoff
and delivery devices were received four to five weeks ahead of schedule. In additiori, various items were obtairied in some cases from
several different firms in partial deliveries in order to maintain regular
installation of the equipment.
One means of expediting this program was believed to be the negotiation of. contracts dhectly with known suppliers rather than the
issuing of invitations to bid. The Treasury Department granted this
authority to the Bureau in Treasury Department Order No. 155,
dated August 22, 1952. (See exhibit on p; 293.) Two negotiated
contracts resulted in equipment dehveries in one-thhd or one-fourth
of the time that would have been required under the former procedures.
The 18-subject procedures have resulted in an increase in the output of each plate printer on 18-subject currency presses by 50 percent.
At the same time there has been a decrease in the estimated production requhements for the fiscal years 1954 and 1955. These two factors have resulted in a surplus of plate-printing perspnnel.
Printing.—The possibUity of developing a nonoffset black intaglio
ink was discussed in the 1952 annual report. I t \fas expected thiat
an ink could be developed for the printing of curiency faces which
would yield savings equal to those realized from the introduction of
nonoffset green ink for the printing of currency backs. During the
year a number of modifications and improvenients were made in the
formula. The first experirnent of the nonoffset black ink on a production basis was made iri July 1952, and the ink has been in use as
standard procedure since November 1952.
With the use of nonoffset ink the currency sheets could be removed
and stacked mechanically one on top of the other, This was achieved
during the year through the installation of automatic tiakeoff and
^.delivery devices on all currency face presses. Thus the printers'
assistants who had been performing this work mariually becapie sui*^
plus. It was through reductions in force of these assistants and others
that savings, already reported iri. Qpnhection with the 18-subject program, were realized.
, . • V
: ,
7
i
100
1953 REPORT ^OF THiE' SEGlEiilTARY OF THE TREASURY
The use of automatic takeoff and delivery devices oh currency
presses suggested their use on bond presses. A total of 25 such units
were ordered and by the end of thefiscal year 1953 they had been received and placed in operation.
The advances in rotary press operation which have been achieved
on the experimental web-fed rotary press in recent years were demonstrated during 1953 in the production of the International Red Cross
commemorative postage stamp. The basic design of the stamp was
printed by the wet intaglio process, and a second color was overprinted
typographically with rubber plates. Special heat-set inks were developed, for use in both types of printing. Printing started October
13 ahd was cbniiilet'ed in February 1953. On several occasions the
press produced oVer 20,000 sheets in a 9-hour day, compared with the
regular press output of 9,300 sheets in the same amount of time.
Mechanical innovations.—The development of completely automatic feeding devices for 12-subject sheets of currency was carried on
early in the fiscal year on a pilot model. However, when the 18-subject
program was undertaken, it was necessary to devise a feeder wliich
could accommodate the larger size of sheet. For this purpose a suitable pilot model was manufactured and this device was feceived in
the Bureau in November 1952. After extensive evaluation studies
it was found to be satisfactory and an order was placed for 226 production units. Delivery on this order will start in July 1953 and will be
completed in February 1954.
Procedural improvements
A large number of methods and procedural improvements during
the year made possible absorption of a heavier worldoad with fewer
employees.
In the engraving and plate manufacturing operatioris procedural
improvements resulted in adding wearing qualities to the finished
plates, safety of workingtconditioris for employees, and speed of operations, ' etC; Included, were: Elimihation : of one time-consuming
examination of new plates by the plate finishers; development of further uses for a new type of deep etch lithographic plate, called a
^lithure" plate, with a, chromium surface, which is particularly adapted
to long running jobs; development of mechanical means of raising
plates from hot cyanide in the hardening process, and lowering the
plates into the oil quenching tank; development of a new method for
hardening which results in slightly harder plates, with less warping;
rearrangement of space and facilities in the pho toll tho section; and
installation of a ventilation system in the electrolytic section to carry
iron oxide out of the air.
Currency examination operations were improved by training supervisors in the cost of processing the work and in reducing spoilage; relieving supervisors of routine checking and counting of work; providing
larger examination tables for examiners on 18-subject work; and the
inauguration of improved drying conditions with a resulting decrease
in spoilage. Two new tying machines, designed to exert up to 1,000
pounds of pressure, flatten the printed sheets and thereby improve subsequent sizing operatipns.
Plate-printing operations were improved during the year by severail
means. Manpower use was rescheduled. A revised' method, of
printing honds also resulted in some savings, and a* niunber of mechani-
; . , , / : . .
ADMINISTRATIVE REPORTS _ -
,
.,
101
cal improvements were made in rotary press operations. Savings
from these improvements in 1953 amounted to $15,190. On an
annual basis, they would total $35,600.
. The division engaged in surface printing and processing operations
printed 6.5 percent more impressions during 1953 than in 1952. At
the same time the working force was reduced by 80. Although the
most extensive procedural changes were made in connection with the
18-subject currency overprinting operations, a number of mechanical
and administrative improvements were made in connection with
printing and processing other classes of work. An example was the
installing of hydraulic elevators beside cutting machines which are
used to process offset printed cigarette stamps and miscellaneous
work, thus keeping the printed work at a convenient height for the
cutting machine operator. Identifiable savings in the fiscal year 1953
amount to approximately $31,778. On an annual basis these savings
are estimated to be $40,000.
, Improvements in ink manufacturing and testing centered on development of nonoffset black intagho ink, the acquisition of new machinery, and a reduction in the amount of waste ink.
Materials management was directed primarUy toward procuring
and expediting delivery of items required for the 18-subject program.
In addition, a number of other changes improved the work. Suppliers
of cutting blades were invited to see the application of their product
in the Bureau, with the result that one supplier on the basis of a
closer understanding of requirements, was able to quote a bid of
$5,000 lower than the price previously paid for these blades. A
cyclical basis for conducting physical inventories was developed; and
a number of economies in materials and methods were initiated.
Personnel programs aiid activities
The total number of employees on the rolls at the beginning of the
fiscal year was 6,176. There were 65 appointments and 561 separations, leavihg a total of 5,680 on the rolls as of June 30, 1953.
An inspection report of personnel functions was received in October
1952 from the Civil Service Commission. Favorable comments were
made in the repprt on such matters as the extent to which this Bureau
had carried out the principle of delegation of authority, elimination
of duplicate records, and publication of written policies. The report
emphasized the accuracy of personnel transactions. In their summary
the inspectors bonimented favorably on the progress made in developing the Office of Industriai Relations as a staff office.
The study of unscheduled absences, which was begun last year on
a trial basis, was continued during the fiscal year 1953, for the purpose
of analyzing absenteeism data, identifying the chronic leave offenders,
^nd determining the effects of employee education in reducing absenteeism. Reports for March through June 1953 showed a decrease in
ithe rate of-lost time from corresponding periods in 1952 of 0.67 percent
representing a saving of 3,050 rnan days.
; . The seporid annual survey of production division leave records was
made during. the period from Febuary to May 1953, and lists of
eniployees 3hose records showed the largest number of unscheduled
absences were submitted to division superintendents for investigation,
and if warranted, disciplinary action. During the survey, meetings
102
195 3 REPORT OF THE SECRETARY OF THE TREASURY
were held with eriiployee groups to explain the purpose of the attendance survey, discuss effects of the absenteeism problemj and to gain
their cooperation in reaching a solution.
Wage adjustments affecting approximately 4,076 unclassified employees (3,600 noncraft subjourneyman and 476 trades and crafts),
and amounting to approximately $504,986.80 per annum ($374,400
noncraft and $130,586.80 trades and crafts) were made to meet the
increases in wage rates granted by the Government Printing Office
for job classifications which have been determined to be comparable
to jobs in this Bureau.
Executive and supervisory training programs conducted during the
year included: A series of 10 conferences for the 20 supervisors in the
Office of Budget and Accounts; training of a junior management
assistant followed by his appointment as an organization and methods
examiner in the Ofiice of Planning; sponsoring of the Superintendent
of the Postage Stamp Division for the career development program
for administrative officers; and initiation of a publication entitled
Aids to Supervisors, which contains materials emphasizing the human
relations aspects of supervision. Conference training was used widely
at both staff and division levels, and has proved to be an effective
means of supervisory and executive development, as well as promoting
broader understanding of management policies and production planning. Whenever practicable, employee groups, ai^e rApresented at
such meetings.
Continuing efforts of the Bureau's Executive Safety Council were
reflected in the reduction of the accident frequency rate^ from 14.82
in 1952 to 11.74 in 1953. Safety training included a 10-week course
for 140 supervisors; on-the-job training for plate printer apprentices;
a series of safety training conferences for superintendents, chiefs, and
their assistants; and first aid training for 61 employees. Civil defense
training was provided for wardens, rescue, fire, and utility squads.
A bulletin entitled ''Safety News" was first issued in November 1952
and monthly thereafter.
Continuing publicity of the employee suggestion program during
the past year has resulted in a 20 percent increase in the ..number of
suggestions received. In 1952 there were 323 employee suggestions
submitted, and in 1953 there were 388. Of the t o t a l n u m b e r submitted, 44 were adopted, with cash awards of $1,200 going to nine
employees. Savings accruing from these suggestions in 1953 amoun ted
to $42,400. On an annual basis these savings amount to $37,790.
Long-range improvement program
Numerous experiments were conducted on the web-fed rotary press
during 1953 in recognition of the need to replace outmoded production
presses now used in the printing of postage stamps. The experimental
web-fed press has made possible the development of equipment capable of printing stamps in one and in two colors. Through continued
research it is anticipated that the Bureau will attain high quality work
at increased speeds on the web-fed rotary press, and eventually wiU
produce postage stamps more economically than at preserit.
Experiments are being conducted on a pilot model sheet-fed rotary
intaglio press for printing currency and other securities.
1 The number of disabling injuries per 1,000,000 man-hours worked.
103
ADMINISTRATIVE REPORTS
New issues pf stamps
Orders were received and dies were engraved for new issues of postage
stamps as follows:
Denomination
(cents)
Issue
100th Anniversary of the American Society of Civil En.e;ineers Commemorative, Series 1952..
500th Anniversary of the Printing of the First Book, The Holy Bible, from Movable Type
Commemorative, Scries 1962
.j....
,
Women in Our Armed Services Commemorative, Series 1952
Newspaperboys of America Commemorative, Series 1952
.:
_.
_.
Internatioual Red Ciross Commemorative, Series 1952
Ohio Statehood Commemorative, Series 1953
_
_•
National Guard Commemorative, Series 1953
-.
Washington Territory Commemorative, Series 1953
Louisiana Purchase Commemorative, Series 1953..
__.
60th Anniversary of Aviation, Air Mail, Commemorative, Series 1963
_
100th Anniversary of Commodore Perry's Negotiations with Japan Commemorative, Series
1953..—
...J
Other new issues of stamps produced during the year include the
$2 Federali Migratory-Bird Hunting Stamp, Series 1953-54, and a
new $20 denomination of the Foreign Service Fee Stamp. Orders
were received and new plates were made for Puerto Rican bottle
strip stamps for spirits and wine, two series of cigarette stamps, eight
denominations of internal revenue stamps, and bottle strip stamps for
spirits, seribs 1953, in a denomination of ^less than K pint."
Production
Deliveries of finished work during the fiscal year 1953 totaled
842,578,942, an increase of 7,879,207 items or approximately 0.94 percent as compared with the quantity delivered during the previous
fiscal year.i A comparative statement of deliveries of finished work
in the fiscal years 1952 and 1953 follows:
Sheets
Face value
1953
Class
1952
Currency:
Uriited States notes
Silver certificates
Federal Reserve notesTotal
Bonds, notes, bills, certificates, and debentures:
Bonds:
Postal savings..
•'T'reasury _•'_
_
United States savings
Depositary.Consolidated Federal farm loan for the 12 Federal
intermediate credit banks
Notes:
Treasury, modified new design 10 coupon
Treasury savings, 1940 Eagle design:
Series A__
Series B - .
Consolidated Federal home loan banks, bearer
Other
Treasury bills, 1940 design
Certificates:
Indebtedness, new design
.-.
Military
Postalsavings
Other
1953
4.125,000
129.204.000
63.043.000
3, 596, 667
95,006.000
£8, 562.222
$164,704,000
1.664.596,000
14,206.000.000
196, 372,000
187,164,889
16.034,300.000
2.070
678,468
1,546,000
792. 625
104,877,000
1,000
199.000
17,963,820.000
17,637,376,000
100, 900
53,000
410,210,000
66,775
231,000
22,386,000,000
69.000
980
1,072,400
3,300
282.000
20.000
3,351
1,331,000
3,300.000,000
17, 648.000.000
200.000,000
126, 690,000,000
946,100
1.032,000
1,029.500
1,000
502, 620
29, 210.000,000
1,561, 600
761
1, 200, 767, 750
104
1953 REPORT OF THE SECRETARY OF THE TREASURY
Sheets
Face value
1953
Class
1952
Bonds, notes, bills, certiflcates, and debentures—Con.
Debentures:
Collateral trust of the Central Bank for Cooperatives..
Consolidated collateral trust for the 12 Federal
.Intermediate credit.banks,..
Federal Houshig " Adrdihistration ' war housing
Insurance
1.
'Title I housing insurance fund
Housing insurance fund.
^
Military housing msurance fund
National defense housing insurance fund
Mutual mortgage insurance fund
Specimens:
Bonds
Notes
:
Certificates
i
Debentures
Bills
•
Total.
Stamps:
Customs
:
Internal revenue:
TooiRcesof issue.
.--..,
Obsolete stock delivered to Commissioner of Internal Reyenue for destruction
_
. Specimens
'.'Puerto Rican revenue
—
Virgin Islands revenue
-.-•
_.
United States war savmgs
Postage:
United States
Specimens, United States..
Canal Zone
-District of Columbia beverage tax paid
_._
Federal migratory bird hunting
Foreign service fee.
Passenger baggage
-.
Slaight lock seals
Total.
Miscellaneous:
Checks
--.
Certificates
Commissions
_
:..
Diplomas..Drafts
:..
Government requests for transportation..
Other miscellaneous
.
Specimens.,
•
._
.—
Military payment orders-..^...
Total
Grand total..
'Revised.
» Passenger baggage included in customs in fiscal year 1953.
1963
9,650
11,900
$155,000,000
63,000
73,000
.1,150,000,000
7,710
9,410
1,600
4.000
2,000
2,000
1,450
94,100,000
2.150.000
19.490.000
9.995.000
9.495,000
6,095,000
418
31
8
16
1
3,426,225
24,000
3,000
310.000
1,000
1,476
92
8
4
' 86,616,122
109, 765, 581 238.096, 460,97fi
562,000
1, 774, 500
Number of
stamps, etc.
1953
10.245,000
302,719,827
304,961, 560
23,083,338,089
10,552,040
. .488,387
, 6
1,470, 683
600
936,340
-.17, 787,368
24
98,112,825
60,000
97,474, 660
210.456, 621
18
17, 260
1,022, 400
21,325
16, 904
840,000
3,704
216,235, 976
9
56, 600
897,900
66, 375
19, 800
23, 225,144,465
2,184
5, 660,000
44.895,000
7,434,000
1,980,000
17,408
600,032
527,623, 957
526,926,144
46,592,633,637
12,805, 709
1,840, 990
218, 736"
953
250
785, 32-3
9,134,809
689
3,300
10, 660, 638
1,809, 714
742, 468
6,291
53, 345, 390
1,809, 714
742.468
5,291
216. 735
5,272,457
25
15,000
1.083,676
5,272,467
125
75,000
21. 790, 666
18.722. c2S
62. 334,120
• 834, 699,735
842, 678,942
1,463, 611
180
246,077
0)
'
"
ADMINISfRATIVE REPORTS
•' '
105
Fiscal Service—BUREAU OF ACCOUNTS
The Bureau of Accounts performs numerous fiscal functions, most
of which are pursuant to specific provisions of law or executive orders
and are Government-wide in scope.
The Bureau issues warrants of the Secretary which establish, on the
books of the Treasury and the individual departments or agencies
concerned, appropriations made by the Congress; maintains the
central accounts of the Government for receipts, appropriations, and
expenditures; covers moneys into the Federal Treasury and authorizes
their withdrawal; and prepares various reports on the results of the
financial operations of the Government. The financial reports include
the Combined Statement of Receipts, Expendiiures and Balances of the
United States Government, submitted annually to the Congress; the
Annual Report of the Secretary of the Treasury on the State of the Finances
to Congress; the Treasury Bulletin pubhshed monthly; and various
other periodic and special reports compiled for use within the Government or as a matter of public information. The Bureau also
provides technical direction and certain data required in the compilation and publication of the Daily Statement of the United States
Treasury.
'
The Bureau performs the disbursing function with respect to the
civilian agencies of the executive branch of the Government, with a
few exceptions, such a s t h e Post Office Department aiid certain corporations. JRelated functions include the receipt and dejposit of collections, the handling of the claims of payees for reissuance of lost,
destroyed, stolen, or mutilated Government,checks, and the issuance
of savings bonds under the Federal Payroll Savings Plan.
Other riesponsibilities of the Bureau include the performance of
operations relating to the designation by the Secretary of the Treasury
of banks a^s Government depositaries and fiscal agents; supervision of
the Federal depositary system including deposit of withheld income,
social security, railroad retirenient, and excise taxes; the handling of
investments of various trust and other funds for the Secretary of the
Treasury; the maintenance of records relating to transactions of
Government corporations and agencies with the Treasury and their
authority to borrow frpm the Treasury, and loans made to such ageur
cies; the negotiation of loan agreements with the various corporations
and agencies; approval of surety bonds and determination of underr
writing qualifications of surety companies authorized to do business
with the United States; the accounting, billing, and collecting for
lend-lease articles transferred and surplus property sold to foreign
governments; the liquidation of certain terminated agencies; and the
handling of various claims under provisions of congressional legislation
including settlement of claims in connection with shipments of valu-
1953 REPORT OF THE SECRETARY OF: THE TREASURY
ables under the Governraent Losses in Shipment Act 'and payment of
international claims.
The Bureau also furnishes technical assistance on accounting systems, procedures, and fiscal internal audit to the bureaus of the
Treasury Department and participates at the departmental level, in
the Joint Accounting Program of the Secretary of the Treasury, the
Comptroller General of the United States, and, the Director of the
Bureau of the Budget for the improvement of overall Government
accounting and financial reporting.
Realignment of functions
In order to carry out certain requirements of the Budget and
and Accounting Procedures Act of 1950 (31 U. S. C. Supp. V, 66-66c)
and to effect iinprovements in central accounting and financial reporting, the organization structure of the Bureau of Accounts was realigned, effective January 4, 1953, by Treasury Department Order
No. 164, dated December 12, 1952. (See page 298 of the exhibits.)
The Bureau now consists of the Office of the Commissioner of Accounts
and six divisionSj as follows: Division of Central Accounts, Division of
Central Reports, Division of Deposits and Investments, Division of
Disbursement, the Accounting Systems Division, and the Adminis'trative Division.
Transfer of functions to Bureau
Certain responsibilities which were formerly functions of the Office
of the Technical Staff were transferred td the Bureau of Accounts by
Treasury Department Order No. 170-1, dated February 27, 1953.
(See page 304 of the exhibits.) These comprise preparation of the
Annual Report ofthe Secretary ofthe Treasury and the Treasury Bulletin
and the functions and responsibilities of the Government Actuary.
This official has been designated to render technical assistance to the
Committee on Retirement Policy for Federal Personnel in its current
study of Government retirement systems under the act, approved
July 16, 1952 (66 Stat. 722-723).
Accounting, reporting, and related fiscal matters
Major effort was directed during the year to developing within the
Treasury the necessary framework for carrying into effect the longrange objectives of the Budget and Accounting Procedures Act of
1950 (31 U. S. C. Supp. V, 66-66c) related to central accounting and
reporting. Other* projects included a continuation of work on accounting systems of Treasury bureaus and work of Government-wide fiscal
character. The achievements are described in the following paragraphs:
Government central accounting and reporting.—An overall program
for improvement of the Department's accounting for the Government's
receipts and expenditures and related cash operations was developed
jointly by the Treasury Department and the General Accounting
Office. I t consists of progressive steps to improve the accounting, and
to provide simplification, better accounting results, and improvements
in the internal synchronization of the accounts of the Treasury, and
integration with the accounts of the administrative agencies.
Three steps were taken during fiscal 1953 for implementation of
the program. The'first was the realignment of the organization of
the Bureau of Accounts pursuant, to Treasury Department Order No.
;
.
ADIVGNISTRATIVE REPORTS
.
107
164, dated December 12,: 1952, described before; The order established a Division of Central Accounts into which were, consolidated
the accounting for receipts by sources and the accounting for expendir
tures by appropriations which previously had been performed by the
Division of Bookkeeping and Warrants and the Division of Disbursement. Physical merger of the facilities of the two organizational
units was effected on July 1, 1953. The order also established a
Division of Central Reports which, as now constituted,. represents,
an opera ting-, .ceiiter i n the Treasury for the .preparation of central reports of the Governmeht. Among other things, the order also placed
on the Cominissioner of Accounts responsibility for the development
and administration of fiscal internal auditing regulations to be observed by the several bureaus of the Treasury Department. .
The second step in the program was the issuance of Treasury
Department-General Accounting Office Joint Regulation No. 4 of
June 30, 1953. This regulation waives the requirements of existing
law that appropriated funds be requisitioned and advanced to disbursing officers by accountable, warrant. (See exhibit 50;) The
regulation contemplates certain improvements, including the eventual
maintenance of disbursing officers' checking accounts for the drawing
of checks on the Treasurer of the United States solely on the basis.of
credits established by administrative action of the Treasury Department withiri the-aggregate-of appropriations and' funds administered
by the agencies for which such officers disburse; and the maintenance
of checking accounts in relation to disbursing stations rather than
accounts fdr individual incumbent disbursing officers.
^
The third step was the issuance of Department Circular No. 926,
dated June 30, 1953, which provides for accoraplishing immediately
the maintenance of checking accounts, by disbursing stations. -(See
exhibit 51.)
• I n the area of central financial reporting, initial steps were undertaken to secure improvements in the source data and reports of the
receipts and expenditures of the Federal Government. A survey
was made by a joint working group, the Treasury, the General Accounting Office, and the Bureau of the Budget, of the needs of im-,
portant users-of the daily Treasury statement and a report was
submitted which covfer^d signified t reeommerid^^
changes in
the content and format of this statement. Revisions were made in
the format effective July 1, 1953, which resulted in savings in
printing costs. Studies were made of other Treasury publications
which will serve as a basis for developing future proposals for improvement.
Government-wide Hscal matters.—A.eiion was taken during the year
to carry out the provisions of the act approved July 17, 1952 (66
Stat. 765), relating to the withholding of State and Territorial income
taxes from compensation of Federal employees. Regulations governing such withholding were issued under Department Circular No. 918,
dated November 21, 1952. (See exhibit 53.) The staff also participated in the development of procedures and forms for extending the
depositary receipt system to provide for inclusion of certain Federal
excise taxes, effective July 1, 1953.
ProjectSt^ of.-Government-wide scope under the Joint Accounting
Program, involving participation of the staff, included studies relating
108
1953 REPORT OF THE^ SECRETARY OF THE TREASURY
to the Federal civUian payroll system and the use of Government
transportation requests; and, the extension of the use df punch card
checks in lieu of the paper form of check in use in some agencies.
Accounting and internal audit systems of the Treasury Departmient.—The accounting systems staff, of the Bureau of Accounts coritinued
to give technical assistance td the Internal Revenue Service in effecting
improveirients in the internal revenue accounting and processing
operations; made surveys and prepared reports of findings and recommendations with regard to the accounting systems of the Office of
Administrative Services and the United States Secret Service; effected
improvements in the Bureau of Accounts relating to administrative
accounting and related payroll operations and the accounting related
to the various investment, trust, and deposit fund accounts maintained for the Secretary of the Treasury; made exterisive factual
studies of the relationship between the accounting arid budgeting
processes with respect to administrative expense appropriations of
the various Treasury bureaus; and developed a regulation which
establishes requirements and fixes responsibUity with respect to fiscal
internal auditing in the Treasury Department (Department Circular
No. 924, dated June 24, 1953, see exhibit 52).
Changes in the Daily Statement of the United States Treasury and
Treasury Bulletin.—^During the fiscal year 1953, the riiethods of
reportingtransactions and the format of the daUy Treasury statement
did not change. Effective July 1, 1953, however, in the interest of
economy, the statement was issued in coridensed form," except for the
last day of each month. The statement for the last of each month
contains substantially the same data as heretofore, inclridihg a classified statement of the outstanding public debt and guarariteed obligations, which was published formerly in the statement for the first of
each month.
The comparative tables showirig detailed classification of receipts
and expenditures by months and a statement showing the status of
appropriations are published quarteriy instead of rripnthly. They
appear in the mid-month next after the close of the preceding quarter.
The special tables relating to the social security programs, which
were formerly published monthly in the daily Treasury statement
and iri the Treasury Bulletin, are published quarteriy in the Bulletin,
effective with the issue of September 1953 but carry the data by
months. The corresponding information is omitted from the daily
Treasury statement.
Quarterly balance sheets of Government corporatioris and certain
business-type, activities of the United States Government, which
previously were published quarterly in the daily Treasury statement
and semiannually in the Treasury Bulletin are now published quarterly
in the Bulletin beginning with data for June 30, 1953 (October issue).^
The Bulletin carries the full detail formerly shown in the. daily stater
ment with the addition of business-type activities not shdwn separately there. D a t a on income and expense and source and aipplication
of funds of these agencies continue td be published in the Bulletin at
six-month intervals, with the list of activities correspondirig with t h a t
for balance sheets.
ADMINISTRATiyE REPORTS
109
General operations and management improvement
The operations of the Bureau during the fiscal year 1953 are
described in the following paragraphs.
, Disbursement operations.—^The I)ivision of Disbursement maintains
26 regional, disbursing offices in the continental United States and
territories and other disbursing facilities providing disbursing and
related services for over 1,900 central and field offices of more than 40
Government departments, agencies, and corporations.
Management planning;in the utUization of manpower, conservation
of materials, improvement of accounting and examining procedures,
development of new techniques, and other miscellaneous improvements resulted in savings of $815,559 during the year, which are
included in total management savings of $888,282 for the Bureau of
Accounts as stated on page 111.
The number of payments, collections, and savings bonds issued by
the Division of Disbursement during the last two fiscal years are as
follows:
Number
Classification
1952
Payments, (checks and cash):
SofciaPsecurity ...
_. .
Veterans' benefits
__-_
Special dividend program
Tax refunds._
Other
•
Collection items _
:
Savings bonds issued to Federal employees in payroll saviags plan
Total
_-.
-
.
1963
53,841, 576
68, 731, 512
7, 613, 719
28,935, 941
30,420,622
6,136, 741
2,440, 387
67,895,321
63, 963,834
3,877, 925
33,197,128
31,437,362
6, 658, 609
2, 570, 551
198,120, 498
199, 600, 630
Federal depositary system.—During the fiscal year 1953, a procedure
was develdped and arrangenients were made whereby, effective July 1,
1953, taxpayers who are liable to pay certain Federal excise taxes are
required to deposit such taxes each month, accompanied by a depositary receipt for Federal excise taxes, with a Federal Reserve Bank
or a qualified depositary for Federal taxes, when their liability for
each such month exceeds $100; for the third month of a calendar
quarter, taxpayers having a liabUity df over $100 have the option of
remitting directly td the appropriate Director of InternaL Revenue,
in lieu of making such deposits with a Reserve Bank or depositary.
This procedure is an extension of that already in effect with respect to
withheld income taxes, social security employment taxes, and raUroad retirement taxes. Depositaries for Federal taxes were not required to requalify in order to accept Federal excise tax deposits, and
such deposits are eligible for deposit in the Treasury tax and loan
accounts of qualffied depositaries. Heretofore, taxpayers who were
liable to pay Federal excise taxes were required to remit the total
arriourit of tax due to directors of Internal Revenue at the time they
filed their monthly returns applicable to such taxes. Extension of
the depositary, receipt system to include certain Federal excise taxes
was effected in conjunction with changes in the method of filing
Federal excise tax returns, prescribed by the Internal Revenue Serv-
110
1953 REPORT OF THE SEGRETARY OF THE TREASURY
ice, whereby several excise tax return forms were consolidated in a
single return to be filed on a calendar quarter basis rather than a
monthly basis as heretofore.
Government losses in shipment.—Government departments and
agencies reported shipments made under coverage of the Government
Losses in Shipment Act, as amended (5 U. S. C. 134-134h), valued
at $495,215,634,851 in the fiscal year 1953 as compared with $516,192,569,299 in the fiscal year 1952. Payments from the fund during
the year, recoveries, the amount of estimated insurance premium
savings to the Government, and other information concerning the
operation of the self-insurance plan by the Goverriment will be
foundintables 101 to 105. On May 27, 1953, the Third Supplement
to Treasury Departirient Circular No. 577 (Regulations governing
claims for replacement of valuables, or the value thereof, shipped
pursuant to the ^'Governirient Losses in Shipment Act,") was approved.
Under this supplement. Government departments and agencies will
make a consolidated annual report of shipments instead of monthly
reports as heretofore.
Investrnents of trust and other funds.—^Under various provisions
of law, the Secretary of the Treasury is responsible for investing
certain trust and other funds. A summary of the various investment
accounts for which the Secretary is responsible is shown in table 45.
Surety companies.—The Secretary of the Treasury issues certificates
of authority to corporate sureties, making application and qualifying
under the act approved July 30, 1947, (6 U. S. C. 8), to execute bonds
in favor of the United States. Form 356, Revised, listing companies
currently holding certificates of authority is published annually by
the Treasury as of May 1.
Form 356, Revised, dated May 1, 1953, contained the names of 144
companies holding certificates of authority, 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. In addition, there were 10 companies
holding certificates of authority to act as reinsurer only on bonds in
favor of the United States. Eleven new compariies were issued certificates of authority to act as sole sureties during the year and the
authority of one was revoked. Two new companies were issued
certificates of authority as acceptable reinsurers only under Treasury Circular No. 297.
The Treasury approved a total of 89,436 bond and consent agreements during the year, which was an increase of 19 percent over 1952.
The increase, to a large extent, resulted from the bonding of personnel
of the Bureau of Internal Revenue, incident to the reorganization
of that Bureau.
Deposits by Federal Reserve Banks under Section 16 of the Federal
Reserve Act, as amended.—During the fiscal year 1953, there was deposited into the Treasury as miscellaneous receipts by the Federal
Reserve Banks the sum of $297,715,406, representing interest levied by
the Federal Reserve Board under Section 16 of the Federal Reserve
Act, as amended (12 U. S. C. 414), on the basis of the amount of
FederalReserve notes in circulation. This compares with $277,651,923
in 1952. Comparable total amounts deposited in prior yearsy commencing with 1947, will be found on page 555 of the 1952 aimual
report.
.
-
ADMINISTRATIVE REPORTS
111
Management irnprovement.—SsiYmgs from management improvements effected during the year amounted to $888,282 or over 6 percent
of the appropriations made available by Congress for administrative
expenses of the Bureau. These savings are reflected in the unobligated
balances of appropriatidns amounting to over $1,100,000 turned back
to the Treasury.
Iinproved accounting machiries and machine accounting procedures,
use of certified schedules of payments in lieu of individual vouchers,
realignment of functions involving consolidation of offi.ces into a
smaller number of units, and close control of production and costs
accounted for the major share of savings.
The incentive awards and work simplffication programs resulted in
savings of about $24,000. A group award of $255 was made in connection with a suggestion which resulted in a more economical method
of reproducing the ^'Digest of Appropriations."
The effectiveness of the management improvement program is
evidenced by the results achieved. While generally the volume of
work has increased, the Bureau payroll has been reduced by more than
1,100 employees since July 1, 1947, the beginning of the first fiscal year
after the close of the War. As an instance of the increased efficiericy
with which operations are carried on, the production rate per employee
in the Division of Disbursement has increased from 46,000 to 75,000
items per year over the sam.e period. Despite increases of salaries and
prices of supplies, materials, and contractual services, the unit cost for
checks issued decreased K cent, from 6% cents to 5^8 cents.
Treasury loanSj capital subscriptions, donations, interest, and dividends
Mutual Security Agency.—Pursuant to Reorganization Plan No. 7
of 1953, effective. August .1, 1953, the Mutual Security Agency was
abolished and the Foreign Operations Administration was established.
I n accordance with the reorganization plan and Executive Order
No. 10476, dated August 1, 1953, the Foreign Operations Administration and the Director of the Administration were made the successors,
respectively, of the Mutual Security Agency and the Director for
Mutual Security, except as otherwise provided in the order.
The Treasury had accepted loan notes amounting to $1,212,054,316
and guaranty notes amounting to $200,000,000 from the Administrator
of Economic Cooperation and the Director of Mutual Security Administration as of June 30, 1953. These notes represent allocations
against which the Export-Import Bank, as agent for the Administration, may draw funds as needed. As of June 30, 1953, $1,185,841,434
has been advanced against the loan notes, leaving an unused balance
of $26,212,882 on loan notes. Advances of $3,542,389 have been made
against the guaranty ndtes, leaving an unused balance as of June 30,
1953, of $196,457,611 on guaranty notes. Repayment of $372,071 .of
the amount drawn against the loan notes and repayment of $12,389
of the amount drawn against the guaranty notes left $3,530,000 of
loan notes and $1,185,469,363 of guaranty notes held by the Treasury
as of that date.
Commodity Credit Corporation.—In accordance with the act of
March 8, 1938, as amended (15 U. S. C. 713a-l), an appraisal of the
assets and liabilities of the Corporation is made each year b y the
Secretary of the Treasury to determine its net worth. If the net
112
1953 REPORT QF THE SECRETARY QF THE TREASURY
worth is less than $100,000,000, the Secretary of the Treasury is to
submit an estimate and recommend that the Corigress appropriate
the funds necessary to restore the capital impairment. If the net
worth is more than $100,000,000, the Corporation pays the surplus
to the Treasury. The Government Corporation Control Act (31
U. S. C. 851) requires the Comptroller General to furnish a copy of
the annual audit report to the Secretary of the Treasury and it is
the policy of the Secretary in appraising the assets and liabUities of
the Corporation to give consideration to the Comptroller General's
findings. A statement of; capital impairment, restoration of capital,
and payments to the Treasury is given in table 75.
As determined by the Secretary of the Treasury, the liabilities and
capital of the Corporation on June 30, 1952, exceeded the value of
assets by $96,205,161. Restoration of this amount which was authorized by Public Law 156, 83d Congress, approved July 28, 1953, makes
the net charge against the Treasury for impairment of capital from
inception of the Corporation, $2,591,124,823.
The Secretary of the Treasury, pursuant to the Department of
Agriculture Act of 1953 (Public Law 451, 82d Cong.) canceled notes
issued by the Corporation to the Secretary of the Treasury in the
amount of $193,402,782. Of this amount, $182,162,250 represents net
costs to the Corporation during the fiscal year 1951 for operations
conducted under the International Wheat Agreement Act of 1949
(7 U. S. C. 1641) and the remaining $11,240,532 represents funds
transferred and expenses incurred under the Agricultural Research
Administration through the fiscal year 1951 pursuant to authority
granted in the Department of Agriculture Appropriation Act of 1951
(64 Stat. 661) relating to the eradication of foot-and-mouth disease
program.
During the fiscal year 1953, the Corporation paid into the Treasury
$2,000,000 as interest on its capital stock.
Reconstruction Finance Corporation.—Pursuant to the provisions of
the act of June 30, 1948 (62 Stat. 1187), the Reconstruction Finance
Corporation deposited $113,071,857.04 into the Treasury as miscellaneous receipts during the fiscal year 1953, which represented recoveries less related expenses of national defense, war, and reconversion costs. The act also authorizes the Secretary of the Treasury
to cancel notes of the Reconstruction Finance Corporation in an
amount equal to costs incurred by the Corporation subsequent to
June 30, 1947, for handling, storing, processing, and transporting
critical materials to stockpiles. No notes were canceled during 1953.
A statement showing all cancellations on notes of the Reconstruction
Finance Corporation and recoveries by the Treasury is shown in
table 76.
The Corporation also deposited $12,293,879,76 into the Treasury as
miscellaneous receipts during the fiscal year 1953, which represents
dividends on its capital stock as required by the act of May 25, 1948
(62 Stat. 261).
Public Law 163, 83d Congress, approved July 30, 1953, ends succession of Reconstruction Finance Corporation on June 30, 1954, instead
ADMINISTRATIVE REPORTS
113
of June 30, 1956, as contained in the Reconstruction Finance Corpdration Act, as amended (15 U. S. C. 603 (a)). The act also ends the
Corporation's power to make new commitments for Reconstruction
Finance Corporation loans on the 60th day after the date of enactment
of Public Law 163, dated July 30, 1953.
Donations and contributions.—The total amount of donations
credited to the general fund of the Treasury during the fiscal year
1953 was $141,859. Included in this amount were 5 bequests to the
United States amounting to $113,344. '^Conscience Fund" contributions made to the general fund during the year, several of which
were in excess of $1,000, amounted to $64,198. Among conditional
donations to trust funds subsequently authorized by law, was a
donation of $36,015 to the Library of Congress which was deposited
in the Library of Congress Trust Fund, Permanent Loan Account.
International obligations
Credit to the United Kingdom.—Loans in the amount of
$3,750,000,000 were made by the United States to the United Kingdom
under the terms of the financial agreement dated December 6, 1945.
The agreement provides for repayments on the loans, together with
interest at the rate of 2 percent, to be made annually beginning
December 31, 1951.
The second annual payment was made on December 31, 1952, in
the amount of $119,336,250, of which $74,113,275 applied to interest
on the loan and $45,222,975 to principal. The indebtedness as of
June 30, 1953, amounts to $3,660,440,775.
Payments by Finland on World War I indebtedness.—During the
fiscal year 1953, the Treasury received $396,259 in payment of
Finland's indebtedness under the funding agreement of May 1, 1923,
and the moratorium agreements of May 1, 1941, and October 14,
1943. The act approved August 24, 1949 (63 Stat. 630), provides
that the amounts paid by Finland after August 24, 1949, shall be
placed in a special account which shall be available to the Department of State to finance educational and technical instruction and
training in the United States for citizens of Finland, American books
and technical equipment for institutions of higher education in
Finland, and participation of United States citizens in academic and
scientific enterprises in Finland. In accordance with the act, the
amount received was made available to the Department of State.
Indebtedness of World Wars I and II.—The indebtedness to the
United States from foreign governments arising from World War I
amounted to $17 billion, principal and interest as of July 1, 1953,
and the amount receivable under active agreements with foreign
governments in connection with World War I I amounted to $2.4
billion as of July 1, 1953.
Excluding the amount of indebtedness of Germany, the principal of
which amounted to $1,225,023,750 on the basis of the par value of
the reichsmark as of June 30, 1930, the indebtedness of foreign
governments to the United States as of July 1, 1953, arising from
World War I amounted to $11,434,431,161 on account of principal and
2i73013—54-
114
1953 REPORT OF THE SECRETARY OF THE TREASURY
$5,571,335,463 on account of interest. Tables 112 and 113 show the
status of World War I indebtedness.
Indebtedness to the United States from foreign governments
arising from World War I I amounted to $2,452,540,356 as of June 30,
1953. The indebtedness represents amounts receivable on lend-lease
settlement agreements (coUections on which are being handled by
the Treasury), other lend-lease accounts, and surplus property sales
agreements. Included in other lend-lease accounts is $291,215,173
due the United States for the value of silver transferred to- foreign
governments under the lend-lease program which is to be repaid in
kind. Table 114 shows this indebtedness by countries. Final settlement agreements have not been reached with all foreign governments.
United States dollar collections made by the Treasury from foreign
governments for reimbursable supplies and services furnished under
lend-lease and reciprocal aid agreements and surplus property sales
agreements negotiated by the Department of State during the fiscal
year 1953 amounted to $70,906,348, exclusive of items in suspense,
bringing the total doUar coUections to $1,731,845,608 K
During the fiscal year the accounts of foreign governments under
lend-lease and surplus property were credited with pa^^ments of foreign
currency which, at the time they were credited, had a total United
States dollar equivalent of $42,895,173. The payments of foreign
.cm-rency, from the inception of the lend-lease and surplus property
programs, reduced the amounts receivable by the United States dollar
equivalent of $196,957,485.
After making adjustments for credits reported by procuring agencies
during 1953, articles and services furnished under agreements as
authorized by the Lend-Lease Act, as amended (22 U. S. C. 412),
amounted to $50,232,386,071 between March 11, 1941, and June 30,
1953.
Post World War I I indebtedness of foreign countries on United
States Government credits, asof June 30,1953,is shown in table 115.
Foreign currencies.—The Treasur}^ continued, during the fiscal year,
the operation of central facilities for the custody and disposition of
excess foreign currencies that have been acquired by certain agencies
of the United States in connection with sales of surplus property,
lend-lease goods, Mutual Security Agency counterpart and guarantee
fmids, and other operations in foreign countries. These currencies
are sold to various Government agencies for United States dollar
equivalent, and proceeds from such sales are deposited into the
Treasury as miscellaneous receipts. Such deposits for the fiscal year
1953 amounted to $37,932,905. In accordance with provisions for
educational exchange programs and for international information and
educational activities conducted between the United States and certain countries, as authorized in Section 32 (b) of the Surplus Property
Act of 1934, as amended (50 U. S. C. 1641 (2)), and the act approved
September 27, 1950 (64 Stat. 1059), the currencies, valued at
$11,209,698, were delivered in the fiscal year 1953 to the Department
of State without receipt of the equivalent amount in United States
1 Includes amounts ($1,004,867,799 dollar value) collected by the Department of State before the transfer
ofthe collection function to the Treasury Department.
ADMINISTRATIVE. REPORTS
115
dollars. The amounts by country are shown in the following
statement.
Country
Australia:..
Austria
Belgium
Burma.--.
Ceylon
-Denmark-^
E g y p t ( b u l k sales)-.
Fmland-France
Germany
Great Britain-India
Iraq
--.
Italy
..
Japan
Netherlands
N e w Zealand
Norway
Pakistan..'
Philippines^ •Sweden.
Thailand-Turkey
U n i o n of S o u t h Africa-
Foreign currency
103,004 p o u n d s
9,750,000 schillings
12,465,800 francs
1,904,000 k y a t s
356,985 rupees
1,697,775 k r o n e - - 208,296,000 p o i m d s
48,088,425 m a r k k a
-..
262,500,000 francs
4,200,000 deutsche m a r k s .
534,190 British p o u n d s . . . .
12,000,000,000 d r a c h m a s . . .
2,600,142 rupees
76,127,814 d i n a r s
716,740,000 lire
309,600,000 y e n
950,000 guilders
40,962 p o u n d s
2,921,785 kroner
1,155,000 rupees
401,620 pesos
97,713 k r o n e r
5,768,000 b a h t s
679,616 p o u n d s
5,952 p o u n d s
Total
Equivalent
dollar value
$655, 300.00
375, 000. oa
249, 3 1 6 . 0 0 '
400, 0 0 0 . OO75. OOO. 00'
245, 8 0 0 . 0 0 600, 0 0 0 . 0 0 208, 175.00750, 0 0 0 . OO1,.000, OOO. OO
1, 500, 000. oa
500, 000.00
548, 162.00
213, 824.00
1,146, 784.00
860, 000.00
250, 000.00
115, 000.00
409, 050.00
350, 000.00
200, 000.00
18, 900.00
280, 000. oa
242,
16, 720.00
667.00
11, 209,698.00
The amounts of foreign currencies held by the Treasury on June 30,
1952, transactions during the fiscal year, and balances on June 30,
1953, in foreign currencies and approximate United States dollar
values are shown in table 111.
• Bonds of the Republic of the Philippines.—The final payment by the
Philippines to the special trust account established in the Treasury
under the Philippine Independence Act, approved August 7, 1939
(53 Stat. 1229), was made on October 23, 1951. The status of the
special trust account as of June 30, 1953, for the payment of principal
and interest on pre-1934 Philippine Government bonds, will be
found in table 66.
American Battle Monuments Commission.—In accordance with the
authority granted by Public Law 455, 82d Congress, approved July
5, 1952, the American Battle Monuments Commission was authorized
to utilize during the fiscal year 1953,. certain foreign currencies owed
to or owned by the Treasury in an amount not td exceed $4,500,000
for the construction of memorials and cemeteries and $319,550 for
administrative expenses. From, tiriie to time during the fiscal year
1953 such foreign currencies were transferred to this commission by
the Treasury, without dollar reimbursement, as follows:
Country
Belgiiim...
France
.
Great BritainItaly
NetherlandS---
Total..
Foreign c u r r e n c y
21,633 francs
1,313,233,100 f r a n c s .
35,714 p o u n d s 2^1,718,749 lire
3,492,880 g u i l d e r s - - .
Equivalent
U . S. dollar
value
$132. 66
3,838, 000. oa
100, 000. GO
39, 550. oa
841, 567. 34
4, 819, 550. 00.
116
19 53 REPORT OF THE SECRETARY OFCTHE TREASURY
American-Mexican Claims Commission.—The • Treasury received
from tbe Government of the United States of Mexico $2,500,000
during the fiscal year 1953, representing an installment on the
$40,000,000 which Mexico, in the Convention of November 19, 1941,
agreed to pay in full settlement of the claims of American nationals
as adjudicated by the American-Mexican Claims Commission. The
amount enabled a further distribution of 6.3 percent on. the principal
amount of each award, making a total distribution of 83.5 percent.
A statement of the Mexican claims fund appears as table 106.
Mixed Claims Commission, United States and Germany.—During the
fiscal year 1953, funds were certified to the Treasury by the Department of Justice for distribution on awards of the Mixed Claims Commission in accordance with the Settlement of War Claims Act of 1928,
as amended (50 App. U. S. C. 9). Such funds were distributed to
holders of Class I I I awards in an amount equal to 1.3 percent of
interest accrued to January 1, 1952, on the principal amounts of such
awards.
On February 27, 1953, there were signed in London several agreements pertaining to the external debt of the Government of Germany.
Among these agreements was one pertaining to the recognition by the
present Federal Republic of Germany of the obligations of the former
Imperial German Government regarding awards of the Mixed Claims
Commission, United States and Germany, to American nationals.
Under the agreement the Federal Republic of Germany agreed to
issue to the United States 26 noninterest-bearing bonds in the total
face amount of $97,500,000 in full satisfaction of the obligation.
These bonds are to mature serially over a period of 25 years, beginning
April 1, 1953. The first 5 bonds are in amounts of $3,000,000 each,
the next 5 are in amounts of $3,700,000 each, and the remaining 16 are
in amounts of $4,000,000 each. In exchange for such bonds there will
be delivered to the Federal Republic of Germany those German
reichsmarks bonds issued under the 1930 agreement as evidence of
Germany's indebtedness for awards of the Mixed Claims Commission,
United States and Germany, which have semiannual maturity dates
bet,ween September 30, 1931, and September 30, 1942, both dates
inclusive. The payment due on April 1, 1953, was not made to the
United States during the fiscal year 1953 for the reason that the
agreements were not ratified by the respective signatory powers
during that period. The ratified agreements became effective September 16, 1953, and th3 payment due on April 1, 1953, was made by
Germany to the United States on September 24, 1953.
A s t a t e n e n t showing total payments made on awards under the
Settlement of War Claims Act of 1928, by classes, and the status of the
accounts as of June 30, 1953, is shown in table 107.
International Claims Settlement Act of 1949.—In accordance with
the act approved March 10, 1950 (64 Stat. 13), the International
Claims Commission was established in the Department of State to
receive claims, conduct hearings, and adjudicate and render final
decisions with respect td certain claims of the Government of the
United States, on its own behalf and on the behalf of American
nationals against foreign governments, arising out of World War I I .
Awards of the Commission are certffied to the Secretary of the Treasury
for payment to awardees or their successors or assigns in accordance
with the provisions of the act.
ADMINTSTRATIVE REPORTS
117
Under the Yugoslav Claims Agreement of 1948, the Government of
Yugoslavia has paid to the United States the sum of $17,000,000 in
full settlement of certain pecuniary claims of the United States and
nationals of the United States against the Yugoslav Government
arising out of the nationalization or other taking of property by
Yugoslavia. This is to be paid out to the respective claimants under
the aforesaid agreement as their interests may appear. As of June
30, 1953, 143 awards in the total sum of $587,601 have been certffied
for payment.
Government in occupied, areas {Germany and Austria).—Under the
provisions of the act, approved July 15, 1952 (66 Stat. 649), the
Secretary of State is authorized to utilize, without dollar reimbursement, for expenses, responsibilities, and obligations of the United
States in connection with the governing of the American zones of
Germany and Austria, various foreign currencies as follows: (a) Deposits made under the provisions of the Economic Cooperation Act
of 1948, as amended; (b) deposits by Germany for general use by the
United States Government, including those 'deposits under the control of the State Department in Germany and Austria; and (c) in
the event sufficient funds are not available from those sources, foreign
currencies derived from payments for surplus property sold in Germany and Austria are made available in an amount not to exceed
$25,000,000. During the fiscal year 1953, the Treasury transferred
such foreign currencies to the Department of State, without dollar
payment, as follows:
Country
75,000,000 schillings
64,358, 465 marks .
Austria
Germany
Total
Foreign currency
.
Equivalent
U. S. dollar
value
$2,884. 615. 40
15, 323, 444. 04
18, 208, 059. 44
Organization for European Economic Cooperation, European Productivity Agency.—Section 115 (K) (2) of the Economic Cooperation
Act of 1948, as amended (22 U. S. C. 1501-1522) and Section 516 (a)
of the Mutual Security Act of 1951, as amended (65 Stat. 382), provide for the establishment of a European program to be administered by an agency within the framework of the Organization for
European Economic Cooperation, to be known as the ''European
Productivity Agency," which has as its objective the formulation
and execution of arrangements to seek, develop, and promote the
most suitable and eft'ective methods for increasing productivity in
individual enterprises and in the various sectors of economic activity
in the member countries. In order to carry out this program, a sum
of $2,500,000 appropriated to the Mutual Security Agency was
deposited into a special account of the Secretary of the Treasury.
There were no withdrawals. I t is anticipated that the program wUl
operate for approximately three years.
United Nations Relief and Works Agency for Palestine Refugees in
the Near £fes^.—Pursuant to Section 302, Title I I I of the Foreign
Assistance Act of 1950, as amended by the act approved July 15,
1952 (66 Stat. 649), the Secretary of State is authorized to make con-
118
195 3 REPORT OF THE SECRETARY OF THE TREASURY
tributions to the United Nations Relief and Works Agency fdr Palestine Refugees in the Near East, an organization established by
resolution of the United Nations General Assembly, dated December 8,
1949. During the current fiscal year, in accordance with an agreement with the Department of State, there was established a deposit
fund account in the name of the Secretary of the Treasury for United
Nations Relief and Works Agency for Palestine-Refugees in the Near
East and an amount of $20,000,000 was transferred from appropriated moneys under the jurisdiction of the Department of State to the
deposit fund account. There were no withdrawals.
Withheld foreign checks.—Treasury Department Chcular No. 655,
dated March 19, 1941, as amended, prohibits the delivery of Government checks to payees residing in foreign areas, as follows: Albania;
Bulgaria; Communist-controlled China; Czechoslovakia; Estonia;
Hungary; Latvia; Lithuania; Poland; Rumania; the Union of Soviet
Socialist Republics; the Russian Zone of Occupation of Germany, and
the Russian Sector of Occupation of Berlin. Powers of attorney for
the receipt or collection^ of such checks or warrants will not be recognized, i n addition, delivery of checks to Nationals of Communist
China and North Korea is prohibited by Foreign Assets Control
regulations issued by the Secretary of the Treasury on December 17,
1950, except to the extent that delivery h a s been authorized by
appropriate license.
Liquidations
Liquidation of railroad .obligations.—During the year the Treasury
received $152,500 representing proceeds from the sale of securities of
the Fort Dodge, Des Moines and Southern Railway Company which
were acquired under Section 210 of the Transportation Act of 1920 (41
Stat. 462 and 468). The Treasury also received during the year 1953,
one payment of $6,400 representing dividends on the securities acquired by the United States in connection with loans which were made
to raUroads.
Liguidation of Federal agencies.—During the fiscal year 1953, the
outstanding obligations of the Philippine War Damage Commission
were paid and the administrative accounts closed. The work load
incident to handling inquiries relative to property damage claims and
processing claims for the proceeds of improperly negotiated Philippine
war damage checks was approximately the same as for the preceding
fiscal year. Inquiries and other correspondence relating to these
matters averaged 230 each month.
In addition, the Bureau of Accounts assumed and completed, with
the exception of the disposition of records, the liquidation of the
residual fiscal affairs of other terminated agencies which were transtferred to the Treasury Department by the President, as follows:
Name of agency
Motor Carrier Claims Commission
._
Commission on Renovation of the Executive Mansion
National Capital Sesquicentennial Commission _
.
___
._
Presidential
letter
, Effective
date
Oct. 20,1952
Oct. 13,1952
Dec. 26,1952
Jan. 1,1953
Oct. 31,1962
Dec. 31,1962
ADMINISTRATIVE REPORTS
119
Fiscal Service—BUREAU OF THE PUBLIC DEBT
The Bureau of the Public Debt performs the administrative work
in connection with the management of the public debt, which includes
the preparation of offering circulars, instructions, and regulations
pertaining to each issue, the issuance of securities and the conduct or
direction of transactions in outstanding issues, the final audit and
custody of retired securities, the maintenance of the control accounts
covering all public debt issues, and the keeping of individual accounts
with owners of registered securities and the issue of checks in payment
of interest thereon. The Bureau of the Public Debt also audited the
redeemed United States paper currency and supervised its destruction
through this fiscal year. Effective July 1, 1953, these functions were
delegated to the Federal Reserve Banks and branches.
Effective June 7, 1953, the functions of the Division of Public Debt
Accounts and Audit relating to the audit of Bureau of Engraving and
Printing records, together with inventory, were transferred to the
Bureau of Engraving and Printing. (See Treasury Department Order
No. 174, p. 30*5).
Two principal offices are maintained—one in Washington, D. C ,
for all functions relating to the issuing, servicing, and retiring of public
debt securities except those relating to savings bonds following their
issue to the public; the other in Chicago, 111., where the functions consist of transactions relating to savings bonds after their issue to the
public. In addition to the two principal offices, three field regional
offices, located in New York, Chicago, and Cincinnati, are maintained
for the purpose of decentralizing the auditing of redeemed savings
bonds.
Bureau administration
Management improvement—A large number of improved methods
and procedures have been under study during the fiscal year 1953,
including such projects as the audit and destruction of redeemed
currency in the Federal Reserve Banks, centralization of administrative service functions in the Washington offices of the Bureau,
and a revised redemption procedure for savings bonds. These studies
were successfully culminated and revised procedures were instituted
during the year.
Before July 1, 1953, unfit United States currency (of which one
dollar silver certificates comprises about 82 percent) received in
Federal Reserve Banks was packaged, canceled, and cut in half lengthwise. The bundles of lower halves were shipped to the Bureau of the
Public Debt in Washington, and upon their receipt the upper halves
were shipped to the Treasurer of the United States in Washington.
After a 100 percent verification count and examination by the Bureau
of the Public Debt of the lower halves, and a check by the Treasurer's
Office of those upper halves in which discrepancies were discovered in
the lower halves, both halves were destroyed under supervision of a
Treasury Department Committee for Destruction.
The feasibility of performing this verification and destruction at
Federal Reserve Banks had been considered at various times in the
past. A committee study in 1926 resulted in a recommendation for
continuation of the verification and destruction in Washington, and
a joint Treasury-Federal Reserve committee appointed in October
120
195 3 REPORT OF THE SECRETARY OF THE TREASURY
1928 made a similar recommendation. However, continued attention
was given the subject by the Fiscal Service of the Treasury Department because of the increasing volume of currency in circulation,
which increased the amount of unfit currency being forwarded to
Washington for verification and destruction. The life of a one-dollar
bill is about 10 months and more than a billion pieces are in circulation.
Notes of higher denominations last somewhat longer. The extent of
the increase in work is reflected by the fact that the 1,293 million
pieces of United States currency of all denominations destroyed in
the fiscal year 1953 were double the 636 million pieces destroyed in
the fiscal year 1927.
Under the management improvement program of the Bureau of
the Public Debt a project was commenced in 1949 for a complete
review of the advantages and disadvantages of decentralization.
MeanwhUe, the Department engaged the services of the National
Bureau of Standards to study the possibility of developing electronic
counters to count the lower halves of unfit one-dollar bills. This
study resulted in the manufacture and installation of a battery of 25
electronic counters in May of 1951. Although substantial economies
were obtained through use of the counters, the Bureau of the Pubhc
Debt continued its studies and reinstated this management improvement project for another complete review in 1952. Early in 1953 the
Treasury appointed a committee to work with a similar group representing the Federal Reserve Banks. As a result, the verification and
destruction of United States currency that is unfit for further circulation were decentralized to the Federal Reserve Banks and branches,
effective July 1, 1953, where the function is performed under regulations prescribed by the Treasury.
This change in procedure will result in savings to the Treasury of
approximately $615,000 annually.
An Administrative Services Office was established effective July 31,
1952, in which was placed the responsibility for all service and supply
functions in connection with the operation of the Washington offices,
including procurement and stocking of supplies, duplicating, property
accountability, and arranging for the procurement and the maintenance of furniture, fixtures, and space. This brings these service
functions under closer supervision and results in economies of both
personnel and material.
As a result of continued studies dhected towards improving the
overall savings bonds program, a revised redemption procedure was
instituted. This procedure, while not completed in all phases, was
begun during the latter part of the year. The significant aspects of
this revision are elimination of a large part of the keypunch operations
in the Federal Reserve B,anks, and classification by the regional offices
of the Register of the Treasury, instead of the Reserve Banks, of the
charges in the account of the Treasurer of the United States for the
redeemed bonds. The resulting monetary savings will be substantial.
A study was made of the procedures relating to the extension of
stock credit and recovery work in connection with the loss, theft, or
destruction of unissued United States savings bonds while charged to
the fiscal agents' stock accounts, and also of procedures governing the
placing of caveats and the processing and accounting for replacement
bonds issued in lieu of lost, stolen, or destroyed savings bonds, the
ADMINISTRATIVE
121
REPORTS
nonreceipt of which is alleged. As a result, internal operating procedures were revised, with consequent appreciable savings, to effect
the transfer in August 1952 of certain functions to the Federal Reserve
Banks and of other functions from the Washington Office to the Chicago Branch Office of the Division of Loans and Currency.
Personnel.—On June 30, 1953, there were 3,522 employees on the
rolls of the Bureau of the Public Debt, as compared with 3,888 on
June 30, 1952. The principal changes consisted of decreases of 199
employees in the Division of Loans and Currency and 43 in the Office
of the Register in Washington; and 115 employees in the Division of
Loans and Currency in the Chicago Office.
Bureau operations
The public debt.—A summary of public debt operations handled by
the Bureau appears on pages 30 to 41 of this report, and a series of
statistical tables dealing with the public debt will be found in tables 11
to 30, and 38 to 41.
The public debt of the United States falls into two broad categories:
(1) Public issues, and (2) special issues. The public issues are classified as to marketable obligations, consisting chiefly of Treasury bills,
certificates of indebtedness. Treasury notes, and Treasury bonds; and
nonmarketable obligations, consisting chiefly of United States savings
bonds. Treasury bonds of the investment series, and Treasury savings
notes.
During the fiscal year 1953 the gross public debt increased by
$6,966 million and the guaranteed obligations held outside the Treasury
increased by $6.5 million. The most significant change in the composition of the outstanding debt during the year was the increase of over
$6,900 million in marketable obligations. Total pubhc debt issues,
including issues in exchange for other securities, amounted to $158,877
million during 1953,.and rethements amounted to $151,911 million.
The following statement gives a comparison of the changes during the
fiscal years 1952 and 1953 in the various classes of public debt issues.
Increase, or decrease (—)
Classification
1952
1953
In millions of dollars
Interest-bearing debt:
Treasury bonds, investment series
Treasury savings notes
U. S. savings bonds
Marketable obligations.
Special issues _
Other.
Total interest-bearing debtMatured debt and debt bearmg no interest,
Total
-4S0
-1,205
113
2,490
3,086
7
-758
-2,16a
201
6,928
2,799
74
4.011
-128
7,083
-117
6,966
United States savings bonds.-—These bonds are in registered form
and their issue and redemption represent by far the largest volume of
work for this Bureau. Maintaining both alphabetical and numerical
records of over 1.5 billion of these bonds, replacing lost or stolen
bonds, and handling and recording retired bonds involve a considerable administrative task.
122
1953 REPORT OF THE SECRETARY OF THE TREASURY
Receipts from the sales of savings bonds during the year were
$4,562 million and accrued discount charged to the interest account
and credited to the savings bond principal account amounted to
$1,229 million, a total of $5,791 million. Expenditures for redeeming
savings bonds, including matured bonds, amounted to $5,621 million.
The amount of savings bonds of all series outstanding ori June 30, 1953,
including accrued discount and matured bonds, was $57,977 million,^
an increase of $170 million over the amount outstanding on June 30,1952. Detailed information regarding savings bonds will be found in
tables 31 to 36, inclusive, of this report.
During the fiscal year 1953, 82.8 million stubs representing issued
bonds of Series E were received for registration, making a total of
1,539.1 million, including reissues, received through June 30, 1953.
These stubs are sorted alphabetically by name of owner and microfilmed, and then are sorted in numerical sequence of their bond serial
numbers and microfilmed, after which the original stubs are destroyed. The microfilms serve as permanent registration records.
Of the 1,539.1 million Series E bond stubs received as of June 30, 1953,
1,354.6 million have been completely processed and destroyed, leaving
a balance of 184.5 million stubs in process at various stages of completion. The following table shows the processing, a t various
stages, of the registration stubs of Series E savings bonds.
S t u b s of issued Series E savings b o n d s in Chicago office
( I n millions of pieces)
Alphabetically
sorted
Period
S t u b s received
Restricted F i n e sort,
prior to
ba.' is
filming 2
sort 1
C u m u l a t i v e t h r o u g h J u n e 30,1946
Fiscal year:
1947-.1948
-.1949
1950
1951..
1952
1953
Total
Alphabetically
filmed
N^umeri
cally
filmed
)estroyed
after
filming
1,042.3
958.9
635.4
317.9
1,022.1
265.6
76.8
61.7
66.2
67.8
65.5
76.0
82.8
120.4
72.4
58.5
91.1
60.5
72.2
84.0
37.9
323.1
290.5
88.1
66.2
67.3
69.8
120.1
318.4
382.8
115.3
63.8
67.1
62.3
76.1
66.2
58.9
.5
41.7
27.5
66.4
152.3
196.2
447 4
156.6
36.4
32.2
67.9
1, 539.1
1, 618.0
1,468.3
1,437. 7
1,359.4
1,354. 6
»Not in complete alphabetical arrangement but sorted to such a degree that individual stubs can be
located. Includes those stubs fine sorted.
2 Completely sorted.
The audit of retired savings bonds is conducted in the regional
offices of the Register of the Treasury. There were 88.4 million
retired savings bonds of all series received in the regional offices during
the year. Retired bonds are audited and then microfilmed,. after
which the bonds may be destroyed. The bonds of all series received
ADMINISTRATIVE
123
REPORTS
in these offices have been audited, microfilmed, and destroyed to the
extent indicated in the foUowing table. .
R e t i r e d savings b o n d s of all series in regional offices
(In millions of pieces)
Period
Bonds
received
C u m u l a t i v e t h r o u g h J u n e 30, 1946_
Fiscal year:
1947.
,
.
.
.
1948
1949. _ . _
1950
1951
1952
.
1953
.
Total
_.
Micro"filmed •
Audited,
Balance
. u n a u r ,. uBalance
nfilmed
dited
27.9
19.2
^ 8.7
113.3
95.1
85.7
84.4
92.1
82.4
88.4,
118.4
94.6
86.8
83.0
94.2
82.8
88.5
3.6
4.1
3.0
4.4
2.3
1.9
1.8
1 669.3
61.7
171.4
153.3
101.7
85.2
... , 92.1.
667.5
...
655.4
De"stfoyed-
27.9
141.2
184.6
98.9
- ' 3a 0
• 20.4
17.613.9
13.9
1.8
4.5
312.7
79.2
' 88.6
111.0
596.0
1 Includes 5.6 million pieces of F , G, J, and K bonds, 13.8 million pieces of reissues, 7.0 million pieces
spoiled in issue, and 1.6 million pieces of unissued stock.
After the retired bonds have been audited in the regional offices, a.
listing of the serial numbers is transmitted to the Chicago departmental office where the serial numbers are posted to numerical registers,
and the postings are verified. The following statement shows the
status of the posting of all series of rethed savings bonds.
R e t i r e d savings b o n d s of all ssries recorded i n Chicago Office
(In millions of pieces)
.
Period
C u m u l a t i v e t h r o u g h J u n e 30,1946
Fiscal year:
1947
1948
1949
1950
1961
1962
1953
Total
N u m b e r of
retired
bonds
reported
S t a t u s of posting
Posted
Verified
Unposted
Unverified
454.2
384.0
313.6
70.2
70.5
137.9
99.5
92.5
82.6
89.8
85.6
87.7
195.7
105. 2
96.8
81.2
90.7
88.1
88.0
256.6
110.8
94.9
82.2
93.4
88.2
87.5
12.4
6.7
2.4
3.8
2.9
.3
9.7
4.1
6.0
5.0
2.3
2.2
2.7
1,129. 7
1,129. 7
1,127.0
2.7
Of the 82.6 million Series A - E savings bonds redeemed prior to
release of registration and received in the regional offices during the
year, 80.2 mUlion, or over 97 percent, were redeemed by over 17,000
paying agents, who were reimbursed for this service, in each quarter
year, a t the rate of 15 cents each for the first 1,000 bonds paid and
10 cents each for all over the first 1,000. The total amount paid to
agents on this account during the year was $10,003,609, which was
at the average rate of 12.47 cents per bond.
124
1953 REPORT OF THE SECRETARY OF THE TREASURY
The following table shows the number of issuing and paying
agents for Series A - E savings bonds, by plasses.
J u n e 30
Post
offices
Banks
Building
a n d savings a n d
loan
associations
Credit
unions
Companies
operating
payroll
plans
All
others
Total
Issuing agents
1947
1948
1949
1950
19511952.
1953
25,420
25,179
24,944
25,060
24,720
24, 434
24, 416
_
15,178
15,178
15, 205
16, 225
15, 276
15, 333
15,380
1,856
1, 706
1,621
1,557
1,551
1,569
1,636
719
615
565
522
511
503
464
2,910
3,289
3,192
3,052
3,071
3,090
3,039
1,320
605
595
650
640
594
591
47,403
46, 572
46,122
45,966
45, 769
46, 513
45, 426
63
50
64
57
59
57
57
16,052
16, 508
16,624
16, 691
16,866
17,023
17,143
Paying agents
1947
1948
1949
1950
1951
1952
1953
_
15,176
16, 527
15, 559
15, 623
16, 747
15,851
15,906
683
786
863
874
922
976
1,042
140
145
138
137
138
139
138
During the fiscal 3^ear 1953, 8,414,388 interest checks were issued on
current income type savings bonds with a value of $464,076,176.
This is a decrease of 150,591 checks from the number issued during
1952, and a decrease in monetary value of $78,845,469. As of June 30,
1953, there were 2,683,820 active accounts with owners .of this type
of savings bonds, a decrease of 34,567 accounts from the previous year.
There were 44,766 applications during the year for the issue of
duplicates of lost, stolen, or destroyed savings bonds received in the
Chicago office, in addition to 1,812 cases on hand at the beginning of
the year, making a total of 46,578 cases, of which 944 credit cases were
transferred to Washington for settlement. In 23,865 cases the bonds
were recovered, and in 20,223 cases the issuance of duplicate securities
was authorized. On June 30, 1953, 1,546 cases remained unsettled.
Registered accounts other than savings bonds.—During the year
40,000 individual accounts covering publicly held registered securities
other than savings bonds were opened and 48,000 were closed, making
a total of 309,000 such accounts open on June 30, 1953, covering registered securities in the principal amount of $21.8 billion. A total of
585,000 interest checks were issued to owners of record during the year,
which was a decrease of 36,000 from 1952.
Redeemed currency.—On July 1, 1952, the Division of Loans and
Currency (Washington) had on hand 19,620 unaudited bundles (4,000
half-notes each) of United States currency that had been retired from
circulation as unfit. During 1953, 328,736 bundles were received, an
increase of 7,628 bundles from 1952; and 324,604 bundles were audited,
leaving a balance of 23,752 unaudited bundles on hand on June 30,
1953.
125
ADMINISTRATIVE REPORTS
The Destruction Committee supervised the incineration of redeemed
canceled currency during the fiscal year as follows:
Class of currency
Gold certificates
Silver certificates.
United States notes
Treasury notes of 1890 _
Federal Reserve notes
Federal Reserve Bank notes
National Bank notes.
Fractional currency ._
Pieces
._
_. _
__
_
..'.
_
Total
Fiscal Service—OFFICE OF THE
_
..
._
Value
48,417
1, 251,316,832
42,434,524
3
665, 060,846
825, 643
249, 864
706
$1,285,140
1, 707. 021, 226
176,118,800
3
6,616,850, 620
20, 241, 994
3,895, 209
155
1,859, 936,834
8, 525,413, 047
TREASURER OF THE UNITED STATES
The Office of the Treasurer of the United States is essentially a
banking facility of the Government. The responsibilities of the
Treasurer include the receipt of all public moneys; custody, issue, and
redemption of United States currency and coin; payment of Government checks; custody of securities deposited in the Treasury as collateral or for safekeeping; and payment of principal and interest on the
public debt. The Office of the Treasurer of the United States prepares the Daily Statement of the United States Treasury, which recapitulates all transactions in the accounts of the Treasurer, and issues a
monthly statement of the public debt and the Circulation Statement of
United States Money.
Management improvement.—The Office of the Treasurer has continued active support of the management improvement program and
made definite progress toward improving operations and rendering
more efficient service during the fiscal year 1953. Although practically all functions of this Bureau are rigidly prescribed by law and
have been performed by the Office of the Treasurer since 1778, remarkable progress has been made in procedures. Efficient new
procedures have been developed and old ones modernized in order to
cope with the great increase in the financial transactions of the
Government.
Significant improvements in 1953 were the further extension in the
use of punched card checks which are processed mechanically in lieu of
paper checks requiring manual processing, the decentralization of the
audit and destruction of unfit United States currency to the Federal
Reserve Banks (additional details appear in the report of the Bureau
of the Public Debt), and the revision of the procedure for processing
United States savings bonds for safekeeping.
Money received and disbursed by the Treasurer.—Moneys coUected by
Government officers are deposited with the Treasurer a t Washington,
in Federal Reserve Banks, and in designated Government depositaries
for credit of the account of the Treasurer of the United States, and all
pa3anents are charged against this account. Total receipts and
payments for the fiscal years 1952 and 1953 are shown in the following
table on the basis of the daily Treasury statement.
126
195 3 REPORT OF THE SECRETARY OF THE TREASURY
1952
Receipts, expenditures, and general fund balance
Receipts:
Budgetary (net) >
• Trust accounts, etc.^ ._:.•.:. • •
Public debt 3
....
$62,128, 606, 579. 52
8,806,815,681.85
142,212,081,325.16
$66, 218,336, 562. 73
8, 931, 553, 964. 74
158, 877,189, 563.04
213,147, 603, 586.-53
• 7,356,678,123.19
233, 027,080, 090. 61
6 968, 827, 604.31
220, 504,081, 709. 72
239 995, 907, 694.82
66,145,246,957.62
4, 951, 571,632. 46
74,607,420,232.16
5,168, 818,039. 63
3,636,132,20a 67
3,300, 585,125.90
72,034, 647.85
401,389,312.15
138,328, 879,354.66
25,214,084.81
312, 315, 254.36
161,911, 306, 709.90
. 213, 635, 254,105.41
_._
6,968, 827, 604.31
235.325, 659, 446. 76
4, 670, 248, 248.06
220, 504,081, 709. 72
239,995,907, 694.82
_
Subtotal.1
Balance in general fund beginning of year -_.
Total
- ._- . .
. . .
Expenditures:
Budgetary *
Trust accounts, etc.2 __
Investments of Government agencies in public debt securities (net)
Sales and redemptions of obligations of Government agencies
in market (net)
Clearing account for outstanding checks, etc.
Public debt 3
Subtotal
Balance in general fund at close of year.
Total
-_.
1953
1 Total budget receipts less amounts appropriated to Federal old-age and survivors insurance trust fund
and refunds of receipts. See table 2, footnote 3. For details of receipts for 1953, see table 3.
2 For details for 1953, see table 4.
« For details for 1953, see table 25.
* See table 1, footnote 3, and table 2, footnote 3. For details for 1953, see table 3.
Assets and liabilities of the Treasurer's account.—The assets of the
Treasurer consist of gold and silver bullion, coin and paper currency,
deposits in Federal Reserve Banks, and deposits in the commercial
banks designated as Government depositaries.
A summary of the assets and liabilities in the Treasurer's account
at the close of the fiscal year 1952 and 1953 is shown in table 44.
Gold.—Gold receipts during 1953 amounted to $139,7 million and
disbursements totaled $1,023.4 million, a net decrease of $883.7
million. This decrease brought the total gold assets to $22,462.6
miUion on June 30, 1953. Liabilities against these assets were
$21,322.9 million of gold certificates and credits payable in gold
certificates and $156.0 million for gold reserve against currency. The
balance, $983.7 million, was in the general fund on June.30, 1953.
Credits during the year on account of increment resulting from the
reduction in weight of the gold dollar in 1934 amounted to $41,145.84.
This makes total increment from 1934 through the fiscal year 1953
of $2,819,386,837.46.
Silver.—During the year 25.7 million ounces of sUver bullion, which
had been carried in the general fund at a cost value of $23.3 million,
were monetized at a monetary value of $33.2 million. This $33.2
•million increase in silver assets was offset by a decrease of $11.4
million in holdings of silver dollars, making a net increase of $21,8
niillion in assets during the year. As. of June 30, 1953, the silver
assets of the Treasurer (exclusive of subsidiary coin and bullion held
in the general fund at cost) amounted to $2,412.8 mUlion.
..Liabilities against silver at the end of the year amounted.to. $2,377.4
million for silver certificates, outstanding and $1,1 million fo.r Treasury
notes of 1890 outstanding, leaving a net balance of $34.2 million in the
general fund.
The sUver bullion held in the general fund at cost value (exclusive
of the $34.2 million at monetary value) decreased from $68.0 mUlion
ADMINISTRATIVE
127
REPORTS
on June 30, 1952, to $33.5 million on June 30, 1953. This decrease of
$34.5 million is accounted for as follows: $32.4 million net purchases
of sUver less $23.3 million of silver monetized and less $43.6 million of
silver used for coinage.
Paper currency.—Under the laws of the United States the Treasurer
is the agent for the issue and redemption of United States currency
and coin.
Table 83 shows by class and denomination the value of paper
currency issued and redeemed during 1953, and the amounts outstanding at the end of the fiscal year.
A comparison of the amounts of paper currency of all classes issued,
redeemed, and outstanding, follows:
1952
Pieces
1953
Amount
2, 990, 982.495 $30. 459, 648, 303
1, 905, 670. 522 9, 035, 267, 000
1, 778, 671, 397 7, 873,163, 479
3,117, 981, 620 31, 621, 651,824
Outstanding at begiiming of year
Issues during year
Redemptions during year
_.
Outstanding at end of year.
Pieces
Amount
3,117,981,620 $31, 621, 651,824
1,926. 560,815
9,182, 608, 000
1, 847, 822.336
8, 236. 669, 767
3,196, 720, 099 32, 567, 590 057
For further detaUs on stock and circulation of money in the United
States, see tables 79 to 82.
Depositaries.—The following table shows the number of each class
of depositaries and balances as of June 30, 1953.
Deposits to the
credit of the
Treasurer, U. S.
Class
Federal Reserve Banks and branches
Other banks in continental United States:
General depositaries
:
Special depositaries, Treasury tax and loan accounts.
Insular and territorial depositaries
Foreign depositaries 2..
Total
:
.
$342, 785, 727.39
371,725,294.81
3,071,119,395.98
41,668,658.29
49, 264, 772.48
3.876, 563,848.95
1 Does not include limited depositaries which have been designated for the sole purpose of receiving
deposits made by Government officers for credit in their official checking accounts with such depositaries
and which are not authorized to accept deposits for credit of the Treasurer of the United States..
2 Principally branches of American-institutions. .
For details on the administrative work relating to designation of
depositaries, see page 109.
Checking accounts of disbursing officers and agencies.—Ks oi June
30, 1953, the Treasurer maintained 4,687 checking accounts of disbursing officers and Federal agencies, including those maintained at
the Federal Reserve Banks as fiscal agents of the United States.
The number, of disbursing officers' accounts by classes as of June 30,
128
1953 REPORT OF THE SECRETARY OF THE TREASURY
1952 and 1953, and the number of checks paid during the fiscal years
1952 and 1953 were as follows:
1952
Disbursing officers
Number of
disbursing
officers'
accounts
Number of
checks paid
• Number of
disbursing
officers'
accounts
Number of
checks paid
Treasury...
Army
Navy.
Air Force.Other......
623
491
1,784
330
1,295
189, 556,121
37, 527,368
35,303, 987
17, 536,980
25, 402,121
429
497
1,938
421
1,402
193,803,082
39,151,883
37, 020, 703
20,115,182
25, 276, 723
Total
4,523
306,325, 577
4,687
315,367, 673
Of the 315,367,573 checks paid in the fiscal year 1953, 259,617,322
were in the form of card checks. There were 238,302,274 card checks
paid by the Federal Reserve Bariks and the Manila Branch of the
National City Bank of New York acting as fiscal agents of the Treasurer and the remaining 21,315,048 card checks and all checks not in
card form were paid by the Treasurer in Washington.
The am.ount to the credit of the checking accounts of disbursing
officers and agencies on the books of the Treasurer of the United States
on June 30, 1953, was $89,170,018,084.85 as compared with $80,426,656,555.69 on June 30, 1952. The increase reflects the new accounting
procedure under the joint regulations under the Budget and Accounting Procedures Act of 1950.
Check claims.—During the year the Treasurer of the United States
issued 21,223 checks totaling $1,917,207.30 in settlement of claims for
the proceeds of checks which had been paid bearing forged or unauthorized endorsements. The Chief Disbursing Officer issued 43,922
substitute checks totaling $23,857,293.01 to replace unpaid checks
which, it was claimed, had not been received, or were lost, destroyed,
etc. Many additional claim.s were received but were not honoreci
because they were not well founded. Cases involving forgeries are
investigated by the United States Secret Service. Information on
check forgeries is contained in the report of that agency.
Treasurer's Cash Room.—The commercial checks, drafts, postal
express m.oney orders, etc., deposited by Government officers with
the Treasurer's Cash Room in Washington for collection aggregated
4,040,506 items for the fiscal year 1953, as compared with 3,872,558
items for the fiscal year 1952.
Savings bonds issued and redeemed.—The following savings bonds
were issued and redeemed by the Treasurer's Office in Washington,
D. C , during the fiscal years 1952 and 1953.
ADMINTSTRATIVE
129
REPORTS
1952
1953
Transactions
Number
Issues: i
E
F
G
I-I...
J
K
54,844
213
1,167
.
Number
$2, 832, 900.00
146, 205. 50
1, 534, 500.00
_.
—
Total
•
_
Redemptions: i
A-D
E
F
G
H
J
K
Total
Amount
.
_
-.
.
.-.-
-
.
52,715
$2,832 768.75
618
271
487
611,500.00
469 224.00
1, 244, 600. 00
56, 224
4, 513, 605. 50
54,091
5,157, 992. 75
1,601
36, 274
2,066
6,209
385, 050.00
2, 967, i n . 99
1, 974,492. 29
6, 287,488.00
410
39,576
1, 742
7,612
31
15
26
78 900 00
2,913,196.05
2, 296, 732.49
9 820 274 62
32, 500.00
26 704 30
70, 000. 00
46,150 '
11, 614,142. 28
49,312
15 238 307 46
-
-
Amount
1 For the most part United States savings bonds are issued and redeemed by issuing and paying agents
throughout the country (see p. 123).
Securities held in safekeeping.—The face value of securities held by
the Treasurer in safekeeping on June 30, 1952, and June 30, 1953, is
shown in the following table.
Purpose for which held
June 30,1962
June 30,1953
To secure deposits of public moneys in depositary banks
$406, 778,400
To secure deposits of postal savings funds
32, 307,100
For the Board of Trustees, Postal Savings System...
1,674,977.160
For District of Columbia:
Sinkingfund
_
104. 420
Teachers' retirement and annuity fund
20, 260,000
Relief and rehabilitation fund
732, 950
other
_
..,
6,826, 200
For the Secretary of the Treasm-y:
12,118,351,862
Foreign obligations
Capital stock and obligations of Government corporations and
9, 685. 373.064
agencies
_
2. 766. 474, 216
Other
:.
.1,253,407,000
For Federal Deposit Insurance Corporation
_
Indian trust funds
_
,
35,425. 556
United States savings bonds held for various depositors
46, 736, 600
Miscellaneous
98, 749, 349
Total
..—
28,146, 502,866
$478,410, 800
33, 728, 600
1, 972, 552, 340
104, 420
21,810,000
757, 950
6,826, 200
12,118, 237, 862
11, 780,188,096
3, 290, 288,868
1, 336, 700,000
34,076, 406
45, 223, 845
104, 573, 951
31,223,479,327
Savings bonds placed in safekeeping with the Treasurer and those
withdrawn were as follows:
Number
1952
I n safekeeping a t b e g i n n m g of y e a r
P l a c e d in safekeeping
.
. .
W i t h d r a w n from safekeeping
I n safekeeping a t e n d of year
273013—54-
-10
..
1953
622,495
53,930
694,796
57,335
676,426
81,629
652,131
81, 300
594,796
670;831
130
1953 REPORT OF THE SECRETARY OF THE TREASURY
Servicing of securities for Federal agencies andfor certain other governments.—In accordance with agreements between the Secretary of the
Treasury and the several Government corporations, agencies, and
Puerto Rico, the Treasurer of the United States acts as special agent
for the payment of principal of and interest on their securities (including pre-1934 bonds of the Philippine Government). The aniounts
of such payments during the fiscal year 1953, on the basis of the daily
Treasury statement, were as follows:
Principal
F e d e r a l h o m e loan b a n k s
_. . .
F e d e r a l farm loan b o n d s
___
Federal F a r m Mortgage Corporation..
Federal Housing Administration
H o m e O w n e r s ' L o a n Corporation
P h i l i p p i n e Islands
P u e r t o Rico
_
Total
_
Interest paid
in cash
Registered
interest
Coupon
interest
$62. 50
18, 522, 687.14
6,075. 50
$529,190,000
186, 402, 200
86, 900
34,093,650
204, 025
10, 783, 000
262, 500
$6, 738, 896. 23
1, 610. 25
218. 38
322, 948. 39
172. 50
2, 030. 00
5, 490. 00
84, 062. 50
19, 786. 82
420, 970.00
321, 530.00
761, 022, 275
7,065,876.75
2, 701, 045. 97
19, 291, 111. 96
$501,434. 28
2,110, 059.19
Internal Revenue Service ^
The Internal Revenue Service is responsible for the collection of the
internal revenue and for the enforcement of the internal revenue laws
and certain other statutes. These other statutes include the Federal
Alcohol Administration Act (27 U. S. C. 201-212); the Liquor E n forcement Act of 1936 (18 U. S. C. 1261, 1262, 3615); the Federal
Firearms Act (15 U. S. C. 901-909), and the National Firearms Act
.(26 U. S. C. 2721).
Management improvement
Reorganization.—The most significant development during the first
half of the fiscal year was the implementation of Reorganization Plan
No. 1, approved by the Congress on March 13, 1952. The complete
reorganization of the national office on a functional basis, replacing
the former structure based on type of tax, was effected on August 11,
1952.. The second half of the fiscal year was characterized by intensive
study and careful evaluation of Internal Revenue Service operations
and the issuance of appropriate directives to assure uniform and
coordinated efforts in the continuing program to improve all areas of
,operation and management.
The Office of Director of Practice was established in the national
^office of the Internal Revenue Service by order of the Secretary of the
Treasury dated January 9, 1953 (18 F . R. 225). The order consolidated in the Office of the Director of Practice the enrollment and disbarment functions (except those relating to customhouse brokers)
previously performed by the Committee on Practice and the Attorney
for the Government, respectively. . _
In April 1953 further important improvements were effected in the
organizational structure of the national office. The offices of Assistant to the Commissioner and Administrative Assistant to the Com. y More detailed information will be Jo.und in, the. Annual Report .ofthe Commissioner of Internal Eevenue
for the fiscal year 1953. , The Bureau of Internal Revenue was designated as "Internal Revenue Service"
tby Treasury •Departm'ent Order NO: 150'-29,'July'9,1953.
ADMINISTRATrVE REPORTS
131
missioner were abolished and the offices of Deputy Commissioner of
Internal Revenue, Assistarit Commissioner (Administration), and
Assistant Commissioner (Planning) were established. As a result,
functions of top officials of the national office were realigned.
Plans were completed during the last half of the fiscal year for the
•elimination of approximately 900 positions in the national office,
leading to an ultiraate savings of $4 million annually. The work performed in these positions either was deemed unnecessary or was to be
decentralized to the regions. (See discussion below of work decentralized to regions.)
Plans to streamline the overall administrative setup in the regional
offices were approved by the Secretary of the Treasury in May 1953.
These plans called for a reduction in the number of regional offices in
the Internal Revenue Service from 17 to 9, effective July 1, 1953, and
a change in titles of the office of District Commissioner of Internal
Revenue and office of Director of Internal Revenue to Regional Commissioner of Internal Revenue and District Director of Internal
Revenue, respectively. The reduction in the number of regional
offices will eliminate much overhead cost and provide a more closely
knit supervisory structure.
Decentralization of operating functions.—Studies were continued
during the fiscal year for the purpose of identif3dng operations conducted in the national office which could be performed more effectively
in regional and district director offices. As a result of such studies,
the following actions were completed or initiated during the first half
of the fiscal year: (a) District directors were given jurisdiction over
the adjustment of emplo3^ment tax claims; (b) district directors were
a,uthorized to make assessments on employment tax returns prepared
for dehnquent taxpayers and to assess fraud and 100 percent penalties
in employment tax cases; (c) district directors were authorized to
handle estate tax claims under the same rules applicable to income tax
claims, thus ehminating the practice of initially referring such claims
to the national office for consideration and disposition; and (d) final
authority was delegated to each of the Excess Profits Tax Council
advisers stationed in regional offices to make settlements on behalf of
the Commissioner.
In addition, the following actions were completed or initiated during
the second half of the fiscal year: (a) The housing of corporation returns for 1949 and subsequent years was transferred to district directors' offices; (b) the processing operations on tobacco tax monthly
returns and reports were transferred to regional offices; (c) district
directors were authorized to schedule for abatement, credit, br refund
tentative allowances in any amount; (d) the processing of certain
applications for inspection of returns and related documents was
transferred to district directors' offices; (e) control and service func^
tions performed by the Audit. Division of the national office iri the
processing of banla-uptcy and receivership cases were discontinued ;
(f) authority was delegated to the regional commissioners to issue
notices under Section 3631 of the Internal Revenue Code authorizirig
additional inspections of taxpayers' books and records; (g) the practice
of transmitting cases involving examiners' determinations to the
riational office for post-review was discontinued with respect to all
types of examined returns with more effective review substituted at
132
1953 REPORT OF THE SECRETARY OF THE TREASURY
the field level; and (h) regional commissioners were delegated authority
to enter into contracts and procure supplies and equipment.
Revenue accounting and related activities.—Intensive studies of procedures in the accounting and processing operations of the Service
have resulted in a number of improvements in this area. One of the
year's highlights was the success of the taxpayer assistance program
during the January 1 to March 15, 1953, filing period. A record
number of taxpayers, almost 12 million, sought and were given fast,
courteous assistance in the preparation of their 1952 income tax
returns. Evening telephone service was provided in major cities
throughout the country, and many offices were kept open on Saturdays. All possible arrangements were made for the comfort and
convenience of taxpayers waiting in line. The average waiting time
for taxpayers seeking assistance was only about 20 minutes.
Other improvements made in this area include: (1) A new procedure
for issuing and recording special occupational stamps which is expected
to save an estimated $150,000 per year; (2) a modified work program
for the Processing Branch at Kansas City which is expected to effect
annual savings of $1,500,000; (3) extended utilization of electric typewriters and automatic posting machines in district directors' offices;
and (4) development of new return forms and revision of regulations
to permit eight excise taxes previously reported and paid on separate
monthly returns to be reported and paid on one quarterly return.
Form 720, with an extension of the depositary receipt system to cover
such taxes.
Under intensive investigation are various ways of eliminating the
need for filing income tax returns by persons whose incomes are below
certain limits and consist exclusively or almost exclusively of wages
subject to withholding.
Other accounting and processing activities are being studied and
analyzed by a committee composed of officials of the Office of the
Secretary of the Treasury, the General Accounting Office, and the
Internal Revenue Service. Projects considered by this committee
include: Collection and deposit procedures, accounting phases, processing of returns, matching of withholding and information documents,
leveling of peak filing period workloads, and relationships with other
Federal agencies.
Interpretative and other technical functions.—The work of the national
office in the technical tax fields was reorganized during the fiscal year
1953 by placing under the Assistant Commissioner (Technical) direct
responsibility for, and supervision of, the technical offices of the
national office. Thus, for the first time, responsibility was centered
in one office for all functions of the national office concerned with
rulings, regulations, and other technical services, involving all types
of taxes except alcohol and tobacco taxes.
One of the major accomplishments in the technical area during the
fiscal year 1953 was the virtual elimination of the backlog of unissued
regulations to conform to recent tax laws. The regulations were
brought to a practically current state by the issuance of 87 Treasury
decisions. Another improvement effected in this area was the speedup
of service on taxpayers' requests for rulings. By delegations of authority to division , directors and branch chiefs, taxpayers' requests
for rulings have been answered, on the average, in 28 days. Procer
ADMIjSnSTRATIVE REPORTS
133
dures for obtaining rulings have been revised and simplified to reduce
work and expense for both the taxpayer and the Government.
Emphasis has been placed on increased publication in the Internal
Revenue Bulletin of communications to field offices involving substantive tax laws, procedures affecting taxpayers' rights or duties, or
industry regulation.
Forms work affecting all taxes was brought under the centralized
control of a Forms Section, and more than 80 tax forms were reviewed
or revised, including the new quarterly excise tax return. Form 720.
Other improvements.—An intensified program of records management
has accelerated the retirement of records to Federal records centers,
while space studies made possible increased utilization of space and
improved work flow and operations. A program designed to codify
and reduce the number of informational and instructional directives
has moved nearer its overall objective of a loose-leaf Internal Revenue
Manual.
The training program throughout the Service was stepped up and
expanded, and a number of specialized training courses were developed.
A supervisory development program was organized and an executive
development program initiated.
In the area of audit and investigation, a new ^^single-package" audit
policy was adopted for examining, wherever practicable, all types of
Federal tax returns filed by a business taxpayer at the same time the
income tax examination is being made. This procedure is complemented by another for the more scientific and uniform selection of
tax returns for audit, developed as a result of studies of the data from
the audit control program of 1948. A procedure for informal conferences with taxpayers on contested issues is expected to result in
more settlements by the district directors with a corresponding decrease
in the number of cases referred to the Appellate Division.
Through the intensified review of nonsettled cases to assure that all
avenues of settlement have been adequately explored it is expected
that the number of cases petitioned to the Tax Court after consideration by the Appellate Division will be reduced materially. Steps
were taken also to reduce the nuinber of cases petitioned by taxpayers
directly to the Tax Court without Appellate Division consideration.
As a result of the past year's experience, many improvements in
Inspection Service methods have been determined possible, and
significant revisions are now being made with the objective of attaining
better results from inspections and more effective reports.
In the area of public information a policy was adopted for widening
the scope of tax information which properly could be made available
to the press and general public, and greater emphasis was placed upon
improving public understanding of Federal tax laws and the policies
and procedures as to their application. A program to instruct present
and future taxpayers of high-school age on the proper filing of individual income tax returns was launched during the year by the preparation of instruction kits which were mailed to approximately 30,000
secondary schools for use in their classrooms.
A voluntary advisory committee of tax practitioners has been
assembled from three outstanding professional organizations to aid
in the solution of problems that are unnecessarily harassing taxpayers.
134
1953 REPORT OF THE SECRETARY OF THE TREASURY
CoUections
,
Internal reveriue collections for the fiscal year 1953 totaled-'
$69,686,509,399, an iricrease of 7.2 percent over the total for the
preceding year, and the largest amount of internal revenue ever
collected during any year. Collections of all types of taxes were
substantially above those of last year.
Collections by tax sources for the fiscal years 1929-53 are shown in
table 7 in the tables section of this report. A comparison of collections^
from the principal sources of tax revenue for the fiscal years 1952 and
1953 follows:
1952
1953
Source
I n t h o u s a n d s of dollars
I n c o m e a n d profits taxes:
Corporation
Individual:
Withheld b y employer i
Other 1
_
-
T o t a l income a n d profits taxes
E m p l o y m e n t taxes:
Old-age i n s u r a n c e '
U n e m p l o y m e n t insurance .Carriers taves—old-age benefits
_
21, 594, 515
0.6^
17, 929 047
11, 345,060
21,134, 243
11, 403, 942
17.9'
.5
__
50, 741, 017
54,132, 700
6.7'
_
3, 684,025
259, 617
620, 622
3, 816, 262
271, 214
628, 969
6.5
4.5
1.3
4,464 264
4,716,435
5.6'
891, 284
2, 780, 925
1, 654, 911
90, 319
2,862, 788
495,917
2, 061, 230
7.0
9.1
5.7
6.3
21.9
4.3
5.9
9,804,112
10,837, 374
10.5
65,009,393
69,686, 509
7.2
...
.
_
-
-.
833,147
2, 549,088
1, 566,162
84, 996
-- r 2,348 943
>• 475 466
»• 1, 947 311
-_
T o t a l miscellaneous i n t e r n a l r e v e n u e
T o t a l collections 2. _
(-)
21, 466,910
-
T o t a l e m p l o y m e n t taxes
Miscellaneous internal r e v e n u e :
E s t a t e a n d gift taxes .
L i q u o r tax'es ^
Tobacco taxes
S t a m p taxes
M a n u f a c t u r e r s ' e x c i s e taxes
Retailers' excise taxes
.
Miscellaneous taxes 2 3
_.
-
Percent
increase,
or
decrease
_
NOTE.—These figures are based on gross collections rather than deposits; consequently, the totals are not
directly comparable with the internal revenue receipts as shown in the Treasury daily statement. For
further explanation of bases of figures, see page 322.
»• Revised.
1 Estimated, for purposes of comparison with earlier years. Beginning January 1951, collections of tax.
withheld are not separated as between income tax and old-age insurance. The collections of old-age insurance tax imposed on self-employment income for taxable years beginning on or after January 1951, arereported in combination with individual income tax other than tax withheld. The figm*es shown reflect
the estimated components of the combined amounts.
2 Excludes collections for credit to trust accounts.
3 Includes repealed taxes.
Workload
The Internal Revenue Service workload continued its steady climb
of the past few years as 60 million taxpayers filed,over 93 million tax
returns of all types during the fiscal year 1953, in addition to 239
million directly related information documents. The taxes reported
on these returns were assessed and accounting operations were performed in connection with the amounts paid in. I n addition, the
income tax liability was computed for nearly 12 mUlion taxpayers
filing returns on Form 1040A, and income tax refunds and credits were
scheduled for the more than 30 million individuals whose prepayments
exceeded their liabilities.
During 1953 a preliminary inspection of 68 million* returns was
made to select those to be examined. The inspection was made under
ADMINISTRATIVE REPORTS •
"
135
revised procedures designed to reduce the time spent in identifying
and segregating the returns which are believed to be most in need of
correction from the standpoint of noncompliance with internal revenue
laws. Of the returns considered, 3,486,977 were selected for more
thorough consideration by exaniining officers, including those returns
requiring investigation because of taxpayers' claims, offers in compromise, or other features which made examination mandatory. A
discussion of the audit activities appears under -^Enforcement activities" in this report.
In addition to the processing of returns and related information
documents, the Internal Revenue Service workload includes the disposition of claims for adjustments based on the various ^^carry-back"
provisions of the Internal Revenue Code. Under the provisions of
Section 722, which allows relief from the excess profits tax for corporations under certain circumstances, there had been filed as of the close
of the year a cumulative total for World War I I excess profits tax
years of 54,665 applications for excess profits tax reductions amounting to more than $6.5 bUlion. There were 3,515 such claims, totaling
$2 billion, still pending on June 30, 1953, but only 100 applications on
which examination or conference work was not completed. The
remaining 3,415 cases were awaiting final review, were pending before
the Tax Court, or were awaiting some administrative action. ^'Carryback" allowances of approximately $344 million were made during
the year under the ''quick refund" provisions of the Tax Adjustment
Act of 1945 (26 U. S. C. 124k).
Enforcement activities
Audits and investigations of all classes of retmms, including fraud
and racketeer investigations, numbered 2,946,786 during the fiscal
year 1953. Of this total, 1,402,035 returns were found to be correct
as filed or to have overstated the tax. Additional taxes were found to
be due on 1,544,751 returns, primarUy as a result of taxpayer errors in
reporting income, claiming exemptions or deductions, or computing
the tax. The additional assessments of tax, penalties, and interest
made as a result of audits and investigations totaled $1,555,961,612.
During the fiscal year 1953, collections on warrants for distraint
amounted to $505,591,808. This amount represents primarily collections of undisputed amounts of original tax assessed on retm*ns as
filed, which taxpayers have failed to pay when due and on which it
was necessary to issue warrants for distraint to enforce collection.
Occasionally, it also becomes necessary to coUect additional assessments by distraint warrant, but these cases represent only a small
portion of the total warrant collections.
Total fraud investigations completed during 1953 numbered
3,296, including those racketeer cases in which fraud was suspected.
Prosecution was recommended in 1,276 cases, whUe penalties of a
civil nature without prosecution were recommended in 1,237 cases.
During the year indictments were returned against 1,259 defendants.
Indictments were refused in cases involving 27 individuals. In the
cases reaching trial stage, 884 defendants were convicted or entered
pleas of guilty or nolo contendere.
The eft'ectiveness of enforcement efforts is indicated further by the
increasing number of persons convicted on tax evasion charges or,
136
1953 REPORT OF THE SECRETARY OF THE TREASURY
entering pleas of guUty or nolo contendere. The following table
presents the record of convictions, including pleas of guilty or nolo
contendere, for the years 1945 through 1953, in cases involving all
classes of internal revenue taxes except alcohol or tobacco taxes.
Individuals
convicted
Fiscal year
1945
1946
1947
1948 . 1949
-
.
65
149
182
315
346
---
Individuals
convicted
Fiscal year
385
324
563
. 884
1950
1951
1952
1953
The following table shows the number of returns examined, number of fraud investigations completed, amount of additional tax assessments, and amount collected on warrants for distraint during the
fiscal years 1948 through 1953.
Returns examined
Fiscal year
Fraud
investigations
Additional
assessments
Collections
of tax, inter- on warrants
est, and pen- for distraint
alty
In thousands of dollars
19481949
1950
1951 . . .
1952
1953
-
...
...
2,971,113
3,073,301
3, 545,169
4,382, 564
4, 054, 526
2, 946.786
3,800
2,955
3,112
3,195
3.872
3,296
1,897,015
1,891, 679
1, 747, 592
1,856, 603
1,840,162
1, 555, 962
280,184
346, 509
368, 385
376, 506
455, 752
505, 692
The decrease in number of returns examined stems primarily from
a decrease in manpower available for the examination of returns.
Less manpower was available during 1953 tban in 1952, first, because
of a decrease in appropriations as between the two years, and secondly, because of the assignment of. a larger number of enforcement
officers to assist taxpayers in the filing of their returns during February and March of 1953 than during the previous filing period. Moreover, there was included in the 1952 and prior figures the number of
returns on which mathematical verifications were performed, whereas these verifications were included in the 1953 figures only to a limited extent. Since these verifications were not uniformly reported in
all years, there is at this time an undetermined lack of comparability
in the figures. To the extent possible, the next annual report will
contain adjusted figures. The decrease iri additional assessments was
due, first, to the decrease in the number of returns examined and,
secondly, to the diminishing effect of the World War I I excess profits
tax assessments during 1953 as compared with earlier years. As between 1952 and 1953 the World War I I excess profits tax additional
assessments decreased by $45 million, which accounted for close to
16 percent of the total dechne in additional assessments.
Violations of internal revenue liquor laws were confined largely to
regions of low income where the demand for cheap spirits was high
ADMINISTRATIVE
137
REPORTS
and to local option areas where taxpaid liquor was not readily available. During 1953, there were 10,699 illicit stills seized, together with
6,151,100 gallons of mash, 172,951 gallons of illicit liquors, and 2,333
automobiles and trucks. There were 9,370 persons arrested for violations of the internal revenue liquor laws; indictments were obtained
against 8,250 persons; and 5,350 were convicted. The following
table shows for the years 1948 through 1953 the number of stills and
gallons of mash seized and the number of arrests made.
Fiscal year
1948
1949..
1950
Stills
seized
Mash seized
(wine gallons)
6,757
8,008
10,030
2. 715,800
3,661,400
4,892.600
Arrests
made
7,640
8,915
10,236
Fiscal year
1951
1952
1953
Stills
seized
10,177
10, 269
10, 699
Mash seized
(wine gallons)
6,545,400
5,700, 600
6,151,100
Arrests
made
10,384
9,851
9,370
Refunds
Refunds of internal revenue taxes and the interest thereon, as required by law, are paid out of an appropriation separate from that
covering the Internal Revenue Service administrative expenses. The
total amount of thesepayments for the fiscal year 1953 was $3,204,663,235
as compared with $2,333,544,315 '' in the preceding year. The increase
was due principally to a rise in the amount of individual income tax
overprepayments .refunded.
Interest pa3^ments on refunds (included in the above totals) decreased from $75,350,923 in 1952 to $74,363,186 in 1953.
Settlement of disputes
In a large proportion of the tax disputes arising from the Internal
Revenue Service investigative operations, settlements are reached
through conferences with taxpayers, thereby avoiding expensive and
time-consuming litigation. Effective with the reorganization of each
internal revenue district, the conference work formerly conducted in
revenue agents' offices was transferred to the Appellate Division where
the appellate functions of the Internal Revenue Service are now centered. The total number of protested cases disposed of by the Appellate Division dming the year, including cases received both before and
after reorganization, was 11,674, of which 9,675 cases were settled
and 1,999 cases were appealed to the Tax Court. As a result of further
hearings conducted in cases pending before the Tax Court (including
cases not previously considered by the AppeUate Division), settlement
by stipulation was effected in 4,229 cases out of 5,763 cases disposed
of, and the balance consisted of 520 cases closed by dismissal or default
and 1,014 cases tried on merits before the Tax Court.
Personnel
The employees on Internal Revenue Service rolls at the close of
the year numbered 53,463, consisting of 3,834 employees in the national office and 49,629 in the regional and district offices. At the
close of the preceding year, the number of persons employed totaled
55,371, comprising 3,842 national office employees and 51,529 regional
and district office employees.
»• Revised.
138
1953 REPORT OF THE SECRETARY OF THE TREASURY
Changes during the year in the number of employees in the various
branches of the Internal Revenue Service are shown in the following
table.
N u m b e r o n pajToll as
of J u n e 30—
Branch of service
1952
National office
Regional and district oflices:
Enforcement personnel:
Collection oflicers
Oflice auditors
Returns examiners..
Revenue agents 1
.
.
_
Special agents (tax fraud)._.
._
Alcohol tax inspectors .
Alcohol tax investigators
-.. Storekeeper-gaugers.
Supervisory
T o t a l enforcp.mp.nt personnel
O t h e r personnel:
Legal
Other technical
Stenographers a n d t y p i s t s
Clerical (excluding t e m p o r a r y )
Messengers a n d laborers
T e m p o r a r y employees
'.
-.
_-•_
3,834
10, 221
. 3,278
866
7,768
1,186
526
857
1,453
357
9,037
3,064
1,002
7,617
1,200
581
832
1,294
614
-1,184
* -214
136
— 141
14
55
-25
-159
157
26, 502
25,141
-1,361
..
232
2,412
6,578
14, 642
183
980
271
2,786
6, 453
13, 791
178
1,009
39
374
-125
-851
-5
29
^^-
_
-
_.
_
__
1953
3,842
-
-
Increase,
or decrease (—)
__
_
.
-8
25, 027
24,488
-539
T o t a l regional a n d district offices ._
51, 529
49, 629
-1,900
Grand total.
55, 371
53, 463
— 1,908
T o t a l , other t h a n enforcement
1 Includes excise tax agents.
Cost of administration
The entire cost of the Internal Revenue Service operations during
the year, including all items of expense except amounts refunded to
taxpayers, was $268,590,806. The amount avaUable for administrative expenses was $270 mUlion; thus, there was an unobligated balance
of $1,409,194. The cost of coUecting $69.7 biUions during the year
was 38.5 cents per $100 of revenue, compared with 41.8 cents per $100
in 1952 when collections were considerably lower.
Data on the annual cost of administration, although of interest and
value for certain purposes, cannot be relied upon either as a guide to
the proper scale of administrative activity or as a measure of relative
efficiency of operation from year to year. An annual ratio of cost to
collections is determined by many factors, most of which have no
relationship to these objectives. To illustrate, the higher the level
of tax rates and the more numerous the levies that are inherently
economical to collect, the lower will be the average cost ratio. The
prevailing level of salaries paid to Internal Revenue Service personnel
and the volume of essential services performed for taxpayers are other
examples of these determinative factors.
Office of International Finance
The Office of International Finance assists the officers of the Department in the formulation and execution of policies and programs in
international financial and monetary matters. The Director of the
ADMINISTRATIVE REPORTS
139
Office is assisted by advisers on financial policy and by a staff organized
into divisions corresponding to geographic areas or to the functional
^activities of the Office. These divisions are: National Advisory
Council Secretariat; Stabilization Fund, Gold and Silver Division;
International Statistics Division; Commercial Policy and United
Nations Division; European Division; British Commonwealth and
Middle East Division; Latin American Division; and Far Eastern
Division. The Office also maintains Treasury representatives in
several foreign countries.
By direction of the Secretary, the Office of International Finance
is responsible for the Treasury's activities in matters of international
financial and monetary policy, including international monetary and
exchange problems, and gold, and silver policy; the Bretton Woods
Agreements Act and the operations of the International Monetary
Fund and the International Bank for Reconstruction and Developm e n t ; foreign lending and assistance; the North Atlantic Treaty
Organization; the activities of the National Advisory Council on
International Monetary and Financial Problems; the Anglo-American
Financial Agreement; the United States Exchange Stabilization
Fund; and the Foreign Assets ControL
The Office acts for the Treasury on the financial aspects of international treaties, agreements, and organizations in which the United
States participates, and it takes part in negotiations with foreign
governments with regard to matters included within its responsibilities. I t assists the Secretary on the international financial aspects
•of problems arising in connection with his responsibilities under the
Tariff Act. The Office also represents the Treasury in the work of the
subordinate organs of the National Advisory Council on International
Monetary and Financial Problems, of which the Secretary of the
Treasury is chairman.
The Office of International Finance advises Treasury officials and
other departments and agencies of the Government concerning ex/change rates and other financial problems encountered in operations
involving foreign currencies. In particular, it advises the State
Department and the Department of Defense on financial matters
related to their normal operations in foreign countries and on the
special financial problems arising from defense preparation and
military operations. The Treasury representatives in foreign countries act as financial advisers to the diplomatic missions and to the
missions of the Mutual Security Agency ^ In conjunction with its
-other activities, the Office studies the financial policies of foreign
countries, exchange rates, balances of payments, the fiow of capital,
and other related problems.
The Division of Foreign Assets Control administers the Foreign
Assets Control Regulations issued under Section 5 (b) of the Trading
With the Enemy Act. These regulations block all property in the
United States in which any Communist Chinese or North Korean
interest exists and prohibit all trade or other financial transactions
with those countries. The Control carries on licensing activities in
connection with transactions otherwise prohibited, takes action to
enforce the regulations, and has taken a census of Chinese and Korean
assets located in the United States. In addition, the Control admin1 Superseded by the Foreign Operations Administration on August 1,1953, in accordance with Reorganization Plan No. 7 of 1953 and Executive Order 10476.
140
1953 REPORT OF THE SECRETARY OF THE TREASURY
isters regulations issued by the Secretary on June 29, 1953, which
prohibit persons in the United States from purchasing, selling, or
arranging the purchase or sale of strategic commodities outside the
United States for ultimate shipment to the Soviet bloc.
Legal Division
The General Counsel is by statute the chief law officer of the
Treasury Department, responsible to the Secretary for the legal
advice upon which he acts and for all legal work in the Department.
I n carrying out this responsibility the General Counsel is assisted
by the Legal Division, over which he has supervision. The Legal
Division is made up of the General Counsel's immediate staff in the
Office of the General Counsel, which includes the Legal Advisory
Staff' \ and the offices of the Chief Counsels in the major bureaus.
The activities of the General Counsel as chief legal officer for the
Secretary and of his staff include consideration of legal problems
relating to the broadest aspects of management of the public debt,
the administration of the internal revenue laws, international cooperation in the monetary and financial fields, and similar matters
with which the Secretary is concerned as chief financial officer of the
Government. Other activities of the Legal Division embrace legal
matters arising in connection with the duties and functions of every
branch of the Department, the scope of which is described in the
separate administrative report of each organization.
A major responsibility of the General Counsel is the handling and
coordination of legislative work in the Department, including appearances before congressional committees, drafting proposed legislation,,
and preparing reports on legislative proposals. Important work in
the fiscal year 1953 included participation with other personnel of the
Treasury Department and the vStaft' of the Joint Congressional Committee on Internal Revenue Taxation in a program designed ultimately to overhaul thoroughly the internal revenue laws, and the
preparation and presentation of the Customs Simplification Act of
1953.
In the field of international finance, the Legal Division assisted in
formulating financial and economic aspects of the programs relating to
foreign assistance and technical cooperation, and served as counsel to
the National Advisory Council on International Monetary and
Financial Problems. I t also dealt with problems arising in connection
with international gold and stabilization operations of the Department,
and performed legal services in connection with the administration of
the Foreign Assets Control necessitated by the Korean conflict. I t
also participated in the negotiation of consular conventions, and
treaties for the avoidance of international double taxation, with the
countries of Australia, Belgium, the United Kingdom, France, Italy,
Austria, Sweden, Japan, and Germany.
1 Established by Treasury Department Order No. 170-2 to replace and supersede the Office of Tax Legislative Counsel.
ADMINISTRATIVE REPORTS
141
Bureau of the Mint ^
The two major functions of the Bureau of the Mint are the manufacture of coins and physical custody of the United States monetary
stocks of gold and silver, including their purchase and sale.
All United States coins are manufactured by the Bureau of the Mint.
Foreign coins are also manufactured at cost for other governments
without minting facilities, when orders can be met without impeding
the required coinage of the United States.
An important function and also accompaniment to all work engaged
in by the Bureau of the Mint is the continuous safeguarding and
protection of values which total many billions of dollars. Custody of
gold and silver involves a number of essential operations. Included
are assaying, melting, refining, other treatment, and movement of the
various forms of metals received; storage, and such processing and
handling as are required when gold and silver are sold or otherwise
withdrawn.
Approximately 1,000 employees are engaged in these and various
other related functions of the Bureau of the Mint in eight locations,
as follows: Coinage mints in Philadelphia, Pa., San Francisco, Calif.,
and Denver, Colo.; assay offices in New York, N. Y., and Seattle,
Wash.; a gold bullion depository in Fort Knox, Ky.; a silver bullion
depository in West Point, N. Y., which operates as an adjunct of the
New York Assay Office; and the Office of the Director of the Mint in
Washington, D. C. The Washington office establishes general policies, directs and coordinates operations of the field institutions, and
maintains requisite controls.
Coinage
The number of coins manufactured during the fiscal year 1953
totaled 1,810 million pieces consisting of 1,620 million United States
coins with a face value of nearly $94 million, and 191 million foreign
coins. This was an increase of 14 percent over the previous fiscal
year's production of 1,582 mUlion pieces consisting of 1,551 million
United States coins and 31 million foreign coins. Coins were manufactured for the following countries.
Number
(In millions)
Country
Cuba
El Salvador
Ethiopia
Haiti
Honduras
Total
_
.„:
...
... _
_
.
_
• .
.
71.0
12.7
100.0
4.5
2.5
190.7
Over 7,400 avoirdupois tons of metals including silver, copper,
zinc, nickel, and tin were required for the 1953 coinage, of which
approximately 6,500 tons were used in United States coins and 900
tons in foreign coins.
The demand for coins in the United States continued at a high
level throughout the year, as in the past several years. Shipments
1 More detailed information concerning the Bureau of the Mint is contained in the annual report of the
Director of the Mint.
142
195 3 REPORT OF THE SECRETARY OF THE TREASURY
of the six denominations totaled 1,732 million pieces during 1953,
exceeding the previous year's shipments by 26 percent. Minor coinswere in greatest demand, and the 1-cent denomination comprised 71
percent of total shipments in 1953. Scarce nickel supplies in this
fiscal year, as in 1952, limited production of 5-cent pieces and, therefore, restricted the number available for circulation. Details of
shipments are shown in the following statement.
Shipments of United States coins for circulation hy the Bureau of ihe Mint duringihe fiscal year 1953
N u m b e r of
coins s h i p p e d
Denomination
Silver dollars
Half dollars
Q " a r t e r dollars.
Dimes
.
6-cent pieces
1-cent pieces
Total
".
.
-
. . . .
__.
.
.
_
.
F a c e value
Gross
weight in
short t o n s
9, 783,079
41,191, 799
95, 584, 257
237, 227,442
112, 647, 021
1, 235, 582, 022
$9, 783, 079.00
20, 595, 899. 50
23. 896, 064. 25
23, 722, 744. 20
5, 632, 351. 05
12, 355, 820. 22
288568"
659664
621
4, 2.36^
1,732,015,620
95, 985, 958. 22
7,026'
The stock of coins in the United States, including coins held in the
Treasury, in banks, and in circulation, is estimated at over $2 billion
asof June 30, 1953.
Gold
Gold transactions at the mint institutions during the fiscal year
1953 totaled 34 million fine ounces ($1,188 million in value), including^
receipts and withdrawals of gold for purposes authorized or permitted
by law. Receipts amounted to 4.3 million fine ounces ($152 million
in value), of which 1.5 million fine ounces ($51 million in value) werefrom newly mined domestic production. Withdrawals amounted
to 30 million fine ounces ($1,036 million in value) including 2.1 mUlion
fine ounces ($73 million in value) issued for domestic industrial,
professional, or artistic purposes. Other withdrawals were principally
in connection with the United States' settlement of international
balances.
Total gold holdings at the mint institutions at the beginning of
the fiscal year 1953 amounted to 667 million fine ounces (or 22,870'
short tons) valued at $23 billion, and at the close of the year 642
million fine ounces (or 22,004 short tons) valued at $22 billion, a netdecrease in holdings during the year of 25 million fine ounces valued
at $884 mUlion.
Silver
Silver transactions at the mint institutions totaled 302 millionfine ounces during the fiscal year 1953, effecting a net increase in
bullion holdings of 58 million fine ounces. A total of 56 million fineounces of silver was manufactured into United States subsidiary >
sUver coins, 1.1 million fine ounces of which were provided from uncurrent coins unfit for further circulation which had been returned to
the mints and melted during the year. The mints and assay offices
received 36 mUlion fine ounces of silver from newly mined domestic
production during the year, and 26 miUion fine ounces were monetized as security for silver certfficates. A total of 75 million fine
143
ADMINISTRATIVE REPORTS
ounces of Treasury silver returned from defense use by other agencies
of the Federal Government was reprocessed into regular mint bars
durhig the year. No sales of silver were made during the year under
the act of July 31, 1946 (60 Stat. 750), and none has been leased under
this legislation since its enactment. Year-end holdings of silver
bullion, amounted to 1,339 million in fine ounces valued at $1,685
million.
Revenues deposited into the general fund of the Treasury by the
Bureau of the Mint during the fiscal year 1953 totaled $56 million of
which $55.3 million was composed of seigniorage, divided as follows:
Seigniorage on subsidiary silver coinage, $32.5 million; seigniorage on
minor coinage, $12.8 mUlion; and seigniorage on sUver bullion, the
difference between cost value and monetary value, $10.0 million.
inventory
A final settlement of accounts, with physical inventory of all bullion, coin, currency, and other values is made annually during the
month of June in the coinage mints and assay offices. Special settlements and examinations are made also as required.
On January 9, 1953, a committee" was appointed jointly by the outgoing Secretary of the Treasury and the Secretary-designate of the
incoming administration to develop plans for verifying and transferring the Government's vast stock of gold, silver, and other assets in
custody of the Treasur}^ to officials of the incoming, administration.
This committee, which was comprised of four outstanding members
of the banking profession, made recommendations which they deemed
necessary to provide complete assurance as to the existence of Treasury
assets and the proper statement thereof in the Treasury's records.
The monetary assets of the mint were verified in accordance with the
procedures recommended by the committee, and all holdings were
found to be as represented in the mint's accounts. An account of this
audit appears on page 27.
Management improvement
The management improvement program of the Bureau of the Mint
was continued on an active basis throughout the fiscal year 1953. A
number of innovations, resulting in reduced operating costs, were
adopted during the year.
New improvements and mechanisms devised during the past year
for more efficient production of coins, together with extension and
perfection of projects adopted in previous years, resulted in further
reductions in coinage unit costs. Although salary costs have increased
approximately 75 percent during the past several years, coinage costs
are actually 25 percent lower today than they were several years
ago. Coinage unit costs for the fiscal years 1946, 1952, and 1953 are
listed, as follows:
^
Coinage production costs per 1,000 pieces, hy denomination
Fiscal year
1946
1952
1953
-
-
. . . .
1-cent
$1.59
1.10
1.03
5-cent
$2.81
2.99
2.72
10-cent'
$2.12
1.71
1.54
25-cent
$5.10
3.49
3.23
50-cent
$8.25
6.79
5.99-
144
195 3 REPORT OF THE SECRETARY OF THE TREASURY
r Representative accomplishments, with savings on an annual basis
amounting to $84,000, and other program actions are described in the
following paragraphs.
An especially designed folding conveyor which can be moved into
small vault compartments was successfully utilized at the West Point
Depository during the year to stack 75-pound silver bars. This
resulted in annual savings of $14,000.
Present coin-blank reviewing operations have been extensively
mechanized by overhead cranes which feed blanks to reviewing belts,
and remove inspected material in 500-pound lots in place of 50-pound
lots formerly handled manually. New vibratory feeders assure a
constant flow of material across the reviewing belt. These improvements have not only reduced operating costs but have eliminated
possible injuries to employees from constantly lifting and feeding
heavy quantities of materials. Annual savings are estimated at
$12,000.
Handling of coin blanks from blanking presses by using larger containers with a capacity of about 350 pounds and handled with overhead cranes to empty the container permits the operator to spend a
much greater portion of his time feeding strips into the press, and
relieves him of the physical strain of constantly lifting 50-pound boxes
of material. I t is estimated that resulting annual savings will amount
to $11,000.
Coin counting machines at Philadelphia have been rearranged so
that one counting machine is located directly over a second machine,
and the coins flow automatically from the first machine, after counting,
into the second one where they are counted again. Automatic vibratory feeders provide a continuous flow of coins to the machines. The
adciitional output per employee and the increased accuracy of counting
operations permit the elimination of weighing silver coins before
sacking. I t is estimated that annual savings will amount to $16,000.
Milling machines used to form a slightly upset edge on coinage
blanks prior to stamping operations have been equipped with dual
disc feeds. This innovation doubles the output of each machine.
Annual savings are estimated at $4,000.
Installation of automatic feeders on weighing machines at Denver
for weighing individual coin blanks permits semiautomatic operation of
such equipment with consequent reduction in operating costs. These
feeders were previously used for 25-cent pieces only, but additional
feeding equipment has now been made which utilizes automatic
feeders for 50-cent pieces also. Savings are estimated to amount to
$4,000 annually.
New streamlined procedures have been effected in counting and
reviewing uncurrent coins, and sorting out counterfeit pieces, foreign
coins, slugs, etc., thereby eliminating much of the tedious labor
formerly expended; and spot checking and test counting veriflcation
methods have been substituted. Wartime steel pennies and silver
nickels are picked out mechanically by unique mechanisms constructed
for that purpose. Annual savings are estimated at $11,000.
;ADMESnSTRATIVE REPORTS)
:
145;
Coining presses at San Francisco have been equipped with large
containers which hold a sufficient quantity of blanks to operate a
press several hours. Overhead cranes'are used to fill the containers,
eliminating hand feeding, and each worker now operates additional
presses; Personnel changes, resulting in more effective utUization of
supervisory and die setting employees, have also increased press output. Savings are estimated to total $12,000 annually.
A formal internal audit program was established for the Mint Service
during the year, and its broad policies and scope were outlined in a
special mint accounting procedures letter issued for that purpose.
This audit program, functioning as a part of the mint's general system
of internal control, wUl provide manageinent with the auditor's findings on the effectiveness of financial control throughout the Mint Service; objective views as to the manner in which financial policies and
operating procedures have been carried out; and recommendations for
improvements in areas with which the audit may be concerned. A
special management-audit survey of the Denver Mint was completedi
Bureau of Narcotics^
The Bureau of Narcotics administers a program designed to deal
with the control of sources of the illicit supply of drugs on international,national, and local levels.
Nationally, the Bureau is charged with the investigation, detection,
and prevention of violations of the Federal narcotic and marihuana
laws and of the Opium Poppy Control Act of 1942, and related statutes.
The scope of the Bureau's operations is enlarging graduaUy as additional drugs are made subject to these laws. Opium and coca leaves
and their derivatives have been under national control since 1915;
marihuana has been under control since 1937; isonipecaine was brought
under control in 1944; and under the act of March 8, 1946 (26 U. S. C.
3228 (f)), 16 recently developed synthetic narcotics have been brought
under control through findings by the Secretary of the Treasury, proclaimed by the President, that the drugs possessed addiction liability
similar to morphine. Of the last, five were included during 1953.
Internationally, opium,- coca leaves, marihuana, and their more
important derivatives have been under control by reason of the Opium
Conventions of 1912, 1925, and 1931. Under the International
Protocol of November. 19, 1948, two additional opium derivatives,
isonipecaine, and twelve synthetic drugs were found to have addicting
qualities similar to morphine or cocaine and have been brought under
international control by a procedure similar to that provided in our
national legislation. An agreement to limit the production of opium
to world medical and scientific needs was signed at the United Nations
on June 23, 1953, after forty-four years of effort on the part of the
United States to accomplish such an agreement. If the Protocol
J Further information concerning the Bureau of Narcotics is available in the separate report of the Commissioner of Narcotics.
273013—54
11
146
1953 REPORT OF THE SECRETARY OF THE TREASURY
is ratified by a sufficient number of governments and beconies effective
there should be a large reduction in the amount of opium available for
the illicit traffic, particularly if production in Turkey and Iran is
controlled.
In the United States important and effective aid in discouraging the
illicit traffic in narcotics and marihuana continues to be afforded by
the act approved November 2, 1951 (65 Stat. 767), which provided
for mandatory minimum penalties for violation of certain narcotic
laws, particularly for second and third offenders.
The Bureau directs its principal activities toward the suppression
of the illicit traffic in narcotic drugs and marihuana and the control
of the legitiniate manuf ac ture and distribution of narcotics through the
customary channels of trade. I t issues permits for import of the cruder
narcotic drugs and for export and in-transit movements of narcotic
drugs and preparations. The Bureau supervises the manufacture and
distribution of narcotic substances within the country and has au-^
thority to issue licenses for the production of opium poppies to meetthe medical needs of the country if and when such production should
become in the public interest. Cooperation is given to States in local
narcotic legislation and enf orcement and td the Department of State
in the discharge of the international obligations of the United States
concerning the abuse of narcotic drugs and marihuana.
^ During the fiscal year 1953, the total quantity of narcotic drugs
seized in illicit traffic within the United States amounted to 4,383
ounces, in comparison with 3,330 ounces seized in 1952. Seizures of
marihuana amounted to 939 pounds bulk, and 16,702 cigarettes, as
compared with 1,064 pounds bulk and 16,393 cigarettes in 1952.
Continued progress was made during the year in driving out soirie
of the bigger racketeers in illicit narcotics. Many principal dealers
in illicit drugs were caught and convicted and heavy prison sentences
were imposed under the act of November 2, 1951.
Thefts of narcotics from persons authorized to handle the drugs
increased slightly in number during 1953 and the quantity stolen was
2,178 ounces as compared with 1,553 ounces in 1952.
During the fiscal year there were approximately 400,000 persons
registered with directors of internal revenue under the Federal narcotic^
and marihuana laws to engage in legitimate narcotic and marihuana,
activities.
The table foUowing shows for the fiscal year the nuinber of violations .of the narcotic and marihuana laws by persons registered to
engage in legitimate narcotic and marihuana activities and by persons
who have not qualified by registration to engage in such activities, as
reported by Federal narcotic enforcement officers. .
147
ADMINISTRATIVE REPORTS
Number of violations of the narcotic and marihuana laws reported during the fiscal
year 1953 wiih their dispositions and penalties
Marihuana laws,
Narcotic laws
Nonregistered persons
Registered persons
Federal
Court
Pending July 1,1952
Reported during 1953:
Federal»
Joint»
Total to be disposed of..
Oonvicted:
Federal
Joint
Acquitted:
Federal
Joint
Dropped:
Federal
Joint
Compromised :2
Federal . .
Joint
_
Total disposed of
Pending June 30,1953
Total..-.
1,296
487
1,995
492
750
466
466
3,783
1,703
. 7
1
•
Total
1,032
216
349
132
481
262
79
60
36
8
19
8
48
29
20
26
5
8
129
80
20
27
412
86
2
1
40
1
.
Fines imposed:
Federal
Joint
State
Court
244
17
2
1
161
9
:
Federal
Court
State
Court
205
39
2
Sentences imposed:
Federal
Joint
Federal
• Court
state
Court
Nonregistered persons
266
2,376
1,186
200
1,408
517
Yrs. Mos. Yrs. Mos. Yrs. Mos. Yrs. Mos. Yrs. Mos.
76
1
6 . . 3,034
1
668
5 1,3.30 -.
4 ..
1 . . . 716 7
227
1
795
1
80
1
7
-.
3,750
8
785
6
2,125
1
Yrs. Mos.
171
8
91 262
8
$21,426
$200
$139,537
26,189
$16,640
3,139
$34,053
16,632
$9,855
1,775
21,425
200
164, 726
18,779
49,685
11,630
J Federal cases are made by Federal officers working independently while joint cases are made by Federal
and State officers working in cooperation.
2 Represents 41 cases which were compromised in the sum of $12,200.
In foreign countries, investigation, surveillance, and negotiation
are undertaken to restrict the amount of narcotic drugs entering this
country. Through cooperation with the French and Italian Governments, agents of the Bureau of Narcotics have reduced the quantities
of heroin and opium avaUable to the illicit trade in the United States.
The Bureau is continuously on guard against the large supplies of
opium and heroin which are available in Communist China.
The importation, manufacture, and distribution of opium and its
derivatives are subjected to a system of quotas and allocations designed to secure their proper distribution for medical needs. Additional quantities of opium were imported during the year. Coca leaf
imports were sufficient both for medicinal purposes and for the manufacture of nonnarcotic flavoring extracts.
The quantity of narcotic drugs exported in 1953 was considerably
lower than in 1952, but the export total is not signfficant in comparison with the quantity used domestically. The manufacture of opium
derivatives continued high, principally because of the high medical
consumption of codeine and papaverine.
14S
1953 REPORT OF THE' SECRETARY OF THE TREASURY
National defense operations also have increased the responsibilities
of the Bureau of Narcotics. The mobilization of large numbers of
troops has resulted in many special requests from the military forces
for aid by the Bureau of Narcotics in dealing with the traffic in narcotics in and near military installations; in problems incidental to
the drafting of addicts; and in cases in which narcotic addiction has
been given falsely as a reason to escape the draft.
^ Substantial progress was made by this Bureau during the fiscal
year 1953 in the field of management improvement. The Bureau's
procedures for handling and accounting for stockpile and surplus
property narcotics have been completely revised and a new and more
secure workroom has been provided for the. Drugs Disposal Committee. Revised manuals have been issued for the guidance of field
officers and more authority has been delegated to such officers. In
addition, further improvemients have been made in administrative
and advance fund accounting procedures, as well as in the methods
of disposing of surplus automobiles.
United States Coast Guard
General
The Coast Guard is responsible for a wide variety of duties which
are defined in Section 2, Title 14 of the United States Code as follows:
*^The Coast Guard shall enforce or assist in the enforcement of
all applicable Federal laws upon the high seas and waters subject to
the jurisdiction of the United States; shall administer laws and
promulgate and enforce regulations for the promotion of safety of life
and property on the high seas and waters subject to the jurisdiction
of the United States covering all matters not specifically delegated by
law to some other executive department; shall develop, establish,
maintain, and operate, with due regard to the requirements of national
defense, aids to maritime navigation, ice-breaking facilities, and
rescue facilities for the promotion of safety on and over the high seas
and waters subject to the jurisdiction of the United States; and shall
maintain a state of readiness to function as a specialized service in the
Navy in time of war."
The primary purpose of most of these duties is to prevent avoidable
loss of life and property due to illegal or unsafe practices. However,
in actual practice, the maintenance of safety and order in maritime
navigation is not limited to the strict enforcement of laws but also
encompasses a program of education among ship operators and boatmen, and the enlistment of their cooperation and self-regulation in the
prevention of marine casualties. This latter approach has tended to
reduce violations of the laws.
Law enforcement
The port security program, conducted under Executive Order 10173
which invoked the provisions of the Magnuson Act and charged the
Coast Guard with the protection of vessels and waterfront facilities,
has been limited to: (a) Protecting specified categories of vessels and
waterfront facilities in major port areas of the United States; (b) controlling the entry of certain vessels into major port areas; (c) screening'
of merchant seamen sailing on United States yessels and of waterfront
workers; and (d) supervising the losidihg of explosives and other
hazardous cargoes, and the issuing of permits therefor.
ADMINISTRATIVE; REPORTS
. .•:•.
149
The constitutionality of the security screening program is currently
being litigated in two major cases. A district court in San Francisco,
Calif., although upholding most of the operation of the program,
recently held that a limited injunction will be issued because the program is contrary to due process in not affording seamen adequate
notice of the charges against them. In an earlier case, involving three
criminal prosecutions for violations of the port security regulations, a
district court in Seattle, Wash., held the screening procedures to be
contrary to due process because of inadequate notice and hearing.
This decision is on appeal to the Ninth Circuit Court of Appeals.
During the year, 47,750 merchant mariners' documents bearing
evidence of security clearance were issued to individuals and 363
security appeal hearings were granted to those classed as poor security
risks.
= In the category of longshoremen, warehousemen, pilots;, and other
waterfront workers, 93,926 persons were screened, 93,535 port security
cards were issued, and 375 hearings were granted upon appeal by
persons who had been fourid to be poor security risks.
' The following statistics for the year refiect the volume of enforcement activities but not preventive actions taken by the Coast Guard.
Vessels and motorboats boarded._^__
80, 068
Reports of violations of the Motorboat Act, 1940 (46 U.S.C. 526)_._
.4, 251
.Reports of violations of the Oil Pollution Act, 1924 (33 U.S.C. 431)._
150
Reports of violations of Port Security Regulations
6, 219
Permits issued to load or discharge explosives
1, 237
Total tonnage of explosives covered by above permits
1, 921, 578
Explosive loadings supervised
I, 910
Inspections of other hazardous cargoes
8, 490
Regattas patrolled
;
991
The Coast Guard also assisted other
primary responsibility for the enforcement
(33 U. S. C. 431) anchorage regulations,
revenue, customs, immigration, quarantine,
protection of wUdlife and the fisheries.
Federal agencies having
of the Oil Pollution Act,
laws relating to internal
and the conservation and
Assistance operations
The Coast Guard operates rescue facilities and facilities for the
promotion of marine safety consisting of surface craft, aircraft, lifeboat stations, bases and radio stations, together with operation and
communications centers (rescue coordination centers), in its several
districts within the continental United States, in Alaska, Puerto
Rico, and Hawaii, and at selected forward naval bases. Assistance
rendered during the fiscal year' 1953 is summarized in the following
statistics.
Number of assistance calls responded to ^
Number of instances of major assistance ^
Number of instances of minor assistance
^_Value of vessels and aircraft assisted (including cargo)3...
Lives saved or persons rescued from peril
Vessels refloated........
_.
•Disabled yessels towed to port
18, 443
2, 528
II, 122
.__ $933, 269, 930
_.___-^._
5, 213
1, 247
.
7, 525
1 The difference in the number of calls responded to and the number of instances of assistance rendered
represents those cases in which the Coast Guard responded but in which assistance was given by some other
source or was no longer needed or possible.
,
-^
8 The term "major assistance" as used here means those rescue incidents wherein immediate danger to
the person or craft was involved and which, without Coast Guard assistance, probably would have resulted
in death, serious injury to persons, aircraft, or vessels; shipwreck; or great financial loss from damage to the
craft.
3 Increased value of vessels and aircraft assisted (including cargo) in the present flscal year over previous
years is due in part to an increased number of incidents and in part to improvement in reporting procedure.
150
1953 REPORT OF THE SECRETARY OF :THE TREASURY
Assistance rendered by the Coast Guard during the year is exemplified by the following cases:
On July 9, 1952, the yacht Sandpiper, 90 miles east of Gloucester,
Mass., reported a crew member was hemorrhaging badly. A Coast
Guard seaplane from Boston landed in the open sea, took the patient
aboard and transported him to the Coast Guard Air Station a t Salem,
Mass., for medical attention.
Port security personnel gave assistance on July 14, 1952, when the
oil tankers Lompoc and Victor H . Kelly, csiught fire while discharging
at the Union Oil Dock at Oleum, Calif. Coast Guard surface ci^aft
and portable pumpers assisted fireboats from Oakland, Calif., in
extinguishing this fire.
On July 21, 1952, the S. S. Black Gull in position south of Block
Island, Long Island, advised by S O S that she was afire. The
C. G. C. Mackinac, enroute from New York to Ocean Station Echo,
and the S. S. Gripsholm removed 45 persons of the 49 aboard.
On September 8, 1952, the S. S. Foundation Star sent a distress
message that she was in tremendous, rough seas and in danger of
breaking in half. Four Coast Guard vessels and three commercial
vessels proceeded to her assistance, and were instrumental in rescuing
the crew before the vessel broke and sank.
An assistance case which combined night fiare and radar search by
air and surface craft was that of the F/.V Dorothy and Edith, ,\Yhich on
October 25, 1952, advised by radio that the vessel was sinking in
position about 70 miles east of Nantucket Lightship and that the oneman crew was abandoning in a dory in heavy seas. Successful search
was made by a Coast Guard aircraft which vectored a Coast Guard
surface craft to the scene. The latter recovered the crew member
from the low-floating dory 30 miles from the position where the fishing
vessel had been reported abandoned.
Coast Guard search and rescue facilities at the Naval Base in Bermuda were instrumental in rescuing 4 survivors and recovering 17
bodies from the Cuban Aircraft ^^Gubana" 471 which crashed on
take-off from the airport at Kindley Field, Bermuda, December 6,
1952,
.
On January 19, 1953, the Coast. Guard lifeboat station at Marblehead, .Ohio, Jearned that >a laijge. group, of /fishermen were: stranded^on
an ice floe at the west end of Sandusky. Bay, Sandusky, Ohio. Personnel from this unit proceeded to the scene with a portable skiff and
found 47 men stranded on a large floe of ice which had broken loose
from shore and was drifting out into the bay. Coast Guard personnel
assisted by several small boats were able to bring all fishermen safely
ashore.
On January 26, 1953, Coast Guard forces assisted civilian authority
in evacuating 191 persons from the Coquille Valley fiood area.
On February 16, 1953, Coast Guard surface vessels and aircraft
participated in the search for a National Air Lines airliner which had
left Tampa, Fla., for New Orleans, La., and crashed about 60 miles
south of New Oiieans. Coast Guard forces were instrumental in recovering 17 bodies, much debris, and practically all of the United
States mail.
On/February 22, 1953, a GoastGuard helicopter on patrol from,.the
i San-: Francisco; air. station,, observed a .fishing vessel-breaking up in- the
ADMINISTRATIVE REPORTS
151
surf off the entrance to the Golden Gate. WhUe the helicopter hovered
over the scene, its hoist was used to rescue 6 persons from the water.
On March 2, 1953, a Navy aircraft enroute from Bermuda to the
Azores was so crippled by a casualty to one o^ the engines that it could
not maintain level flight. I t proceeded to the Coast Guard-manned
ocean station ''Echo," halfway between Bermuda and the. Azores.
The Navy land plane ditched in the water alongside the ocean station
vessel whicii had previously vectored the aircraft to the landing area
by radar control. The aircraft sank but all 14 men aboard were
rescued with no injuries.
Marine inspection and safety measures
During the year no passenger lost his life as a resiUt of any marine
casualty involving inspected and certificated American passenger
vessels.
The duties performed by the Coast Guard in promoting, safety of
life and property on vessels subject to navigation and vessel inspection
laws of the United States include promiUgation and enforcement of
regulations embracing inspection of vessels and their equipment, construction and repair of vessels, investigation of marine casualties,
manning and citizenship requirements, mustering and drilling of
crews, protection of merchant seamen, licensing of officers, pilots and
seamen, load lihe reqhiri^riients, pilot rules, transportation of dangerous
cargoes on vessels, outfitting and operation of motorboats, licensing
of motorboat operators, and regattas and marine parades.
Of primary importance to the maritime nations was the coming into
effect on November 19, 1952, of the International Convention for the
Safety of Life at Sea, 1948. The requirements of this Convention
necessitated changes in the Coast Guard's regulations applicable tb
merchant vessels. The development of these changes had been under
way for several years and on October 18, 1952, revised regulatioris
containing the. necessary provisions were published. Revision and
clarification bf the format of the existing regulations were also accomplished.
On December 19, 1952, the United Kingdom, as authorized by the
final act of "the 1948 International Convention for the Safety of Life
at Sea, announced that the regulations for the prevention of collisions
at sea would be effective on and after January 1, 1954. Through a
series of informational articles in its monthly publication of the proceedings of the Merchant Marine Council, the Coast Guard is familiarizing the maritime industry, seamen, boat owners, and others with the
new iriternational rules.
At the request of the Military Sea Transportation Service of the
Department of the Navy, the Coast Guard has set up an expanded
progra-m for the inspection arid certification of merchant-type civilianmanned transports.
.
The program for effecting structural alterations on ' ' T - 2 " type
tankers, initiated in the fiscal year 1952, as a result of serious structural failures on a number of vessels of the class, has been brought
rsubstantially to completion. Remedial irieasures taken included an
increase in longitudinal strength and installation of additional "crack
arrestors." In addition, a manual suggesting satisfactory loading
.and ballasting practices was completed by the American Bureau bf
152
1953 REPORT OF THE SECRETARY ^OF THE TREASURY
Shipping in cooperation with the Coast Guard. During the winter
season of 1952, serious structural failures of merchant vessels were
reported on only four United States vessels and none of the vessels
involved was a " T - 2 " type tanker. •
The United States, as a contracting Government, assumed additional obligations, under Chapter VI of the Convention for the Safety
of Life at Sea, 1948, with respect to4he carriage of dangerous cargoes
at sea. The Coast Guard w a s ' allocated this responsibility under
Executive Order 10402 but, because of expansion of the chemical
industry and allied activities, was unable alone to handle the inspection and administration requhed without great additional expense.
The National Cargo Bureau, Inc., a nonprofit, privately owned
corporation, was incorporated and subsequently formally authorized
by the Coast Guard to assist in the administration of certain provisions of the Dangerous Cargo Act and the 1948 Convention. Joint
groups from the Coast Guard, American Petroleum Institute, Manufacturing Chemists, aiid the National Cargo Bureau, Inc. continued
to review regulatory material on this subject, as. well as allied problems.
In response to statutory requirements for Federal Government
regulation of the navigation and vessel inspection laws in Guam, an
.inspection office was established there during the:year.
Based on experience in the operation of merchant vessels on the
Great Lakes since the inception of Federal, load-line standards in
1935, the Coast Guard was requested to consider amending requirements to permit deeper loading during intermediate aud summer
seasons. After consultation with American Bureau of Shipping
. technical committees and the Canadian authorities, and after holding
a public hearing, changes were adopted establishing a new load-line
mark and new seasonal limits applicable to the Great Lakes.
On July 31, 1947, a new system was established for handling
approvals of items of live-saving and fire-fighting equipment required
on merchant vessels. Approval of each item is limited to a period
of five years and reconsidered at the end of that time. Thus, obsolete
items are automatically eliminated. On July 31, 1952, the first fiveyear period was completed. Approval pf 629 items in this first group
was terminated and approval was extended on 507 items. During
the fiscal year, 393 items were granted approval in addition to those
.noted above, and of this number 98 were extensions of previous
approvals.
All certificates of inspection issued by the Coast Guard to merchant
vessels are being combined into one form to simplify procedures.
Approximately 7,000 forms issued annually will be prepared on the
new type of certificate instead of on seven dffi'erent forms used previously.
There were 2,571 marine casualties reported during the year. In
138 of them, 280 lives were lost. Eight involved the loss of vessels of
more than ,1,000 gross tons. The most serious casualty was the
foundering of the ore carrier S. S. Henry Steinbrenner with the loss of
17 lives during a severe storm on Lake Superior. Marine Boards of
Investigation were conducted in 19 cases and 2,000 other casualties
were investigated by less formal methods.
;...;-;
- ADMINISTRATIVE REPORTS
v
: ?
153?
A digest of certain,phases of the marine inspection activities follows:
Gross tonnage of
vessels
Annual inspections completed *
_
_.
_-_.-.._-....
Drydock examinations
_--.._
Reinspections
._
Special surveys (passenger vessels)^
.
^
,
Special exarninations by traveling inspectors of passeng.er and tank vessels
Miscellaneous inspections-_---l..i
Undocumented vessels numbered under provisions of act bf June 7, 1918 (46
U. S. C. 288)3
-.:...._
Violations of navigation and vesselinspection laws....
'.
Factory inspections*.
:._
.__
.'_...
_.
.
Merchant vessel plans reviewed «
•._.-.
:.
1 Includes 215 vessels, totaling 533,427 gross tons, which were conversions or new construction completed
during the year.
.
.
.
2 Discontinued February 17, 1953. .
3 The total of vessels numbered is 33,589 less than that reported for the fiscal year 1952, mainly because of
removal from the records of 59,595 vessels which are exempt from the numbering requirements. This
represents a net gain of 26,006 vessels.
4 There were factory inspections of 465,926 items of equipment. This does not include special visits by
traveling inspectors to 46 factories to check the various methods of manufacture and inspection of Coast
Guard approved equipment.
* Refers to number of separate plans or blueprints reviewed, not number of vessels involved.'
Merchant marine per sonnel.-^uicensing and certificating of merchant
marine personnel involved issuance of a total of 93,285 documents.
Of this number, 26,566 were issued to persons who had no previous
service in the merchant marine, and 343 were licenses issued to radio
officers under the provisions of the act of May 12, 1948 (46 U. S. C.
229 (c)). In the interest of national defense, 481 individual waivers
of manning requirements for merchant vessels were issued. Shipping
commissioners supervised the execution of 14,214 sets of shipping
articles in connection with the shipment and discharge of seamen.
Merchant marine investigating units in major United States ports
and merchant marine detaUs in certain foreign ports continued to
operate in the administration of discipline in the merchant marine in
accordance with the provisions of the actof May 12, 1948. Merchant
niarine details in London, Antwerp, Bremerhaven, Naples, Trieste,.,
and Piraeus operated throughout the year and on October 16, 1952,
a merchant marine detail was established at Yokohama to handle
increased merchant marine problems occurring there as a result of
the Korean conflict. During the year, 10,859 investigations of cases
involving negligence, incompetence, arid iriisconduct were conducted
with charges being preferred in 1,022 cases. Hearings looking
toward disciplinary action in these latter cases were conducted by.
civilian examiners.
'
Aids to navigation
On June 30, 1953, a total of 38,169 aids to navigation were maintained in the navigable waters of the United States, its Territories,possessions, the Trust Territory of the Pacific Islands, and at overseas
military bases. These aids consisted of loran stations, radarbeacon^
stations, light' stations, fog signal stations, radiobeacon stations,
lightships, lighted and unlighted buoys, minor lights, and daybeacons.
During the year, 1,413 new aids were established and 1,255 aids
were discontinued, resulting in an increase of 158. For the most part,
these changes were necessary to mark completed rivers and harbors'
154
1953 REPORT OF THE SECRETARY OF THE TREASURY
iriiprovements and to mark changes in natural channels. On June
30, 1953, thirty-seven Coast Guard loran stations were supplying
long-range navigational service to aircraft and ships over widespread
areas. This total includes a two-station extension to the Japanese
chain and a one-station extension to the Hawaiian chain which were
established during the fiscal year.
Ocean stations
Coast Guard ships transmitted 70,020 weather reports, made
55,217 radio contacts with aircraft, rendered assistance in 22 cases,
and cruised 943,589 miles in connection with the ocean station program. Ocean station vessels provided search and rescue, communications, air navigation facUities, and meteorological services in the
ocean areas regularly traversed by aircraft of the United States and
other cooperating governments. The Coast Guard operated five
stations in the Pacific Ocean and five stations in the North Atlantic
Ocean. An additional North Atlantic station was operated by the
Coast Guard two-thirds of the time and by the Netherlands the
remaining one-third. Upon request of the Netherlands Government,
two of its patrols on this station were made by Coast Guard vessels
because the Netherlands vessel was needed in the North Sea while
repairs to the dikes were being effected.
International Ice Patrol
The post-season activities of the International Ice Observation and
Ice Patrol Service in the North Atlantic Ocean for the 1952 season
consisted of an oceanographic survey made by the C. G. C. Evergreen
from July 7 to July 27, 1952, in the area northerly from the Grand
Banks to Baffin Bay.
Preliminary aerial reconnaissance fiights by aircraft operating from
Argentia, Newfoundland, commenced for the 1953 season on. February 10, 1953, and routine aerial ice reconnaissance was begun
March 10. Immediate danger to the shipping lanes existed between
March 24 and April 6, 1953, when three icebergs were sighted in the
vicinity of the North Atlantic lane route then in effect. Since the
locations of these bergs were known accurately and the danger to
shipping was considered temporary, it was not necessary to inaugurate
a surface patrol. The C. G. C. Evergreen made four cruises carrying
out the program of oceanographic surveys in the region of the Grand
Banks. Operations for the 1953 season were discontinued on June 6,
1953.
Bering Sea Patrol
The Bering Sea Patrol was carried out by the C. G. C. Storis from
June 12 to September 21, 1952. The purposes of this annual patrol
are the protection of life and property, protection of the seal herds
and other wildlife, law enforcement and transportation of a floating
court in the administration of justice, the furnishing of medical and
dental assistance to natives and others in remote localities in the areas
contiguous to the Bering Sea and Arctic Ocean, and the logistics support of isolated Coast Guard facUities. During the patrol, the Storis
cruised 10,47.9 miles, carried 38 passengers on missions in the public
interest, transported 54.2 tons of freight, 9.5 tons of fuel oil, 8.7 tons
of gasoline, and 7,499 pounds of maU for Government agencies, and
ADMINISTRATIVE REPORTS
155
rendered medical treatment to 1,305 persons and dental treatment to
593 persons.
Facilities, equipment, construction, and development
Floating units.—The larger ships in active commission at the end of
the year consisted of 195 cutters and buoy tenders of various types, 63
patrol boats, 36 lightships, 41 harbor tugs, and 10 buoy boats. During.
,the year, they cruised 3,299,215 mUes, compared with 3,216,617 miles
the previous year.
The 195 cutters include two special vessels, the C. G. C, Courier and
the C. G. C. Eagle. The Courier^ a 339-foot vessel equipped with
radio broadcasting facilities, is manned and operated by the Coast
Guard for the Voice of America program of the State Department ^
The Eagle, a 295-foot training vessel, is placed in commission each
year for the Coast Guard cadet practice cruise.
The lightship WAL-613 was commissioned on September 12, 1952,
and assumed duty as Ambrose Lightship on October 6, 1952, replacing
lightship WAL-533. WALr-533 assumed duties as Portland Lightship^
Portland, Maine.
In April 1953, the 15,000 beam candlepower optic on lightship
WALr-613 was replaced by a stabilized optic lens. The intensity of
this new lens is variable between 250,000 and 5,000,000 beam candlepower. As prevailing atmospheric conditions change, this increase
and flexibility in candlepower will permit mariners to make use of the
light under conditions not heretofore possible.
Construction of new Coast Guard-designed 95-foot diesel-powered
seagoing steel patrol boats has been started at the Coast Guard Yard.
These boats are being built to provide facilities required to carry out
the port security program and as replacement for three vessels approaching obsolescence. Thirteen hulls have been launched to date
and the flrst boat to be completed is now undergoing evaluation tests.
Six destroyer escort type vessels were reactivated and assigned to
search and rescue duty. The Coast Guard also reactivated the C. G. Co
Westwind (WAGB-281), one of the two icebreakers returned to this
country after being loaned to Soviet Russia during World War I I ; the
Sebago (WPG-42) as a replacement for the Dexter (WAVP-385) which
was decommissioned; and the I ahoma (WAGE-10) for guard ship
duty at the entrance to Chesapeake Bay. In addition, under the
military defense assistance, program, the service reactivated six 83foot patrol boats and constructed six 40-foot utility boats.
In addition to the larger ships, 26.8 motor surfboats, 171 motor
lifeboats, 1,198 miscellaneous motorboats, 1,913 nonpowered braft,
and 76 barges were in operation.
Shore establishments .—Shore establishments at the end of the flscal
year included 12 district offices, 2 area offices, 4 inspection offices, 3
section offices, 24 bases, 24 depots, 46 marine inspection offices, 7 merchant marine details located in foreign ports, 11 examiner offices, 27
group offices, 1 shipyard, 2 supply centers, 10 supply depots, 1 receiving center, 1 training station, 1 academy, 9 air stations, 13 air detachments, 1 aircraft repair and supply base, 16 radio stations, 150 lifeboat stations, 37 loran transmitting stations, 331 manned light stations, 56 light attendant stations, 1 fog signal station, 3 radiobeacon
» Transferred to the United States Information Agency as of Aug. 1,1953, under Reorganization Plan
No. 8 of 1953.
156:
1953 REPORT OF THE SECRETARY OF THE TREASURY
stations, 1 radio direction finder statipn, 1 electronic engineering sta^
tion, 27 recruiting stations, 5 ship training detachments, 13 electronic*
repair shops, 1 field testing and development unit, and 10 moorings.
Captain of the port offices, supplemented by port security units, continued to be maintained in major shipping centers. Six search and
rescue groups, each comprised of a rescue coordination center, vessel,
and aircraft, were established at locations outside the continental;
United States serving principal military and civilian air lanes.
Indicative of the improvements made in these facUities during the
year were the construction of a loran station on Saipan; the installation
of five mobile loran stations in the western Pacific area; reconstruction
of the French Frigate Shoals (T. H.) loran station; and the buUding
of signal power buildings at Cape Blanco, Oreg. and Pt. Grenville, .
Wash. Industrial shops were completed at Depot, St. Louis, Mo.,
and Aircraft Repair and Supply Piase, Elizabeth City, N. C. Rescue
coordination centers for search and rescue units were provided on
islands in the Pacific and Atlantic Oceans. Air detachment facilities
at Annette Island, Alaska, were expanded.
Construction of the search and rescue facilities at Wake Island were
well under way on September 15, 1952, when the typhoon "Olive"
struck the area and destroyed all the partially completed construction
above ground. Severe damage was caused to the Coast Guard loran
transmitting station built several years previously and a bridge providing access to the loran station was partially destroyed. Emergency;
repairs were made to the loran facilities and within a few days the
station was restored to service. In view of the long delays which ,
would have resulted from attempting to rebuUd the destroyed steel
buildings planned for the search and rescue unit, wood frame structures
were constructed to fit the newly placed concrete foundation.
Projects started during the fiscal year and still in progress are mobile
loran transmitting, stations at four more locations in the western Pacific
area, and new loran transmitting station structures at Nantucket,
Mass. and Pt. Arena and Pt. Arguello, Calif. Contracts are also in
progress on the extension or replacernent of seaplane ramps, together
with paving reinforcement at air stations in St. Petersburg, Fla., and
Elizabeth City, N. C , to accommodate heavier ahcraft. Other work
under way includes an industrial shop at Base, Sault Ste. Marie, Mich.
Aircraft.—During the year the Coast Guard operated 137 fixed and
rotary wing aircraft from nine air stations and thirteen air detachments. Air detachments outside the United States proper are located
at Argentia, Newfoundland; Berrnuda Islands; San Juan, P. R.;Honolulu, T. H.; Midway Island, Wake Island, Guam, M. I., Sangley.
Pt., P. I.; Annette Island, Alaska; and Kodiak, Alaska. The additional
air detachments and the additional aircraft to those in fiscal 1952 were
operated in support of the mUitary readiness program involving increaseci search and rescue facUities. Nine fixed wing and eight rotary
wing aircraft were acquired as replacements of over-age aircraft, with
attendant improvements in speed, range, and utility.
In carrying out various duties, 18,747 sorties were fiown for a,total
of 47,203 hours. Aircraft fiew 1,143,836 tori-miles of supplies and,
equipment in logistic support of isolated Coast Guard, shore;units not,^
served by regular commercial air or surface transportation.
'
ADMINISTRATIVE REPORTS
157
Communications.—During the year the Coast Guard has been adjusting frequency assignments in accordance with the recommendations of the Extraordinary Administrative Radio Conference (EARC)
Geneva 195L Approximately 35 percent of existing operations are
now in consonance with the international table of frequency allocations
contained in the Radio Regulations, Atlantic City, 1947.
Because adequate commercial facilities became, available, approximately 325 circuit miles of Coast Guard telephone facilities were discontinued. A total of 15,960 circuit miles of landwire and cables are
operated in areas where commercial facilities remain inadequate.
New developments.—A remote controlled high-frequency radio
direction finder, developed in Coast Guard electronics laboratories, is
now ready for field testing. The equipment, designed for uriattended
operation and for installation at a technically suitable location within
a distance of 20 miles from a radio station, will be controlled by the
operator on watch at the radio station. Likewise, high-frequency
radio direction finders for search and rescue have been developed for
both aircraft and surface craft to supplement the precision shore
station high frequency radio direction finder.
The loran system, a long-range electronics navigational systeiri of
the pulsed variety, requires that the emission of pulses from loran
stations be synchronized as closely as one millionth of a second.
These tolerances and the limitations of equipment have required a
continuous manual watch on equipment. A new method of synchronizing loran signals has been developed by a Coast Guard officer.
Automatic loran synchronizing equipment incorporating this new
development has been field tested at three operating loran stations,
with successful results. Plans have been made to install this equipment at other stations.
A mobile loran station was developed and utilized to meet the
requirement for loran expansion in the Pacific area. Such a station is
complete from a technical standpoint, containing prime power supplies,
communications equipment, and loran transmitting equipment.
This development permits the building of loran stations where trained
engineers and craftsmen are available and assembly line techniques
may be utilized. Once tested, the stations can be transported to
frontier areas and can be put in operation by personnel on the site.
This reduces requirements for construction by technical engineers in
frontier areas where the costs are exorbitant. Where needs for
navigational coverage change, the stations can be moved to meet new
conditions.
The program for standardization of buoys has resulted in the
development of designs for five classes of buoys to replace eleven
classes. Four of these new designs have integral radar reflectors
which rriore than double the range at which these buoys can be
detected by radar.
Ship Structure Comrnittee.—The Ship Structure Committee continued its research, program to improve the hull structures of ships.
Under the chairmanship of the Engineer in Chief of the Coast Guard,
the committee consists of members from the various agencies principally concerned with ships; i. e.. Navy Department, Maritime Administration, the American Bureau of Shipping, and the Coast Guard.
158
1953 REPORT OF THE SECRETARY OF THE TREASURY
The National Academy of Sciences, National Research Council
contributes important technical assistance and advice.
Personnel
Active military and civilian.—On June 30, 1953, the military personnel strength of the Coast Guard on active duty was 34,491, consisting
of 3,177 commissioned officers, 452 commissioned warrant officers, 343
cadets, 454 warrant officers, and 30,065 enlisted men. The authorized
force of civilian employees at Coast Guard headquarters was 919. In
the field service the authorized civilian force was 1,472 salaried personnel, 3,179 wage board employees, and 586 part time lamplighters.
On June 5, 1953, 86 cadets were graduated from the Academy and
commissioned as ensigns. In the 1953 nation-wide competitive
examination for appointment as cadets, 413 received passing grades
from among 1,014 who took the examination for appointment to the
€lass of 1957. The 1953 cadet practice cruise, a two months trip to
Norway, Belgium, Spain, and the Canary Islands aboard the cutters
Eagle and Rockaway, commenced June 9, 1953.
In addition to Academy graduates, regular officers for the Coast
Guard were obtained by the selection of chief warrant and warrant
officers or enlisted men in the Coast Guard, and from among qualified
Merchant Marine officers.
Newly appointed Reserve officers have been procured as replacements for Reserve officers who have completed twenty-four months of
obligated service and have been released from active duty. The
number of Reserve officers being released from active duty has been
relatively high since March 1953, and will continue so through
February 1954, the number per month ranging from 30 to 75 officers.
Thi'oughout the year enlisted reservists without previous active
duty were called to active duty upon request of the individual, utilizing
the authority of Section 21 of the Universal Military Training and Service Act of 1948, to insure reemployment rights. Such persons were
called for two years of extended active duty.
During the early part of the year enlisted retirements were curtailed
inasmuch as available funds were not sufficient to permit retirements
for reasons other than statutory retirement for age, 30 years' service,
and physical disabUity. Unanticipated attrition of the retired list
and failure to retire as many as expected for physical disability made
i t possible during the latter part of the year to permit the voluntary
retirement of 170 enlisted men eligible for and desiring retirement
because of 20 years' service. There remains a backlog of 233 applications from men desiring such retirement.
Of 15,407 men who applied for enlistment in the Coast Guard,
4,166 were enlisted, 2,751 were rejected physically, 7,154 were rejected
for other reasons, 434 were accepted but failed to enlist, and 902
applications were pending on June 30, 1953.
To meet continuing demands for an adequate number of petty
officers, an advanced training program for enlisted men was continued
a,t approximately the same level as in 1952. The number receiving
ADMINISTRATIVE REPORTS
159
this training was 4,784, 3,299 in Coast Guard schools, 1,354 in Navy
schools, and 131 in all other schools.
Enrollments in Coast Guard Institute correspondence courses increased to 12,725. Coast Guard enrollment in the U. S. Armed
Forces Institute courses increased approximately 50 percent.
The Coast Guard continued its program of cooperation in the training of foreign nationals. Representatives from Iraq, Sweden, India,
Greece, Haiti, Ryukuia, Formosa, Japan, Canada, Australia, and Italy
studied and observed Coast Guard activities.
Public Health support.—On June 30, 1953, 32 medical officers, 40
dental officers, 8 nurses, and 1 scientist officer of the LT. S. Public
Health Service were on duty at Coast Guard units. Full-time coverage by medical officers was maintained during the year for ocean
weather station vessels manning stations "Alfa," "Bravo," and
"Coca." Five full-time meclical officers were carried on the staff of
Commander, Coast Guard Western Area for duty on ocean weather
stations "Sugar" and "Victor."
Military justice.— During the year, 1,342 courts-martial cases were
received for processing, a reduction of 142 from the fiscal year 1952.
Included were 30 general courts-martial, 369 special courts-martial,
and 943 summary courts-martial. Appellate review by the Board of
Review was required in 20 general and 64 special courts-martial cases
and six Board of Review cases were appealed to the United States
Court of Military Appeal. Of these, four were affirmed and two are
riow pending.
Coast Guard Reserve.—The purpose of the Reserve is to provide a
trained force of officers and enlisted personnel which, added to regular
personnel, will be adequate to enable the Coast Guard to perform its
functions and duties at all times. The Chief of the Office of Personnel
at Coast Guard Headquarters is the flag officer designated, pursuant
to Section 256 (b) of the Arnied Forces Reserve Act, to have direct
responsibility to the Commandant for the administration of the
Reserve. A Reserve director on the staff of each Coast Guard district
commander administers Reserve affairs locally.
Steady progress has been made during the year in carrying out the
provisions of the Armed Forces Reserve Act of 1952. Indefinite term
appointments have been tendered to Coast Guard Reserve officers, as
required by this act, in lieu of 3-year commissions, with approximately
86 percent accepted.
The Coast Guard Reserve is organized into paid drilling units,
nonpaid drilling units, unassigned personnel, inactive status lists, and
retired Reserve lists.
During the year, the Reserve experienced a steady growth in the
number of persons, organized units, and personnel participating in tho
orgariized training program. At the end of the fiscal year the strength
of the Reserve had reached 17,597 distributed as follows: On extended
active duty, 951 officers and 1,602 enlisted men; and on inactive duty
2,602 officers and 12,442 enlisted men.
Reserve training is divided into 3 major prograjms: port security^
vessel augmentation, and aviation. The port security aud vessel aug-
160
1953 REPORT OF THE SEGRETARY OF THE TREASURY
mentatioQ programs comprise 48 scheduled drills and 2 weeks of active
trainiag duty annually, all with pay. The aviation program.-is' operated by affiliation with units of the naval air reserve program. At
present-the 77 organized Reserve training units are using .63 joint
facUities, 12 Coast Guard facilities, and 2 civic facilities.
• The port security traiaing program, representing the major phase
•of the Reserve training program, experienced the greatest growth
during the year. On June 30, 1953, 57 organized Reserve training
units, port security, were in commission, with 391 officers and 3,914
ealisted mea associated ia a drill pay status. This represeats aa iacrease over the previous year of 15 uaits. 123 officers, aad 1,065 enlisted mea. The vessel aug.meatatioa training program was expanded
to 20 units, with 121 officers and 638 ealisted mea associated in a drUl
pay status, an increase over the previous year of 5 units, 45 officers,
and 353 enlisted men. On June 30,1953, there were 130 officers and 52
enlisted men who were affUiated with the trainiag program but who
were drilliag with orgaaized units of a Reserve component of another
Armed Force, because of nonavailability of a Coast Guard organized
unit in their geographic locality, or because of their participation in
the aviation program at a Navy installation.
An extensive active duty for training program was carried out during
1953 for officers and enlisted men of the Reserve. Approximately
4,599 reservists were assigned to active duty for training during the
year. In comiection with the active duty for training program, a
three-day test mobilization drill was conducted for all organized units,
with an overall participation of 80 percent of on-board strength.
Recruit training for newly enlisted reservists, together with unit and
special training of individuals, was conducted throughout the year at
the Coast Guard Receiving Center, Cape May, N. J.
New Reserve officers are obtained prim.arily from among college
graduates, who attend the four-month Officer Candidate School at
New London, Conn. Graduates of this school are commissioned ensigns i.n the Reserve and are immediately placed on active duty. Upon
relea.se from active duty they perform such Reserve obligations as are
required by law.
Administration
Fiscal and supply management.—-The basic framework for the improved accounting and supply systems having been established, emphasis has been placed, during the past year, on practical use of
fi.nancial reports for management of- the service. In the Coast Guard
monthly fi.nancial reports, significarit trends and developments were
summarized in nontechnical form in a "highlight" section. Analysis
of the industrial operations at repair bases and/depots served as a
bas's for standardizing certain financial management practices'at such
units. Continuing examination was made of costs of comparable-type
units to discover reasons for significant viariances.
ADMINISTRATIVE REPORTS
161
The first annual cycle of comprehensive on-site audit of districts,
headquarters units, arid headquarters by Coast Guard internal auditors was completed during the year. These audits evaluate operational efficiency of comptroller activities, effectiveness of fiscal policies
and procedures, extent of the utilization of financial data in management of units, and adherence to prescribed fiscal policies and procedures.
. Supply operations continued toward the goal of identifying, appraising, recording, and reporting all material and segregating it into proper
categories for effective control. The total amount of the stock inventory reported as of April 30, 1953, was $40,475,818, as compared with
.$19,397,236 reported on July 1, 1950. The increase is attributable
principally to recording material already on hand which had not previously been taken up, and is exclusive of material in use, on allowance
lists or in stock at consuming units. At the end of the year more
than 95 percent of all stocks available for issue had been properly
recorded and reported.
Complementing the program for improved inventory reporting,
during the past year excess and scrap material actually sold was
valued at a total of $3,329,564.73 and excess declarations, totaling in
value $1,517,768.27, have been processed for disposition.
Personnel safety program.—Accidental injuries to civilian employees
werC' reduced approximately 25 percent as compared with 1952.
Some success was also obtained in reducing damage due to fires and
in reducing off-duty motor vehicle fatalities during fiscal 1953; A
system of examination and certification of all motor vehicle operators
was instituted. Effective July 1, 1953, every operator of a Coast
Guard motor vehicle must have in his possession a Coast Guard
operator's license.
Coast Guard Auxiliary
The Coast Guard Auxiliary closed the fiscal year with 13,071
members and 7,989 facilities, including boats, planes, and amateur
radio stations. The primary activity of this volunteer nonmilitary
organization, which is active in 151 communities, is the promotion of
safety and efficiency in the operation of small boats.
In pursuit of its statutory purposes, the accomplishments of the
Auxiliary included examination of .18,591 motorboats, patrolling 338
regattas, and answering 1,808 assistance calls.
An understanding has been reached between the Coast Guard and
the Federal Civil Defense Administration that presages participation
by the Auxiliary in civil defense emergency and natural disaster relief.
Funds available, obligations, and balances
During the fiscal year 1953, the sum of $4,668,300 was expended
for mustering-out payments under the provisions of the MusteringOut Payment Act of iFebruary 3, 1944, as amended (38 U. S. C. 691),
arid the Veterans Readjustment Assistance Act of July 16, 1952
(37 U. S. C. 37). In settlement of unused leave, under the act of
August 9, 1946 (37 U. S . C v 37), $1,640,105 was paid to 7,142
claimants.^
• - ^ - =. , ^
•
273013—54
12
162
1953 REPORT OF THE SECRETARY OF THE TREASURY
The following table shows the amounts available for the Coast
Guard during 1953, and the amounts of obligations and unobligated
balances.
Operatingexpenses
Reserve training
Retired pay
Acquisition, construction, and improvements
Other prior year appropriations
_
Total appropriated funds.-.
..^...
.-
.
Trust funds:
Coast Guard Academy, donation for chapel, Treasury
Department
_
United States Coast Guard gift fund
Total trust funds
Working funds established by advances from other agencies:
Department of Defense:
Department of the Navy
_
__
Department of the Army
_
Federal Security Agency
_._
..
Department of Commerce
_.
Department of State
Total working funds
Grand total
Funds
available
, Net total
obligations
Unobligated
balances
$199,200,000
2.600,000
17,625,000
2 28,643, 758
13,611
$197, 576,228
2,467, 765
17,612,493
24,823,170
13,611
1 $1,623,772
132,235
12,507
3,820,588
248,082,369
242,493,267
10,336
100
10,336
100
10,436
10, 436
855,072
41, 770
617,796
120
450,000
837,190
41,770
617, 796
120
416,925
1,964, 758
1, 913,801
60,957
250,057, 563
244,417,504
5,640,059
6,589,102
17,882
33,075
1 Includes unapportioned reimbursements in the amount of $282,191.
2 Funds available under appropriation "Acquisition, Construction, and Improvements" include unobligated balances brought forward from prior year appropriations in the amount of $4,393,758.
United States Savings Bonds Division
The United States savings bonds program rounded out 18 years of
existence in the fiscal year 1953, continuing its basic purposes of
encouraging national thrift and security for individuals through
investment in non.marketable Government securities not subject to
fiuctuations in market price.
Sales of Series E and H bonds to individuals during the fiscal year
1953 amounted to $4.1 billion, more than 20 percent ahead of sales
during either of the two preceding years. This increase in sales,
combined with practically no increase in redemptions during the year,
brought the volume of bonds cf these two seiies outstanding at the
end of the year to an all-time peak of $36 bUlion.
To emphasise their insulation against market fluctuations, the
present basket of securities—expanded into four series from the single
original "baby" bond—continued to be registered securities which
were not transferable. Although savings bonds are not eligible for
collateral, they are, of course, easily redeemable by their owners at
specified redemption values. As a result, the average small investor
has available to him a security which provides a fah rate of return
according to the length of time the bond is held and he knows he can
always get his .money whenever the need arises.
The aim of the Savings Bonds Division is to sellithe;greatestcdollar
amourit of bonds possible to promote thrift and future security, and
furthermore to encourage holders of E bonds to realize the value of
keeping their bonds not onlv to maturity but also for the ten additional
ADMINISTRATIVE REPORTS
163
years of the extension period. In this way the Division can help
immeasurably in achieving a wider distribution of the ownership of
the public debt and in providing funds to help finance the defense
effort in a noninflationary way.
The Division employed its staff and volunteer organization to
encourage established investors to hold their maturing E bonds for an
additional ten years. The importance of publicizing this privilege is
seen readUy when it is realized that approximately $23 billion of this
type of security reach maturity in the five-year period ending in fiscal
1957. The success of this endeavor is measured by the fact that 75
percent of maturities have remained uncashed since the extension privilege was first offered in 1951.
The work of volunteers in the Division's program continued to
over-shadow all other efforts during the year. This was particularly
true in the promotion of payroll savings where important industry-wide
campaigns were conducted during the period under review. I t is
estimated that at the close of fiscal 1953 more than 8 million persons
employed in industry and Government were signed up on this automatic plan. The net gain dui;ing the year was more than half a million
persons. The payroll saver purchases on the average $20 worth of E
bonds each month.
Of primary importance in the promotion of payroll savings in the
past year have been the acccmphshments in industry-wide campaigns.
This series of ca.mpaigns involves industries which employ well in
excess of five million workers. Outstanding in these promotional
campaigns were those of the petroleum industry, air transport lines,
the glass industry, the aircraft manufacturing industry, the automobile
industry, the telephone industry, the machine tool industry, and the
meat packing industry.
During the year, savings bo.nd farm promotion developed to meet
the need of the farmer for investing an amount of money equal to the
annual depreciation of farm equipment. Recognizing that most
farmers are unaware of their depreciation costs, the farm branch
launched a widiB program of education and promotion to bring this
topic to the attention of all farmers.
Perhaps the iriost signfficant stride made in farmer education on
farm machinery replacement was the obtaining of the full support of
the farm implement industry, especially the dealer. Through the
services of the Natipnal Farm Machinery Dealers Association, all
dealers have been supplied with posters, direct mail material, folders,
and other information, to help keep the replacement plan before
farmers.
Additionally, the Executive Director of the National RetaU Farm
Equipment Association distributed farm posters and leafiets to all
State secretaries of the Retail Farm Equipment Associations. These
efforts resulted in an increase in sales of over 50 percent in Series E and
H savings bonds in 643 selected farm counties during the first five
months of 1953 as against sales in the comparable period of the
previous year.
During the year, the Advertising and Promotion Branch was able
to obtain a dpriation of over $50 miUiprnvworthvof advertisirigdn
broadcast and printed media, a-nd additional unestimated millions
164
1953 REPORT OF THE SECRETARY OF THE TREASURY
of dollars worth of support in motion pictures, newspaper features,
and editorial cooperation.
An average of more than 750 publications each month, with an
aggregate monthly circulation of 150 million, contributed space fpr the
Medal of Honor series; more than 275 executive busiriess publications,
having a total circulation of some 5 million businessmen each month,
donated space for the series of messages promoting .the installation
and promotio.n of the payroll savings plan; an average of 35 important
farm publications each month, having a total circulation of 10 miUion
farm subscribers, donated space for the promotion of the farm machinery replacement program; and four,general newspaper advertisements each month were developed, produced, and merchandised to
daily and weekly newspapers by direct mail. An average of 4,505
mats were ordered by daily newspapers each month and an average of
14,885 by weekly newspapers. The advertising linage contributed by
the daily newspapers exceeded 8 million lines during the year. The
linage of weekly newspapers is estimated to be in excess of 25 million
lines.
United States Secret Service
The major functions of the United States Secret Service, under
direction of the Secretary of the Treasury, are protection of the person
of the President of the United States and members of his immediate
family, of the President-elect, and of the Vice President at his request;
the detection and arrest of persons committing any offenses against
obligations and securities of the United States and of foreign governments; the detection and arrest of persons violating certain laws relating to the Federal Deposit Insurance Corporation, Federal land
banks, joint-stock land banks, and national farm loan asspciations;
and the detection and arrest of any persons violating any laws of the
United States directly concerning official matters administered by
and under the direct control of the Treasury Department. These
and other duties of the Secret Service are defined.in 18 U. S. C. 3056.
The Secret Service also directs activities of the White House Police
Force, which protects the Executive Mansion and grounds; and of the
Uniformed Force, which protects the Treasury Building and certain
other buildings housing Treasury Department activities.
Management improvement
The continuing management irriprovement prograni is closely coordinated with the inspection system, in which regional inspectors
make regular and thorough inspections of all Secret Service field offices.
The Inspectors and the executive aide tp the Chief comprise the
Secret Service Management Committee, which functions under the
close supervision of the Chief.
During the 3^ear, the Civil Seryice Commission formally approved
a training agreement drafted by the Committee with the help of the
Treasury iPersonriel Division, to proyide for systematic promotion of
Secret Service male clerks and qualified members of the Uniformed
Force to positions as special agents. Plans for a course for the
specialized training of S e c r ^ Service agents were completed but
the; course was riot'iristituted because of laick of, funds to bririg field
agents tb Washington for the traiiiirig. '
.,
,.. , ADMINISTllATIVE REPORTSV
165''
,A comprehensive collection of court decisions and opinions of the
General Counsel of the Treasury Departirient and of the Attorney
General was completed and issued to all field offices for study by
investigative personnel. The material relates directly to matters of
official interest to the Secret Service.
A complete manual on the production of currency was drafted and
is being.prepared in final form for distribution to investigative personnel. The manual deals exhaustively with methods used to manufacture.genuine.coins,.paper money, bonds, stamps, and other obligations of the United States; knowledge of these processes is of prime importance to personnel engaged in the suppression of counterfeiting..
During 1952 the Secret Service recommended that cash payrolls in
Washington be eliminated in favor of payment by check to conserve
manpower in the Uniformed Force, which protected the cash. Cash
payrolls have now been discontinued in all agencies except the Bureau
of Engraving and Printing where employees, because of the nature
of their work, are not at liberty to leave the buildings to cash checks.
Consequently, the complement of the Armored Truck Company of
the Uniformed Force was reduced from 29 to 19 guards; and it appears
that other savings will result because the cost of payment by check
is less than by cash.
.
.
Plans were compileted to transfer to the exclusive jurisdiction of the
Director of the-Bureau of Engraving and Printing that part of the
Uniformed Guard Force which protects the Bureau and which heretofore had operated under the supervision of the Chief of the Secret
Service. The transfer to the Bureau was effective July 1, 1953. By
direction of the Secretary, the Secret Service will make annual inspections of the guards at the Bureau of Engraving and Printing and also
a t the United States mints and assay offices.
An ecoriomy was effected upon recommendation of the Secret
Service that it be permitted to use administrative discretion in certain
cases in collecting overpayments made by disbursing officers. A survey had shown that in some iristances the Secret Service was assigning
its agents, upon request, to obtain refunds of small amounts involved
in overpayments and that in some cases the cost of obtaining a refund
was many times the.amount of the refund. The Secret Service conferred with other iiiterested Treasury officials who agreed to permit
the Secret Service to use its own discretion in such cases, depending
upon travel and other factors affecting costs.
I n its continuing program of field-office inspections, the Secret
Service sent its inspectors into field offices throughout the country to
review pendirig cases, to inspect office and motor vehicle equipment,
and to maintain close liaison between the field and the Washington
headquartjers. In the interests of increased efficiency, the inspectors
recommerided some changes in district boundaries.
A suggestion ;Submitted by an inspector recommending simplified
reporting in routine check forgery cases was adopted with the approval
of the Office of the Treasurer of the United States. Under this new
system all riecessary information will merely be checked off on a
printed form instead of being submitted in lengthy typewritten
report?. ;
^
Con tinued.^promotion of the cash awards (employee suggestion)
program tended to increase efficiency and promote morale. During
166
1953 REPORT OF THE SECRETARY OF THE TREASURY
the year the Secret Service Awards Committee considered 57 suggestions and adopted 8. There were 7 suggestions pending at the close
of the year.
One economy was effected by the Secret Service in the cost of
production of its credentials for special agents, and also in the production of passes for persons authorized to enter the Executive Mansion.
The previous high cost was incurred partly by the printing of individual names on the credentials and passes. By ordering-quantities
of credential-inserts and quantities of passes without names, and by
inscribing the names by typewriter and using its own laminating
equipment, the Secret Service reduced the cost of credentials from
$35.18 to about $3.50 each, and the cost of White House passes from
$9.30 to approximately 28 cents each.
Protective and security activities
Following the Presidential election in November 1952, the Secret
Service assigned agents to protect President-elect Dwight D . Eisenhower, under the basic authority given in 18 U. S. C. 3056. After
his inauguration, the President was protected by the regular White
House detail of the Secret Service, and agents were also assigned to
protect the Vice President at his request. Agents made preparations
for the President-elect^s journey to Korea and provided, protection
for him while there.
Enforcement activities
Secret Service agents captured 12 counterfeiting plants before their
operators could get one counterfeit bill into circulation, thus preventing
a potential flood of counterfeit money. In all, 18 plants were captured.
Agents seized $287,715.75 in counterfeit bills made in the other
plants, of which $172,785.50 had been passed on reta;il storekeepers.
The balance of $114,930.25 was captured before it could be circulated.
The representative value of counterfeit coins seized totaled $6,406.11,
of which $5,598.99 had been passed.
There were 50 new counterfeit note issues and variations thereof
during the year, and 193 persons were arrested for violating the
counterfeiting laws.
The following table summarizes seizures of counterfeit money during
the fiscal years 1952 and 1953.
Counterfeit money seized—fiscal years 1952 and 1953
•1952
Counterfeit and altered notes seized:
After being circulated
.
Before being circulated..
•.
Total
Counterfeit coins seized:
After being circulated
Before being circulated
Total
Grand total
_
. . _.
$374,002.15
393,802. 25
decrease (—)
Pefcientale
increase,* or
decrease (—)
$172, 785. 50 -$201,216.65
114,930. 25 -278,872.00
-53.8
-70.8
1953.
''^
767,804.40
287, 715. 75
6,859. 84
266. 70
5, 598.99
807.12
-480,088.65
-62.5
-260.85
640.42
—4.5
202.6
.
6,126. 54
6,406.11
279.67
4.6
773,930.94
294,121.86
-479,809.08
-62.0
167
ADMINISTRATIVE REPORTS
Number of inviestigaiions of crimirtal arid noncriminal activities—fiscal years 1952
and 1953
Cases closed
Criminal cases:
Making or passing:
Counterfeit notes
.
Counterfeit coins
._
Altered obligations
.
Other counterfeiting.
Forged Oovernment checks._
Stolen or forged bonds
Protective research cases. „
Miscellaneous
Total..
Noncriminal
._
„
Grand total
1952
.
.
1953
Percentage
Increase, or increase,
or
decrease ( - ) decrease
(—)
860
67
310
184
30,091
4,900
2,831
209
685
77
371
272
26,179
4,626
1,679
397
-175
10
61
88
-3,912
-374
-1,152
188
—20 3
14.9
19 7
47.8
—13.0
—7 6
—40.7
90 0
39, 452
3,012
34,186
3,329
- 6 , 266
317
—13.4
10 5
42,464
37, 615
-4,949
—11 7
There were 27,720 forged Government checks received for investigation and 7,504 on hand at the beginning of the year. Agents
completed investigations of 26,179 forged checks worth $2,119,243.44,
but on June 30 there was a backlog of 9,045 checks awaiting investigation. Agents arrested 2,284 persons for check forgery.
In Boston, Mass., a cost accountant for a watch manufacturer
offered to prepare income tax returns for his fellow-workers, and
then falsified the returns to get tax refunds from the Government.
In each case he forged the taxpayer's name to the return, and when
refund checks were delivered to him he forged and cashed them and
delivered a small percentage of the refunds to the taxpayers. When
arrested for check forgery, he estimated that he had netted more than
$5,000 through these frauds. The Intelligence Division of the Bureau
of Internal Revenue determined that some $50,000 in taxes is owed
to the Government by those who collected ''refunds'' from the offender. He pleaded guilty and was sentenced to 18 months.
The largest proportion of the checks stolen and forged during the
year were servicemen's allowance and allotment checks, with veterans'
pension and social security checks ranking second and third.
Forgeries of stolen United States defense bonds also added to the
Secret Service case load. In addition to 1,752 forged bonds on hand,
4,345 forged bonds were received for investigation. Agents investigated 4,526 forged bonds worth $355,564.55 and arrested 91 persons
for bond forgery.
168
1953 REPORT OF THE SECRETARY OF THE TREASURY
The Secret Service arrested 231 persons for crimes other, than.counterfeiting and forgery, making a total of 2,799 persons arrested.
There were 2,409 convictions, representing 98.3 percent of convictions
in all cases prosecuted, some of which were pending from the previous
year.
Prison sentences during the year totaled 2,549 years, and additional
sentences of 2,551 years were suspended or probated. Fines incriminal cases totaled $50,492.91.
Cases of all types received for investigation, including counterfeiting and forgery cases, aggregated 38,834, and 9,952 cases were pending.
Although 37,515 cases were closed during the year, 11,271 cases were
awaiting investigation as of June 30.
The following table constitutes a statistical summary of Secret
Service investigations, arrests, and dispositions for the fiscal years
1952 and 1953.
Number of arrests and cases disposed of, fiscal years 1952 and 1953
1952 .
Arrests for:
Making,or passing:
Counterfeit notes.
Counterfeit coins
Altered oblisfations..:.
Otber counterfeiting
_
Foreed Goverrment checks
Violations of Gold Reserve Act
Stolen or forged bonds.
Protective research cases
False claim cases
._....
Miscellaneous.
. ..
_.
_..
__
. .
Total
Cases disposed of:
Convictions in connection with:
Counterfeit notes
Counterfeit coins .__
_
Altered obligations
Other counterfeiting ..
Forged Government checks
Violations of Gold Reserve Act
Stolen or forged bonds
Protective research cases.
False claim cases
...'.
Miscellaneous
Total
... ..
Acquittals
Dismissed, not Indicted or died before trialTotal cases disposed of
.-_
69
-15
-6
140
50
-14
31
-39
41
-44.1
41.2
-20.3
-54.5
6.5
384.6
-13.3
41.9
-90.7
227.8
2,799
112
4.2
187
21
58
5
1,963
7
90
72
3
16
89
11
61
7
1,993
14
85
97
2
. 50
-98
-10
3
2
30
, 7
-5
25
-1
.34
-52.4
-47.6
6.2
40.0
1.5
100.0
-5.6
34.7
-33.3
212.6
2,422
.49
214
2,409
42
188
2,685
2,639
.
_
Percentage.
Increase, or increase,
or
decrease (—) decrease
(—)
1953
188
17
74
11
2,144
,. 13
105
74
43
• • 18
' 105
24
69
5
2,284
63
91
105
2,687
-83
•
• 4
;
7
-13
' -7
-26
-46
'
-0.5
—14.3
-12. 2
-1.7
EXHIBITS
Public Debt Operations
Treasury Certificates of Indebtedness, Treasury Notes, and Treasury Bonds
Exhibit 1.—Oflfering of 2 percent certificates of Series C-1953 *
[Department Circular No. 912. Public Debt]
TREASURY DEPARTMENT,
Washington, August 4, 1952,
I. QEFERING: OP .CERTIFICATES
1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions from the people of the United
States for certificates of indebtedness of the tlnited States, designated 2 percent
Treasury certificates of indebtedness of Series C~1953, in exchange for V/z percent
Treasury certificates of indebtedness of Series C-1952, maturing August 15, 1952,
or IJ^ percent Treasury certificates of indebtedness of Series D-1952, maturing
September 1, 1952. Exchanges will be made par for par in the case of the certificates of indebtedness of Series C-1952, and at par with an adjustment of interest
as of August 15, 1952, in the case of the certificates of indebtedness of Series
D-1952.
II. DESCRIPTION OF CERTIFICATES
1.. The certificates will be dated August 15, 1952, and will bear interest from
that date at the rate of 2 percent per annum, payable with the principal at maturity
on August 15, 1953. They will not be subject to call for redemption prior to
maturity.
2. The|/incom;e;(derived. frpm; the ^certificates shall be subject to all taxes, now or
hereafter impGsed'''Wder the' Internal R evenue Code, or laws amendatory or
supplementary thereto. 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 pr hereafter imposed on the principal or interest thereof by any
State, .or any lof 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 aicceptable in payment of taxes.
4. Bearer cei'tificates will be issued in denominations of $1,000, $5,000, $10,000,
$100,000, and $1,000,000. 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.
;
i l l . SUBSCRIPTION A^D ALLOTMENT
1. Subscriptions, will be^ received at the Federal Reserve Banks and branches
and at the Treasury Department, Washington. ' Banking, institu tions generally
may submit 'subscnp'tions^'fo^^^^^^
of customers, but only the Federal Reserve
Banks and the; Treasury Department are authorized to act as oflScial agencies.
2. The Secretary of the Treasurv 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,
all subscriptions will be allotted in full. Allotment notices will be sent out
promptly upon allotment.
IV. PAYMENT
1. Payment for certificates allotted hereunder must be made on or before
August 15, 1952, or on later allotment. Payment of the principal amount may
be made only .in Treasury certificates of indebtedness of Series C-1952, maturing
August 15,1952, or in Treasury certificates of indebtedness of Series D-1952, maturing
September 1, 1952, which will be accepted at par and should accompany the subscription. The full amount of interest due on the certificates of Series C-1952
* Details of Department Circular No. 911, dated June 16,1952, covering the offering of certificates of Series
B-1953, dated July 1,1952, will be found on page 256 of the 1952 aimual report. Allotrrients of these certificates will be found in exhibit 2.
.
,
.
' •'
•-• "
• ^'—-^
^ ^.aTi...,,,./
172
1953 REPORT OF THE SECRETARY OF THE TREASURY
surrendered will be paid to t h e subscriber following acceptance of t h e certificates.
I n t h e case of t h e certificates of Series D-1952; accrued interest from October 1,
1951, t o August 15, 1952 ($16.34221 per $1,000) wiU be paid t o t h e subscriber
following acceptance of t h e certificates.
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 Resert^e Banks are authorized
a n d requested t o receive subscriptions, to make allotments on t h e basis a n d u p t o
t h e a m o u n t s indicated by the Secretary of t h e Treasury t o t h e Federal Reserve
Banks of the respective districts, t o issue allotment notices, t o recei ve p a y m e n t for
certificates allotted, t o m a k e delivery of certificates, 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
certificates.
2. The Secretary of t h e Treasury m a y a t a n y time, or from t i m e t o time, prescribe supplemental or a m e n d a t o r y rules and regulations governing t h e oflfering
which will be communicated p r o m p t l y t o t h e Federal Reserve B a n k s .
JOHN W . SNYDER,
Secretary of ihe Treasury,
Exhibit 2.—Details of certificate issues and allotments
Circulars pertaining t o other issues of Treasury certificates of indebtedness
during t h e fiscal year 1953 are similar in form t o t h e circular shown as exhibit 1
a n d therefore are n o t reproduced in this report. However, t h e essential details
regarding each issue are summarized in t h e following table, a n d t h e final allotm e n t s of new certificates in exchange for m a t u r i n g or called securities are shown in
t h e succeeding table.
Summary of information contained i n circulars pertaining io Treasury certificates
of indebtedness issued during the fiscal year 1953
of indebtedness issued and secuDate of Numberof Certiflcates
rities exchanged for new issues
circular circular
1952
Aug. 4
912
Nov. 17
917
1953
Feb. 2
919
May 20
923
2 percent Series C-1953Exchanged for—
V/i percent Series C-1952 certificates
maturing Aug. 15, 1952.
1% percent Series D-1952 certificates
maturing Sept. 1,1952.
2 percent Series C-1953 (additiorial issue)
Exchanged for V/i percent Series F-1952
maturing Dec. 1,1952.
Allotment
Date sub- payment
Date of
Date of scription date on
issue
m a t u r i t y books or before
(or on
closed
later allotment)
1952
Aug. 15
. 1953
: .J952
Aug. 15 Aug. 7
AUg. 15
Aug. 16
1953
2H percent Series A-1954
Feb. 15
Exchanged for VA percent Series A-1953
maturing Feb. 15,1953.
2 ^ percent Series B-1954
—. June .1,
Exchanged for—
V/i percent Series B-1953 certificates
maturing June 1,1953.
2 percent Treasury bonds of 1953-55
(dated Oct. 7, 1940) called for redemption June 15,1953.
Nov. 20 2 Dec. 1
1953
1954 .
Feb. 15 Feb. 6
June
1
1952
Aug. 15
1953
Feb. 16
May 22
|3 June 1
3 June 15
» Following acceptance of the surrendered certificates, the full amount of interest due on Series C-1952
certificates was paid, and accrued interest from Oct. 1,1951, to Aug. 15,1952 ($16.34221 per $1,000), was paid
on Series D-1952 certificates.
2 Following acceptance of the surrendered certificates, the full amount of interest due on the Series F-1952
certificates was credited, accrued interest from Aug. 15 to Dec. 1, 1952, on the Series C-1953 certificates
($5.91781 per $1,000) was charged, and the difference was paid to the subscribers.
8 Following acceptance of the surrendered certificates, the full amount of interest due was paid. Final
interest due June 15,1953, bn the called bonds surrendered was paid as follows: On coupon bonds by payment
of the June 16 coupon, and on registered bonds by checks drawn in accordance with assignnients on the
surrendered bonds. Accrued interest on the Series B-1954 certificates from June 1 to June 16,1953 ($1.00685
per $1,000) was charged in the case of coupon bonds and deducted from the amount of the fliial interest check
in the case of registered bonds.
Treasury certificates of indebtedness issued in exchange for matured or called securities by Federal Reserve districts, fiscal year 1953
Federal. Reserve district
Boston
^
New York.
—-.---.
Philadelphia----Cleveland
Cincinnati
Pittsburgh.:
Richmond
:....
Baltimore.-:--.'Charlotte^.Atlanta...---.
Birmingham
Jacksonville.
Nashville..-.N e w Orleans.-.Chicago
St. L o u i s . .
Little Rock
Louisville
, = -Memphis
'
Minriieapolis
Kansas City
Dallas..
El Paso-.--.
Houston
Sari A n t o n i o
San Francisco..
Los Angeles
Portland
Salt L a k e C i t y
Seattle
.Treasury...
, T o t a l a l l o t m e n t s on exchanges
M a t u r i n g or called securities red e e m e d for cash or carried to m a tured debt
^
--T o t a l m a t u r e d or called securities---.
2 p e r c e n t Series C-1953 certiflcates exchanged
for—
V/i p e r c e n t
Series B-1953
certificates
exchanged for
V/i p e r c e n t
Series B-1962
certificates
maturing
J u l y l , 1952
V/i p e r c e n t
Series C-1952
. certiflcates
maturing
A u g . 15,1952
969,000
2,772, 248,000
98, 287,000
142, 193,000
29, 875,000
97, 017,000
23, 310.000
9, 731,000
23, 361.000
67, 821,000
17. 892, 000
108,000
l l r
15, 403,000
47, 978,000
702, 040,000
. 88, 856,000
6, 305,000
432.000
37. 511,000
20, 365,000
105, 621,000
203, 908,000
38. 636,000
5, 044,000
30, 790,000
11, 283.000
136, 233,000
102, 475,000
7, 642,000
3, 688,000
12, 063.000
4.
4,962,885,000
$35,752,000
189,744,000
3, 737,000
31,891.000
2,433,000
2,667,000
2,009,000
1,634,000
2,617,000
2,662,000
748,000
673,000
593,000
2,001,000
83,935,000
5,819,000
1,153,000
6.054.000
1,273,000
9,655,000
10, 954,000
10,274,000
200,000
1,188,000
20,000
18,185.000
2,845,000
504.000
600.000
435,000
1.384,000
433,539,000
V/i p e r c e n t
Series D-1952
certificates
maturing
Sept. 1,1952
$26,088,000
687,581,000^
65.825,000
36,090,000
9, 755,000
11,809,000
8,967,000
4,192,000
4, 577,000
31,613,000
7, 548,000
10,171,000
7, 202,000
24,748,000
218, 761,000
45,923,000
6,027,000
23.963.000
4,314,000
61,644,000
81,028,000
17,787,000
3,048,000
15,393,000
7,139,000
42, 285,000
90, 846, ood
3,440,000
1,379,000
10, 536,000
6,235,000
1,574,914,000
Total
2 "percent
Series C-1963
certificates
(additional issue) exchanged
for V/i p e r c e n t
Series F-1952
certificates
maturing
D e c . 1,1952
$61,840,000
877,325,000
69, 662,000
67,981,000
12,188,000
14,476,000
10,976.000
5,826,000
7,194,000
34,275,000
8,296,000
10, 744,000
7, 795.000
26,749,000
302,696,000
61,742,000
6,180,000
30.017.000
5,587,000
71,299,000
91,982,000
28,061,000
3,248,000
16, 581,000
7,159,000
60,470,000
93, 691,000
3,944,000
1,979,000
10,971,000
7,619,000
2,008,453,000
873,123,000
$155, 646,000
5, 533,099,000
-83, 898,000
156, 889, noo
69, 832,000
53, 519,000
33, 635,000
65, 106,000
24, 318,000
68, 332,000
17, 248,000
20, 157,000
22, 049,000
61, 825,000
724, 117,000
128, 241,000
14, 537,000
49. 099.000
18, 564,000
131, 676,000
269, 473,000
55. 798,000
10, 344,000
49. 941,000
27, 207.000
110, 544,000
91, 573.000
8,447.000
8,832,000
24, 299,000
45. 920.000
8,114.165,000
2 H p e r c e n t Series B-1954 ciertificates
exchanged for—
2 percent
Treasury
V/i p e r c e n t
b o n d s of 1963Series B-1953
65 ( d a t e d
certificates
O c t . % 1940)
maturing
called for
J u n e 1,1953
redeinption
J u n e 1'5,1963
566,000
2,633, 592,000
94, 607,000
•136, 824,000
35, 409,000
40, 617,000
25, 442,000
9, 962,000
22, 981,000
47, 478,000
14, 891,000
11, 970,000
9, 258,000
47, 097,000
502, 844,000
78, 800,000
6, 998,000
43. 527,000
12. 121,000
89, 408,000
171, 708,000
28, 471,000
2, 090,000
26, 986,000
5, 943,000
97, 422,000
118, 205,000
7, 321,000
839,000
3, 629,000
10, 192.000
4,
4,410,198,000
$6,^999,000
145,-271, OGO
9/648,000
33,774,000
1,915,000
11,949,000
2,591,000
701,000
190,000
390,000
662.000
644,000
1,191,000
8.000
117,583,000
21,188,000
770,000
3,943,000
503,000
13,044,000
24,110,000
5,283,000
305,000
2,847,000
1,878,000
17,863,000
11, 320,000
449,000
40,000
2,965,000
8,051,000
447,975,000
Total
$76, 565,000
2,778, 863,000
104, 155,000
170, 598,000
37, 324,000
52, 666,000
28, 033,000
10, 663,000
23, 171,000
47, 868,000
15, 553,000
12, 614,000
10, 449,000
47, 105,000
620, 427,000
99, 988.000
7, 768,000
47, 470,000
12, 624,000
102, 462,000
195, 818,000
33, 754,000
2, 395,000
833,000
29, 821,000
7, 285,000
116, 525,000
129, 770.000
7, 879.000
3, 694,000
13, 243,000
12.
4,858,173,000
W.v
252,964,000
149. 663,000
257. 532,000
407.195.000
189,511,000
133. 669.000
652.687,000
276, 702,900
829,389,900
5.215,849,000
583,202,000
1,832,446,000
2,415,648,000
1.062,634,000
8.867,962.000
4,962,885,000
724,677,900
5,687,562,900
•<|
••—
00
» Of t h e m a t u r i n g certificates, $620,128,000 w a s exchanged for t h e 2J^ p e r c e n t T r e a s u r y b o n d s of 1958.
$37,200,000
426,710,000
14,096,000
48,156.000
6,749,000
18, 698,000
5,916,000
11, 583,000
3,185,000:
12, 702,000
1,094,000
1,175,000
1,817,000
6,029.000
117,330,000
14,970,000
1,613,000
21.018.000
7,169; 000
29,644,000
24, 794,000
6,603,000
130,000
2,739,000
2; 240,000
23.804,000
16,490,000
1,955,000
250.000
2,763,000
6,601,000
2H percent
Series A-1954
certificates
exchanged for
V/i p e r c e n t
Series A-1953
certificates
maturing
Feb. 15,1953
(See exhibit 6.)
174
1953 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 3.—Offering of 2 % percent Treasury notes of Series A41953 a n d allotments
(Department Circular No. 913. Public Debt]
TREASURY
•
j
DEPARTMENT,;
Washington, September 15, T952.
I.
OFFERING OF N O T E S
• 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 par, from t h e people of
t h e United States for notes of t h e United States, designated 2% percent Treasury
notes of Series A-1953, in exchange for Treasury certificates of indebtedness of
Series E-1952, m a t u r i n g October 1, 1952.
•
II.
D E S C R I P T I O N OF N O T E S
•
1. T h e notes will be d a t e d October 1, 1952, and will bear interest from t h a t
d a t e a t t h e r a t e of 2% percent per a n n u m , payable on a semiannual basis on June
1 and December 1, 1953. T h e y will m a t u r e December 1, 1953, 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 taxes now or hereafter imposed under t h e I n t e r n a l Revenue Code, or laws a m e n d a t o r y or supplem e n t a r y thereto. 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 t a x a t i o n '
now. or hereafter imposed on t h e principal or interest thereof .by any State, or
any of the'possessions of t h e United States, or b y aiiy local taxing authority.
3. T h e notes will be acceptable to secure deposits of public moneys. T h e y
will not be acceptable in p a y m e n t of taxes.
4. Bearer notes with interest coupons attached will be issued.in denominations
of $1,000, $5,000, $10,000, $100,000, anci $1,000,000. T h e notes will not be issued
in registered form.
5. T h e notes will be subject to t h e general regulations of t h e T r e a s u r y IDepartmentj now or hereafter prescribed, governing United States:notes.
III.
S U B S C R I P T I O N AND
ALLOTMENT
1. Subscriptions will be received a t t h e Federal Reserve B a n k s a n d branches
and a t t h e Treasury D e p a r t m e n t , Washington. Banking institutions gerierally
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 t h e right to reject any subscription,
in whole or in p a r t , to allot less t h a n t h e 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 t o 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
October 1, 1952, or on later allotment, and m a y be m a d e only in Treasury certificates of indebtedness of Series E-1952, m a t u r i n g October 1, 1952, which will
be accepted a t par, and should accompany t h e subscription. T h e full a m o u n t of
interest due on t h e certificates surrendered will be paid to t h e subscriber following acceptance of t h e certificates.
V.
GENERAL
PROVISIONS
1. As fiscal agents of t h e United States, Federal Reserve Banks are authorized
and requested t o receive subscriptions, to m a k e allotments on t h e basis and 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, to issue allotment notices,.to receive p a y m e n t
for notes allotted, to make delivery of notes on full-paid subscriptions allotted,
and 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 any time, or .from time to tinie, .
prescribe supplemental or a m e n d a t o r y ' rules-and^ regulations •governing t h e offering, which will be cominunicated p r o m p t l y to- t h e Federal Reserye > Banks.
E.
H.
FOLEY,
Acting Secretary of the Treasury.
175
EXHIBITS
Allotments of 2}i percent Treasury notes of Series A-1953 issued in exchange' for
ly^ percent Series E-1952 ceriificaies
[In thousands of dollars]
Subscriptions
received and
allotted
Federal Reserve district
76,178
8,713,250
Boston
..-:..
New York
.._.
Philadelphia-Jt-.
Cleveland
Cincinnati.-!
Pittsburgh--.
Richmond
...
Baltimore
Charlotte
Atlanta
Birmingham.
Jacksonville..
Nashville
New Orleans.
Chicago.1---.
St. Louis
_-.
Little Rock-.
108,2^6
92, 254
43,411
44,144
31,643
25,310
27,028
53,840
13,889
12,095
10,197
35, 752
501,852
64,412
4,609
Federal Reserve district
Subscriptions
received and
allotted
St. Louis—Continued
Louisvillel-'J-.--:.
Memphis
Minneapolis.
Kansas City
Dallas
ElPaso
Houston
San Antonio
San Francisco.
Los Angeles
Portland
Salt Lake C i t y - . .
Seattle
Treasury
-.Total-..
38,986
. 9,842
101,468
188,144
57,810
6,097
51,982
19, 475
80,861
52,868
11. 266
3.553
18,285
42,960
10, 541,667
Exhibit 4.—Allotments of 2% percent Treasury bonds of 1958 ^ due June 15,
1958 (dated July 1, 1952)
Federal Reserve district .
Boston.-.
,-..
New York
Philadelphia-J. 1.
Cleveland
---.
. Cincinnati--.
Pittsburgh...
Richmond.
• Baltimore-..-.
Charlotte
Atlanta
_-.
Birmingham.
Jacksonville-.
Nashville
New Orleans.
Chicago
St. Louis.^-Little Rock..
Subscriptions
:. allotted
$221, 275,000
2,049, 472, 500
•102,432,000
, 90,358,500
•55, 517,000
18, 031, 500
• -48,465, 500
69, 304,-000
21, 439,500
. 95,631,000
• 20, 040,000
28, 401,500
75, 084,000
29, 326,000
150,000
.. 480,
62, 005, 500
3,928,000
Federal Reserve district
St. Louis—Continued
Louisville
Memphis
Minneapolis.. -.
Kansas City
Dallas
El Paso
Houston
San Antonio
San Francisco
Los Angeles.
Portland.
Salt Lake City
Seattle
Treasury-.-_.
Total
Subscriptions
allotted
$14,962, 500
21,300,000
107, 547,000
120,988, 500
104,800, 500
2,125, 500
20,470,000
21, 746, OCO
153, 769,000
27,109, 500
20,796, 000
21,319,000
32,487, 500
104, 530; 000
4,244,812,500
1 Department Circular.No. 910, dated June 16,1952, covering the offering ofthese bonds, is shown on page
261 of the 1952 aimual report.
Exhibit 5.—Offering of 2% percent Treasury bonds of 1958 and allotments
[Department Circular No. 920. Public Debt]
TREASURY DEPARTMENT,
Washington, February 2, 1953,
I. OFFERING OP BONDS
1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as aniended, invites subscriptions, at par, from the people of
the United States for bonds of the United States, designated 2}i percent Treasurybonds of 1958, in excliange for 1% percent Treasury certificates of indebtedness
of Series A-1953, maturing February 15, 1953. The amount of the offering under
this circular will be limited to the amount of maturing certificates tendered in
exchange and accepted.
176
1953 REPORT OF THE SECRETARY OF THE TREASURY
2. I n addition to t h e offering u n d e r this circular, < holders of t h e inaturing
certificates are offered t h e privilege of exchanging all or any p a r t of such certificates for 2% percent Treasury certificates of indebtedness of Series A - l 954, which
offering is set forth in D e p a r t m e n t Circular N o ; 919, issued simultaneously with
this circular.
II.
DESCRIPTION OP BONDS
i . T h e bonds will be dated F e b r u a r y 15, 1953, and will bear interest from t h a t
d a t e a t t h e rate of 2}^ percent per a n n u m , payable on a semiannual basis on J u n e
15 and 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, 1958, and will not be subject to call for redemption
prior to maturity.
'^
2. T h e income derived from t h e bonds shall be subject to all taxes how or
hereafter imposed under t h e I n t e r n a l Revenue Code, or laws a m e n d a t o r y or
supplementary thereto. 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 b y 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 be acceptable to secure deposits of public moneys.
4. Bearer bonds with interest coupons attached, and bonds registered as t o
principal and interest, will be issued in denominations of $500, $1,000, $5,000,
$10,000, $100,000, and $1,000,000. Provision will be made for t h e interchange of
bonds of different denominations and of coupon and registered bonds, and for t h e
transfer of registered bonds, under rules and regulations prescribed by the.
Secretary of t h e Treasury.
5. T h e bonds will be subject to t h e general regulations of t h e Treasury D e p a r t ment, now or hereafter prescribed, governing United States bonds.
III.
S U B S C R I P T I O N 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. 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 t h e right to reject any subscription,
in whole or in part, to allot less t h a n t h e 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 may take in these respects shall be final. Subject to these reservations, all
subscriptions will be allotted in full. Allotment iiotices 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 bonds allotted hereunder m u s t be made on or before
February 16, 1953, or on later allotment, and m a y be made only in Treasury
certificates of indebtedness of Series A-1953, m a t u r i n g February 15, 1953, which
will be accepted a t par, a n d . should accompany the subscription. T h e full
a m o u n t of interest due on t h e certificates surrendered will be paid to t h e subscriber
following acceptance of t h e certificates.
V.
GENERAL
PROVISIONS
1. As fiscal agents of t h e United States, Federal Reserve B a n k s are authorized
and requested to receive subscriptions, to make allotments on t h e basis and u p
to t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve
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,
and they m a y issue interim receipts pending delivery of t h e definitive bonds.
2. T h e Secretary of t h e Treasury m a y a t any time, or from time t o t i m e ,
prescribe supplemental or a m e n d a t o r y rules and regulations governing t h e offering^,
which will be communicated p r o m p t l y to t h e Federal Reserve Banks.
G.
M.
HUMPHREY,
Secreiary of the Treasury.
177
EXHIBITS :
Allotments of 2/2 percent Treasury bonds of 1958 issued in exchange for P/s percent
Treasury ceriificates of indebtedness of Series A - 1 9 5 3
[In thousands of dollars]
Federal Reserve district
Boston
New York
Philadelphia
Cleveland
Cincinnati...
Pittsburgh...
Richmond
Baltimore
Charlotte
Atlanta
Birmingham.
.Tacksonville..
Nashville
New Orleans.
Chicago
St. Louis
Little Rock..
Subscriptions
received and
allotted
20,960
310, 562
19, 973
20, 509.
6,143
10, 271
4,760
3.617
11,066
6,821
2,223
598
6,388
3, 269
76,161
13, 679
217
Federal Reserve district
Subscriptions
received and
allotted
St. Louis—Continued
Louisville.--.
Memphis
Minneapolis
Kansas City
DallasEl Paso
PIouston
San Antonio
San Francisco
Los Angeles.
Portland
Salt Lake City
Seattle
Treasury...
__
.
Total.
7,218
279
14,069
21, 307
10,555
2,072
3,796
1,675
2,426
38, 254
1,090
663
575
932
620,128
Exhibit 6.—Call, February 13, 1953, for redemption on J u n e 15, 1953, of 2 percent
Treasury bonds of 1953^55, dated October 7, 1940 (press release of February
13, 1953)
Secretary of t h e Treasury H u m p h r e y announced t o d a y t h a t all outstanding 2
percent Treasury bonds of 1953-55, dated October 7, 1940, due June 15, 1955, are
called for redemption on June 15, 1953. There are now outstanding $724,677,900
of these bonds. T h e bonds of this issue are being called at this time because of t h e
partially tax-exempt attributes they carry.
Two issues of 2 percent Treasury bonds of 1952-54, t h e 2 percent Treasury
bonds of 1951-55, and the 2% percent Treasury bonds of 1952-55, which are also
callable on J u n e 15, 1953, will not be called for redemption on t h a t date.
T h e text of t h e formal notice of call is as follows:
Two
P E R C E N T T R E A S U R Y B O N D S OF 1953-55 ( D A T E D OCTOBER 7,
1940)
To Holders of 2 Percent Treasury Bonds of 1953-55, and Others Concerned:
1. Public notice is hereby given t h a t all outstanding 2 percent Treasury bonds
of 1953-55, dated October 1, 1940, due J u n e 15, 1955, are hereby called for redemption on J u n e 15, 1953, on which d a t e interest on such bonds-will cease.
2. Holders of these bonds may, in advance of the redemption date, be offered
t h e privilege of exchanging all or any p a r t of their called bonds for other interestbearing obhgations of t h e United States, in which event public notice will hereafter be given and an official circular governing t h e exchange offering will be
issued.
3. Full information regarding t h e presentation and surrender of the bonds for
cash redemption under this call will be found in D e p a r t m e n t Circular No. 666,
d a t e d July 21, 1941.
G. M. H U M P H R E Y ,
Secretary of the Treasury.
27.3013—54-
178
1953 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 7.—Offering of 3^^ percent Treasury bonds of 1978-83 a n d allotments
[Department Circular No. 921. Public Debt]
TREASURY
DEPARTMENT,
Washington, April 13, 1953.
I. O F F E R I N G OF B O N D S
1. The 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, from t h e people of t h e
United States, for bonds of the United St;ates, designated 3>4 percent Treasury
bonds of 1978-83.
2. Cash offering.—Subscriptions are invited a t p a r and accrued interest. T h e
a m o u n t of the public offering is $1,000,000,000, or thereabouts. I n addition t o
t h e a m o u n t offered for public subscription, the Secretary of t h e Treasury reserves
t h e right to allot limited a m o u n t s of t h e s e ' b o n d s to Government investment
accounts. ,
3. Exchange offering.—Exchange subscriptions are invited at par, with interest
adjustments as set forth ih section IV hereof, from holders of United States
savings bonds of Series F and G m a t u r i n g in t h e mont.hs of M a y through December, 1953. Holders of Series F and G bonds aggregating less t h a n an even multiple
of $500 m a t u r i t y value m a y exchange such bonds with p a y m e n t of t h e difference
in cash to make u p t h e next higher $50.0 multiple.
II.
DESCRIPTION OF BONDS
1. T h e bonds will be dated May 1, 1953, and will bear interest from t h a t d a t e
a t t h e rate of ZYA percent per annum, payable on a semiannual basis on December
15, 1953, and thereafter on June 15 and December 15 in each year until t h e principal a m o u n t becomes payable. They will m a t u r e J u h e 15, 1983, b u t m a y be
redeemed at t h e option of the United States on and after'Jlihe 15, 1978, in whole
or in p a r t , at par and 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 the Treasury shall
prescribe. In case of partial redemption t h e bonds to 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 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 taxes now or hereafter imposed under t h e Internal Revenue Code, or laws a m e n d a t o r y or s u p p l e - .
m e n t a r y thereto. T h e bonds shall be subject to estate, inheritance, gift, or o t h e r
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 possessions of t h e United States, or b y any local taxing authority.
3. The bonds will be acceptable to secure deposits of public moneys.
4. Bearer bonds with interest coupons attached, and bonds registered as toprincipal and interest, will be issued in denominations of $500, $1,000, $5,000,
$10,000, $100,000, and $1,000,000. Provision will be made for the interchange
of bonds of different denominations and of coupon and registered bonds, and for
t h e transfer of registered bonds, under rules and regulations prescribed by t h e
Secretary of t h e Treasury.
5. Any bonds issued hereunder which upon t h e death of t h e owner constitute
p a r t of his estate, will be redeemed a t t h e option of t h e duly constituted representatives of t h e deceased owner's estate, a t p a r and accrued interest to d a t e of
payment, 1 provided:
(a) t h a t t h e bonds were actually owned by t h e decedent a t t h e time of his
d e a t h ; and
(b) t h a t t h e Secretary of t h e Treasury be authorized to apply t h e entire p r o ceeds of redemption to the p a y m e n t of Federal estate taxes.
Registered bonds submitted for redemption hereunder m u s t be duly assigned to
' ' T h e Secretary of t h e Treasury for redemption, t h e proceeds to be paid to t h e
Director of I n t e r n a l Revenue a t
for credit on Federal estate taxes due
from estate of
" Owing to the periodic closing of t h e transfer books
J An exact half-year's interest is computed for each full half-year period irrespective of the actual number of
days in the half year. For a fractional part of any half year, computation is on the basis of the actual number of days in such half year.
EXHIBITS
;
.; :
179
and the impossibility of stopping payment of interest to the registered owner
during the closed period, registered bonds received after the closing of the books
for payment during such closed period will be paid only at par with a deduction'of
interest from the date of payment to the next interest payment date; 2 bonds received during the closed period for payment at a date after the books reopen will
be paid at par plus accrued interest from the reopening of the books to the date-,
of payment! In either case checks for the full six months' interest due on the
last day of the closed period will be forwarded to the owner in due course. All
bonds submitted m u s t b e accompanied by'Form PD'1782,^ properly completed;signed and sworn to, and by proof of the representatives' authority in the form of
a court certificate or a certified copy of the representatives' letters of appointment
issued by the court. The certificate, or the certification to the letters, must be^
under the seal of the court, and except in the case of a corporate.representative,,,
must contain a statement that the appointment is in full force and be dated
within six months prior to the submission of.the bonds, unless the certificate or
letters show that the appointment was made within one year immediately prior
to such submission. Upon payment of the bonds appropriate memorandum
receipt will be forwarded to the representatives, which will be followed in due
course by formal receipt from the Director of Internal Revenue.
6. Except as provided in the preceding paragraph, the bonds will be subject
to the general regulations of the Treasury Department, how or hereafter prescribed
governing United States bonds.
'
.
III.
SUBSCRIPTION AND ALLOTMENT
1. Cash subscriptions.—Subscriptions will be received at the Federal Reserve
Banks and branches and at the Treasury Department, Washington. Commercial
banks, which for this purpose are defined as banks accepting demand" deposits,
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 commercial banks will not be permitted to enter subscriptions except
for their own account. Subscriptions from commercial banks for their own account will be received without deposit, but .will be restricted in. each case to an
amount not exceeding 5 percent of the combined amount of time certificates of
deposit (but only those issued in the names of individuals, and of corporations,
associations, and other organizations not operated for profit), and of savings deposits, as shown on the bank's books as of December 31, 1952. Subscriptions from
all others must be accompanied by payment of 10 percent of the amount of borids
apphed for. Where payment for bonds allotted is to be deferred beyond May I^'
1953, as provided in section IV hereof, delivery of 10 percent of the total par
amount of bonds allotted, adjusted to the next higher $500, will be withheld from
all subscribers except incorporated banks and trust companies until payment
for the total amount allotted has been cornpleted. In every case where payment
is not so completed the 10 percent so withheld shall, upon declaration made by
the Secretary of the Treasury in his. discretion, be forfeited to the United States.
2. Exchange subscripiions.—Subscriptions will be received at the Federal Reserve Banks and branches and at the Treasury Department, Washington. Banking institutions generally, and paying agents, eligible to process bonds under
Treasury Department Circular No. 888, Revised, may submit exchange subscriptions for account of customers.
3. 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 apphed 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, cash
subscriptions from commercial banks for their own account may be allotted on a
different percentage basis than cash subscriptions from other classes of subscribers,
and subscriptions in payment of which United States savings bonds of Series F
and G maturing in the months of May through December, 1953, are tendered
and accepted will be allotted in full. The bases of the allotment on cash subT
scriptions. will be pubhcly announced, and allotment notices will be sent Oui
promptly upon allotment.
_
3 The transfer books are closed from May 16 to June 15, and from November 16 to December 15 (botfe
dates inclusive) in each year.
3 Copies of Form P D 1782 may be obtained from any Federal Reserve Bank or from the Treasury Department, Washington, D. C.
180
1953 REPORT OF THE SECRETARY OF THE TREASURY
IV.
PAYMENT
1. Cash subscriptions.—^Feiyineut at par for bonds allotted hereunder may be
made or completed on or before May 1, 1953, or payment at par and accrued
interest from May 1, 1953, may be made at any time or times thereafter, with
payment to be fully completed not later than July 31, 1953. One day's accrued
interest is $0,089 per $1,000. Any qualified depositary will be permitted to make
payment by credit for.bonds allotted to it for itself and its customers up to any
arnount for which it shall be qualified in excess of existing deposits, when so notified
by the Federal Reserve Bank t>f its district.
2. Exchange sub ser iptions,^—F&y ment for bonds allotted hereunder on exchange
subscriptions must be made on or before May 1, 1953, or on later allotment, and
may be made only in United States savings bonds of Series F and Series G maturing
from May 1 to December 1, 1953, inclusive, which will be accepted at par, and
.should accompany the subscription, together with any cash difference nece^ary
t o make up an even $500 multiple, and where Series F bonds are exchanged, by
.any interest to be collected from the subscriber. Holders of Series F and G bonds
will receive interest on the new bonds at the rate of Z}i percent from May 1, 1953,
.-and interest adjustments with respect to bonds accepted in exchange will be made
:as follows:
(a) Series F bonds.—Holders of Series F bonds maturing after May 1, 1953,
tendered in exchange and accepted will be charged an amount equivalent to interest on the maturity value from May 1 to the respective dates of maturity of the
"Series F bonds at the rate of 2.53 percent per annum as follows:
Bonds maturing on the first day of—
•
Amount of interest
per $100 maturity
value to be coUected
from subscriber
May 1953.
June 1953
..-_.
$0. 2155
July 1953
.. 4263
Aug. 1953
. 6430
Sept. 1953_.-_
. 8456
Oct. 1953
1. 0576
Nov. 1953
1. 2650
Dec. 1953:.
>
. 1. 4805
(b) Series G bonds.—Holders of Series G bonds tendered in exchange and accepted will be credited with accrued interest from the last preceding interest payment date to May 1, 1953, at the rate of 2}^ percent per annum, as follows:
Bonds maturing on the first day of—
Amount of final
interest, per $100
maturity value to
be paid to subscriber
May 1953
.
$1.2500
June 1953
1.0371
July. 1953
. 8287
Aug. 1953
._--,
^
.6146
Sept. 1953
. 4144
Oct. 1953
---. 2049
Nov. 1953
.
1. 2500
Dec. 1953
.
.--- . . 1.0371
The final interest payable on bonds maturing November 1, 1953, will be paid in
regular course on May 1, 1953, by check mailed by the Treasury Department.
The remainder of the final interest payments provided for above will be paid
following acceptance of the bonds by the agency through which the exchange is
made.
(c) Requests for payment.—Series F and G bonds tendered in exchange must
bear appropriate requests for payment in accordance with the provisions of Treasury Department Circular No. 530, Seventh Revision, as amended, or the special
endorsements provided for in Treasury Department Circular No. 888, Revised.
In any case in which new bonds in bearer form, or new registered bonds in another
name, are desired, requests for pjayment must be supplemented by specific in;StruCtions signed by the owrier who signed the request for payment.
181
EXHIBITS
V.
R E G I S T R A T I O N OF N E W B O N D S ;
1. New Treasury bonds in registered form m a y be registered only as authorized
in Treasury D e p a r t m e n t Circular N o . 300, as supplemented a n d amended.
Registration in t h e n a m e of one person payable on death to another is nbt a u thorized. Treasury bonds are not redeemable before m a t u r i t y a t t h e option of t h e
owners. Registered Treasury bonds m a y be transferred to a purchaser only upon
proper assignment. Treasury bonds registered in t h e form *'A or B ' ' may be
transferred only upon assignment by or on behalf of both, except t h a t if one of
thehi is deceased, an assignment by or on behalf of t h e survivor will be accepted.
A bond registered in t h e n a m e of a minor m a y be assigned only by a guardian or
similar representative appointed b y a court of competent jurisdiction or otherwise
duly qualified.
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, t o m a k e allotnients on t h e basis a n d u p
to t h e a m o u n t s indicated by t h e Secretary of t h e Treasury to t h e Federal Reserve
Banks of t h e respective districts, t o issue a l l o t m e n t notices, to receive p a y m e n t
for bonds allotted, to m a k e delivery of bonds ori full-paid subscriptions allotted,
a n d t h e y m a y issue interim receipts pending delivery, bf t h e definitive bonds.
2. T h e Secretary of t h e Treasury m a y a t a n y time, or from time to time, prescribe supplemental or a m e n d a t o r y rules a n d regulations governirig t h e offering,
which will be communicated p r o m p t l y t o t h e Federal Reserve Banks.
G.
M.
HUMPHREY,
Secretary of the Treasury^
00
Allotments of 3yA percent Treasury bonds of 1978-83 issued for cash and in exchange for Series F and Series G savings bonds
to
CO
Exchange subscriptions allotted
Federal Reserve district
Boston
_
New York
__.
Philadelphia
Cleveland..
-.Cinciimati
Pittsburgh
Richmond
_. .
Baltimore.
Charlotte.
__.
Atlanta.—
Birmingham
_
Jacksonville.._
Nashville
New Orleans
Chicago
St. Louis..
_
Little Rock-.
Louisville
Memphis
Minneapolis
Kansas City.
_
Dallas-.—
_
El Paso
_
._
Houston...
.-San Antonio
SanFrancisco
LosAngeles
Portland
_
Salt Lake City .
Seattle Treasury..Government investment, aecoiints
Total
Series F
savings bonds
exchanged
_. -
. •
.
.
-
-
Total subscripSeries Q
savings bonds Cash differences tions allotted
on exchange
exchanged
Cash subscriptions allotted
$64,617.500
148,923,000
50,176, 500
30, 223, 500
$2,919,300
10,999,100
3,003,500
2,446.700
$61,634,600
137,599,800
47, 068, 700
27,691, 200
$63,600
324,100
104,300
85.600
1,623,000
13, 268,100
35,900
14, 927,000
784,350
6,844, 500
27,650
6,656, 500
5, 258, 000
845, 775
37,166, 500
12,096,800
119, 500
67,925
42,544,000
13, 010, 500
854, 000
688, 200
481, 700
9,181, 500
7,381, 000
4, 699, 600
16, 500
29,300
11, 700
10, 052, 000
8, 098, 500
6,193, 000
922,800
893,300
12,003,400
7, 756,900
28,800
24,300
12, 955, 000
8,674,500 i
260, 500.
2, 067,000
11,500
2,339,000
385,459,600
950,675
•
_ .
.
.
1
. . . . . . .
_.
-
_
_.
. .
•
-
31,980, 226
Total
allotted
o
$66,858,500
570, 603,000
33,871,000
20,878,500
9,380, 500
18,084, 500
12,395,500
21,060,000
16,095,000
6,864,000
2, 773,000
4,992,000
10,432,000
5, 588,000
106, 775, 500
li. 353,000
529,500
6,300, 500
5,383.000
19,185,000
17,605, 000
14,922, 500
589, 500
2,634, 500
3,611,500
47, 995, 500
16,413, 500
6,164,000
3,485, 500
6, 517,000
702,000
117, 779. 000
418,390, 500 i 1,187,821,500
$131,476,000
719,526, 000 o
84, 047,500 • = 1
51,102,000
9,380,600
18,084,500
27,322, 500
21, 060, 000
16, 095, 000 w
13, 520, 500 fel
2, 773,000 o
4,992, 000
10,432, 000
5, 588, 000 •-3
149,319, 500 >
24,363, 600
529, 500
6,300, 500
5,383, 000 o
29, 237, 000
25, 703, 500
20,115,500
589, 500
2, 634, 600
3,611,500
60,950, 500
25,088, 000
6,164, 000
3.485, 500 >
6, 517, 000
3, 041, 000
117, 779,000
1, 606, 212, 000
EXHIBITS
183
Treasury Bills
'
Exhibit 8.—Inviting tenders for Treasury bills dated July 3, 1952 (press release
of June 26,1952)
The Secretary of the Treasury, by this public notice, invites tenders for $1,200,000,000, or ther^eabouts, of 91-day Treasury bills, for cash and in exchange for
Treasury bills maturing July 3, 1952, in the amount of $1,201,505,000, to be
issued on a discount basis under competitive and noncompetitive bidding as hereinafter provided. The bills of this series will be dated July 3, 1952, and will
mature October 2, 1952, 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 Bariks and branches up to the
closing hour, 2 o'clock p. m., eastern daylight saving time, Monday, June 30, 1952.
Tenders will not be received at the Treasurj^ Departmerit, Washington. Each
tender must be for an even multiple of $1,000, and in the case of competitive
tenders 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.
Others than banking institutions will not be permitted to submit tenders except
for their own account. 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 2
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 range 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.
Subject to these reservations, noncompetitive tenders for $200,000 or less without
stated price from any one bidder will be accepted in full at the average price
(in three decimals) of accepted competitive bids. Settlement for accepted tenders
in accordance with the bids must be made or completed at the Federal Reserve
Bank on July 3, 1952, in cash or other immediately available funds or in a like face
amount of Treasury bills maturing July 3, 1952. Cash and exchange tenders will
receive equal treatment. Cash adjustments will be made for differences between
the par value of maturing bills accepted in exchange and the issue price of the
new bills.
The income derived from Treasury bills, whether interest or gain from the sale
or other disposition of the bills, shall not have any exemption, as such, and loss
from the sale or other disposition of Treasury bills shall not have any special treatment, as such, under the Internal Revenue Code, or laws amendatory or supplementary thereto. The bills 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. For purposes of
taxation the amount of discount at which Treasury bills are originally sold by the
United States shall be considered to be interest. Under Sections 42 and 117 (a) (1)
of the Internal Revenue Code, as amended by Section 115 of the Revenue Act of
1941, the amount of discount at which bills issued hereunder are sold shall not be
considered to accrue until such bills shall be sold, redeemed or otherwise disposed
of, and such bills are excluded from consideration as capital assets. Accordingly,
the owner of Treasury bills (other than life insurance companies) issued hereunder
need include in his income tax return only the difference between the price paid for
such bills, whether on original issue or on subsequent purchase, and the amount
actually received either upon sale or redemption at maturity during the taxable
year for which the return is made, as ordinary gain or loss.
Treasury Department Circular No. 418, as amended, and this notice, prescribe
the terms of the Treasury bills and govern the conditions of their issue. Copies of
the circular may be obtained from any Federal Reserve Bank or branch.
184
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 9.—Acceptance of tenders for Treasury bills dated July 3, 1952 (press
release of July 1, 1952)
The Secretary of the Treasury announced last evening that the tenders for
$1,200,000,000, or thereabouts, of 91-day Treasury bills to be dated July 3.and
to mature October 2, 1952, which were offered on June 26, were opened at the
Federal Reserve Banks on June 30.
The details of this issue are as follows:
Total applied for.
$2, 136, 032, 000
Total accepted (includes $167,903,000 entered on a noncompetitive basis and accepted in full at the average
price shown below)
1, 200, 257, 000
Average price, equivalent rate of discount approximately
1.788 percent per annum
99. 548-1Range of accepted competitive bids:
High, equivalent rate of discount approximately 1.586
percent per annum
99. 599
Low, equivalent rate of discount approximately 1.800
percent per annum
99.545
(2 percent of the amount bid for at the low price was accepted.)
Total
applied for
Federal Reserve district
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta.
Chicago-.
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco-..-i
-
-'
.- -
--_ .
1
Total, __-
--
--- -
.
---
-_-
__
_•
._—
-.-
_
J
..__
Total accepted
$19,407,000
1, 527,920, 000
36,521,000
34, 731, 000
16,184, 000
12,334, 000
228,982,000
39, 592, 000
, 13,600,000
46, 285, 000
34, 515, 000
125,961, 000
$13,427,000
705,630,000
21, 521, 000
29, 731, 000
• 14, 098, 000
12, 236, 000
166,028, 000
29,392, 000
11,422, 000
43,305,000
34, 515, 000
118, 952,000
2,136,032, 000
1; 200, 257,000
V--17^;-/;:; .:• : . .• :' •
.-.EXHIBITS
:.,
•;, •;
,:':;v^
,185
Exhibit 10.—Inviting t e n d e r s for t h e Tax Anticipation Series of Treasury bills
dated J u n e 3, 1953 (press release of M a y 26, 1953)
T h e Secretary of t h e Treasury, b y this public notice, invites tenders,for $800,000,000, or t h e r e a b o u t s , of 107-day Treasury bills, t o be issued on a discount
basis under competitive a n d noncompetitive bidding as hereinafter pro.vided.
T h e bills of this series will be designated T a x Anticipation Series, t h e y will be
d a t e d J u n e 3, 1953, a n d will m a t u r e September 18, 1953; They will be accepted
a t face value in p a y m e n t of income a n d profits taxes due on September 15, 1953,
a n d t o t h e extent t h e y are n o t presented for this purpose t h e face a m o u n t of these
bills will be payable without interest a t m a t u r i t y . Taxpayers desiring t o apply
these bills in p a y m e n t of September 15, 1953, income a n d profits taxes have t h e
privilege of surrendering t h e m t o a n y Federal Reserve Bank or branch n o t more
t h a n fifteen days before September 15, 1953, a n d receiving receipts therefor showing t h e face a m o u n t of t h e bills so surrendered. These receipts m a y be s u b m i t t e d
in lieu of t h e bilL« on or before September 15, 1953, t o t h e Director of I n t e r n a l
Revenue for t h e district in which such taxes are payable. T h e y will be issued in
bearer form onlv, a n d in denominations of $1,000, $5,000, $10,000, $100,000,
$500,000, a n d $1,000,000 (maturity value).
Tenders will be received a t Federal Reserve Banks a n d branches u p t o t h e
closing hour, 1 o'clock p . m., eastern daylight saving time, Friday, M a y 29, 1953.
Tenders will n o t be received a t t h e Treasury D e p a r t m e n t , Washingoon. EacH
t e n d e r m u s t be for an even multiple of $1,000, a n d in t h e case of competitive
tenders t h e price offered m u s t be expressea on t h e basis of 100, with not more
t h a n three decimals, e. g., 99.925. Fractions m a y n o t b e used. I t is ,urged t h a t
tenders be. m a d e - o n t h e printed forms a n d forwarded in t h e special envelopes
which will be supplied b y Federal Reserve Banks or branches on application
therefor.
. .•
•
Others t h a n bankirig institutions wiir not be p e r m i t t e d t o submit tenders
except for their own account.. Tenders will be received without deposit from incorporated b a n k s a n d t r u s t companies a n d from responsible and recognized
dealers in investment secuiities. Tenders from others m u s t be accompanied Sy
p a y m e n t of 2 percent of t h e face a m o u n t pf, T r e a s u r y bills applied for, unless t h e
tenders are accompaniea by an express g u a r a n t y of paym.ent by an incorporated
b a n k or t r u s t company.
:
;: .
^ .
• •
Immediately after t h e closing hour, tenders will be opened a t t h e Federal
Reserve Banks and. branches, following which public announcement will be m a d e
by t h e Secretar}^ of t h e Treasury of t h e a m o u n t a n d price range of accepted bids.
186
1953 REPORT OF THE SECRETARY OF THE TREASURY
Those submitting tenders will be advised of t h e acceptance or rejection thereof.
T h e Secretary of t h e Treasur}^ expressly reserves t h e right to accept or reject any
or all tenders, in whole or in p a r t , a n d his action in any such respect shall be final.
Subject to these reservations, noncompetitive tenders for $200,000 or less without
s t a t e d price from a n y one bidder wiil be accepted in full a t t h e average price (in
three decimals') of accepted competitive bids. Settlement for accepted tenders iri
accordance with t h e bids must be made or completed, a t t h e Federal Reserve
Bank in cash or other immediately available funds on J u n e 3, 1953, provided,
however, any qualified depositary will be permitted to m a k e p a y m e n t b y credit
in its Treasury t a x and loan account for Treasury bills 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 B a n k of its district.
T h e income derived from Treasury bills, whether interest or gain from t h e sale
or other disposition of t h e bills, shall not h a v e a n y exemption, as sucri, a n d loss
from the sale or other disposition of Treasury bills shall not have any special
t r e a t m e n t , as such, under t h e I n t e r n a l Revenue Code, or laws a m e n d a t o r y or
supplementary thereto. 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 priricipal or interest thereof by an3^ State, or any
of t h e possessions of the United States, or by any local taxing a u t h o r i t y . For
purposes of taxation t h e a m o u n t of discount at which Treasury bills are originally
sold by the United States shall be considered to be interest. Under Sections 42
a n d 117 (a) (I) of t h e Internal Revenue Code, as amended by Section 115 of the
Revenue Act of 1941, the a m o u n t of discount at which bills issued hereunder are
sold shall not be considered to accrue until such bills shall be sold, redeemed or
otherwise disposed of, a n d such bills are excluded from consideration a s ' c a p i t a l
assets. Accordingly, t h e owner of Treasury bills (.other t h a n life insurance
companies) issued hereunder need include in his income t a x r e t u r n only t h e difference between t n e price paid for such bills, whether On original issue or on subsequent purchase, a n d the a m o u n t actually received either upOn sale or redemption
a t m a t u r i t y , or t h e a m o u n t of income or profits taxes paid by rneans of t h e bills,
during t h e taxable year for which t h e return is made, as ordinary gain or loss.
Treasury D e p a r t m e n t Circular No. 418, as amended, and 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 t h e circular m a y be obtained from any Federal Reserve Bank or branch.
187
.EXHIBITS
Exhibit 11.—Acceptance of tenders for the Tax Anticipation Series pf Treasury
bills dated June 3, 1953 (press release of May 30, 1953)
The Secretary of the Treasury announced last evening that the tenders for
$800,000,000, or thereabouts, of Tax Anticipation Series 107-day Treasury bills
to be. dated'June 3 and to mature Septernber 18, 1953, which were offered on May
26, were operied at the Federal ReserveBanks on May 29.
The details of this issue are as follows:
!
Total apjpliedfor
$1, 675, 707, 000
Total accepted (includes $117,267,000 entered on a noncompetitive basis and accepted in full at the average price
.
shown below)
• 800, 064,000
Average price, equivalent rate of discount approximately
2.383 percent per annum
99.292
Range of accepted competitive bids:
High, equivalent rate of discount approximately 1.753
;
percent per annum__
.___
99. 479
Low, equivalent rate of discount approximately 2.443
percent per annuni
^--.-^
,
-99.274
(68 percent of the amount bid for at the low price, was accepted.)
Total applied
for
F e d e r a l R e s e r v e district
Boston
NewYork
._
Philadelphia
Cleveland
_
Richmond
Atlanta.-Chicago-- -.St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..-
_
_
.
_
_
_
;
_
:
-
Total
_-.
_
J
!
...
.
....
.
$29,840,000
981,051,000
74,527, 000
99, 040, 000
25,472, 000
50,892, 000
188,309, 000
66,510,000
21,086, 000
43, 747,000
34, 679,000
70, 655, 000
1,675,707,000
Total accepted
$22,208. OOOi
303 866 OOa
36,617, OOO*
58, 240, 000'
19. 908, 000»
38,392,000
148,609, 000
44,670,000'
18,485,000'
34,107,000*
30, 043, OOOl
44,919, ooa
800,064,000
Exhibit 12.—Summary of Treasury bill information contained in press releases
Press releases pertaining to the Weekly Series of Treasury bill issues during the
fiscal year 1953 were similar in form to exhibits 8 and 9 of this report. The press
releases for the October 8 and November 21, 1952, Tax Anticipation Series were
similar in form to exhibits 10 and 11 of this report. Therefore the releases are
not reproduced in this report but the essential details regarding each issue are
summarized in the following table.
;
;
:
Summary of information contained in press releases^ pertainirig to Treasury bills issued during thefiscal year-1953
M a t u r i t y v a l u e (in t h o u s a n d s of .dollars)
Prices a n d r a t e s
Tenders accepted
Dateof
issue
Dateof
maturity
Days
to m a turity
Total
applied
for 2
T o t a l b i d s accepted
Competitive bids accepted
High
Total
accepted3
O n com- . O n n o n petitive ' competitive
basis 2 3
basis 2
F o r cash
(X)i
OP...
Liex• change .
Average
price
per
himdred
Equivalerit
.average
rate *
(percent)
P r i c e per
hundred
. Low
Equivalent
rate* •
(percent)
Price per
hundred.
Equivalent
rate * .
(percent)
o
W e e k l y Series
1952
July
3
10
17
24
31
Aug. 7
14
21
28
Sept. 4
11
18
25
Oct.
2
9
16
23
30
Nov. 6
13
20
28
Dec. 4
11
18
26
1952
Oct. 2
9
16
23
30
Nov. 6
13
20
28
Dec. 4
11
18
26
1953
Jan.
2
8
15
22
29
Feb. 6
13
19
26
Mar. 5
12
19
26
91
91
91
91
91
91
91
91
92
91
91
91
92
2.136, 032
2,161,080
1.981,995
2,103,975
2,056,372
1,934,841
2,336, 976
2, 082, 519
2,161, 085
2, 074, 457
2, 277, 503
2. 275,105
2,108,974
1, 200, 257
1,400,368
1,400,395
1,399, 910
1, 500,422
1,300,141
1. 500, 769
1, 300, 266
1, 299,887
1, 300. 311
1, 200,934
1, 202,812
1, 200,432
1,032,354 1, 210,479 :-.
1,193, 688
1,185,060
1,314, 662
1,111,939
1, 284, 690.
1,088,727..
1,117, 667
1,136,974
959,132
947,375
969,429
-.
167,903
189,889
206,707
214,860
185, 760
188, 202
216,169
211,539
182, 230
163,337
241,802
266,437
231, 003
92
91
91
91
91
91
92
91
90
91
91
91
90
1, 915,828
2,108,115
2,237,832
2,408,430
2,327, 461
2,116, 288
2, 222, 922
1,904,875
1,862, 552
1,836,380
1,943, 714
1, 713,088
1,775,177
1,199,990
1,400,115
1,401,185
1,401, 548
1, 501,416
1, 301, 003
1,500,852
1,300, 619
1,300,013
1,300, 750
1, 200,342
1,199,975
1,200,337
1,004,729 .. 196,261
1,184,878
• 215, 237
1,191,230
209,955
1,128,994.
272, 564
1,286,879
215,637
1,082.995:
218, 008
1, 261,206
239, 646
1,069, 013
231, 506
1,109,624
190,389
1,118,368
182,392
966, 083
234,259
959, 277
240, 698
223,221
977, U 6
1,166,446
1,351,876
1,338, 078
1,305,622
1, 420, 472
1, 233, 083
1,366, 694
1, 207, 759
1, 230, 683
1,262,715.
1.157, 294
1,153, 064
1,125,107 •
• 33,811
48,492
62,317
94,388
79,950
67, 068
135,165
92,507
69, 204
37, 596
43,640
' 49,748
75,325
1,161, 058
1,332, 028
1,313,442
1,346,167
1,436,388
1, 237,802
1,377,116
1,224,762
1, 251,387
1, 256, 772
1,144,330
1,155,978
1,161,993
38,932
68,087
87,743
56,381
66,028
63,201
123, 736
76,767
48, 626
43,978
66, 012
43,997
38,344
hj
O
~
.
99. 548
99.547
99.542
99.632
99.626
99.530
99. 519
99. 536
99. 615
99. 524
99.532
99. 662
99. 582
1.788
L793
L810
1.850
L877
1.860
1. 903'
1.841
1.899
L884
1.850
1.773
L635
99. 560
99. 638
99. 636
99. 561
99.556
99. 546
99. 629
99. 626
99. 517
99.482
99. 471
99. 460
99.443
L760
1.829
1.836
1.735
1.757
1.796
1.843
1.877
L931
2.049
2.091
2.138
2.228
99.599
99. 600
99.600
: 8 99.556
99.655:
. 6 99.635
99. 540
99.653
99.560
99.650
7 99.638
99. 557
99.605
99. 617
99.675
8 99.580
99. 570
99.680
99. 580
99.660
99.662
99.546
99.550
99. 517
99.556
99.498
.:
99. 545
99, 643
99. 535
99.627
99. 617
. 99. 521
99. 514
99. 631
99. 511
99. 621
99. 631
99. 651
99.-579
1.800
1.808
L840
1.871
1.911
1.895
1.923
L865
L913
1.896
1.865
L 776
1.647
1.499
99.543
99.631
1.681
99.633
L662
1.701
99.560
; 99.564
1.662
99. 644
1.662
99.626
1.722
1.733
99. 620
99.513
1.820 • ^
99.469,
1.780
99.466
1.911
1.760
99.450
99.433
2. 008
1.788
1.855
-1.847
1.741
L764
1.804
.1.859
1.899
1.948
. 2.101
2.113
2.17^
2.268
L586
1.582
1.582
1.760
i;760
1.840
1.820
i : 768
1.761
1. 780
1.828
L763
1.546
.
W
H..
^:
>o
W
>
1953
Jan. 2
8
15
22
29
Feb. 5
13
19
26
Mar. 6
12
19
26
Apr. 2
9
16
23
30
May 7
14
21
Apr.
May
June
July
Aug.
28
June A
11
18
25
Sept.
2
9
16
23
30
7
14
21
28
4
11
18
25
2
9
16
23
30
6
13
20
27
3
10
17
24
90
91
91
91
91
91
90
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
91
098,195
1, 200, 662
057,816
1, 399,431
036, 001
1, 400,166
127; 140
1, 400,403
383,809
1, 600,439
133,008
1,300.354
385,969
1, 500,475
291, 525
1,301,247
993, 070
1,300,725
•997', 470 1,301,388
442,093
1, 201,879
388, 021
1, 200, 500
229, 681
1, 200, 652
943,266
1, 200, 547
275, 404
1, 400,812
098, 593
1, 400, 736
202, 275
1, 600, 526
183, 999
1, 499,924
166,340
1, 500,380
230,987
1, 600, 569
340, 299
1, 601, 213
087, 038
1, 500, 777
782, 421
1, 500,301
290, 278
1,399,956
207,179 -1, 500, 503
985,339
1, 500, 229
991.357
1,166,346
1,143, 094
1,160,464
1, 237, 651
1,083,392
1,259,945
1, 059, 206
1,104, 391
1,102, 662
971, 762
925, 541
959, 750
999, 200
1,179,964
1,146,087
1, 238, 613
1, 250, 522
1, 252, 666
1, 238, 020
1, 245, 080
1, 292, 781
1,317, 299
1,169,122
1, 218, 662
1, 261,869
209,305
233, 086
257, 072
239,939
262,888
216, 962
.240, 530
242, 041
196,334
198, 726
230,117
274,959
240, 902
201,347
220, 858
264,649
262, 013
249, 402
247, 714
262, 549
256,133
207, 996
183, 002
230, 834
281,941
238,360
1.161, 694
1, 263. 003
1,172, 627
1, 254, 709
1,447, oob
1,156, 051
1, 346,179
1, 224, 700
1, 237, 225
1. 261, 637
1,130, 711
1,144, 001
1,156, 784
1.162, 037
1, 360,330
1,189, 237
1,327,612
1, 427,891
1, 330, 211
• 1, 328, 764
1, 429, 547
1,436,482
1, 443, 285
1, 332,109
1, 442, 650
1, 456,149
38,968
136, 428
227, 539
145, 694
53,439
144,303
164, 296
76, 547
63, 600
39.851'
71,168
56,499
43,868
38, 510
40, 482
211,499
172, 914
72, 033
170,169
. 171,805
71, 666
• 641295
. 57,016
67; 847
67, 953
44; 080
2.191
1.986
2.124
2.097
1.961
2.031
1.993
1.977
2. 070
2.164
2.098
2.029
2.036
2.029
2.073
2.219
2.320
2.243
2.352
2.271
2. 092
2.084
2.416
2.323
2.228
1.954
99.452
99.498
99.463
99.470
99. 504
99.487
99. 602
99. 500
99. 477
99.453
99. 470
99. 487
99. 486
99. 487
99. 476
99. 439
99.414
99.433
99.405
99.426
99.471
99. 473
99.389
99.413
99.437
99. 506
9 99.463
10 99.526
99. 550
99. 620
99. 575
n 99. 525
99. 520
99.620
99.650
'
99.500
12 99. 476
99. 500
99. 522
99.494
99. 507
99. 494
99.494
99.460
99.450
99.443
99.477
99. 602
99.486
99.440
13 99.444
99. 523
2.148
1.879
1.780
1.899
1.681
1: 879
1.920
1.899
1.780
1.978
2,073
1.978
1.891
. 2. 002
1.950
2.002
2.002
2.136
2.176
2.204
2.069
1.970
2.037
2.216
2.200
1.887
99.447
99.493
99.454
99.464
99.500
99. 482
99.499
99. 498
99.470
99.448
99.468
99. 485
99. 484
99.485
99.47299. 431
99. 410
99. 426
99.400
99.423
99. 469
99.470
99; 346
99. 407
99.432
99.490
2. 212
2.006
2.160
2.120
1.978
2: 049
2.004
1.986
2.097
2.184
2.105
2'. 037
2.041
2.037
2.089
2.251
2.334
2.271
2.374
2.283
2.101
2.097
2.587
2.346
2.247
2. 018
fei
';W
T a x A n t i c i p a t i o n Series
1952
Oct.
8
N o v . 21
1953
June 3
1953
M a r . 18
J u n e 19
161
210
3,279,105
3,923, 790
2, 601,890
2, 002, 666
2,300, 690
1, 776, 266
201> 200
226,400
2, 501,890
2,002, 666
99.231
98. 923
S e p t . 18
107
1, 676,107
800, 464
682, 797
117,667
800, 464
99. 292
N O T E . — A m o u n t of m a t u r e d issues will b e found i n t a b l e 26;
1 Press release i n v i t i n g t e n d e r s for T r e a s u r y bills is d a t e d 7 d a y s before d a t e of issue"
Press release a n n o u n c i n g acceptance of t e n d e r s is d a t e d 2 d a y s before d a t e of issue.
Closing d a t e on w h i c h t e n d e r s for issue are accepted is 3.days before d a t e of issue.
2 F i g u r e s are final a n d differ in m o s t cases, from those sho^vn in press releases a n n o u n c i n g d e t a i l s of p a r t i c u l a r i s s u e .
3 N o n c o m p e t i t i v e t e n d e r s for $200,000 or less w i t h o u t s t a t e d price from a n y o n e b i d d e r
were accepted in full a t average price for a c c e p t e d c o m p e t i t i v e - b i d s .
* B a n k discount basis.
—
8 E x c e p t $100,000 a t 99.949 a n d $550,000 a t 99.600.
.
L720
1.846
2.383
14 99. 284
18 99. 000
99.479
1. 601
. 1.714
99.204
98.915
1.780
L860
1.753
99.274
2.443
6 E x c e p t $60,000 a t 99.556.
7 E x c e p t $300,000 a t 99.550 a n d $25,000 at.99.545.
8 E x c e p t $300,000 a t 99.621.
9 E x c e p t $200,000 a t 99.498 a n d $300,000 a t 99.480.
10 E x c e p t $50,000 a t 99.550.
" E x c e p t $100,000 a t 99.670 a n d $200,000 a t 99.544.
12 E x c e p t $200,000 a t 99.600.
13 E x c e p t $800,000 a t 99.635 a n d $200,000 a t 99.611.
14 E x c e p t $20,000 a t 99.329 a n d $500,000 a t 99.307,
15 E x c e p t $50;000 a t 99.250.
:00
190
1953 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 13.—Seventh a m e n d m e n t J a n u a r y 12, 1953, to Department Circular
; No. 418, relating to Treasury bills
;
TREASURY DEPARTMENT,
Washington, J a n u a r y 12, 1953.
P a r a g r a p h 5 of D e p a r t m e n t Circular N o . 418, as amended (31 C F R 309.5),
as revised May 13,1952 (17 F R 4561), is hereby further revised to read as follows:
" 5 . Treasury bills will be acceptable a t m a t u r i t y value to secure deposits of
public moneys; they will not bear t h e circulation privilege. T h e Secretary of
t h e Treasury, in his discretion, when inviting tenders for Treasury bills, m a y
provide t h a t Treasury bills of a n y series will be acceptable a t maturity, value,
whether a t or before m a t u r i t y , under such rules and regulations as-h§,:,shall prescribe or approve, i n - p a y m e n t of income a n d profits taxes payable under t h e
.|:^.r,pvisions of t h e I n t e r n a l Revenue Code. Any Treasury bills-^^vhichr.by t h e
'"ierms of their issiie may be accepted in payrhent of income and profits taxes
}may be surrendered to any Federal Reserve B a n k or branch, acting as fiscal
-•agent of the United States, fifteen days or less before t h e d a t e on which t h e taxes
'become due. T h e Federal Reserve Bank or branch will issue receipts to t h e
'Owners showing t h e face a m o u n t of t h e bills so surrendered. These receipts
}may be submitted in lieu of the bills on or before the specified t a x p a y m e n t dates
t o t h e Director of I n t e r n a l Revenue for t h e district, with t h e owners' t a x r e t u r n s .
jNotes secured by Treasury bills are eligible for discount or rediscount a t Federal
Keserve Banks by member banks, as are notes secured by bonds and notes of t h e
United States, under t h e provisions of Section 13 of t h e Federal Reserve Act.
T h e y will be acceptable a t m a t u r i t y , b u t not before,, in p a y m e n t of interest or of
principal on account of obligations of foreign governments held by t h e United
States."
J O H N W . SNYDER,
Secretary of the Treasury.
United States Savings Bonds and Treasury Savings Notes
Exhibit 14.—Second a m e n d m e n t , July 7, 1952, to D e p a r t m e n t Circular No. 750,
Revised, regulations governing payments by b a n k s and other financial institutions in connection with the redemption of United States savings bonds
TREASURY DEPARTMENT,
Washington, J u l y 7, 1952.
Sections 321.4 (b), 321.9 (a) a n d 321.12 (first sentence) of D e p a r t m e n t Circular
N o . 750, Revised, d a t e d J u n e 30, 1945, as amended (31 C F R 321), are hereby
amended to read as follows:
" S E C . 321.4 (6) 'Bond(s)' shall include only United States savings bonds of
Series A, B, C, D , or E, including bonds of Series E designated 'Defense Savings
Bonds' or 'War Savings Bonds.' (Savings bonds of Series F , G, H , J, a n d K are
n o t included.)
" S E C . 321,9 (a) If t h e bond is presented for p a y m e n t less t h a n two m o n t h s
from t h e issue d a t e (the issue d a t e should not be confused with t h e d a t e appearing
in t h e issuing agent's dating s t a m p ) . Any p a y m e n t or advance to a bond owner
before a bond is eligible for redemption is not authorized in any circumstance.
" S E C . 321.12. T h e redemption value of a bond is determined according to t h e
period of time t h a t it has been outstanding, and t h e table of redemption values
applicable to each b o n d . "
J O H N W . SNYDER,
Secreiary of the-Treasury.
.
- EXHIBITS
..
-
191
Exhibit 15.—First a m e n d m e n t , April 6, 1953,, to Department Circular No. 530,
Seventh Revision, regulations governing United States savings bonds
TREASURY
DEPARTMENT,
Washington, April 6, 1953. •'
To Owners of United States Savings Bonds and Others Concerned:
P u r s u a n t to Section 22 (a) of the Second Liberty Bond Act, as amended (55
S t a t . 7, 31 U. S. C. 757c), Sections 315.21 (a), 315.28, and 315.29 of D e p a r t m e n t
Circular N o . 530, Seventh Revision (17 F . R . 4871), are hereby amended to read
as follows:
" S E C . 315.21 (a) Method of interest payments.—rWith the exception of the final
interest due on bonds of Series G, which will be paid with t h e principal and in t h e
same manner, the interest due on a current income bond will be paid on each
interest p a y m e n t date by check drawn to t h e 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 the
inscription on the bond. In the case of a bond registered in t h e form 'A, payable
on death to B ' , a check will be drawn to t h e order of A alone until the Bureau of
the Public Debt, Divisionof L o a n s a n d Currency, 536 South Clark Street, Chicago
5, Illinois, receives notice of A's death, and thereafter the 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 found to be entitled to the bond.
Checks issued in p a y m e n t of interest on a bond registered in the names of coowners
will be drawn to the order of 'A or B ' and will be mailed to the address of record
of t h e payee first named, unless otherwise specifically directed or until t h e Bureau
of t h e Public Debt, Division of Loans and Currency, 536 South Clark Street,
Chicago 5, Ilhnois, receives notice of his death. Upon receipt of notice of t h e
d e a t h of the coowner to whom'interest is being mailed the interest will be mailed to
t h e other coowner, if living, or, if not, will be held subject to the claim of the
representatives of or persons entitled to the estate of the last surviving coowner.
" S E C . 315.28. Presentation, surrender, and payment—all series.—Except as
otherwise provided, in section 315.22 or section 315,29, p a y m e n t will be made in
accordance with t h e provisions of this section. T h e request for p a y m e n t should
be duly signed by. t h e owner and certified as provided in section 315.24. T h e
bond should then be presented and surrendered to (1) a Federal Reserve Bank,
or branch, (2) t h e Bureau of the Public Debt, Division of Loans and Currency,
536 South Clark Street, Chicago 5, Illinois, or (3) the Treasurer of the United
States, Washington 25, D . C. Usually p a y m e n t will be expedited by surrender to
a Federal Reserve Bank. In all cases presentation will be a t the expense and
risk of.the owner, and, for his protection, t h e bond should be forwarded by registered mail if not presented in person. P a y m e n t will be made by check d r a w n
to t h e order of the registered owner or other person entitled and mailed to him a t
the address given in his request for p a y m e n t .
" S E C . 315.29. Optional procedure limited io bonds of Series A to E, inclusive, in
names of individual owners or coowners only.—An individual (natural person) whose
name is inscribed on t h e face of a bond of Series A, B, C, D, or E, either as owner or.
coowner in his own right, m a y present such bond (unless marked ' D U P L I C A T E ' )
to any incorporated bank or t r u s t company or any other organization qualified
as a paying agent under t h e provisions of D e p a r t m e n t Circular No. 750, Revised.
If such bond is in order for p a y m e n t by the paying agent, t h e owner or coowner,
upon establishing his identity to t h e satisf action, of t h e paying agent and upon
signing t h e request for p a y m e n t and adding his home or business address, m a y
receive immediate p a y m e n t a t t h e appropriate redemption value, as provided in
sections 315.22 and 315.23. Even though t h e request for ^payment has been
signed, or signed and certified prior to the presentation of the bond, nevertheless
t h e paying age-nt is required to establish to its satisfaction the identity of tlie owner
or coowner requesting p a y m e n t and such paying agent may require t h e ow^ner or
coowner to sign again the request for p a y m e n t . No charge wull be made to t h e
owner. This procedure is authorized notwithstanding t h e provisions of any
Treasury D e p a r t m e n t circulars offering the bonds for sale and notwithstanding any
instructions which may be printed on t h e bond and is optional with individual
owners. This procedure is not applicable to deceased owner cases or other cases
in which documentary evidence is required or to partial redemption cases."
G.
M.
HUMPHREY,
Secreiary of the Treasury.
192
1 9 5 3 REPORT OF T H E -SECiRETARY OF T H E
TREASURY
Exhibit 16^—Revision April, 8, 1953, of D e p a r t m e n t Circular No. 888, regulations
governing the special e n d o r s e m e n t of Uhited States savings bonds of any s e r i e s
and the payment of m a t u r e d Series F and G bonds by eligible paying a g e n t s
' •
TREASURY
DEPARTMENT,
• • , • . ,
Washington, April 8, 1953.
P u r s u a n t to Section 22 of t h e Second Liberty Bond Act, as amended, (49 S t a t .
21, as amended; 31 U. S. C. 757c) D e p a r t m e n t Circular No. 888, dated M a y 15,
1951 (31 C F R 1951 S U P P . 330), is hereby revised effective May 1, 1953, to read
as follows:
:
" S E C . 330.1. Purpose of regulations.—These regulations (1) prescribe a p r o cedure whereby eligible qualified paying agents m a y specially endorse United
States savings bonds of certain classes, with or without the. owners' signatures to>
t h e requests for p a y m e n t , and (2) make provisions for such agents to p a y certain
bonds so endorsed or forward t h e m to t h e Federal Reserve Bank of t h e district for
p a y m e n t of for any authorized exchange. See sec. 330.3 hereof for classes of bonds
which such paying agents may endorse and sec. 330.8 hereof for those which they
m a y p a y or present to t h e Federal Reserve B a n k of t h e district for p a y m e n t o r
exchange. Although t h e provisions of this circular are designed primarily t o
p e r m i t p a y m e n t without t h e signatures of t h e owners to t h e requests for p a y m e n t
on bonds held by paying agents in safekeeping or t r u s t accounts for known customers, application thereof is not so limited. For example, an eligible paying
agent m a y process a matured bond of Series F or G by special endorsement undert h e provisions and conditions of this circular for the owner, whether or not he
signs t h e request for p a y m e n t , arid whether or not t h e bond is held in a safekeeping
or t r u s t account. U N D E R N O C I R C U M S T A N C E S S H A L L T H E P R O V I SIONS OF T H I S CIRCULAR BE USED TO GIVE E F F E C T TO A T R A N S F E R , H Y P O T H E C A T I O N , OR P L E D G E OF A B O N D OR T O P E R M I T P A Y M E N T T O A N Y P E R S O N O T H E R T H A N T H E O W N E R OR.
C O O W N E R . V I O L A T I O N OF T H E S E P R O H I B I T I O N S W I L L B E CAUSE
F O R T H E W I T H D R A W A L OF AN A G E N T ' S P R I V I L E G E T O P R O C E S S
ANY BONDS U N D E R THIS CIRCULAR.
" S E C . 330.2. Agents eligible to process bonds.—Any institution qualified as a.
paying agent of United States savings bonds under t h e provisions of D e p a r t m e n t
Circular No. 750, Revised, upon establishing its eligibility in accordance with thissection, is hereby authorized to process savings bonds and to p a y m a t u r e d savings
boiids of Series F and G, subject to t h e provisions and conditions of this circular
and any instructions issued hereunder. In order to establish such eligibility, the
institution should apply on Treasury D e p a r t m e n t Form P D 2291, Revised, to theFederal Reserve Bank of t h e district in which it is located. This form provides a.
certification t h a t by duly executed resolution of its governing board or committeet h e institution has been authorized to apply for t h e privilege of processing and
paying bonds in accordance with the provisions and conditions of Department.
Circular No. 888, Revised, including all supplements; amendments, and revisions
thereof, and any instructions issued in connection therewith. If t h e application
is approved, t h e Federal Reserve B a n k will so notify.the institution by means of
Treasury D e p a r t m e n t Form P D 2292, Revised. T h e authority given in thiscircular to p a y m a t u r e d savings bonds of Series F and G and to otherwise process,
savings bonds will become effective upon t h e receipt of such duly executed Formi
P D 2292, Revised, b u t not before May, I 1953. T h e Secretary of t h e Treasury
reserves the right to withdraw such privilege from any institution a t any time and
such action m a y be t a k e n either by the Treasury D e p a r t m e n t direct or through a,
Federal Reserve Bank, acting as fiscal agent of t h e United States. T h e eligibility
established by any institution to process savings bonds under D e p a r t m e n t Circular
No. 888, d a t e d M a y 15, 1951, is hereby withdrawn, effective a t t h e close of businessApril 30, 1953.
' " S E C . 330.3. Bonds eligible for processing.—A United States savings bond of
any series may be processed under these regulations upon t h e request of the
registered owner (which terrii as now and hereafter used, in this circular includes,.
a coowner) named on the bond. The term 'owner' is defined to include individuals,,
incorporated and uniiicorporated bodies, executors, administrators, and otherfiduciaries nahied ori the bonds. T h e procedure does not apply, for example, t o
cases where a p a r e n t requests p a y m e n t or exchange in behalf of a minor child whois named on t h e bond a,s- its owner or to cases where requests for p a y m e n t or
exchange are made by surviving beneficiaries, or to any other cases requiring death,
ceriificates or other supporting evidence.
. - - . - ,-r ;
.;
'
EXHIBITS
•
193
" S E C . 330.4. Guaranty given io the United States.—Each paying agent by t h e
act of paying or presenting to t h e Federal-Reserve Bank of t h e district either
for p a y m e n t or for exchange a bond bearing t h e special endorsement prescribed
in sec. 330.6 shall be deemed thereby (1) to have unconditionally guaranteed to
t h e United States t h e validity of t h e transaction, including t h e identification of
t h e owner and t h e disposition of t h e proceeds or the new bonds, as the case niay
be, ,in accordance with his instructions, (2) to have assumed complete and u n conditionalliability t o - t h e United States fpr any loss which m a y be incurred byt h e United States as a result of t h e transactions, and (3) to have unconditionally
agreed to make p r o m p t reimbursement for the a m o u n t of t h e loss upon request
of the Treasury D e p a r t m e n t .
" S E C : 330.5. Evidence of owner-s authorization to agent.—By the act of paying
or presenting to t h e Federal Reserve Bank of the district for p a y m e n t or for
exchange a bond bearing t h e special endorsement prescribed in sec. 330.6, t h e
paying agent represents to t h e United States t h a t it has obtained adequate instructions from t h e owner with respect to p a y m e n t or exchange of the bond and
disposition of its proceeds or t h e new bond, as t h e case m a y be. To support
this representation agents should maintain such records as m a y be necessary to
establish t h e receipt of such instructions as well as records establishing compliance
therewith.
" S E C . 330.6. Endorsement of bonds.—Each bond processed u n d e r . t h e s e regulations shall bear t h e following endorsement (see sec. 330.7 for additional instructions covering bonds inscribed in coownership form):
'Request by owner and validity of transaction guaranteed in accordance
with T. D . Circular No. 888, Revised.
{Name and location of agenty
This endorsement m u s t be. placed on t h e back of the-bond in the:space provided
for the owner to.request payment. T h e endorsement s t a m p must be legibly impressed
in black or other dark-colored ink. T h e Federal Reserve Bank.of t h e district
will furnish rubber stamps for impressing t h e above endorsement or, in lieu
thereof, will approve designs for suitable stamps to be obtained by paying agents.
Requests for endorsement stamps to be furnished or approved by the Federal
Reserve Bank shall be made in writing by an officer of t h e institution. T h e use
of endorsement stamps which have been approved or furnished by Federal
Reserve Banks p u r s u a n t to D e p a r t m e n t Circular No. 888, dated M a y 15, 1951,
shall be discontinued at t h e close of business April 30, 1953.
" S E C . 330.7. Bonds in coownership form.—In addition to t h e endorsement
prescribed in sec. 330.6, t h e paying agent shall, in t h e case of bonds registered in
coownership form, indicate which coowner requested p a y m e n t or exchange. This
should be done by encircling in black or other dark-colored ink the name of such
coowner (or both coowners if a joint request for p a y m e n t or exchange is made)
as it appears in the inscription on the face of t h e bond.
" S E C . 330.8. Payment or exchange of bonds.—
"(A) Payment of Series A to E, inclusive, by paying agents.—Bonds of Series
A to E, inclusive, bearing the special endorsement (see sec. 330.3 and sec. 330.6)
m a y be paid by a paying agent p u r s u a n t to the authority and subject to. t h e
provisions and conditions of D e p a r t m e n t Circular No. 750, Revised, and t h e
instructions issued p u r s u a n t thereto, except, of course, t h a t t h e owner's signature
to the request for p a y m e n t of the bond will not be required, and except also t h a t
each such endorsed bond carries with it a guarantee to the United States against
loss (see sec. 330.4). Series A to E bonds, inclusive, which bear the special endorsement and which are thereafter paid by t h e paying agent under D e p a r t m e n t
Circular No. 750, Revised, will be combined with other Series A to E bonds paid
under t h a t circular and forwarded to the Federal Reserve Bank of the district.
"(B) Payment of M A T U R E D B O N D S — S E R I E S F A N D G-r-by paying
agents.—Matured savings bonds of Series F and G other t h a n thpse marked
' D U P L I C A T E ' , bearing the special endorsement (see sec. 330.3 and sec. 330.6),
m a y be paid by qualified paying agents whose eligibility to pay matured. Series
F and G bonds has been duly established p u r s u a n t to sec. 330.2. No fees will
be paid to t h e agents for making these p a y m e n t s . Such, m a t u r e d bonds m a y
be paid only under the provisions and conditions of this subsection and such
instructions as m a y be issued p u r s u a n t thereto. I t will be r e q u i r e d , t h a t (1)
the bonds be of a class which m a y be processed by special endorsement (see sec.
330.3), (2) t h e owner (as defined in sec. 330:3) has requested t h e p a y m e n t , ,(3)
t h e bonds bear no material alteration, irregularity, mutilation, or other defect
273013—54
14
194
1953 REPORT OF THE SECRETARY OF THE TREASURY
t h a t m a y be a basis for questioning p a y m e n t thereof, and (4) t h e bonds bear the
special endorsement (see sec. 330.6).: T h e p a y m e n t of m a t u r e d bonds of Series
F and G shall be m a d e in accordance with t h e following provisions:
(a) A Series F bond shall b e p a i d a t its face value.
(b) A Series G bond shall be paid a t its face value together with t h e final
interest due thereon at t h e rate of $1.25. for each $100 of face value. T h e total
a m o u n t payable a t m a t u r i t y for each authorized denomination, including t h e
final interest due, is as follows:
Series G bond
authorized
denominations
Amount payable
{Face value plus
final interest)-
$1Q0__--.--$10L 25
-$500
506. 25
$1,000- - - - 1, 012. 50
$5,000__—5, 062. 50
$10,000
10, 125. 00
(c) Each bond shall bear on its face, in t h e upper right portion, a p a y m e n t
s t a m p setting forth t h e word ' P A I D ' and t h e a m o u n t of the p a y m e n t (including
t h e final interest on Series G bonds), t h e d a t e of p a y m e n t (month, day, year), and
t h e n a m e and location of t h e paying agent including t h e ABA transit number or
other identifying code approved or assigned by t h e Federal Reserve Bank of t h e
district (the p a y m e n t s t a m p prescribed for use under D e p a r t m e n t Circular No.
750, Revised, m a y be used).
(d) T h e proceeds of each bond shall be disposed of p u r s u a n t to t h e owner's
instructions.
(e) Paid bonds shall be forwarded to the Federal Reserve Bank of t h e district
a t such time or times p u r s u a n t to such instructions as. may be prescribed by such
Bank, as fiscal agent of t h e United States.
(/) Each p a y m e n t shall be subject to t h e g u a r a n t y and liability provisions
of,sec.. 330.4,hereof.
(^) Paying, sigxsnts .shall be subject t o such other instructions governing these
p a y m e n t s as m a y be issued by t h e Federal Reserve Bank of t h e district, as fiscal
agent of the United States.
T h e Federal Reserve B a n k of t h e district will make immediate settlement, subject
to adjustment, with t h e paying agent for t h e t o t a l a m o u n t due on t h e paid bonds
forwarded hereunder bj^ t h e agent at any one time.
"(C) Payment or exchange of bonds by Federal Reserve Banks—All series.—
(1) General.—All bonds forwarded to a Federal Reserve Bank for; p a y m e n t
or exchange under t h e provisions and conditions of this circular must be accpmpanied by approp riate. instructions goverriing t h e transaction and t h e disposition
of t h e redemption checks or t h e new bonds, as t h e case may be. T h e bonds m u s t
be kept separate from any bonds t h e agent m a y pay and they m u s t be presented
in accordance with such instructions as m a y be issued by t h e Federal Reserve
Bank of the district, as fiscal agent of t h e United States.
(2) Payment.—Savings bonds presented to an eligible paying agent for p a y ment which t h e agent elects to process by special endorsement under t h e provisions and conditions of this circular (see sec. 330.3 for bonds eligible to be so
processed) m u s t be forwarded to t h e Federal Reserve Bank of t h e district for
p a y m e n t (i) if t h e bonds are not payable under subsections (A) or (B) of this
section or (ii) if being payable under said subsections, the agent does not elect
to-rnake t h e p a y m e n t .
(3) Exchange.—Savings bonds which are to be exchanged, in whole or in
part, p u r s u a n t to an authorized exchange m a y be processed by an eligible paying
agent by special endorsement under the provisions and conditions of this circular
(see sec. 330.3 for bonds eligible to be so processed): Provided, T h a t , each such
specially endorsed bond m u s t be forwarded to the Federal Reserve Bank of t h e
district which, as fiscal agent of t h e United States, is authorized to effect t h e
exchange.
" S E C . 330.9. Functions of Federal Reserve Banks.—The Federal Reserve Banks,
as fiscal agents of the-United States, are authorized and directed to perform such
duties, and prepare and issue such instructions, as m a y be necessary to t h e fulfillment of t h e purpose and requirements of this circular. T h e Federal Reserve
Banks m a y utilize any or all of their branches in the performance of these duties.
" S E C . 330.10. Modification of other 'circulars.-—The provisions of these regulations shall be considered as amendatory of and supplementary to D e p a r t m e n t
EXHIBTTS
195
Circulars 530, 653, 654, 750, 751, 885, 905, and 906 and any revisions thereof,
and those circulars are hereby modified where necessary to accord with the provisions hereof.
"SEC. 330.11. Other circulars generally applicable.—Except as provided in these
regulations the circulars referred, to in the preceding section will continue to be
generally apphcable.
' . "SEC. 330.12. Supplements and amendments.—The Secretary of the Treasury
may at any time or from time to time supplement or amend the terms of these
regulations, or of any amendment or supplement thereto."
G. M. HUMPHREY,
Secretary of the Treasury.
Exhibit 17.—Offering of Treasury savings notes of Series B
[Department Circular No. 922. Public Debt]
TREASURY DEPARTMENT,
• Washington, May 11, 1953.
SUBPART A: OFFERING OF NOTES
SEC. 334.1. 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 as provided in section 334.12 hereof, an issue
of notes of the United States designated Treasury savings notes. Series B, which
notes, if inscribed in the name of a Federal taxpayer, will be receivable as hereinafter provided at par and accrued interest in payment of income, estate, and gift
taxes imposed by the Internal Revenue Code, or laws amendatory or supplementary thereto. The notes may also be redeemed for cash at par and accrued
interest, with certain exceptions applicable.,.to banking institutions, as provided
in section.334.16 hereof.
^EC,.-j3.3j.2. Withdrawal of .Series A notes.—The sale of Treasury savings notes.
Series AV offered under Department Circular No. 889, dated May 10, 1951, is
hereby terminated at the close of business May 14, 1953.
SEC. 334.3. Duration of offer.—The sale of notes of Series B offered by this
circular will begin on May 15, 1953, and will continue until terminated by the
Secretary of the Treasury.
SEC. 334.4. Definitions.—(a) The word "month" as used herein means the
period from and including the 15th day of any one calendar month to but not
including the 15th day of the next succeeding month.
V (6), The words "issue date", mean the date as of which a note is issued.and
wiira,lways be the 15th day of a calendar month.
(c) The words "interest accrual date" or "accrual date" mean the date upon
which a month's interest accrues on a note, the first accrual date being the 15th
day of the calendar month next following the issue date.
SUBPART B : DESCRIPTION OF NOTES
SEC. 334.5. General.—Treasury savings notes. Series B, will in each instance be
dated as of the 15th day of a calendar month. The issue date will be determined
by the day of the month on which payment at par and accrued interest, if any, is
receiyed and credited by an agency authorized to issue the notes. For.example;
payinent received and credited on any day during the period from and including
May 15, 1953, to and including June 14, 1953, would result in the issue of notes
dated May 15, 1953. They will mature two years from that date and may not be
called by the Secretary of the Treasury for redemption before maturity. All
notes bearing issue dates within any one calendar year shall constitute a separate
series indicated by the letter " B " followed by the year of maturity. At the time
of issue the issuing agency will inscribe on the face of each note the name and
address of the owner, will enter the issue date and will imprint its dating stamp
(with current date). The notes will be issued in denominations of $100, $500,
$1,000, $5,000, $10,000, $100,000, $500,000, and $1,000,000. Exchange of authorized denominations from higher to lower, but not from lower to higher, may be
arranged at any agency that issues Treasury savings notes. Series B.
SEC. 334.6. Acceptance for taxes or cash redemption.—If inscribed in the name
of an individual, corporation, or other entity paying income, estate, or gift taxes
196
1953 REPORT OF THE.,SECRETARY OF THE TREASURY
imposed under the Internal Revenue Code, or laws amendatory or supplementar>^
thereto, the notes will be receivable, subject to the provisions of section 334.15 of
this circular, at par and accrued interest, in payment of such income, estate, or
gift taxes assessed against the owner or his estate. If not presented in payment
of taxes, or if not inscribed in the name of a taxpayer liable to the above-described
taxes, and subject to the provisions of section 334.16 of this circular, the notes
will be payable at maturity, or at the owner's option and request they will be
redeemable before maturity at par and accrued interest.
SEC. 334.7. Interest.—rlnterest on each $1,000 principal amount of Treasury
savings notes. Series B, will accrue monthly on the 15th calendar day of each
month after the issue date on a graduated scale, as follows:
_. . , .
Each month
First to sixth months, inclusive
$1. 80
Seventh to twelfth months, inclusive
_,
2. 10
Thirteenth to eighteenth months, inclusive-.
2. 20
Nineteenth to twenty-fourth months, inclusivei_
2. 30
The table appended to this circular shows for notes of each denomination, for
each consecutive month after issue date to maturity, (a) the amount of interest
accrual, (b) the principal amount of the note with accrued interest (cumulative)
added, and (c) the approximate investment yields. Subject to the provisions of
sections 334.15 and 334.16 hereof, when Treasury savings notes. Series B, are to
be paid on an interest accrual date, the payment will include interest accruing on
that date; otherwise, interest will be paid only to the interest accrual date next
preceding the date of payment. Interest will be paid only with the principal
amount, and will not accrue beyond the maturity date of the note.
SEC. 334.8. Forms of inscription.—Tiesismy savings notes. Series B, may be
inscribed in the name of an individual, corporation, unincorporated association
or society, or a fiduciary (including trustees under a duly established trust where
the notes, would not be held as security for the performance of a duty or obligation),
whether or not the inscribed owner is subject to taxa-tion under the Internal
Revenue Code, or laws amendatory or supplementary thereto. They may also
be inscribed in the name of a town, city, county, or State or other governmental
body and in the name of a partnership, but notes in the name of a partnership are
not acceptaple in payment of taxes, since a partnership is not a taxpaying entity
under the Internal Revenue Code. The notes will not be inscribed in the names
of two or more persons as joint owners or coowners; or in the name of a public
officer, whether or not named as trustee, where the notes would in effect be held as
security for the performance of a duty or obligation.
SEC. 334.9. Restrictions on transfer.—Except as otherwise specifically provided
herein, the notes may not be transferred, reissued, hypothecated, or pledged as
security, may not be paid to any person othei* than the owner, and may not be
accepted in payment of Federal income, estate, or gift taxes assessed against any
person other than the owner. The notes will not be acceptable to secure deposits
of public moneys.
SEC. 334.10. Taxation:—Ineome derived from the notes shall be subject to all
taxes now or hereafter imposed under the Internal Reveriue Code or laws amendatory or supplementary thereto. 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.
SUBPART C : PURCHASE OF NOTES
SEC. 334.11. Official agencies.—In addition to the Treasury Department, the
Federal Reserve Banks and their branches are hereby designated agencies for the
issue and redemption of Treasury savings notes, Series B. The Secretary of the
.Treasury, from time to time, in his discretion, may designate other agencies for
the issue of the notes, or for accepting.applications, therefor, or for making paj'-ments on account of the redemption thereof.
SEC. 334.12. Applications ahd payment.—Applications will be received by the
Federal Reserve Banks and branches and by the Treasurer of the United States,
Washington, D. C. Banking institutions generally may submit applications for
the account of custoriiers but Orily the Federal Reser.ve Banks, their brariches and
the Treasury Department are authorized to act as official agencies. The use of
an official application form is desirable but not necessary. Such forms may be
V:-'-;-.'
•
'.•• '. ?
,.• E X H I B I T S
-^ •• •" ' '^
'l'"
••
197
•obtained upon request frbm a n y ' F e d e r a l Reserve B a n k or branch or t h e T r e a s u r e r
•of t h e United States. E v e r y application m u s t be accompanied by p a y m e n t in.
full, a t p a r a n d accrued interest, if a n y . The a m o u n t of accrued interest payable
b y t h e purchaser will be computed a t t h e r a t e a t which interest accrues on t h e
notes ($1.80 per m o n t h per $1,000 p a r amount) for t h e actual number of days
from b u t not including t h e issue date t o a n d including the' date funds are credited,
t o t h e account of t h e Treasurer of t h e United States. For example, if funds are
credited on t h e 20th d a y of J a n u a r y t h e issue date will be J a n u a r y 15, a n d five
d a y s ' accrued interest must be paid by t h e purchaser. If collection is delayed
.so t h a t credit is not given until F e b r u a r y 15, t h e issue date will be F e b r u a r y 15,
a n d no accrued interest will be collectible. One day's accrued interest for a
t h i r t y - o n e d a y period is $0.05806 per $1,000, for a t h i r t y day period $0.06 p e r
$1,000, for a twenty-nine d a y period $0.06207 per $1,000, a n d for a twenty-eight
day period $0.06429 per $1,000. Any form of exchange, including personal
checks, will be accepted, subject t o collection, a n d should be drawn to l^he order of
t h e Federal Reserve B a n k or t h e Treasurer of t h e United States, as payee, as t h e
case m a y be. Any depositary qualified 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 N o . 92, Revised, as amended, will be permittisd t o make
p a y m e n t by credit for notes applied for on behalf of itself or its customers u}) t o
any a m o u n t for which it shall be qualified in excess of existing deposits.
SEC. 334.13. Reservations.—The Secretary of t h e Treasury reserves t h e right
t o reject a n y application, in whole or in part, a n d t o refuse t o issue or permit t o
be issued hereunder a n y notes in any case or in a n y class or classes of cases if he
deems such action t o be in t h e public interest, and his action in a n y 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.
SEC. 334.14. Delivery of notes.—Upon acceptance of a full-paid application,
notes will be duly inscribed and, unless.delivered in person, will be delivered, a t
t h e risk a n d expense of t h e United States a t t h e address given by t h e purchaser,
by mail, b u t only within t h e United States, its Territories and island possessions,
a n d t h e Canal Zone. N o deliveries elsewhere will be made.
S U B P A R T D : P R E S E N T A T I O N I N P A Y M E N T OF T A X E S
SEC. 334.15. At a n y time after t w o m o n t h s from t h e issue date, during such
time a n d under such rules a n d regulations a:s t h e Commissioner of Internal
Revenue, with t h e approval of t h e Secretary of t h e Treasury, m a y prescribe, notes
issued-hereunder in t h e name of a Federal taxpayer, m a y be presented by such
taxpayer, his agent or his estate for'credit against a n y income (current a n d back,
personal a n d corporation taxes, a n d excess profits taxes) pr a n y estate or gift
taxes (current a n d back) imposed by t h e I n t e r n a l Revenue Code, or laws a m e n d a t o r y or supplementary thereto, assessed against t h e inscribed owner or his estate.
F o r example, a note d a t e d J a n u a r y 15 m a y be presented for credit against taxes due
M a r c h 15. T h e notes will be receivable b y t h e Director of Internal Revenue a t
par a n d accrued interest t o t h e d a y (but no accrual beyond maturity) when t h e
taxes are due, if such d a y falls on t h e 15th d a y of a calepdar :month, whether t h e
notes are received on or before t h a t day.- If t h e taxes are due on a n y other d a y
of t h e m o n t h t h a n t h e 15th,. accrued.interest will be credited t o t h e accrual date .
next preceding t h e d a y when t h e taxes are due. Notes are receivable only in
p a y m e n t of taxes equal t o or exceeding t h e entire value of t h e notes, including
accrued interest. . T h e notes must be forwarded t o t h e Director a t t h e risk a n d
expense of t h e owner and, for his protection, shpuld be forwarded b y registered
mail, if not. presented in person.
S U B P A R T E : C A S H R E D E M P T I O N AT OR B E F O R E M A T U R I T Y
^
.,
S E C . 334.16. General.-—Any Treasury savings note. Series B, not presented in
payrrient of taxes .will be paid a t m a t u r i t y , or, a t t h e option a n d request of t h e
owner, a n d without advance notice, will be redeemed before maturity, a t a n y
time after four m o n t h s from t h e issue d a t e . For example, a note dated J a n u a r y
15 m a y be redeemed for cash on or after M a y 15. If redemption prior t o m a t u r i t y
is requested on a n interest accrual date t h e redemption will include interest
accruing on t h a t date, otherwise, redemption will be a t par a n d accrued interest
t o t h e interest accrual date next preceding the redemption date, except in t h e case
of a note inscribed in t h e name of a b a n k t h a t accepts d e m a n d deposits, in which
case p a y m e n t , whether a t or before m a t u r i t y , will be made only a t par, with a
refund of a n y accrued interest which m a y h a v e been paid a t t h e time of purchase
198
1953 REPORT OF THE SECRETARY OF THE TREASURY
of t h e note. If a note is acquired b y a banking institution t h r o u g h forfeiture of
a loan, p a y m e n t will be made a t p a r a n d t h e accrued interest payable as of t h e
date of acquisition.
S E C . 334.17. Execution of request for payment.—The owner in whose name the
note is inscribed m u s t appeai*'before one of the officers authorized by t h e Secretary, of the Treasury to.witness and.certify.requests for p a y m e n t , estabh$hrhis
identity,'arid in the presence of such, officer sign a n d complete ,the;.reqiiest\foi:
p a y m e n t appearing on t h e back of t h e note. After t h e request for pa3'-ment h a s
been executed, t h e witnessing officer should execute t h e certificate provided for
his use.
SEC. 334.18. Officers authorized to certify requests for payment.—All officers
authorized to certif}^ 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, Seventh Revision, as amended,
are hereby authorized to certify requests for cash redemption of Treasury savings,
notes issued under this circuiar. Such officers include, among others. United
States postmasters, certain other post office officials, officers of all banks a n d
t r u s t companies incorporated in the United States or its Territories, including
officers at branches thereof, a n d commissioned and w a r r a n t officers of the Armed.
Forces of the United States.
SEC. 334.19. 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 a n y Federal Reserve
Bank or branch or t o the Treasurer of the United States, Washington 25, D. C.,.
a t t h e expense and risk of the owner. For the owner's protection, notes should
be forwarded by registered mail, if not presented in person.
SEC. 3S4:.20. P a r t i a l redemption.—V.Six:t}Sil cash redemption, pf.a..nptp,;,cprresponding-tb an authorized denomiriation,.may.be made in t h e - s a m e i m a t o e r . a s
full cash redemption, appropriate changes being made in the request for p a y m e n t .
I n case of partial redemption of a note, the remainder will be reissued in t h e
same name a n d with the same issue date as the note surrendered.
S E C . 334.21 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'maturity, will be made by any Federal Reserve Bank or branch or
the Treasurer of t h e United States, following clearance with the agency of issue,
which will be obtained by the agency t o which t h e note is surrendered. P a y m e n t
will be made by check drawn to the order of the owner, and mailed to t h e address
given in his request for p a y m e n t , or by credit in a n y account maintained by a
banking institution with the Federal Reserve Bank of its district.
S U B P A R T F : P A Y M E N T OR R E I S S U E TO O T H E R T H A N I N S C R I B E D O W N E R
SEC. 334.22. Presentation and surrender.—A note m a y be paid or reissued in.
accordance with any of the provisions of this subpart only upon the presentation'
a n d surrender of t h e note a t the risk a n d expense of the owner t o the issuing
agency, accompanied by an appiopriate request for t h e particular transaction.
SEC. 334.23 Authorized transfers.—
(a) Between husband and wife.—A note inscribed in the name of a married m a n
m a y be reissued in the name of his wife, a n d a note iriscribed in the name of a
married woman m a y be reissued in t h e name of her husband.
(6) Between affiliated corporations.—A note inscribed in the name of a parent
corporation, which is hereby defined as a corporation owning more t h a n 50'
percent of the stock, with voting power, of another corporation, m a y be reissued in
the name of a subsidiary, a n d a note registered in t h e name of a subsidiary m a y
be reissued in the name of the parent corporation.
SEC. 334.24. Authorized pledge.—A note m a y be pledged as collateral for a
loan from a banking institution, a n d if title thereto is acquired by the institution
because of default in the p a y m e n t of the loan, the notes will be redeemed at par
a n d accrued interest t o t h e interest accraal date next preceding the date of such
EXHIBITS
199
acquisition, unless acquired on an interest accrual date, in which case redemptiori
will be made at par and accrued interest to t h a t date. Proof of the date of acquisition must be furnished, and p a y m e n t must be requested by the pledgee under a
power of a t t o r n e y given by the pledgor in whose name the note is inscribed.
The note will not be transferred to the pledgee.
SEC. 334.25. Payment to representatives, of^deceased or incompetent owners,finfl
payrp,ent or reissue to heirs or legatees of deceased- owners.—In case of t h e death-or
disalDility of an individual owner, if the notes are riot to be presented in p a y m e n t
of taxes, pa3^ment will be made to the duly constituted representative of his
estate, or t h e y m a y be reissued to one or more of his heirs or legatees upon satisfactory proof of their right; but no reissue will be made in the names of two or
more persons jointly or as coowners.
SPJC. 334.26 Payment or reissue to successors of corporations, unincorporated
associations or partnerships.—If a corporation or unincorporated body in whose
name notes are inscribed is dissolved, consolidated, merged or otherwise changes
its organization, the notes m a y be paid to, or reissued in the name of, those
persons or organizations lawfully entitled t o the assets of such corporation or
body by reason of such changes in organization.
SEC. 334.27. Payment to representatives of bankrupt or insolvent owners.—If a n
owner of notes is declared b a n k r u p t or insolvent, p a y m e n t , b u t not reissue, will
be made t o the duly qualified trustee, receiver or similar representative if the notes
are submitted with satisfactory proof of his appointment and qualification.
SEC. 334.28. Payment as a res-alt of judicial proceedings.—Payment, b u t not
reissue, will be made as a result of judicial proceedings in a court of competent
jurisdictioriyif the notes are submitted, with.proper .proof of such proceedings .and
their finality, '
- .. - ,'
!•,.-.,• .
SEC. 334.29 Instructions and information.—Before executing the request for
p a y m e n t or submitting the notes under the provisions of this subpart, instructions
should be obtained from a Federal Reserve Bank or branch or from the-Treasury
D e p a r t m e n t , Division of I^oans a n d Currency, Washington 25, D . C.
SUBPART G :
GENERAL PROVISIONS
SEC. 334.30. Regidations.—Except as provided in this circular, t h e notes
issued hereunder will be subject t o the general regulations of the Treasury D e p a r t m e n t , now or hereafter prescribed, governing bonds a n d notes of the United
States; the regulations currently in force are contained in D e p a r t m e n t Circular
No. 300, as amended.
SEC. 334.31. Loss, theft, or destruction.—In.case of t h e loss, theft, or destruction
of a savings note Imme diate. notice (w^rhich should include a full description of the
note) should be given the agency which issued the note and instructions should
be requested as to the procedure necessar}^ to secure a duplicate.
SEC. 334.32. Fiscal agents.—Federal Preserve B a n k s 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 and necessary under t h e provisions of this circular
and under a n y instructions given by the Secretary of the Treasury, arid t h e y m a y
issue interim receipts pending delivery of t h e definitive notes.
SEC. 334.33. Amendments.—The Secretary of t h e Treasury m a y a t any time or
from time to time supplement or a m e n d t h e t e r m s of this circular, or of a n y
a m e n d m e n t s or supplements thereto, and m a y a t any time or from time t o time
prescribe a m e n d a t o r y rules a n d regulations governing t h e offering of the notes,
information as to which will promptly be furnished to the Federal Reserve Banks.
G. M . HUMPHREY,
Secreiary of ihe Treasury.
TREASURY SAVINGS N O T E S — S E R I E S B
TABLE O F T A X - P A Y M E N T OR REDEMPTION VALUES AND INVESTMENT YIELDS .
.
.
.
.
The table below shows for each month from issue date io maturity.date the amount of interest accrual; ihe principal amount urith accrued
interest added, for notes of each denoniination; the approximate investment yield on the par value from issue date to the 15th of each month following ihe issue date; and the approxirnate investment yield on the current redemption value from the 15th of the month indicated tothe maturity date.
Par value
_
- - : - _ ^ . - _ . - . • - •• • $100
A m o u n t of i n t e r e s t accrual e a c h m o n t h
after issue m o n t h
I n t e r e s t accrues a t r a t e of $1.80 p e r r a o n t h p e r
$1,000 p a r a m o u n t :
First month
__ . Second m o n t h
Third month
F o u r t h m o n t h . . ...
.....
Fifthmonth
Sixth m o n t h . .
_ __
I n t e r e s t accrues a t r a t e of $2.10 p e r m o n t h p e r
$1,000 p a r a m o u n t :
Seventh m o n t h
Eighth month
....
Ninth month
•_ •.
Tenth month
i.
Eleventh month
.
Twelfth m o n t h
_-..
I n t e r e s t accrues a t r a t e of $2.20 p e r m o n t h p e r
$1,000 p a r a m o u n t :
Thirteenth month
.....
Fourteenth month
Fifteenth m o n t h
. ..
•..
Sixteenth m o n t h
'
Seventeenth month
.
Eighteenth month
..
I n t e r e s t accrues a t r a t e of $2.30 p e r m o n t h p e r
$1,000 p a r a m o u n t :
Nineteenth month
Twentieth month
Twenty-first m o n t h
Twenty-second m o n t h
Twenty-third month
Maturity.
. _.
...
.
'
• .$500
- $1,000 .
•' $5,000
$10,000
$100,000
$500,000
$1,000,000
T a x - p a y m e n t or r e d e m p t i o n values d u r i n g each m o n t h l y period after issue m o n t h i
Approximate
Approximate
investment
i n v e s t m e n t . : yield on curyield on p a r
r e n t tax-payvalue from
m e n t or r e issue d a t e t o
demption
b e g i n n i n g of
values from'
each m o n t h l y
b e g i n n i n g of
period
each m o n t h l y
thereafter
period t o '
maturity .
Percent
2.16
2.16
2.16
2.16
2.16
2.16
Percent
' 2 49
2.50
2 62
2.54
2.66
2.58
$100.18
100.36
100. 54
100. 72
- 100.90
101. 08
$500. 90
501.80.
• 502.70
503. 60
504. 50
. 505. 40
$1, 001.80 1, 003. 60
1, 005.40
1, 007. 20
1,009.00
1, 010.80
$5,009. 00
5, 018. 00
5, 027. 00
5, 036. 00
5, 045. 00
5, 054. 00
$10, 018
10, 036
10, 054
10, 072
10, 090
10,108
$100,180
100, 360
100, 540
100, 720
100, 900
101, 080
101. 29.
101. 50
101. 71
• 101.92
102.13
102.34
506. 45
507. 50
. 608.55
509. 60
510. 65
.511.70
1, 012. 90
1, 015. 00
1,017.10
1, 019. 20
1,021.30
1,023.40
5, 064. 50
5, 075. 00
5,085.50
5, 096. 00
5,106. 50
5,117. 00
10,129
10,150
10,171
10,192
10,213
10, 234
101, 290
101, 500
101, 710
101, 920
102,130
102, 340
506, 450
507, 500
508, 550
509, 600
510, 650
511,700
1,
1,
1,
1,
1,
1,
012, 900
015, 000
017,100
019, 200
021, 300
023, 400
2.21
2.25
2.27
: 2. 30
2.31
2. 33
2 58
2.59
2 69
2.60
2. 61
2. 62
1, 025. 60
1, 027.80
1, 030. 00
1, 032. 20
1, 034. 40
• 1, 036. 60
5,128. 00
5,139. 00
5,150. 00
5,161. 00
5,172. 00
5,183. 00
10,
10,
10,
10,
10,
10,
256
278
300
322
344
366
102, 560
• 102, 780
103, 000
103, 220
103, 440
103. 660-
512,800
513.900
515, 000
516,100
517, 200
518,300
1, 025, 600
1,027,800
1, 030, 000
1, 032, 200
1, 034, 400
1, 036, 600
2.35
2.36
2. 38
2.39
2. 40
2.41
2.62
2.63
2. 63
2.64
2. 65
2.66
1,038.90
1, 041. 20
1, 043. 50
1, 045. 80
1, 048.10
1, 050. 40
5,194. 50
5,206.00
5, 217. 50
5. 229. 00
5, 240. 50
5, 252. 00
10, 389
10, 412
10, 435
.10,458
10, 481
10, 504
103, 890
104,120
104, 350
104, 580
104,810
105, 040
519, 450
520, 600
521, 750
522, 900
524, 050
525, 200
1, 038, 900
1, 041, 200
1, 043, 500
1, 045,800
1, 048,100
1, 050, 400
2.42
2.44
2.452.46
2. 47
2.47
2.66
2 66
2 65
2 65
2'65
102. 56
1-02. 78
' 103.00
103.22
•103.44
103.66
512.80
513.90
515. 00^
516.10
517. 20
518.30
103.89
104.12
104. 35
. 104.58
104.81
105; 04
519. 45
520. 60
521. 75
522. 90
524.05
525. 20
.
$500, 900
501,800
502, 700
503, 600
504, 500
505, 400
$1, 001,800
1, 003, 600
1, 005, 400
1, 007, 200
1, 009, 000
1, 010,800
NOTE.—The word "month" as used in this table means the period from and including the 16th day of any one calendar month to but not including the 15th day of the next succeeding month.
1 Not acceptable in payment of taxes until after the second month froin issue date, and not redeemable for cash until after the fourth month from issue date.
2 Approximate tnvestment yield for entire period from issue date to maturity, 2.4'7.
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EXHIBITS
201
Obligations Guaranteed by the United States
Exhibit 18.—Partial redemption, before maturity, of 2 % percent mutual mortgage
insurance fund d e b e n t u r e s , Series E (tenth call)
[Department Circular No. 914. Public Debt]
TREASURY
DEPARTMENT,
Washington, October 13, 1952.
To Holders of 2y^ Percent M u t u a l Mortgage Insurance Fund Debentures, Series E :
I.
N O T I C E OF C A L L FOR P A R T I A L R E D E M P T I O N , .BEFORE M A T U R I T Y , OF 2% P E R . CENT M U T U A L M O R T G A G E I N S U R A N C E F U N D D E B E N T U R E S , S E R I E S E
The Federal Housing Commissioner, with the approval of the Secretary of t h e
Treasury, has issued the following notice of call for partial redemption a n d offer
t o purchase with respect t o 2 ^ percent m u t u a l mortgage insurance fund debentures. Series E :
" P u r s u a n t t o t h e a u t h o r i t y conferred by the National Housing Act (48 Stat.
1246; U. S. C. title 12, sec. 1701 e t seq.) as amended, public notice is hereby given
t h a t 2% percent m u t u a l mortgage insurance fund debentures. Series E,; of t h e
denominations a n d serial numbers designated below, are hereb}- called for redeniption, a t par a n d accrued interest, on J a n u a r y 1, 1953, on which date interest on
such debentures shall cease:
2y^ percent mutual mortgage insurance fund debentures, Series E
Denomination
Serial numbers
(AU numbers inclusive)
$50
$100
$500
$1,000____.
$5,000
$10,000
231 t o 326
-_-_ 838 to 1289
. 277to 382
7 7 3 t o 1098
3 1 0 t o 492
110 t o 137
" T h e debentures first issued as determined b y t h e issue dates thereof were
selected for redemption by t h e Commissioner, Fe'deral Housing Adniinistration,
with t h e approval of t h e Secretary of t h e Treasury.
" N o transfers or denominational exchanges in debentures covered by t h e foror
going call will be made on t h e books maintained b y t h e Treasury D e p a r t m e n t on o r
after October 1, 1952. This does n o t affect t h e right of the holder of a debenture
to sell a n d assign the debenture on or after October 1, 1952, a n d provision will be
made for the p a y m e n t of final interest due on J a n u a r y 1, 1953, with t h e principal
thereof to t h e actual owner, as shown by the assignments thereon.
" T h e Commissioner, of the Federal Housing Administration hereby offers t o
purchase ariy debentures included in this call a t a n y time fro.m October 1, 1952, t o
December 31, 1952, inclusive, a t p a r a n d accrued interest, t o date of purchase.
"Instructions for the presentation a n d surrender of debentures for redemption
on or after J a n u a r y 1, 1953, or for purchase prior to t h a t date will be given by t h e
Secretary of t h e Treasur3^''•
II.
TRANSACTIONS IN T E N T H - C A L L E D D E B E N T U R E S
1. Thc debentures included in the foregoing notice of call for partial redemption
on J a n u a r y 1, 1953, are hereb}^ designated tenth-called 2 ^ percent m u t u a l mortgage insurance fund debentures. Series E, a n d are hereinafter referred t o as t e n t h called debentures.
2. Transfers a n d denominational exchanges in tenth-called debentures will
t e r m i n a t e a t the close of business on September 30, 1952.
III.
R E D E M P T I O N OR P U R C H A S E
' 1. Holders of tenth-called debentures will be entitled t o have such debentures
redeemed and paid a t p a r on J a n u a r y 1, 1953, with interest in fuh t o t h a t date, a t
t h e rate of $13.75 per $1,000. Interest on tenth-called debentures will cease on
J a n u a r y 1,1953.
. ' '.
' 2. Holders of tenth-called debentures have t h e privilege of presenting such
debentures a t a n y time from October 1 to December 3 1 , 1952, inclusive, for pur-
202
1953 REPORT OF THE .SECRETARY OF THE TREASURY
chase at par and accrued interest, a t the rate of $0.074728 per $1,000 per day from
Juh^ 1, 1952, to date of purchase.
IV.
R U L E S AND R E G U L A T I O N S G O V E R N I N G R E D E M P T I O N AND P U R C H A S E
1. The United States Treasury D e p a r t m e n t is the agent of t h e Federal Housing
Commissioner for the redemption and purchase of tenth-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 tenth-called debentures will be governed by the general regulations of the
T r e a s u r y D e p a r t m e n t with respect to Uiuted States bonds a n d notes, so far as
applicable, except as otherwise provided herein.
2. Tenth-called debentures presented for redemption on J a n u a r y 1, 1953, or for
purchase-from October 1 to'December 31, 1952, inclusive, m u s t b e assigned by the
registered payee or assignee thereof or b y t h e i r duly constituted representatives in
t h e form indicated in p a r a g r a p h 3 of this section, a n d should thereafter be presented and surrendered t o a n y Federal Reserve Bank or to the Division of Loans
a n d Currency, Treasury D e p a r t m e n t , Washington 25, D. C , accompanied by
appropriate written advice. (Use Form P D 2391 a t t a c h e d hereto.) The debentures must be delivered at the expense and risk of the holders. (See paragraph 8
of this section.) I n all cases checks in p a y m e n t of principal a n d 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 that 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 t o " T h e
Federal Housing Commissioner for r e d e m p t i o n " or t o " T h e Federal Housing
Commissioner for purchase," according to whether the debentures are to be
presented for redemption on J a n u a r y 1, 1953, or for purchase prior t o 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, t h e debentures should be assigned t o " T h e Federal
Housing Commissioner fpr redeniption (or purchase) for the account of-___
_.
- - - , " inserting t h e name- a n d address of the • person to whom p a y m e n t is
t o be made.
4. An assignment in blank or other assignment having similar effect will be
recognized, but in t h a t event p a y m e n t will be made t o t h e person surrendering t h e
debenture for redemption or purchase since, under such an assignment, t h e debenture becomes in effect payable t o 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 a n y tenth-called debentures, whether purchased prior to or
redeemed on or after J a n u a r y 1, 1953, will be paid with the principal in accordance
with the assignments on the debentures surrendered.
6. All assignments m u s t be made on t h e debentures themselves unless otherwise directed b y t h e Treasury D e p a r t m e n t .
Detached assignments will be
recognized a n d accepted in any particular case in which t h e use of detached
assignments is specifically authorized by t h e Treasury D e p a r t m e n t . Any assignm e n t not made upon t h e debenture is considered a detached assignment.
. 7 . A tenth-called debenture registered in t h e n a m e of, or assigned to, a corporation, will be paid to such corporation on or after J a n u a r y 1, 1953, upon an
appropriate assignment for t h a t purpose executed on behalf of t h e corporation
b y a duly authorized officer thereof. An assignment so executed and duly
a t t e s t e d 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 authority. I n all cases coming under
this provision p a y m e n t will be made only by check drawn to the order of t h e
corporation. Proof of t h e a u t h o r i t y of t h e ofBcer assigning on behalf of a corporation will be required, in accordance with t h e general regulations of the Treasury
P e p a r t m e n t , in t h e case, of assignments for purchase prior to J a n u a r y 1, 1953,
.•ai,nd-lh iease-of assignments, ifor". rede"rilj>tion on or-after J a n u a r y I, 1953, for t h e
account of any person other t h a n t h e corporation.
8. Debentures presented for redemption or purchase under this circular m u s t
be delivered to a Federal Reserve Bank or to t h e Division of Loans and Currency,
Treasury D e p a r t m e n t , Washington 25, D . C , a t t h e expense and risk of the
holder. Debentures bearing restricted assignments m a y be forwarded by regis.tered mail, b u t debentures bearing unrestricted assignments should be forwarded
b y registered hiail insured or by express prepaid.
203
EXHIBITS
9. In order to facilitate the redemption of tenth-called debentures on J a n u a r y
1, 1953, a n y such debenture m a y be presented a n d surrendered in t h e m a n n e r
herein prescribed in advance of t h a t date b u t not before December 1, 1952. Such
early presentation b y holders will insure p r o m p t p a y m e n t of principal a n d interest
when due.
V. G E N E R A L P R O V I S I O N S
1. Any further information which m a y be desired regarding the redemption of
tenth-called debentures under this circular m a y be obtained from a n y Federal
Reserve B a n k or from t h e Division of Loans and Currency, Treasury D e p a r t ment, Washington 25, D . C , where copies of the 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 a n y necessary acts under this circular. The Secretary
of t h e T r e a s u r y m a y a t a n y time or from time t o time prescribe supplemental
a n d a m e n d a t o r y rules and regulations governing the m a t t e r s covered by this
circular, which will be communicated p r o m p t l y to t h e registered owners of t e n t h called debentures.
J O H N W . SNYDER,
Secretary of ihe Treasury.
Exhibit 19.—Summary of information contained in circulars pertaining to calls
for partial redemption, before maturity, of insurance fund d e b e n t u r e s
D u r i n g t h e fiscal year 1953 there were three calls on October 13, 1953, for partial redemption before m a t u r i t y , of insurance fund debentures. T h e circular
covering t h e t e n t h call of Series E m u t u a l mortgage insurance fund debentures
is show:ri as exhibit 18. T h e other two circulars h a v e been omitted b u t t h e general
rules a n d regulations contained in t h e omitted circulars are trie same as those
shown in exhibit 18. T h e essential details contained in t h e circulars are s u m m a rized in t h e following table.
Summary of information contained in circulars pertaining to insurance fund debentures called for partial redemption during the fiscal year 1953
2 ^ percent mutual
mortgage insurance
fund
debentures,
Series E, tenth call
Department circular covering
call.
Redemption date..
Serial numbers called by de. nominations:
$50
_
' $100 . . .
$500
$1,000
$5,000.._
_.
$10,000
.
Pinal date for transfers or denominational exchanges (but
not for sale or assignment).
Redemption on call date, amount
paid at par with interest in
full at rate of.
Presentation for purchase prior
to call date:
Period _
Amount paid at par and accrued interest .at rate of.
2J^ percent mutual
mortgage insurance
fund
debentures,
Series K, second call
2\^ percent war housing insurance fund
debentures,
Series
H, eleventh call
No. 914, Oct. 13, 1952.. No. 915, Oct. 13, 1952.. No. 916, Oct. 13, 1952.
Jan. 1,1963
Jan. 1, 1953
231-326.
838-1289 • •
277-382_.
773-1098
310-492
110-137
Sept. 30, 1962 . -
2-3 — 3-4
2-3.-_
3-4._
3-4 - _
Sept. 30, 1952 .
814-920.
10509-10927.
885-986.
4104-4524. •
- 840-999, 1251.
4656-5000, 7861-8601.
Sept. 30, 1962.
$13.75 per $1,000
$12.50 per $1,000
$12.60 per $1,000.
-
Jan. 1, 1953.
-
Oct. 1-Dec. 31, 1952... Oct. 1-Dec. 31,1952... Oct. 1-Dec. 31, 1952.
$0.074728 per $1,000 $0.067935 per $1,000 $0.067935 per $1,000
per day from July 1,
per day from July 1,
per day from, July.l,
1952, ..to. date ':df"'pur- •1952, to date of pur1952, to date of pur-'
chase.
chase.
chase.
204
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Taxation Developments
Exhibit 20.—Message from the President, May 20, 1953, transmitting
recommendations for tax legislation
[House Document No. 146, 83d Congress, 1st sess.]
To ihe Congress of the United States:
When this administration took office 4 months ago, it inherited a critically unsound state of financial affairs. The Federal budget was unbalanced by $4 billion
in the fiscal year 1952; the estimates of the outgoing administration indicated a
further deficit of $5.9 billion in the. current fiscal year, and a still larger deficit of
$9.9 billion in the fiscal year 1954. Moreover, the estimate of the former administration left on hand for the end of this fiscal year $81 billion of unspent appropriations; in, effect $81 billion of bills which would fall due and have to be paid by
the new administration.
In addition, revenues appear to have been overestimated by the. former administration to the extent of at least $1.5 billion in the fiscal year 1953 and about
$1.2 billion in the fiscal year 1954. These overestimates will have the effect of
increasing the deficits already indicated for both of these years.
In addition to that, the present-tax laws-contain certain provisions which will
soon begin sharply to reduce Government revenues. These tax reductions will
reduce annual revenues by an estimated $8 billion. Only $2.1 billion of this loss
falls in the fiscal year 1954.. But the full effect falls in 1955—the latter being the
first year for which the budget will be prepared by the incoming administration.
The fact is that in 1954 and 1955 we reach the peak of expenditures' caused by
earlier appropriations and programed and contracted for expenditure at the same
time Government revenues are sharply reduced. These simple-facts highlight
the problems we have faced in trying to bring prudence and foresight into our
budgetary planning.
Despite these problems we have made real progress in attempting to straighten
out our financial affairs. Our first effort was a prompt review of the outgoing
administration's budget recommendations for the fiscal year 1954. We have thus
far succeeded in reducing those recommended requests for new appropriations by
about $8H billion, an amount equivalent to over $50 for each man, woman, and
child in the Nation.
Expenditures in the fiscal year 1954 cannot immediately be reduced by the full
amount of this $8}^ billion, because a large part of the 1954 expenditures will be
for the payment of obligations incurred by the Government in previous years.
However, the reductions made in requested appropriations will eventually lead to
a saving of the full amount. Some of this saving will be reflected in lower expenditures in 1955 and later years as well as in 1954.
Expenditures by the previous administration in 1954 were estimated at $78.6
billion. They now are estimated at $74.1 billion, $4.5 billion less than had been
planned. We intend to continue our efforts to reduce Government spending and
to put the Nation's financial affairs on a sound basis. These objectives will be
pursued in our everyday operations and will chart our course in every budget this
administration transmits to the Congi-ess.
Almost 73 percent of our spending in 1954 will be for national security purposes,
mostly for our own military services,' international programs, and atomic energy.
Another 15 percent will be for interest and veterans' programs, largely fixed costs
brought about by the past wars. The remaining 12 percent has already been
substantially trimmed, and further reductions are under study.
To reduce experiditures enough to balance the 1954 budget would require more
drastic curtailment of our national security programs than we can safely afford in
today's troubled world. These programs will be continually reviewed in light of
the world situation, our international commitments, and the need for economy and
prudence in all Government operations., Substantial reductions have be.en made
already. We are:working hard to increase them within the framework of the
administration program.
Against the foregoing revised expenditure estimate of $74.1 billion, net revenues
for the next fiscal year are now estimated at $67.5 billion, if all of the reductions
in taxes authorized under present laws take place. This would leave a deficit of
$6.6 billion.
Receipts for the current fiscal year ending on. June 30 will be at an alltime high
level. Nevertheless, they will probably fall short of the estimate made in the
205
EXHIBITS
J a n u a r y budget message of t h e prior administration b y $1.5 billion, perhaps even
more. With t h e large collections a t t h e end of J u n e , a margin of error of several
h u n d r e d million dollars m u s t be allowed for even a t this late date, b u t it is clear
now t h a t t h e earlier estimate was too high.
I n view of recent experience with collections, t h e estimate of receipts for t h e
next fiscal year, made early last J a n u a r y b y t h e past administration, is now
revised downward by $1.2 billion. T h e new estimate is m a d e on t h e assumption
t h a t employment and business will continue at a high level, b u t in the interest of
prudence some relaxation of t h e extremely high rates of activity now existing is^
allowed for.
Because of t h e reduced estimates of receipts, t h e deficit for t h e next fiscal year,
which t h e past administration projected at $9.9 billion, would rise to $11.1 billion
if expenditures were not curtailed. With t h e economies in expenditures which I
h a v e recotiimended, t h e projected deficit would be brought down to $6.6 billion in
t h e conventional or administrative budget. T h e deficit on a cash basis, t h a t is,
after adjusting for t h e retirement reserves and other special accounts, would t h e n
be $3.3 billion.
T h e above estimates are based on t h e assumption t h a t t h e reductions in t a x
rates will t a k e effect as now scheduled under t h e law. Those reductions would
involve a loss in revenue of $2.1 billion in t h e fiscal year 1954, as follows:
Estimated revenue loss from scheduled tax reductions
[In billions of dollars]
Effective
date of
reduction
Corporation:
Excess profits tax
Income tax 1.
Individuallncome tax
Excis^'^taxe's
-
Total
-
. . .
._..
i.
•
July
Apr.
Jan.
Apr.
1,1953
1,1964
1,1954
1,1954
•
Fiscal year
1954
$0.8
1..I
.2
2.1
Full year
loss
$2 0
2 0
30
10
80
T h e discrepancies between t h e immediate fiscal-year a n d eventual full-year
effects are explained by t h e date of t h e scheduled reductions a n d by lags in
collections.
If no reductions were m a d e in present t a x rates, estimated receipts would be
$69.6 billion in t h e next fiscal year, which would exceed those of t h e current year
by $2.4 billion. Even if t h e scheduled reductions in tax rates go into effect, total
receipts are estimated t o reach an alltime high, exceeding those of t h e current
year by $300 million.
Nevertheless, t a x receipts will apparently fall considerably short of our necessary
expenditures during t h e next fiscal year. I n view of this fact I have come t o t h e
conclusion t h a t no reductions in t a x rates should become effective during this
calendar year. I regret this conclusion because I share t h e widespread feehng
t h a t our taxes are generally too high a n d t h a t some of our t a x laws are inherently
defective. B u t facts are facts and I propose t h a t we face them. I t seems t o
me t h a t under t h e conditions stated here, a n d regardless of t h e origination of
t h e t a x reductions now written in t h e law, no administration could acquiesce in
their taking place as scheduled unless-it was willing to ta,ke vigorous.^aetion to
reduce expenditures sufficiently to bring outlays within available revenues.
T h e problem of fiscal readjustment is one of timing. Under present conditions
of high-business activity, coupled with a budget deficit, a t a x reduction would
not be consistent with attaining t h e vital financial objective of a sound dollar.
I w a n t t o see a t a x reduction carried out; I w a n t it very much. B u t I want even
more t o stop t h e deterioration of t h e currency which has been going on for so m a n y
years under t h e unsound fiscal and m o n e t a r y policies of t h e past administration.
As a m a t t e r of basic long-term policy, we m u s t look forward to reducing t a x
revenues as Government expenditures are curtailed. B u t it is also wise under
existing conditions not to reduce receipts a n y faster t h a n we can cut back on
expenditures.
206
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Since an immediate t a x reduction would be financially unsound, I submit
t h e following six recommendations for tax legislation by the Congress:
(1) T h e excess profits t a x should be extended as now drawn for 6 m o n t h s
beyond its present expiration date of June 30. This action seems necessary in
spite of t h e fact t h a t this is an undesirable way of taxing corporate profits.
Though the name suggests t h a t only excessive profits are taxed, t h e t a x actually
penahzes thrift a n d efficiency a n d hampers business expansion. I t s impact is
especially hard on supcessful_srnail .busiriesses which m u s t depend .on Tetained
earnings for growth. 'These disadvaritages of t h e tax are riow widely recognized.
I would not advocate its extension for more t h a n a m a t t e r of months. However,
under existing circumstances t h e extension of the present law is preferable to t h e
increased deficit caused by its immediate expiration or to any short-term substitute
tax.
T h e scheduled expiration of the tax in June would be misleading iii its consequences. I t would simply mean t h a t the tax would be applied a t half t h e full
rate, 15 percent, to all of this year's business income. Therefore its b a d effects
in penalizing efficiency and encouraging waste will continue through this year in
a n y event. T h e extension of t h e t a x through December 1953 would raaintain
t h e full 30 percent rate for t h e entire year a n d would produce a gain in revenue
of $800 million in t h e fiscal year 1954.
(2) The reduction in t h e regular corporate tax rate from 52 percent to 47
percent, now scheduled t o go into effect on April 1, 1954, should be rescinded. A
continuation of these extra 5 percentage points on the corporate tax will bring in
about $2 billion a year, about t h e same a m o u n t as will be lost annually by t h e
expiration of t h e excess profits tax at the end of this calendar year.
T h o u g h a 52 percent corporate tax rate is too high for t h e long run, the budget
will not now permit a reduction in b o t h individual and regular corporate tax
rates. A reduction in individual taxes m u s t come first, for t h e benefit of t h e
entire economy.
/
(3) The increase in t h e old-age insurance tax from 1}^ to 2 percent on b o t h
employees and employers, now scheduled t o go into effect next J a n u a r y 1, should
be postponed until J a n u a r y 1, 1955.
T h e old-age a n d survivors t r u s t fund has now reached almost $18 billion.
Receipts a t present tax rates are currently well in excess of expenditures. T h e
further addition to t h e fund which would flow from t h e projected tax increase is
not required.
From now on, t h e old-age t a x a n d t r u s t accounts, while maintaining t h e cont r i b u t o r y principle, should be handled more nearly on a pay-as-you-go basis.
T h e postponement of t h e t a x increase will reduce t h e impending tax burden
on every covered employee and employer. I t will not influence t h e administrative budget, b u t it will involve an increase in t h e cash deficit.
(4) The wide variety of existing excise rates makes little economic sense a n d
leads to improper discrimination between iridustries a n d among consumers.
Specific proposals for a modified system of excise taxation will be included in
t h e recommendations for tax revisions t h a t will be submitted to t h e Congress
next J a n u a r y .
T h e reductions in excise taxes, which would t a k e place next April 1 under
present law, should be rescinded pending t h e development of a better system of
excise taxation.
(5) I believe t h a t a reduction in personal income taxes can and should b e
made effective next J a n u a r y 1. This reduction will a m o u n t to a b o u t 10 percent
on t h e lower a n d middle incomes, graduating down to between 1 a n d 2 percent on
t h e highest brackets. While this reduction is in accordance with existing law,
it would have been impossible to accomplish on t h e basis of the previous a d m i n -
207
EXHIBITS
istration's budget without additional deficit financing with its resultant inflationary pressures. A reduction will be justified next J a n u a r y only because of
reductions in proposed expenditures which t h e present administration has already
been able to make a n d because of additional economies we expect to achieve in
t h e future.
While this administration will spare no effort to effect further economies, largescale success in t h a t effort will depend on some easing of the tension t h a t besets
t h e world t o d a y . Should this improvement fail to come a b o u t .arid t h e r e f e
p r e v e n t significant further economies, I shall find it necessary t o make recommendations for alternative sources of revenue. However, if we are able to follow
without interruption t h e course we have marked out, a balanced budget will be
in sight and t h e much-needed tax relief will be a sound financial measure.
(6) As you know, t h e Ways a n d Means Committee of t h e House of Representatives is currently engaged in a comprehensive reexamination of the existing
t a x structure. To help achieve this objective, I have asked the Secretary of t h e
Treasury to present by t h e end of t h e year recommendations to remove existirig
inequities of our t a x structure, simplify t h e needless complications which have
developed over t h e years in t a x laws, a n d generally secure a better balance of
tax revenues. The analysis in the Treasury is being made in close cooperation,
with t h e appropriate committees of the Congress and their staffs.
The, Treasury m u s t be assured of a d e q u a t e revenues to finance necessary
expenditures for national security and other essential purposes. At t h e same
time we m u s t develop a system of taxation which, to the greatest extent possible,
will not discourage work, savings, and investment, b u t will permit and encoura,ge
initiative and the sound growth of our free economy.
A recapitulation of t h e budget position for t h e next fiscal year is given below,
showirig tlie effects of the revisions and recommendations which I have .made in
this message:
Budget outlook, fiscal year 1954
[In billions of dollars]
Budget
expenditures
January budget, past administration
Revisions in (estimates
_
_
_.
. .
Revised budget, with scheduled tax reductions...
Effect of recommended changes in taxes from rates now
scheduled to become effective
$78.6
-4.5
74.1
74.1
Revised budget
Budget
receipts
Deficit
administrative
$68.7
-1-2
$9.9
-3.3
67.5
6.6
-i-LO
-LO
68.5
5.6'
Deficit
cash
$6 6
—3.3
3.3
1 — 5
• 28
1 Difference between effects on administrative andcash budgets is explained.by a reduction-of $600..million in old-age insurance tax receipts.
The admiriistration has begun t h e heavy task of p u t t i n g t h e Federal Governm e n t ' s fiscal house in order. I t is moving vigorously to reduce expenditures
with due regard for t h e needs of national security. I a m making the above tax
recommendations in t h e conviction t h a t they are p r u d e n t a n d sound. I commend t h e m to the earnest attention of the Congress.
DWIGHT D .
TnB
W H I T E R o v s E , May
20,
1953.
EISENHOWER.
208.
1953 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 21.—Statement of Under Secretary of the Treasury Folsom before Subcommittee No. 2 of the Select Committee on Small Business, House of Representatives, May 21, 1953
INTRODUCTION
I am glad to have this opportunity to discuss with members of the Subcommittee of the House Select Committee on Small Business some of the major
tax problems which confront small business and to outline Treasury viewpoints
and objectives in this important area. The invitation to appear before you,
extended by your chairman, comes at a most opportune time. The Treasury
Department is now engaged in an intensive study of the entire tax system; the
material which'is developed in these hearings may be helpful in our own work.
Though it is not now possible to indicate specific recommendations which will
be made to the Congress at a later time through the Ways and Means Committee,
I can note some of the major areas of interest and indicate the point of view
from which we approach our examination of the tax law.
This administration is vitally interested in encouraging small business which
is so important an element in the balanced and dynamic development of the
American economy. We need small business, as well as medium-sized and
big businesses. Each has its role to fulfill; each has its special contribution
to make toward meeting our economic needs. Policies to reduce the tax barriers to the growth of small business are especially important to maintain the
traditional American pattern of economic organization.
As President Eisenhower said in his State of the Union Message:
'^ • « .-i! Yie must develop a system of taxation which will impose the least
possible obstacle to the dynamic growth of the country. This includes particularly real opportunity for the growth of small business. Many readjustments in
existing taxes will be necessary to serve these objectives and also to remove
existing inequities. Clarification and simplification in the tax laws as well as
the regulations will be undertaken."
The Treasury's review of the tax system will, we are sure, develop a number
of practical measures which can contribute to the growth and continued
independent existence of small business, including (1) simplification and clarification, (2) the removal of provisions which serve as a trap for the unwary,
and (3) the reduction of paperwork involved in the payment of taxes by smallbusiness men.
Secretary Plumphrey, in his statement before the Treasury Subcommittee on.
Appropriations, stated the goal of the Treasury as follows:
"It is our purpose in the Treasury to help provide the proper economic climate
in America. The fiscal policy is very important in determining that climate
which is intangible but has a direct effect upon the lives of each of us every
day. It is our purpose to establish and maintain such fiscal policies as will
permit America to continue to grow and reach even higher standards of living
for all its people."
Whatever suggestions the administration makes to Congress for tax legislation will be the result of the most careful possible study in an effort to determine what is for the good of the entire Nation. I wish that we could foresee
enough reduction in expenditures in the immediate future to permit us to recommend all the adjustments which we find desirable. However, as the President
stated in his recent message on the Budget: "The Treasury must be assured of
adequate revenues to finance necessary expenditures for national security and
other, e.ssential purposes."
We shall proceed as promptly as we can with recognition that our recommendations must be consistent with our primary objective of maintaining a
sound budget position.
It should be emphasized that we do not believe that the tax revisions needed
to promote the sound development of small business should be regarded as special
favors but rather as a method of preserving a dynamic, progressive, and competitive economic system.
The broad objective of providing a tax system under which small business will
flourish has three major aspects:
First, small business must be permitted to grow. An ample supply of available funds from the business' own earnings and from outside sources is essential
to finance expansion. In this connection, the structure and rates of the cor-
EXHIBITS
209
porate and individual income taxes, the definition of income, the allowable
deductions, and the treatment of undistributed corporate income are all of great
importance.
Second, the continued independent existence of established small business must
be encouraged. Those features of the law and regulations which relate to
financing the estate taxes due when important members of the business die are
of particular interest. The tax effect of the recapitalization which occurs in connection with the partial withdrawal of the investment of the original owners
is also of special importance.
The third major approach is one not directly related to the actual dollar load
of tax but is concerned primarily with lightening the burden of compliance for
small business through simplification of the tax laws and regulations and improvement in administrative attitudes. Such an improvement would go a long
way toward reducing arbitrary interference with business decisions, minimizing
areas of unnecessary dispute and controversy, and eliminating painful uncertainties in the final determination of tax liability as well as needless adjustments of income and deductions from one taxable year to another.
The specific areas of diflaculty and corrective suggestions which I shall mention must be considered only as examples of the problems and alternative solutions now under study. They do not in any sense indicate definite policy recommendations or conclusions.
Some of the revisions involved are essentially technical and have little revenue
significance. Others, unfortunately, including some of greatest importance incentivewise, carry revenue losses of varying amounts, and the existing tight
budget situation imposes severe limitations on the actions which may be undertaken now.
Regardless of the immediate promise of each particular measure, we must not
lose sight of the fact that overall tax reduction is justified only as we show
that we can succeed in bringing the budget under control. As the budget is
balanced, the tax burden can be eased. But, as Secretary Humphrey has indicated, both taxes and expenditures should come down together. Sound policy
requires careful and coordinated timing of tax and expenditure reduction to
avoid either inflation or depression.
I. REDUCTION OF TAX BARRIERS TO GROWTH
A. Excess profits tax
The excess profits tax highlights the interrelated economic and budgetary
aspects of the problem. This tax is of concern to many small businesses. Because of the need to maintain revenue until expenditures are reduced. President
Eisenhower, in his message to the Congress on May 20, recommended the extension of the excess profits tax. for 6 months beyond its present expiration date
of June 30. In doing so, he stated:
"* * * This action seems necessary in spite of the fact that this is an undesirable way of taxing corporate profits.
''Though the name suggests that only excessive profits are taxed, the tax
actually penalizes thrift and efficiency and hampers business expansion. Its
impact is especially hard on successful small businesses which must depend
on retained earnings for growth. These disadvantages of the tax are now widely
recognized. I would not advocate its extension for more than a matter of months.
However, under existing circumstances, the extension of the present law is
preferable to the increased,deficit caused by its immediate expiration or to any
short-term substitute tax.
"The scheduled expiration of the tax in June would be misleading in its consequences. It would simply mean that the tax would be applied at half the full
rate, 15 percent, to all of this year's business income. Therefore, its bad effects
in penalizing efficiency and encouraging waste will continue through this year
in any event. The extension of the tax through December 1953 would maintain
the full 30 percent rate for the entire year and would produce a gain in revenue
of $800 million in the fiscal year 1954."
The termination of the excess profits tax at the end of this year, in accordance
with the schedule recommended by the President, will remove one of the major
tax problems of small business.
273013—54
15
210
1953 REPORT OF THE SECRETARY OF THE TREASURY
B. Depreciation
One of the positive steps that may be taken to reduce obstacles to the dynamic
flow of investment is an improved treatment of depreciation in computing taxable
income. This is of particular importance to small business.
The depreciation allowance is essentially a matter of timing, of deductions, but
the speed of the tax-free recovery of costs is of critical importance with respect
to the willingness to incur risk, the working-capital position, and ability of the
business to borrow.
A liberalization of the present rules governing depreciation so as to allow
management greater discretion would increase total investment, particularly in
risky ventures, stimulate a generally higher level of national income and economic
activity, and incidentally, but not less important, remove sources of irritation
and fruitless controversy in the administration of the tax laws.
A more liberal depreciation policy would also ease the financial problems of
many small businesses. Working capital which the business could plow back
into its operations or use to write off bank loans would be increased.
Investment risk would be reduced by a quicker tax-free recovery of such outlays.
The credit position of the small business would be improved, since more liberal
depreciation allowances would give the business and its creditors a claim to
receipts which is prior to the tax liability. This would tend to provide better
access to bank funds for hard-pressed businesses which have no recourse to
the ordinary sources of equity capital.
One of the most direct ways of encouraging what is broadly termed "investment
incentive" is to provide the capital necessary to back up a potential investment
decision. All the incentive in the world will be futile unless business has
adequate funds.
While the administration's objectives and sympathies in this area are clearly
defined, there remain many questions as to methods and extent of change. Some
liberalization may be effected through regulations issued under existin.sj statutory provisions. More extensive changes may require legislation. The adoption
of a substantial program in this character would require careful planning, and
the initiation of the new rules must be related to the general budgetary situation.
C. Section 102 surtax on surplus accumulation
Another provision of the tax laws of special interest to small business is the
Section 102 surtax on improper accumulation of surplus. While it is generally
reco,8:nized that some device of this nature is indi^^pensable to prevent tax
avoidance. Section 102 has been an important source of controversy, primarily
in its application to small business. Critics have charged that Section 102
discriminates against small business retaining earmngs in the form of liquid
cash reserves for future use; occasions fear and uncertainty; retards expansion
or causes premature or unwise expansion; and promotes undesirable business.
practices to divert profits which would otherwise be vulnerable to the penalty tax.
This whole area is being carefully studied with a view to improved administration and possible legislative recommendations. The rate and basic structure
of the tax penalty as well as the statutory criteria for its application need to be
reviewed. A specific administrative aspect which will need attention is the
so-called immediacy test which makes it difficult for a small business to
accumulate earnings gradually from year to year for ultimate use on sizable
expansion projects. Large businesses, which can finance complete investment
projects out of current earnings or justify an accumulation on the basis of
definite and more or less formal plans, have been reasonably free from this
problem.
D. Corporate surtax exemption
The present surtax exemption assures corporate business a reduced rate on
the first $25,000 of its earnings and a substantial reduction of the overall
effective rate over a considerable range of income above that level. The surtax
exemption was introduced in 1950 as a means of eliminating the high-notch rates
previously applied to income between $25,000 and $50,000.
Basically, the reduced rate on small corporate incomes is designed for the
assistance of small businesses dependent primarily on retained earnings for
growth. A graduated tax for corporations cannot be justified on the same basis >
as progressive taxation of individuals since the size of the income of the business
is not necessarily related to that of the individual owner. Whether the present
EXHIBITS
211
surtax exemption is adequate for its intended purpose under present conditions
is subject to review. Attractive as it may appear as a means of easing the
tax impact on small concerns, even a moderate increase in the surtax exemption
involves a substantial revenue loss.
E. Double taxation of dividends
The fundamental problem of the double taxation of dividend income raises
special problems in connection with small, closely held companies. The smallbusiness aspect will necessarily be considered carefully in the work on methods
of coordinating corporate and individual income taxes to alleviate double taxation. Here again the loss of revenue may be large, and desirable changes may
have to be delayed or adopted on a limited scale.
F. Individual income taxes
The level of individual income tax rates is of crucial importance for small
business. The existing high individual rates threaten to dry up the chief sources
of risk-capital funds and to reduce the willingness of potential investors to bear
the type of risk associated with small, new business.
G. Investment loss deduction
One of the most significant proposals for the modification of the tax law to
encourage investment in small business and other risky ventures would provide
more liberal recognition of capital losses as offsets against ordinary income.
Under present law, investment losses of individuals are treated as capital losses
and as such are deductible only against capital gains, plus $1,000 annually of
ordinary income. Many feel that this tax treatment results in a "heads I win,
tails you lose" situation which reduces the relative attractiveness of the type
of risk investment involved in a small-business undertaking. One possible
remedy would be to increase the extent to which investment losses can be off'set
against ordinary income.
H. Excise taxes
One of the specific questions which your committee has raised relates to the
effects of the present system of excise taxation on small business.
The excises are the third largest source of Federal revenue and are now
imposed on a variety of goods and services, some of which are true luxuries
and others ordinary necessities. Some of the items taxed are produced by
prosperous industries; others are supplied by industries that are experiencing
economic distress, even at a time when the level of business activity in general
is very high. Some of the items taxed are produced by industries in which the
business unit is compartively small.
As President Eisenhower stated in his message of May 20 to the Congress:
"The wide variety of existing excise rates makes little economic sense and
leads to improper discrimination between industries and among consumers.
Specific proposals for a modifled system of excise taxation will be included in
the recommendations for tax revisions that will be submitted to the Congress
next January."
He noted further that:
"The reductions in excise taxes, which would take place next April 1 under
present law, should be rescinded pending the development of a better system of
excise taxation:"
The interest of small business in the relative emphasis to be placed on excise
taxes and the selection of items to be taxed is appreciated in the Treasury
Department. Moreover, we are fully aware of the importance, particularly for
the small business, of reducing the tasks of compliance imposed on manufacturers and retailers to the minimum consistent with fair and uniform enforcement. Some of the steps being taken in this direction will be mentioned later.
II. INDEPENDENT EXISTENCE OF SMALL BUSINESS
The problem of encouraging vigorous small business is twofold. It is not
enough merely to facilitate the growth of such business. Encouragement for
its continued independent existence is equally important.
In this connection, attention must be given to the problems of financing estate
tax. liabilities and the tax treatment of the recapitalization of a corpora!tion
which-a/rise, Jrom, the.partial withdrawal of the investment. of an important
2l2
1953 REPORT OF THE SECRETARY OF THE TREASURY
shareholder who seeks to give his estate greater liquidity, diversify his investments during his declining years, or to effect an orderly transition to new active
management.
While various limited provisions have been developed to meet these problems,
much remains to be done in order to prevent adverse effects on the flow of business
investment. The existing rules governing the tax status of recapitalizations
and partial liquidation are highly technical, rigorous, and uncertain. Complete sale or merger, usually with a larger corporation, is frequently preferred
to avoid these risks and complexities. The consequence is the extinction of the
business as an independent entity. Amendments to the law and changes in
administrative policy which may reduce the existing tax impetus to mergers
deserve careful study.
in.
SIMPLIFICATION AND ADMINISTRATIVE
ATTITUDES
Small business, in common with all taxpayers, has a right to expect complete
honestly and integrity in the tax collection service. It should be able to rely on
the justice and the fairness of the Government's attitude. There are also a
number of more specific ways in which the Government's attitude and treatment
of the taxpayers can accomplish much in lightening the practical load of tax
jpayment.
One of these is the matter of certainty. We are seeking ways in which we
can give the taxpayer assurance that his tax planning will not be arbitrarily
upset or that the same type of questions will not be raised over and over again.
Clarity and simplicity in the tax rules and their application are also of peculiar
importance to small business which is not well equipped to cope with complex
provisions, to avoid possible penalties, or to take full advantage of favorable
treatment.
It should also be possible to reduce interference with the management of
business and unnecessary sources of dispute and friction. Controversy over such
technical matters as the allocation of income and deductions among different tax
years can be reduced.
An illustration of an area which we are examining with a view to clarification
and simplification is the tax treatment of pension and retirement plans and
so-called fringe benefits. Illogical and discriminatory results have developed in
recent years under existing law and regulations. These are frequently detrimental to small business which cannot fully realize the benefits available without
expensive technical guidance and counsel.
Another example is in the determination of depreciation and related allowances
on fixed assets. Administrative attitudes are most important in giving the taxpayer some assurance that irritating and useless adjustments will not be made
in his depreciation rates and that his allowance will conform broadly with reasonable managerial judgments as to the appropriate rate of writeoff. Commissioner
Andrews has recently announced the establishment of a new administrative policy
with respect to depreciation, to reduce controversies with taxpayers. Under the
new policy the taxpayer is entitled to reasonable assurance of stability in depreciation rates consistent with fair and effective enforcement of the statutes.
Steps have already been taken to facilitate compliance with the excise tax
laws. The audit of excise and income tax liabilities is being combined in one
coordinated operation so as to minimize the interference with business operating routine. A new simplified excise tax. return, form 720, is in process
of preparation. It will cover all of the Federal excises and will replace eight
different excise returns now being used. Quarterly excise returns are already
scheduled to replace monthly returns after July 1 of this year. Consideration
is being given to a further simplification by substituting annual for quarterly
returns.
Small business has a special interest in the rules governing the deduction
of such items as reasonable salary compensation and research and development
expenses.
Criticism is frequently made that there is too much inquiry by revenue agents
as to the reasonableness of wage or salary deductions. Present law specifies as
trade or business expenditures ordinary and necessary expenses in carrying on
the business, including a reasonable allowance for salaries or other compensation for personal services actually rendered. The test of reasonableness has
frequently been a source of irritating controversy. This is a matter which
merits sympathetic consideration.
EXHIBITS
213
On the other hand, business has an obligation on its part not to load tax returns with extravagant and unnecessary deductions in the nature of disguised
compensation for business executives. Widespread publicity has been given
to the misuse of expense deductions under hig:h tax rates. This is a matter
receiving careful attention.
Research and development expenditures are frequently essential to the
success of small, growing businesses. Over a period of years, the Bureau of
Internal Revenue has generally allowed taxpayers incurring research and development costs to follow a consistent practice to expense or capitalize thern
at their option. The option to expense, however, does not ordinarily apply to
capital items having a substantial life beyond 1 year or adaptable for other
use, or to the cost of obtaining patents. While the expensing of research and
development costs has definite advantages, it is not always feasible for small
business which does not have a regular research and development budget.
Measures to clarify and liberalize the present treatment, particularly with a
view to insuring that the expensing option is fully available to small business,
will receive comprehensive study.
I can assure j^ou that in our investigation and planning on tax matters
in the Treasury we welcome the type of information and suggestions developed
by your committee. We are working in close cooperation with the congressional tax committees and staff's. In addition to drawing upon the results of
past studies and proposals on tax policy aff'ecting small business, we are also
consulting with various groups outside the Government which have been examining the operation of the tax system as well as informal groups which we
have asked for assistance in our efforts to improve the tax laws and administrative procedures.
With thisi broad base of information and guidance, we are striving to do
our part in helping to solve the difficult problems confronting us. At the proper
time, recommendations for legislative revision will be submitted to the Congress through the Committee on Ways and Means, which has primary responsibility in revenue matters.
It would be false optimism to assume that all the problems of small business
could be solved by revisions in the tax law, or that quick and easy solutions
to the tax aspects of the problem which confronts small business are readily
available and can be put into eftect immediately. However, we are determined
to bring to the solution of these problems the best available skill and knowledge and to proceed with corrective rules and legislation as rapidly as budgetary
and other limitations will permit.
Exhibit 22.—List of topics considered by the House Ways and Means Committee
in hearings on general revenue revision
1. Qualifications for the dependency credit (including such problems as to
whether dependency exemptions should be granted for foster children, whether a
dependency exemption should be apportioned where two or more taxpayers are
providing the support, and the problem arising where an individual who otherwise
would be a dependent earns over $600 of income).
2. The expenses of child or dependency care for working wives, widows, etc.
3. The deduction of medical and dental expenses (such as problems relating to
the 5 percent minimum, the maximum dollar hmits, and the coverage of the
deduction).
4. Deduction of charitable contributions, interest, taxes, and casualty losses.
5. College and educational expenses (including the unusual school expenses of
dependents and also the professional educational expenses of the taxpayers
themselves).
6. Business expense deductions from adjusted gross income (such as traveling
expenses, entertainment expenses, work clothes, and the relationship of these
deductions to the standard deduction).
7. Alimony and separate maintenance and support payments.
8. Income-splitting and head-of-household provisions.
9. Averaging of income (such as modifications of Section 107 to provide a different type of averaging and coverage of types of income not now provided for by
that section).
10. Earned income credit.
214
1953 REPORT OF THE SECRETARY OF THE TREASURY
11. The time and manner of filing returns, and declarations for individuals.
12. Withholding.
13. Employee death and disability benefits.
14. The 3-percent-annuity rule.
15. Stock options and deferred-compensation plans.
16. Pension and profit-sharing treatment provided by Sections 165 and 23 (p).
17. Techniques for alleviating double taxation of dividends.
18. Accounting principles (such as those relating to timing and correlation in
reporting income and expenses).
19. LIFO inventory accounting.
20. Depreciation and amortization.
21. Research and development expenditures.
22. Capital gains and losses including problems relating to basis.
23. Income taxes of lessor paid by lessee.
24. The net operating loss.
25. Cancellation of indebtedness.
26. Consolidated returns and intercorporate dividends.
27. Corporate reorganizations and distributions.
28. Statute of limitations, assessment and collection of taxes, and penalties.
29. Partnerships.
30. The various provisions relating to income derived from foreign sources.
31. Income tax treatment of estates and trusts.
32. Treatment of bad debts (bad-debt recoveries, bad-debt reserves, and
deduction of nonbusiness bad debts).
33. The determination of taxable income inclusions and exclusions.
34. Gift and estate tax problems.
35. Excise tax problems (exclusive of those relating to rates, to new taxes, or to
removal of existing taxes).
36. Retirement funds for self-employed and others not covered by existing
pension plans.
37. Exclusion of pension and retirement income for specific types of employees.
38. Depletion and exploration expenditures.
39. Improper accumulation of surplus (Section 102).
40. Excise tax rates.
Exhibit 23.—Statement of Secretary of the Treasury Humphrey, before the
House Ways and Means Committee, June 1, 1953,^ on extension of the
excess profits tax
I appreciate this opportunity to appear before you.
The immediate problem is the extension of the excess profits tax
for 6 months through December 31. I am here to urge this extension
in spite of the fact t h a t I dishke the excess profits tax and think it is a
bad tax.
The basic problem is that of national security—which means military security and economic security. The country must be kept safe
from aggression from abroad. And further inflation must be stopped
and the dollar must be kept sound to provide a solid base for a healthy
economy. Military security and economic security are the chief responsibilities of the Nation. They must take precedence over everything else.
A few financial facts will show just what we are up against.
Last J a n u a r y the budget filed for the fiscal year 1954 showed total
estimated receipts of $68.7 billion and expenditures of $78.6 billion,
with a prospective deficit of $9.9 billion. On the basis of our present
information, it appears that revenue receipts will be $1.2 billion less
than had originally been estimated for that year. This would make
the deficit $11.1 billion.
EXHIBITS
215
In his message of May 20 to the Congress, President Eisenhower
showed a reduction of $4.5 billion in the proposed expenditures; this
would bring the projected deficit down to $6.6 billion. I personally
am disappointed that we have not been able to make greater reductions in expenditures.
I had hoped until a few weeks ago that it would be possible to cut
back Government spending fast enough to justify a reduction in individual income taxes and the end of the excess profits tax of July 1.
Unfortunately, that is not possible.
I am confident that further cuts can be made as the year progresses.
But I am also satisfied that the reductions now proposed are all that
can be made safely at this time.
We live, as the President has said, in an age of peril. The danger
of an atomic Pearl Harbor is real. Keductions in defense spending
must be made only after full account is taken of all the security factors
involved. We can, in time, secure more defense for less money. Action to date gives me confidence that this result can be accomplished.
In business, a management can drastically cut back on some activity
"and later rebuild it if the original cut turns out to be too large. On
matters affecting national security, we cannot take this risk. The
chance for second guessing may never come. Much though we dislike
the level of Government spending and taxation, we are not willing to
gamble with the Nation's defense by too rapid cuts in defense outlays
which might leave us open to attack.
There is a second gamble we cannot take. With a deficit of $6.6
billion, it is not safe to gamble with the country's economic security
by making immediate cuts in taxes. This would simply increase the
deficit, again build up inflationary pressures and further postpone
the time when a sound economy, sound money, and a balanced budget
can be attained.
The projected deficit of $6.6 billion for fiscal year 1954 is after taking
into account four major tax reductions which are scheduled to occur
under present law during the year. The sequence of these reductions
was fixed by legislation adopted some time ago, without reference to
the military or economic situations which might exist when the tax
cuts were to become eflFective. A sensible financial plan cannot possibly be made now out of such a schedule in view of present conditions.
At the start of the next fiscal year, that is, on next July 1, the
excess profits tax expires. This will involve a loss of revenue of
$2 billion in a full year and $800 million in fiscal 1954.
The individual income tax rates are planned to go down at the beginning of next January by amounts ranging from about 10 percent
in the lower and middle brackets to between 1 percent and 2 percent
in the highest brackets. This will involve a loss of $3 billion on a fullyear basis and $1.1 billion in fiscal 1954.
On April 1, 1954, the normal eorporation tax is to be reduced from
30 percent to 25 percent, with the surtax remaining at 22 percent.
This will reduce the total regular rate on the bulk of corporate income
from 52 percent to 47 percent. It will mean a loss of $2 billion in a
full year, with only a small loss in fiscal 1954.
216
1953 REPORT OF THE SECRETARY OF THE TREASURY
At the same time, April 1,1954, various excise taxes are also schisduled to be reduced, for a loss of $1 billion on an annual basis and $200
million in fiscal 1954.
These reductions all add up to $8 billion for a full year and $2.1
billion for fiscal 1954.
Two things are wrong with this schedule of tax reductions. First,
with a deficit of $6.6 billion, no immediate tax reduction can be safely
made. And second, there are many inequities and hardships which
occur from various provisions of the several tax laws. Tliese aflfect
many corporations and a great many individuals. I n the present
situation, it does not seem fair to let the first reduction benefit only
a relatively small group of corporations at least 6 months ahead of any
relief for any other taxpayers.
Individual income taxes need to be reduced. There are many defects in the excise taxes and many inequities affecting both corporations and individuals under many provisions of the tax laws which
need to be corrected. Much though I dislike the excess profits tax, it
should not be singled out as the only one for special treatment now.
On the basis of all of these facts, and taking into account the need
for maintaining military security and economic security, the President
has made the following recommendations to the Congress concerning
immediate tax legislation. I n his message to the Congress of May 20,
the President said:
(1) The excess profits tax should be extended as now drawn for 6 months
beyond its present expiration date of June 30. This action seems necessary in
spite of the fact that this is an undesirable way of taxing corporate profits.
Though the name suggests that only excessive profits are taxed, the tax actually
penalizes thrift and efficiency and hampers business expansion. Its irapact is
especially hard on successful small bu.sinesses which must depend on retained
earnings for growth. These disadvantages of the tax are now widely recognized. I would not advocate its extension for more than a matter of months.
However, under existing circumstances the extension of the present law is preferable to the increased deficit caused by its immediate expiration or to any shortterra substitute tax.
The scheduled expiration of the tax in June would be misleading in its consequences. It would simply mean that the tax would be applied at half the
full rate, 15 percent, to all of this year's business income. Therefore its bad
effects in penalizing efficiency and encouraging waste will continue through this
year in any event. The extension of the tax through December 1953. would
maintain the full 30 percent rate for the entire year and would produce a gain
in revenue of $800 million in the fiscal year 1954.
(2) The reduction in the regular corporate tax rate from 52 percent to 47
percent, now scheduled to go into effect on April 1, 1954, should be rescinded. A
continuation of these extra five percentage points on the corporate tax will bring
in about $2 billion a year, about the same amount as will be lost annually by
the expiration of the excess profits tax at the end of this calendar year.
Though a 52 percent corporate tax rate is too high for the long run, the budget
will not now permit a reduction in both individual and regular corporate tax
rates. A reduction in individual taxes must come first, for the benefit of the
entire economy.
(3) The increase in the old-age insurance tax from li/^ to 2 percent on both
eraployees and employers, now scheduled to go into effect next January 1, should
be postponed until .January 1, 1955.
The old-age and survivors trust fund has now reached almost $18 billion.
Receipts at present tax rates are currently well in excess of expenditures. The
further addition to the fund which would flow from the projectedvtax increase
is not required. * * *
(4) The wide variety of existing excise rates makes little economic sense and
leads to improper discrimination between industries and among consumers.
EXHIBITS
217
Specific proposals for a modified system of excise taxation will be included in the
recommendations for tax revisions that will be submitted to the Congress next
January.
The reductions in excise taxes, which would take place next April 1 under
present law, should be rescinded pending the development of a better system of
excise taxation.
(5) I believe that a reduction in personal income taxes can and should be
made eft'ective next .January 1. This reduction will amount to about 10 percent
on the lower and middle incomes, graduating down to between 1 and 2 percent
on the highest brackets. While this reduction is in accordance with existing
law, it would have been impossible to accomplish on the basis of the previous
administration's budget without additional deficit financing with its resultant
inflationary pressures. A reduction will be justified next January only because
of reductions in proposed expenditures which the present administration has
already been able to make and because of additional economies we expect to
achieve in the future.
I n the same message, the President referred to the need to revise
the whole tax structure—
to remove existing inequities * * * simplify the needless complications which
have developed over the years in tax laws, and generally secure a better balance
of tax revenues * * * At the same time, we must develop a system of taxation
which, to the greatest extent possible, will not discourage work, savings, and
investment, but will permit and encourage initiative and the sound growth of
our free economy.
As you have said on various occasions, Mr. Chairman, the present
system has developed in a patchwork manner over many years. I t
needs a thorough overhauling. We are pleased to know that you
have directed your staff and the staff of the joint committee to work
on this revision.
AVe in the Treasury are also hard at work on the same subject. We
appreciate the opportunity for cooperation in various ways. We
already have set up ten joint committees with representatives of your
staffs and the Treasury.
With this statement on the general background, I turn to the
President's recommendation for the extension of the excess profits
tax, without amendment or modification, for 6 months through December 31, 1953. I t should be clear from the President's statement
that we disapprove in principle of so-called excess profits taxation.
I shall not elaborate on the disadvantages and bad effects of this form
of tax. They are familiar to all of tiS. I t will be a relief when the
tax is off the books. I want to emphasize that the recommendation
is for a 6-months' extension. We would object to any extension
beyond that time.
I n considering the excess profits tax, it is important to see what
corporations pay it. Complete data on returns filed in 1951, for 1950
income, show that 50,200 corporations paid an excess profits tax. This
was less than 12 percent of the 424,000 corporations with taxable
income in that year. Preliminary figures for returns on 1951 income,
filed in 1952, show that the percentage was even smaller in that year.
Furthermore, most of the tax was paid by large companies. The
1950 returns showed a total excess profits tax of $1,385 million. Of
this total, $1,234 million were from corporations with net incomes of
more than $250,000. This means that only $151 million or 11 percent
of the total tax came from companies with incomes below $250,000
each. The incomplete figures for 1951 income show that this same
218
1953 REPORT OF THE SECRETARY OF THE TREASURY
relationship between large and small companies continued in that
year. The full details on the 1950 returns are being filed with the
committee, today.
The significant point to me from these figures is that though the
tax is a very serious barrier to growth for rapidly expanding small
companies, it does not affect the vast majority of companies. I t falls
most heavily on profitable large companies.
I want to be sure that my position on this point is clear. The
present distribution of the corporate tax burden is bad because of the
tax barriers to growth and the tax penalties on eflficiency. But for
the rest of this calendar year, most of the bad effects are present
anyway.
As the President has noted, the expiration of the tax on J u n e 30
would be misleading in many respects. Eegardless of the date of
expiration, the tax is computed on a full-year basis. Even though it
expires on July 1, its provisions are applicable to the rest of the year.
The expiration of the tax in the middle of the year simply means that
the rate is lower on the income for the entire year. Thus, if a company lost money—here is an example—through June, and made large
profits in the last part of the year, it would still be subject through
December to all of the peculiar, damaging effects of excess profits
taxation on business judgments, even though the tax had supposedly
expired some months previously.
Since the vast majority of companies are on a calendar-year basis,
the end of the calendar year is the logical time for the tax to expire.
I would feel entirely differently about extending the tax even for 1
month into another year.
A while ago I mentioned the fact that we had had to reduce the
earlier estimates of tax receipts. For this year, with only a month
left, we know that receipts will be at least $1.5 billion below the estimate made last January. For next year the reduction is $1.2 billion.
Our figure for next year's receipts differs by only $100 million from
that made independently by the staff of your joint committee.
The reductions in estimates do not mean that tax collections are
falling off. I t just means that the original estimates were too high.
Collections this year will be several billion dollars more than in any
previous year in the history of the country. Next year, even with the
tax reductions proposed in the President's program, receipts will be
higher than this year.
The extension of the excess profits tax for 6 months, without modification or amendment, is a necessary first step toward economic security. I t will give us time to get control of the budget. I t will help
in maintaining a sound dollar. I t will make it possible for tax reductions and revisions affecting everyone to take place at the same time
next year. I t will lessen a gamble with national economic security.
• We are convinced that this is a sound program. The overwhelming
editorial support from all sections of the country is very ofratifying.
We are satisfied that the country as a whole is back of the President's
program. Editorial comment on the President's tax program has been
received from 140 daily newspapers in 36 States. The count of editorials as of Monday, June 1, today, was as follows: Supporting the
program, 102; critical, 11; noncommittal, 27.
EXHIBITS
219
I urge, therefore, that the tax be extended without modification for
6 months and that we then get rid of it once and for all. In the meantime, we will devote ourselves to further reducing current expenditures
so that the reduction in individual income taxes for all the people can
justifiably be made a reality. Then all of our eff'orts will be used in
developing a better tax structure under which the elimination of many
of the inequities and injustices for all taxpayers, both corporate and
individual, can be made at the same time as the excess profits tax expires. In that way justice and fair dealing can be done equally and
contemporaneously for all.
Thank you, Mr. Chairinan and gentlemen, for this opportunity to
appear before you. I will gladly attempt to answer any question.
Exhibit 24.—Letter of Under Secretary of the Treasury Folsom, June 12, 1953,
to Representative Thomas B. Curtis, member of the House Ways and Means
Committee on extension of the excess profits tax
DEAR M R . CURTIS: I was sorry that because of the limitation of time there
was not opportunity during my appearance before the Ways and Means Committee last week to answer more fully your important question about the possible
gamble with economic security involved in the extension of the excess profits tax.
As I tried to indicate, the high level of corporate income taxes is certainly
a real barrier to growth, especially for companies which are dependent on
retained earnings to finance their growth. Business growth is essential for
national economic growth, and the expansion of small, independent companies
is especially important for social as well as economic reasons. I fully share your
concern on the subject. I earnestly hope that many of the changes to be made
in the tax laws next year can be particularly directed to this problem.
I am enclosing a copy of the statement which I presented to the Select Committee on Small Business last month in which I discussed some of the major tax
problems confronting small business.
In discussing the excess profits tax, I think we should recognize that while
this is an especially bad form of taxation, it is only a part of the total tax
burden. Many companies are finding it difficult to retain adequate earnings
for expansion. If such a company is in the top excess profits bracket, it retains
only $30 of every $100 of earnings; but the regular corporate tax takes $52 and
the excess profits tax $18.
Since all of us dislike the excess profits tax in principle, we did look very
carefully into everything that seemed to us to be possible short-run alternatives,
but we could not favor any of them. We first considered raising the normal
corporate rate. Our estimates showed that on the annual basis, 5 points of the
normal rate would bring in approximately $2 billion, which is about the same as
the loss from the excess profits tax. We could not see the justification for
shifting this burden from 12 percent of the corporations, which now pay excess
profits taxes, to the 88 percent that pay only the normal rate. The incidence of
the excess profits tax varies widely by industries. Some industries, such as
the railroads and utilities, pay very little. We knew from talks we have had
with many business people that this shift would not be a very popular one, nor
did we think it would be fair. It is obvious that it would not be fair to shift
this part of the tax load from corporations to individuals—either by increasing
the normal individual tax rate, or by excise taxes.
Though the barrier to growth imposed by this additional tax is important
and undesirable, it seemed to us, for this next 6 months' period, less serious
than the consequences of a tax reduction prior to the time when the Government
had really gotten control of the budget situation. In this first year of the new
Congress and administration, we believe that if we did not place a sound budget
policy as the first financial objective, we would find it even harder in later years
to stand firm on this point.
In case you didn't see it, I am enclosing a clipping from the June 10 New
York Times on this subject.
220
1953 REPORT OF THE SECRETARY OF THE TREASURY
The immediate decision is certainly a choice of evils on which judgments may,
of course, differ. From our appraisal of the situation, we are confident that
the extension of the tax will do less long-run damage to the economy than would
be caused by the abandonment at this time of the principle of a sound budget
policy.
Sincerely yours,
M. B. FoLsoM,
Under Secreiary of the Treasury.
Exhibit 25.—Letter of Secretary of the Treasury Humphrey, April 13, 1953, to
the Chairman of the House Ways and Means Committee urging corrective
legislation for abuses of the exemption for income earned abroad by United
States citizens
DEAR DAN : I know you share my concern about the situation which has developed
in connection with the exemption from United States taxation of income earned
abroad by citizens who spend at least 17 out of 18 months in foreign countries.
Authorization for this treatment was added to the law by the 82nd Congress.
, This provision appears to have been intended primarily to encourage persons
with special skills and technical know-how essential to fundamental economic
development to accept employment in foreign countries. However, under the
law as written, many conspicuous abuses have developed during the past several
months. Advantage has been taken of the law by highly paid individuals whose
work in a foreign country is clearly of a transitory nature.
I do not believe that the situation which has developed was contemplated by
the previous Congress, and regardless of what may have been intended, I respectfully recommend that your committee consider the adoption of corrective legislation. This Department stands ready to give your committee all possible
assistance.
Sincerely,
GEORGE.
Exhibit 26.—Memorandum of disapproval by the President, August 6, 1953, with
respect to H. R. 157, to exempt moving pictures from the admissions tax
I am withholding my approval of H. R. 157, entitled, "To provide that the tax
on admissions shall not apply to moving picture admissions."
My reasons for taking this position are that we cannot afford the loss of revenue
involved and that it is unfair to single out one industry for relief at this time.
In my message to the Congress on May twentieth, I said: ''Tax receipts will
apparently fall considerably short of our necessary expenditures during the next
fiscal year. In view of this fact, I have come to the conclusion that no reductions
in tax rates should become effective during this calendar year." In accordance
with this policy, the Treasury Department advised the Chairmen of the House
Committee on Ways and Means and the Senate Committee on Finance of its
opposition to this bill.
Because of the need for revenue I recommended an extension of the excess
profits tax for six months and the extension has now been made. Tax relief for
one industry now would be inconsistent with that action.
It is estimated that the repeal of the admissions tax on motion picture performances, which has been on the books at the present rate since April 1, 1944,
would'result in a gross loss of revenue of $200 million. After allowing for a
resulting increase in corporation income taxes, the net loss is estimated to be
between $100 million and $120 million a year.
It is not contended by the industry that the present scale of admission prices
which reflects the 20 percent tax is responsible for the existing distress situation
in the ihdustry. Indeed, the industry apparently expects in many cases to
maintain the present price to consumers even though the tax is repealed.
There is distress in large but not all segments of the industry. The basic causes
of the industry's distress, however, arise from new forms of competition.
A strong case can also be made for tax relief in other industries which are subject
to high excise taxes, including other forms of entertainment subject to the admissions tax. If relief is to be given to motion picture theaters at this time it would
riot be fair to refuse relief to these other industries. If widespread rehef were
given, however, the loss in revenue would be very large.
221
EXHIBITS
As I said in m y message of M a y twentieth, " t h e wide variety of existing excise
rates makes little economic sense a n d leads to improper discrimination between
industries a n d among consumers. Specific proposals for a modified system of
excise taxation will be included in the recommendations for tax revision t h a t will
be submitted to t h e Congress next J a n u a r y . "
The Treasury analysis has already progressed t o t h e point where I can say t h a t
I will include a recommendation for a reduction in t h e admissions t a x in m y p r o posals for a modified system of excise taxation. Action could be taken by the,
Congress early in 1954 and relief could be given a t t h a t time.
I t is for these reasons t h a t I cannot give my approval to the repeal of t h e tax.
on admissions to motion-picture performances. T h e country cannot afford a., loss.
of revenue a t this time. Furthermore, it would not be fair a n d would be discrimin a t o r y t o give relief under a single excise t a x a n d t h e n only t o one of the industries;
subject to t h a t tax.
DWIGHT D .
THE
W H I T E H O U S E , August 6,
EISENHOWER.
1953.
Exhibit 27.—Letter of Under Secretary of the Treasury Folsom, M a r c h 31, 1953,
to the Chairman of the H o u s e Ways and M e a n s Committee on H . R. 1215,
extending t h e bonding period for distilled spirits
M Y D E A R M R . CHAIRMAN: F u r t h e r reference is made to the request of your
committee for t h e views a n d recommendations of this D e p a r t m e n t on H . R. 1215,
t o a m e n d Section 2879 (b) of t h e Internal F'evenue Code.
T h e bill would extend from 8 years to 12 years t h e period of storage in bond
for distilled spirits which are in an internal revenue bonded warehouse on t h e
d a t e the a m e n d m e n t takes effect. The 8^year bonding period has, with certain
exceptions a t t r i b u t a b l e to the prohibition era, been in effect since t h e effective
d a t e of t h e act of August 27, 1894 (28 Stat. 509). T h e proposed increase in t h e
period t o 12 years would be conditioned upon an extension of t h e liability of t h e
principal a n d t h e surety on the warehousing bond. T h e bill expressly provides
t h a t t h e extension of t h e bonding period shall not apply to distilled spirits which
are entered into an internal revenue bonded warehouse subsequent to its effective
date.
T h e bill is designed to alleviate a problem which arises out of an unusually
large accumulation of distilled spirits in bonded storage during t h e last 8 years.
As table I indicates, postwar production has, with the exception of t h e current
fiscal year, greatly exceeded withdrawals from bond plus losses during storage.
T h e result was an increase of stocks of whisky in bond from 307.6 million t a x
gallons on J u n e 30, 1945, to 767.6 million t a x gallons a t t h e close of t h e fiscal
year 1952. While there has been some subsequent decline, t h e stocks on h a n d
on December 31, 1952, were still 735.2 million t a x gallons.
T A B L E I.—Production, tax-paid withdrawals, total disappearances, and year-end
stocks of whisky, fiscal years 1936-52
[Tax gallons]
Fiscal year
1936.—
1937
1938..1939
1940.
1941
1942
1943
1944.
1945
1946
1947
1948
1949
1950
1951
1952.
-
.._
Production
_
-.-
223, 659, 539
223, 457, 850
102,895,872
93, 003.917
98, 993', 303
121.851, 983
120, 257, 424
19, 529, 698
0
41, 562, 303
147, 464, 516
167,994,805
129, 597, 067
149, 595, 239
118, 760, 487
205, 702, 460
103, 543, 953
T a x - p a i d withdrawals
67, 299,166
72, 616,195
68,611,650
72,059, 023
81,267,368
80, 541, 974
84, 709,171
87, 913, 792
58, 832, 992
63, 891, 224
63, 226, 912
58.822, 676
53, 603.200
52, 674. 964
60, 499, 332
76, 442,149
64, 907, 563
T o t a l disappearances 1
75,808. 266
78, 83Ci 695
77,021,996
85, 263, 838
96,955,-312
98,708,901
107, 419, 223
111,623,019
76,178, 585
82, 621,139
80,980, 006
77,241.555
72,16i; 616
68, 930.134
78, 406; 837
97, 748, 793
87, 219,154
Year-end
stocks
300, 658, 508
445, 285, 663
471,159 539
478,899, 618
480, 937, 609
504,080, 691
516, 918,887
424, 824, 966
348, 646, 381
307 587 545
374,072,055
464, 825, 305
522, 260, 756
602,925,861
643, 279 511
751, 233,178
767, 557, 977
Source: Annual Beport of Commissioner of Internal Revenue, Fiscal Year Ended .Tune 30,1952.
1 Tax-paid and tax-free withdrawals and losses.
222
1953 REPORT OF THE SECRETARY OF THE TREASURY
The large production of whisky during this period was due in part to the desire
of distillers to replenish stocks depleted daring World War II and in part to the
impetus to production provided by the outbreak of the conflict in Korea.
The distribution of the whisky in bonded warehouses on December 31, 1952,
according to years of production, is as follows:
Calendar year:
^aa: gallons Calendar year—Con.
Taj gallons
1911-21
9,891
1949
119,966,351
1945
13, 227, 965
1950
173,817,808
1946
31, 081, 187
1951
156,129,889
1947
49,949,410
1952
J
68, 651, 234
1948
--. 122,338,674
During the calendar year 1953, 13,2 million tax gallons will reach the 8-year
limit on the bonding period and by the end of 1954 an additional 31.1 million
tax gallons would have to be withdrawn under existing law.
The significance of these figures is revealed by the record of average annual
disappearances of whisky from bond (tax-paid and tax-free withdrawals and
losses) by age periods during the fiscal years 1948, 1949, and 1950 shown below:
.A.ge:
Tax gallons
Age—Continued
Tar gallons
3-4 years
22, 194, 863
7-8 years
10,754,930
2-3 years
5, 372, 157
6-7 years
14,510,120
1-2 years
1, 298, 842
5-6 years
13,827,838
0-1 year
893,707
4-5 years
4,307,656
This experience may be regarded as normal for the industry so long as the
proportion of sales which consists of blended whisky does not change materially.
Since the average annual disappearances of whisky 7-8 years old during this
period were in excess of 10 million tax gallons, it would appear that if the stocks
were fairly well distributed among members of the industry, the 13 million tax
gallons which will reach the limit of the bonding period during 1953 could be
marketed without undue difficulty. There also appears to be a good possibility
that if the stocks were well distributed, the additional 31 million tax gallons
which will have to be withdrawn from bond by the end of 1954 could be marketed
without undue disturbance provided that the normal procedure of withdrawal of
6-7 year old whisky has been followed in 1953. However, the situation in these
years is complicated by the concentration of the relatively aged whisky in the
hands of a few producers.
The problem of excess stocks of aged whisky will become more acute and more
general after 1954. It is estimated that during 1955 the excess of whisky which
will have to be withdrawn under the 8-year rule over the normal withdrawals
will be approximately 36 milhon tax gallons, and that in 1956 the excess will be
approximately 81 million tax gallons. Variable but even larger quantities may
reach the limit of the bonding period in the years 1957 through 1960.
These estimates are based on the practices of the industry in the period 1948
through 1950 and would be altered materially by changes in industry practices.
For instance, the excess stocks would be reduced if over the years the industry
were able to alter the pattern of its sales so as to increase the relative proportion
consisting of straight whisky.
An extension of the bonding period would have pronounced effects on the competitive relationships within the industry. Some companies have inventories of
aged whisky which are excessive compared to their ordinary annual sales. O+her
companies are not in this position.
The probable actions of companies with excessive inventories in the absence of
an extension of the bonding period cannot be foretold with assurance. The
whisky may be forced out of bond, the tax paid, and the whisky disposed of over
a period of yeais. Representatives of some companies have asserted that such
gradual marketing of the excess is impractical because of the difficulty of financing
so large an increase in tax-paid inventories. Alternatively, the excess stocks
could be sold immediately for such prices as may be secured in domestic consumption or in sales to other producers. A third alternative would be to redistill
whisky into neutral spirits which could be used in blended whisky in place of
spirits which would otherwise have been produced for tbis purpose. No tax
would result from such action until the redistilled spirits were withdrawn for
consumption or had been warehoused for 8 years. The redistillation of whisky
into neutral spirits involves the loss of the investment in the aging process. A
fourth alternative is the redistillation of the whisky and sales as industrial alcohol,
EXHIBITS
223
but this procedure would be unlikely because of the present highly competitive
situation in the industrial alcohol market. A final possibility which has been
mentioned by some representatives of the industry is the sale of whisky pi ior to
the force-out date to Canadian or other foreign producers who might hold it for
some time and then reimport it into the United States. Such reimportation, of
course, would involve payment of customs duty.
Although, as has been indicated, there are certain procedures which the members of the industry may undertake to alleviate the problem of excessive inventories, even if the present bonding period is not changed, these procedures bave
certain disadvantages and it is not certain that they would provide a complete
and satisfactory solution to the problem. While the bill also may not provide a
complete solution, it will give certain individual members of the industry an opportunity to arrange for disposition of older whisky stocks in a more orderly
manner during the next few years.
The failure to extend the bonding period could force out whisky and lead to
greater consumption as a result of distress sales or moie intensive sales promotion. The immediate effect would be an increase in excise tax receipts. However, the reaction on the corporate income tax would be unfavorable. On balance, it does not appear that there would be a significant change in total tax
collections as a result of the enactment of H. R. 1215. In this respect, the
Treasury Department has no objection to the passage of the bill.
There is substantial opposition to the bill among members of the industry.
It has been pointed out that the proposed change in the bonding period wiould
introduce a new class of product into the market, whisky aged more than 8
years, with material consequences upon the competitive position of different
members of the industry depending upon the age distribution of their current
inventories. On the other hand, a failure to extend the bonding period could
force those with excessive inventories to attempt to sell stocks for which there
was not a reasonably firm market. This could react to the disadvantage of all
members of the industry irrespective of their inventory posiiion.
It is apparent that, regardless of the action on H. R. 1215, the competitive situation in the industry will be influenced over the next several years by the large
inventories which have been accumulated. The differences of Opinion within the
industry concerning this legislation indicate that there is no simple solution to
the inventory problem. The Treasury Department has been unable to ascertain
any clear balance of advantage on either side of the controversy within the industry and hence takes no position on the general merits of H. R. 1215.
The Director, Bureau of the Budget, has advised the Treasury Department that
there is no objection to the presentation of this report.
Sincerely yours,
M. B. FOLSOM,
Urider Secretary of the Treasury.
Exhibit 28.^MisceIlaneous revenue legislation enacted during the fiscal year
1953, Eighty-third Congress, First Session
Public Law 4, February 14, 1953, continues until June 30, 1954, the suspension
of certain import taxes on copper.
PubHc Law 178, August 1, 1953, includes a provision which enacts into permanent law the temporary provision applicable to. 1953 and 1954 which authorized
members of Congress to deduct for income tax purposes up to $3,000 of their
Washington living expenses.
Public Law 196, August 5, 1953, provides for unemployment insurance coverage
under State unemployriient compensation laws for seamen employed on certain
merchant vessels operated by the United States.
Public Law 202, August 6, 1953j includes a provision for a franchise tax on
Federal land banks, production credit corporations, and the Central Bank for
Cooperatives at a maximum rate of 25 percent of net earnings after certain specified
adjustments.
Public Law 212, August 7, 1953, extends the internal revenue laws to all artificial islands and fixed structures which may be erected on the outer Continental
Shelf for the exploitation therefrom of resources to the same extent as if the outer
Continental Shelf were an area of exclusive Federal jurisdiction located within a
State.
224
1953 REPORT OF THE SECRETARY OF THE TREASURY
Public Law 213, August 7, 1953, extends for one year the exemptions from income tax for compensation for active service in combat zones of members of the
Armed Forces. This law also amends Section 25 (b) (3) of the Internal Revenue
Code by allowing a dependency exemption to be claimed for a child for whom a
petition for adoption had been filed in the appropriate court but which had been
denied because of mental incapacity of the surviving natural parent to agree to the
adoption.
Public Law 219, August 7, 1953, establishes a system of retirement for judges of
the Tax Court who have served 18 years or more or who have served for 10 ye.ars
or more and have reached the age of 70.
Public Law 221, August 7, 1953, continues through June 30, 1954, the suspension
of duties and import taxes on metal scrap.
Public Law 238, August 8, 1953, extends certain provisions of the Internal
Revenue Code relating to narcotic drugs to the Trust Territory of the Pacific
Islands.
Public Law 240, August 8, 1953, redefines the term "narcotic drugs" to include
certain drugs which are or may be chemically synthesized.
Public Law 274, August 14, 1953, specifically authorizes abatempnj. of jeopardy
assessments of income, estate, and gift taxes when it is determined that jeopardy
does not exist.
Public Law 283, August 15, 1953, providf s that a taxpayer may elect to receive,
the refund of taxes on distilled spirits used for designated nonbeverage purposes
on a monthly basis instead of on a quarterly basis.
International Financial and Monetary Developments
Exhibit 29.—Communique, March 7, 1953, on economic and financial discussions
between representatives of the United States and the United Kingdom
Representatives of the United States and the United Kingdom today concluded
their discussions on measures for creating the economic and financial conditions
under which the countries of the free world may be better able to earn their own
living by their own industry. These conversations were informal and raised questions on which it was understood in advance that no commitments would be made.
The United Kingdom representatives explained the suggestions which emerged
from the Conference of Commonwealth Prime Ministers, held in London in
December of last year, for measures which might be taken to restore balance in the
world economy through the channels of commerce and to develop, by progressive
stages, an effective multilateral trade and payments system over the widest
possible area. These measures would involve action by the Commonwealth
countries, the United States, the countries of continental Western Europe, and the
countries that are members of existing international trade and financial institutions.
The discussions covered the internal and international conditions which would
have to be established in order that each country might enjoy the human and
material benefits of freer and dependable currencies and a larger volume of trade
and commerce.
They also included a review of the over-all economic and fiscal situation of the
United States. Note was taken of the significant United States defense expenditures overseas, including offshore purchases.
From these conversations, certain conclusions have emerged:
There is full agreement between the two governments that the solution of the
economic problems of the free world is vital to its security and well being.
They also agree that the essential elements of a workable and productive economic system within the free world should include:
(a) Sound internal policies: international economic policies cannot succeed
unless they are based on sound internal policies, by debtor as well as creditor
countries. During the course of the conversations, the United States representatives made it clear that the Government of the United States welcomes the intention of the Commonwealth Governments, expressed in their December communique, to follow the internal financial and economic policies needed to achieve a
freer exchange of currencies and trade.
(b) Freer trade and currencies: the freeing and expansion of world trade
must cover currencies as well as trade. On the financial side the objective should
be the eventual convertibility of sterling and other currencies and the gradual
removal of restrictions on payments. On the tiade side the objective should be
EXHIBITS
225
to bring about the relaxation of trade restrictions and discriminations in a. way
which, in the words of President Eisenhower's State of the Union Message, ''will
recognize the importance of profitable and equitable world trade." It is in the
interest of the United States to take such measures as are exemplified in the President's Message in order that the members of the free world may the better pay
their way by their own efforts.
(c) Development: the creation of conditions, both by creditor and by debtor
countries, which will foster international investment and the sound development
of the resources of the free world. In this connection, the Government of the
United States emphasized its intention to encourage the flow of investment abroad.
(d) Organization: international institutions should be constructively used
to promote these policies.
The Government of the United States welcomes the initiative taken by the
United Kingdom Government in connection with these problems of common
concern.
The two Governments believe that there is reason to hope for continued progress
toward a better balanced, growing world trade and toward the restoration of a
multilateral system of trade and payments. The nature and scope of the measures
which may be taken by governments to further such progress, and the timing of
such measures, will require further study.
The Government of the United States will undertake, and continue over the
next several months, an intensive examination and review of the general subjects
discussed at the present meetings, including the suggestions resulting from the
Commonwealth Economic Conference, and possible alternative suggestions, in
order to arrive at a sound judgment with respect to the specific courses of action
which might be taken. The two Governments intend to have further discussions
with each other, with other governments, and with the international organizations
concerned, including the Organization for European Economic Cooperation.
Exhibit 30.—Statement by Secretary of the Treasury Humphrey before the
Joint Session of the Senate Foreign Relations Committee and the House
Foreign Affairs Committee, May 5, 1953, on extension of the Mutual Security
Program
You have noted from what has previously been said by the preceding witnesses
that the great bulk of the money that is now being requested is to be spent for
direct contributions to our security. It will be largely for military-end items or
directly contributing to our friends and our own mutual defense. You have also
heard it said by the previous witnesses that we will get as much, or more, for our
money in security in this way than by making additional direct military expenditures. It is our purpose to secure the maximum of security wherever it may be
for the least possible expenditures of money. I believe that the assistance proposed in this legislation meets that requirement. I think it should be rendered
and that we can render it advantageously as compared with any equal expenditures
elsewhere. It is understood, of course, by all concerned that as time goes on and
if conditions change, proposed expenditures will be reduced or omitted wherever
that can properly and suitably be done without prejudice to our security, and at
all times every effort will be made to fully get our money's W9rth.
A good part of the money being requested in this bill will not be spent in the
coming fiscal year. Its authorization enables the forward planning and contracting
that is necessary when you are engaged in building a defense force. But it is
planned for expenditure at a later date.
This question of continuing new obligational authority has been a matter of
deep concern to the administration. As you know, when President Eisenhower
entered office he inherited the problem, of $81 billions in outstanding obligations
and unsatisfied authorizations to spend Government funds. The expenditures for
the fiscal year 1954—the expenditures I will talk about in a few minutes—will
come largely from this overhang.
If we are ever going to balance the budget and bring expenditures within the
tightest possible contiol, we must do something about achieving a run-off of the
large carryover of unspent authorizations. We cannot continue to ask each year
for substantially more money than we will actually spend in the ensuing twelve
months, because that means the overhang constitutes a snowballing threat to
financial stability.
273013—54
16
226
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Now we have tried to do something about this problem in the bill that is before
you. We are changing the direction that has been followed in the past few j'^ears.
But we are not proposing to do so with unreasoning abruptness. We aro trying
to strike a proper balance between maintaining an adequate and continuing free
world defense and creating the conaitions for long-term financial stability in this
country.
Thc way to do that, it seems to me, is to request each year less than will be
spent in the next twelve months. You wfll note from the exhibits before you
that we are beginning to put that pohcy into practice right now. Changing the
practice of the past, we now propose that the Congress authorize new funds for
foreign assistance in an amount smaller than the anticipated expenditures during
the coming fiscal year. As we do our future planning we will have constantly
before us the objective of reducing the overhang of unutiHzed authorizations.
That is a very important objective, and I want you to know that ic is not only our
objective but is now our determined practice. That is why I have talked first
about this problem of new obHgational authority.
Now I turn to the problem of actual expenditures during fiscal year 1954.
These will be large. There is no question that these expenditures and others
necessary to our national security will affect the possibihty of balancing the
budget and the time when we can look forward to tax reductions. Because this
administration is committed to a program of sound money and of reducing taxation at the earliest possible time, I can assure you that these expenditures have
been most carefully studied from the standpoint not only of their effectiveness
but also from the point of view of the necessity of making them in the proposed
amounts to contribute to essential security. We are committed to the policy Of
constantly reviewing the necessity of making the expenditures currently during
the year and will make reductions or eliminations whenever and wherever justified.
Although expenditures of such magnitude will necessarily create problems, they
can be handled under the sound financial principles to which we are committed.
In formulating the foreign assistance program close attention has also been
given to the desirabflity of fostering private investment abroad. This will not
only reduce public expenditure but the Government should not undertake
activities that can better be carried on by the people themselves. In this direction
we will be constantly alert to utilizing the International Bank for Reconstruction
and Development and the International Monetary Fund wherever possible. To
this end also it is the policy of the Government that interest rates on any governmental loans which may be necessary shall be such as not to discourage private
investment.
As we progress throughout the year we will give serious consideration to the
problem of the rate of expenditures which we will lay before you ne.xt year. We
will strive for proper balance between military preparedness in the United States
and overseas, and maintenance of economic strength at home. We have already
laid the groundwork for establishing that balance. In the NATO meeting in
Paris last month my associates and I took steps in that direction. Our friends
abroad were fully advised of this poHcy. As we go through the next year we will
build upon that foundation.
Meanwhile, we feel that the program which has been presented to you today
is the best balance between security for our friends and ourselves and our necessity
for reducing expenditures that can be appropriately managed at this time. We
are looking forward to making savings wherever possible and further progress in
making additional reductions in the future.
Exhibit 31.—Press release, June 9, 1953, on the signing of a Stabilization Agreement between the United States, and Mexico
Secretary Humphrey, Mexican Ambassador Manuel TeHo, ahd Senor Raul
Martinez-Ostos as the representative of the Banco de Mexico todav signea a new
Stabilization Agreement between the United States and Mexico. The agreement,
which becomes effeci-ive July 1, 1953, provides for an increase from $50 to $75
million in the amount available in the United States Stabilization Fund for the
purchase of Mexican pesos to stabilize the doHar-peso rate of exchange.
The United States StabiHzation Fund undertakes until December 31, 1955, to
purchase under the terms ot the agreement signed today Mexican pesos up to the
equivalent of $75 million for the purpose of stabilizin.2; the dollar-peso rate of
exchange if the occasion for such use should arise. The agreement continues
EXHIBITS
227
a r r a n g e m e n t s t h a t have been in effect since 1941 and will, as in t h e past, be operated in close coordination with the activities of the International Monetary F u n d .
T h e increase in the a m o u n t from $50 million to $75 million, it was explained, is
in keeping with the growth of Mexican production and the increase in trade and
financial transactions between Mexico and the United States.
Secretary H u m p h r e y notea t h a t Mexico has achieved a substantial increase in
its national o u t p u t in recent years, while maintaining in full its traditional freedom
of exchange transactions. H e pointed out t h a t the present strength and stability
of t h e peso and the satisfactory condition of Mexico's gold and foreign exchange
reserves stem in large p a r t from the internal financial stability which Mexico has
attained auring t h e last few years.
Exhibit 32.—Press release and notice. M a y 6, 1953, on countervailing duties on
imports of wool tops from Uruguay
I n compliance with provisions of t h e Tariff Act, Secretary of t h e Treasury
George M. H u m p h r e y t o d a y approved issuance by t h e Acting Commissioner of
Customs of a n order levying countervailing duties on imports of wool t o p s from
Uruguay.
(The Secretary announced to t h e House Ways a n d Means Committee on
M o n d a y ( M a y 4) t h a t this action would be taken.)
T h e order was approved in conformance with Section 303 of t h e Tariff Act of
1930. T h e order gives notice " t h a t wool tops imported directly or indirectly
from Uruguay will be subject to t h e p a y m e n t of countervailing duties equal to
t h e n e t a m o u n t of any b o u n t y or grant determined or estimated to have been
paid or bestowed upon their exportation from U r u g u a y . "
T h e order is being issued after full consideration by t h e Treasury of all relevant
factors. I t was concluded t h a t exports of wool tops from Uruguay t o t h e United
States in effect receive t h e benefit of a b o u n t y .
T h e decision of t h e Treasury in accordance with s t a n d a r d procedure will be
effective 30 days after publication in t h e next issue of t h e weekly Treasury
Decisions.
Collectors of customs will be required to collect countervailing duties of 18
percent in addition to all other duties and charges applicable to imports of dutiable
wool tops from Uruguay.
To Collectors of Customs and Others Concerned:
T h e Bureau has received information concerning the export of wool tops to t h e
United States from Uruguay which satisfies t h e Bureau t h a t such exports receive
bounties or grants within the meaning of Section 303 of the Tariff Act of 1930
(19 U. S. C. 1303). Accordingly, notice is hereby given t h a t wool tops imported
directly or indirectly from Uruguay, except any such importations which are free
of d u t y under the Tariff Act of 1930, if entered for consumption or withdrawn from
warehouse for consumption, after the expiration of 30 days after publication of this
decision in t h e weekly Treasury Decisions, will be subject to the p a y m e n t of
countervailing duties equal to the net a m o u n t of a n y b o u n t y or grant determined
or estimated to have been paid or bestowed upon their exportation from Uruguay.
I n accordance with Section 303, it is hereby estimated a n d determined t h a t
under existing conditions the net a m o u n t of such b o u n t y or grant is 18 percent of
t h e sum of the invoice value of t h e wool tops per se and any dutiable charges
applicable to such tops. On and after t h e effective date of this notice, and until
further notice, upon t h e entry for consumption or withdrawal from warehouse
for consumption of such dutiable wool tops, imported directly or indirectly from
Uruguay, there.shall be collected, in addition to any other duties estimated or
determined to be due, countervailing duties in the a m o u n t ascertained in accordance with t h e above estimation a n d determination.
D.
B.
STRUBINGER,
Acting Commissioner of Customs.
Approved M a y 6, 1953:
G.
M.
HUMPHREY,
Secreiary of the Treasury.
228
1953 REPORT OF THE SECRETARY OF THE TREASURY
Exhibit 33.—Agreement, February 27, 1953, relating to the indebtedness of Germany for awards made by the Mixed Claims Commission, United States and
Germany, and a discussion of the agreement
[Senate Executive Document, Executives D, E, F, and G, 83d Congress, 1st session, April 10, 1953]
A G R E E M E N T B E T W E E N T H E U N I T E D STATES O F
AMERICA A N D T H E F E D E R A L R E P U B L I C OF G E R M A N Y
R E L A T I N G TO I N D E B T E D N E S S OF G E R M A N Y FOR
AWARDS M A D E BY T H E M I X E D CLAIMS COMMISSION,
U N I T E D STATES AND G E R M A N Y
W H E R E A S , Germany, under the terms of the agreement of June
23, 1930 between the United States of America and Germany, hereinafter referred to as the 1930 Agreement, was indebted to the United
States of America (hereinafter called the United States) for awards
and interest thereon entered in favor of the United States on its own
behalf and on behalf of its nat.onals by the Mixed Claims Commission, United States and Germany; and
W H E R E A S , the United States is holding, under the terms of the
1930 Agreement, bonds of Germany as evidence of such indebtedness;
and
W H E R E A S , in an agreement between the Governments of the
French Republic, the United Kingdom of Great Britain and Northern
Ireland, the United States of America and the Federal Republic
of Germany in the form of an exchange of letters, on March 6, 1951,
the Government of the Federal Republic of Germany confirmed
that it is liable for the pre-war external debt of the German Reich;
and
W H E R E A S , the United States and the Federal Republic of Germany
(hereinafter referred to as the Federal Republic), desire, as part of the
general settlement of German debts, to make provision for the settlement of the obligations of the Federal Republic with regard to the
remaining indebtedness of Germany for awards made by the Mixed
Claims Commission, United States and Germany, on behalf of
nationals of the United States, and to defer settlement of all other
indebtedness under the 1930 Agreement until the final general settlement envisaged in Paragraph (1) of Article 5 of the Agreement on
German External Debts, signed this day in London:
Now, THEREFORE, it is agreed as follows:
1. The Federal Republic shall pay to the United States the total
amount of $97,500,000.00, on behalf of those nationals of the United
States, or their successois or assignees, on whose behalf awards of the
Mixed Claims Commission, United States and Germany have heretofore been entered which awards have not been fully satisfied.
2. The said total amount shall be paid in 26 annual installments,
in lawful currency of the United States, by the Federal Republic at
the Federal Reserve Bank of New York for credit in the general
229
EXHIBITS
account of the Treasurer of the United States in accordance with the
following schedule:
Installment No.
1
2
:3
4
:5
'6
7
8.
'9
10
n
12
13
Due Date
April
1,1953
April
April
._. April
April
- -. April
April
April
April
April
April
April
1,1955
1,1956
1,1957
1,1958
1,1959
1,1960
1,1961
1,1962
1,1963
1,1964
1,1965
.
-. April 1,1954
Amount
$3, 000,000.00
3,000,000. 00
3, 000, 000. 00
3,000.000.00
3, 000, 000. 00
3, 700, 000. 00
3, 700, 000. 00
3, 700, 000. 00
3, 700,000. 00
3, 700, 000. 00
4, 000,000. 00
4,000, 000.00
4, 000.000. 00
Installment No.
14
15
16
17
18
19
20
21
22
23
24
25
26
-
April
April
April
April
April
April
April
April
April
April
April
April
April
-.-...
_
Amount
Due Date
1,1966
1,1967
1,1968
1,1969
1,1970
1,1971
1,1972
1,1973
1,1974
1,1975
1,1976
1,1977
1,1978
$4,000,000.00
4,000,000. 00
4,000,000. 00
4,000,000. 00
4, 000,000.00
4, 000,000. 00
4, 000,000.00
4, 000,000. 00
4,000, 000. 00
4, 000,000. 00
4,000,000. 00
4. ono, 000. no
4,000,000.00
3. In the event the Federal Republic shall fail to pay any installment
upon the due date such installment shall bear interest at the rate of
3% per cent per annum from that date until the date when such installment is paid.
4. As evidence of the obligations set forth in the preceding articles
of this agreement, the Federal Republic shall issue to the United States
bonds in the form attached hereto as Exhibit A.
The bonds shall be numbered consecutively from 1 to 26, shall be
dated January 1, 1953, and shall mature and be payable serially as
provided for in Article 2 hereof. Each such bond shall be denominated
in dollars and be payable to the Government of the United States in
lawful currency of the United States. The bonds shall be signed for
the Federal Republic by the President and a member of the Bundfisschuldenverwaltung and shall be delivered to the Secretary of ihe
Treasury of the IJnited States at the United States Treasurv io
Washington.
5.. Upon receipt by the United States of the bonds issued pursuuiit
to Article 4 hereof, the United States shall cancel and deliver to r^he
Federal Republic those bonds of Germany issued under the ll'oO
Agreement as evidence of Germany's indebtedness for awards of i)he
Mixed Claims Commission, United States and Germany, which hf.ve
the following maturity dates:
MaTch
March
March
March
March
March
31,
31,
31,
31,
31,
31,
1932
1933
1934
1935
1936
1937
September
September
September
September
September
September
30,
30,
30,
30,
30,
30,
1931
1932
1933
1934
1935
1936
March
March
March
March
March
March
31,
31,
31,
31,
31,
31,
1938
1939
1940
1941
1942
1943
September
September
September
September
September
September
30,
30,
30,
30,
30,
30,
1937
1938
1939
1940
1941
1942
6. The United States will apply the payments made by the Federal
Republic as provided in this agreement in reduction of the remaining
indebtedness of Germany in respect of awards of the Mixed Claims
Commission, United States and Germany, made on behalf of na-
230
1953 REPORT OF THE SECRETARY OF THE TREASURY
tionals of the United States; provided, however, that full performance
of this agreement by the Government of the Federal Republic or by
.t and the government of a re-united Germany and payment of the
^amounts due under this agreement shall constitute and be accepted
by the United States as fulfillment by the Federal Republic and by a
re-united Germany and as full discharge of each of them and of Germany of their respective obligations under the agreement of June 23,
1930, and the bonds issued pursuant thereto, in respect of awards of
the Mixed Claims Commission, United States and Germany, made on
behalf of nationals of the United States, anything in the exchange of
letter of October 23, 1950 and March 6, 1951 between Chancellor
Adenauer and the Allied High Commission for Germany or in the
memorandum of December 1951 prepared by the Tripartite Commission on German Debts to the contrary notwithstanding.
7. Settlement of the indebtedness of Germany in respect of the
awards of the Mixed Claims Commission, United States and Germany, to the United States on its own behalf shall be deferred until
the final general settlement envisaged in Paragraph (1) of Article 5
of the Agreement on German External Debts, signed this day in
London.
8. The amounts to be paid by the Federal Republic in accordance
with this agreement shall be paid without deduction for, and shall be
exempt from, any and all taxes or other public dues present or future,
imposed by or under authority of the Federal Republic or any political
or local taxing authority within the Federal Republic.
9. Any notice from or by the Federal Republic shall be sufficient
if delivered to the American Embassy at Bonn or to the Secretary of
the Treasury at the Treasury of the United States in Washington.
Any notice, request, or consent under the hand of the Secretary of
the Treasury of the United States shall be deemed and taken as the
notice, request, or consent of the United States and shall be sufficient
if delivered at the Embassy of the Federal Republic at Washington
or at the office of the Ministry of Finance of the Federal Republic at
Bonn. The United States in its discretion may waive any notice
required hereunder, but any such waiver shall be in writing and shall
not extend to or affect any subsequent notice or impair any right of
the United States to require notice hereunder.
10. The United States and the Federal Republic, each for itself
represents and agrees that the execution and delivery of this agreement
have in all respects been duly authorized, and that all acts, conditions,
and legal formalities which should have been completed prior to the
making of this agreement have been completed as required by the
laws of the United States and of the Federal Republic Tespectively
and in conformity therewith.
11. Any dispute between the United States and the Federal
Republic respecting the interpretation or implementation of this
agreement shall be settled through negotiation or by such other
method as may then be agreed between the United States and the
Federal Republic.
12. This agreement shall be approved by the United States and the
Federal Republic in accordance with their respective constitutional
procedures.
EXHIBITS
231
The agreement shall enter into force—
(a) upon the exchange of instruments of approval at Washington, and
(b) upon the coming into force of the Agreement on German
External Debts between the Federal Republic on the one part
and France, the United Kingdom of Great Britain and Northern
Ireland, the United States and other countries on the other part.
I N WITNESS WHEREOF, the undersigned representatives duly authorized thereto by their respective governments have signed this
agreement.
D O N E at London on February 27, 1953, in duplicate in the English
and German languages, both texts being equally authentic.
For the United States of America:
W A R R E N L E E PIERSON.
For the Federal Republic of Germany:
ABS.
EXHIBIT A
(Form of Bond)
T H E FEDERAL R E P U B L I C OF GERMANY
Dated January 1, 1953
No. ..
The Federal Republic of Germany, herein called the Federal Republic, in consideration of the mutual covenants contained in an agreement dated
, 1953, between it and the United States of
America hereby promises to pay to the Government of the United
States of America, herein called tbe United States, on April 1, 19._,
for the purposes specified in said agreement the sum of $
This
bond is payable at the Federal Reserve Bank of New York in lawful
currency of the United States.
If this bond is not paid on the date when it is due, interest on the
face amount of this bond shall be paid at the rate of 3% per cent per
annum from such date until the date of payment.
This bond is payable without deduction for, and is exempt from,
any and all taxes and other public dues, present or future, imposed
by or under authority of the Federal Republic or any political or local
taxing authority within the Federal Republic.
This bond is issued pursuant to the provisions of an agreement
dated
, 1953, between the United States and the Federal
Republic, to which this bond is subject and to which reference is made.
I N WITNESS WHEREOF, the Federal Republic has caused this bond
to be executed and delivered on its behalf.
F O R THE
FEDERAL R E P U B L I C OF GERMANY
The Bundesschuldenverwaltung
President
Member
232
1953 REPORT OF THE SECRETARY OF THE TREASURY
UNITED STATES-GERMAN AGREEMENT RELATING TO THE INDEBTEDNESS OF GERMANY FOR AWARDS M A D E BY THE M I X E D CLAIMS
COMMISSION, U N I T E D STATES AND GERMANY
HISTORICAL BACKGROUND
Pursuant to tbe Treaty of Berlin, made August 25, 1921 (42 Stat.
1939), the United States entered into an Executive Agreement with
the German Government dated August 10, 1922, establishing the
Mixed Claims Commission, United States and Germany, to adjudicate
the claims of the United States and its nationals against Germany for
damages suffered through the acts of the German Government during
and prior to World War I. The agreement obligated Germany to
pay to the United States the awards and interest thereon entered in
favor of the United States Government and its nationals by the
Mixed Claims Commission. The Settlement of War Claims Act of
1928 (45 Stat. 254), created in the Treasury a German Special Deposit
Account, and directed that specified funds, including those derived
from German sources, be deposited therein, and that certain payments,
including payment on account of awards made by the Commission, be
made therefrom in accordance with specified priorities.
Pursuant to the authority contained in the Act of June 5, 1930 (46
Stat. 500), the Governments of the United States and Germany signed,
on June 23, 1930, the so-called Debt Funding Agreement whereby
Germany undertook to pay to the United States amounts sufficient
to cover the awards entered, and to be entered, by the above-mentioned Commission (Annual Report of the Secretary of the Treasury,
1930, p. 341). Under the terms of this agreement, Germany delivered
to the United States bonds evidencing its obligation in this respect,
which were to mature serially on March 31, 1930, and semi-annually
thereafter.
The agreement provides that Germany^s obligation is to cease as
soon as all the payments contemplated by the Settlement of War
Claims Act of 1928 are completed. The total payments contemplated
by the Act, with interest to date, amount to $644 million. Of this
amount $414 million relates to Mixed Claims Commission awards.
Payments which have been made on the Mixed Claims Commission
awards total $174 million of which funds received from Germany constituted $53 million. The balance unpaid is $240 million, consisting
of $104 million representing awards to the private nationals and $136
million representing awards to the United States Government.
The priorities established in the Settlement of War Claims Act of
1928, as amended, currently provide that funds deposited in the German Special Deposit Account should be distributed; firstly, in satisfaction of the awards of the Mixed Claims Commission to private
American nationals, (which are the subject of the current settlement);
secondly, in satisfaction of the awards of the Mixed Claims Commission to the United States Government on its own behalf (settlement of Germany^s obligation in this regard is being deferred pursuant
to Article 5 (1) of the Agreement on German External Debts); and,
finally, in satisfaction of unpaid balances of awards of the War Claims
A^rbiter to German nationals and as compensation for certain withheld
German private property, the proceeds of which were deposited iu
EXHIBITS
233
the German Special Deposit Account (settlement of Germany's obligation in this regard is also being deferred).
Since September 1933 Germany has been in default of its obligation
under this agreement.
TERMS O F SETTLEMENT
The Agreement entered into on February 27, 1953, relates only to
awards held by private Am,erican nationals. The terms of settlement
as set forth in the Agreement are the result of long and extensive
negotiations at the London Conference during 1952 between representatives of the United States Government and representatives of
the private American awardholders on the one hand, and representatives of the German Government on the other. The payment terms
agreed upon represent the product of these negotiations and were
approved by the London Conference. The settlement of these Mixed
Claims Commission awards constitutes an integral part of the over-all
settlement arrangements worked out by the London Conference.
The Federal Republic of Germany undertakes to make 26 annual
payments to the United States, in the amount of $3 million a 3^ear for
the first five payments, $3.7 million a year for the next five payments,
and $4 million a year for the final 16 payments, or a total of $97.5
million over a 25-year period. No interest is payable on this amount
except in case of default. The first payment is due on April 1, 1953.
The Federal Republic will thus settle for $97.5 million, a German
obligation of $104 million, consisting of $40 million principal and $64
million accrued interest, plus future accruals of interest. Since this
$104 miUion obligation represents 24 per cent of the total present
obligation of Germany on the 1930 bonds, the United States will
cancel and return to the Federal Republic 24 per cent of the 1930 bonds.
The Federal Republic, in return, will issue new bonds in the amount
of $97.5 million.
IMPLEMENTATION OF THE AGREEMENT BY THE TREASURY
The Settlement of War Claims Act of 1928 authorizes and directs the
Secretary of the Treasury to deposit into the German Special Deposit
Account all money received, whether before or after the enactment of
the Act, by the United States on account of the awards of the Mixed
Claims Commission. Payments received from the Federal Republic
pursuant to the 1953 Agreement would, in accordance with this
provision, be deposited in the German Special Deposit Account from
which the funds received could be distributed without further legislation among the holders of non-governmental awards of the Mixed
Claims Commission.
In accordance with the current priorities set forth in the Settlement
of War Claims Act of 1928, as amended, payments must be applied
first to interest and then to principal. As a result, although the
amount which the Federal Republic has agreed to pay is equivalent to
the full amount of the unpaid principal and a substantial portion of the
interest, the books of the Treasury will show unpaid balances of
principal after all payments by the Federal Republic under the 1953
Agreement have been distributed. Under the terms of the present
234
1953 REPORT OF THE SECRETARY OF "teE'TRE^^
Agreement, however, full performance thereof on the part, of the
Federal Republic of Germany will constitute a full discharge of
Germany's obligation in respect to the non-governmental awards of
the Mixed Claims Commission. Since, under the Settlement of War
Claims Act of 1928, the United States assumes no liability for payment of the awards of the Mixed Claims Commission, the discharge
of Germany's obligation with respect to these awards would extinguish
all liability for any future payments, although as mentioned above
there would remain on the books of the Treasury unpaid balances in
favor of the private awardholders. Whether any legislative action
need be taken with respect to these unpaid balances is a matter which
does not have to be considered until the payments called for under
the Agreement have been completed.
Exhibit 34.—Letter of Secretary of the Treasury Humphrey, May 26, 1953, to
the Chairman, Foreign Relations Committee on the agreements relating to
arrangements for the German external debt settlement
HON. ALEXANDER WILEY,
Chairman, Foreign Relations Committee,
United States Senate, Washington, D. C.
MY DEAR MR. CHAIRMAN: I wish to refer to the message from the President
of April 10, 1953, transmitting to the Senate the agreements with the Federal
RepubHc of Germany which relate to the arrangements for the settlement of
German external debts.
Throughout the development of the settlement prograra and the negotiations
for the settlements, the Treasury Department has been represented on an informal interdepartmental committee on claims against Germany. Through this
medium the Treasury has furnished advice to the Department of State with
regard to financial policy aspects of the settlement arrangements.
It is the Treasury's view that the agreements which have been concluded constitute a fair and equitable settlement. It is also our view that the agreed
reduction in the amount of the United States postwar claims to be cohected from
the Federal Republic of Germany is essential in order to permit the overall
settlement to take place, and that the amounts, terms, and conditions established
for settlement of these postwar claims are reasonable in the light of the circumstances.
In addition to its interest in the financial policy aspects of the settlement
generally, the Treasury has also been concerned with the treatment of its holdings of German bonds issued in connection with awards of the Mixed Claims
Commission, United States and Germany. In conjunction with the State Department, arrangements were made for representation of holders of such awards
at the London Debt Conference. The Treasury has followed closely and approved the agreement reached for the settlement of this claim, and is of the
view that the amount, terms, and conditions of the settlement are satisfactory.
It is my belief that these settlement agreements are in the interests of the
United States Government and private American creditors, and that early
appro valv thereof would be desirable.
Very sincerely yours,
G. M. HUMPHREY,
Secretary of the Treasury.
Exhibit 35.—Statement, September 10, 1953, by W. Randolph Burgess, Temporary Alternate Governor for the United States, at the discussion of the Annual
Report of the International Monetary Fund
I may say that I have been delighted with the discussion. It is a great encouragement to find our friends from all over the world thinking so carefully and
so thoroughly about these questions. It leads one to hope that some day the
EXHIBITS
235
.•governments of the world will determine their economic policies by reason as well
:as by political considerations.
Let me also say that we have noted with very great interest a number of
'Suggestions for the conduct of affairs in the United States which have been made
hy our various friends. We are very glad to receive those suggestions. They
•will be placed before the Commission which the President has appointed and will
"be given, I am sure, very careful consideration.
Now, gentlemen, this is the first meeting that you have had since the Eisenhower
administration came in, and I am sure that all of you are eager to see any signs
of divergence or of similarity in the policies that the administration will follow
with respect to these institutions.
Secretary Humphrey and Assistant Secretary Waugh have already expressed
some of our views, which I hope have been encouraging to you.
Of course, the Fund has always been the more controversial of these two
internationai institutions. The Articles of Agreement have certainly been less
well adapted, shall we say, to the conditions of the postwar world as it turned
out to be. This could not have been anticipated. And it has been subjected to
greater criticism and drawn forth more suggestions for amendment. In fact, at
the time of the adoption of the Articles, you may recall that I was President of
the American Bankers Association, which proposed a number of changes in the
•enacting legislation, some of which were adopted—particularly with respect to
the use of the Fund's resources.
Now, this administration has only had a few months in which to observe the
operations of the Fund and the Bank at first hand. With that limited experience
and limited opportunity to talk with all you gentlemen, I am sure we don't know
the answers immediately to all the very puzzling questions that you face. We
are studying them witb care and, as Secretary Humphrey emphasized, they will
be part of the matters considered by the new Commission.
Without trying to reach or give you profound conclusions on these matters,
I might just call your attention to one or two matters of what we have done
rather than of what we have said.
The first fact that I think may interest you is that we have sought continuity
in our country's relations to the Fund and Bank by continuing in office two able
United States directors who have served effectively for a number of years. Our
participation is thus kept on a nonpartisan level.
Second, let me call your attention, probably needlessly, because you all have
•observed it, to the fact that this administration has made sound, honest money
a major objective. We believe that the maintenance of honest money, which
retains its buying power and avoids both inflation and deflation, is essential to
:sound and dynamic economic growth and justice to all people—the producer, the
seller, the consumer. It encourages the free exchange of goods at fair prices.
And just as we believe in honest money at home, we believe in it abroad.
Only with sound, dependable money can international trade flourish. Many of
you have stated that better than I can. The world has been learning this lesson
the hard way. It is well recognized in the emphasis in your annual report on
the revival of monetary policy.
Therefore, I think from these facts you may safely draw the conclusion that the
present United States Administration is in fundamental agreement with the purposes of the Monetary Fund, for surely those purposes are in substance the restoration of sound international money as a basis for increased trade.
There is no need to remind you that sound money cannot be attained easily—
you have shown that, and you have said it today—but only at a price. We have
found that here at home—that we can make our money sound and stop the creeping inflation of many years only at the cost of curtailed Government spending, a
•central bank policy free from political interference, and some credit restraint.
TJiis restraint has not deserved the term of hard money. That is unnecessary in
a country of our wealth and flow of savings. It has been a very moderate restraint.
However, our tighter budget does mean a re-examination of foreign as well as
domestic spending, and we know that the dollar is today an anchor for world
money, and the anchor must be firm.
In that connection, I regret to find myself in some disagreement with my good
friend, Governor de Kock. We cannot, I am sorry to say, approve of the suggestion of a change in the price of gold. That perhaps will not surprise you
because the issue has been raised before, and the same position has been taken.
A change in the par value of the dollar or in the oflftcial dollar price we pay for gold
would be, in our judgment, inflationary, and we do not believe, with Sir Benegal
236
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Rama Rau and others, that the danger of inflation is wholly past, either here athome or abroad. And we believe a change in the price of gold would undermine
the stability of our program, and we are opposed to any change that undermines
our sound money program. We believe the stability of the dollar contributes
not only to our domestic economy, but is important in developing the international
financial stability which all of us, as members of the Fund and Bank, are working for.
Our firm belief is that a change in the price of gold would disrupt the efforts
being made in other countries to restore stable currencies. Many countries of
the world, particularly those whose economies were most directly affected by
World War II, are just now beginning to see the fruits of efforts to bring budgetsinto balance and to establish monetary policies independent of political pressures,
and the battle, gentlemen, is not yet fully won.
In our judgment, tampering with the price of gold would be a step backward
and would add to the difiiculties in many countries which are still struggling toestablish sound currencies. It does not, gentlemen, go to the root of our problem,
which is much deeper.
Now, we have before us today the annual report of the Fund, and you have
heard the address of the Managing Director. Both the report and the addresswere very cheering. The Fund has been able to point to some encouraging
developments. There has been a continued high level of economic activity in
most countries, including our own. Apart from some necessary readjustments
following the speculative surge unleashed by the outbreak of hostilities in
Korea, international trade has also held at a high level, though it has indeed,
leveled off in many areas.
The countries in the free world have, as a whole, emerged with success fromthe dislocations caused by the Korean conflict. In many countries the wave of
inflation in 1950-51 has been met and brought under control. It has not been
easy. It has called for the determined efforts of governments and of the public.
The untenable bulge in imports in many countries, particularly during 1951 and
1952, has been corrected largely and the level of gold and dollar reserves in most
countries has increased. Indeed, during the year ended June 30, 1953, gold and
dollar reserves of countries other than the United States, excluding the Russian
group of countries, have increased by over $2 billion, and international institutions have added about $250 million.
But it must be frankly admitted that the goal of full convertibility of currencies
still eludes the membership of the Fund taken as a whole.
It must also be recognized that in some countries unsound policies are still
being followed, which delay the relaxation of exchange restrictions, prolong dis^
crimination, and postpone progress toward more and better world trade at economic exchange rates. At the same time, we are entitled to take a real satisfaction from the determination and success with which many countries have
undertaken measures to reestablish and maintain sound currencies.
T'he path ahead is not easy, but it is clearly marked, and the goal is worth
achieving. One purpose served by these annual meetings is to give reassurance
that no country travels the road alone. It is worth working and struggling for
the great gains which come from vigorous and dynamic economic development,,
supported by reliable and convertible currencies. The reduction in payments
deficits and the progress which has been made toward balance should encourage
countries to renew their determination to move toward currency convertibility.
There is increasing evidence that many countries have in fact greatly increased
their efforts. Important plans are being made by a number of countries, including the countries of the British Commonwealth. As these plans develop, as
payments deficits decline and as reserves increase, it may be feasible to take more
decisive steps toward convertibility. In the meantime, smaller but very useful
steps are being taken. We have seen important moves to free commodity markets,
to re-establish the facilities for private foreign exchange trading, and to reduce
discrimination in international trade, particularly in primary commodities.
Our Government, as Secretary Humphrey emphasized, is engaged in an earnest
and intensive re-examination of the whole range of its economic and financial
policies and procedures, with a view to deciding how best it may be able to make
its contribution to the general march toward world-wide financial health. Against
this background, our association together in membership in the Fund, dedicated
to sound money, I am sure, will grow in usefulness to all of us.
EXHIBITS
237
Addresses and Statements by the Secretary of the Treasury and other
Treasury OflScials
Exhibit 36.—General statement by Secretary of the Treasury Humphrey, March
10,1953, before the Subcommittee ofthe House Committee on Appropriations
Mr. Chairman, as you know, this is a new experience for most of us.
Most of us are' here for the first time and, very frankly, I can understand very easily, after listening to your remarks and the remarks of
the distinguished member from Virginia, the very fine relationships
t h a t I understand have existed between the committee and the
Treasury for some time past.
I am sure that the statements that the Treasury Department was
economically run are true. I have been very pleased indeed to find
what good organization there was in the Treasury Department, and
a little disappointed, from the point of view of being able to visualize
large reductions, to find that it was quite economically run.
Now, that does not mean that we haven't any room to work. As you
said, there will always be room as long as there is a Treasury Department, but I hope that you will find that you have the same, very frank,
definite, open cooperation from us and we will hope for the same
helpfulness from you that has prevailed in the past.
I have a statement here that deals with a little broader aspect of
the Treasury activities and, with your permission, I will read the
statement.
I thank the members of the Treasury Subcommittee on Appropriations for the opportunity to appear here today on the Treasury Department's appropriations request for fiscal year 1954. Inasmuch as
this is my first appearance before your committee, I must add that I
welcome the opportunity of working with you in the common interest
of all of us.
ROLE o r T H E TREASURY D E P A R T M E N T I N T H E PROGRAM OF T H E
ADMINISTRATION
I n his state of the Union message on February 2, President Eisenhower referred to the "inescapable need for economic health and
strength if we are to maintain adequate military power and exert
influential leadership for peace in the world." The President specified
that we must have a fiscal and economic policy which could, among
other things, reduce the planned deficits and then balance the budget;
meet the huge costs of our defense; properly handle the burden of
our inheritance of debt and obligations; check the menace of inflation ; work toward the earliest possible tax reduction; and encourage
the initiative of our citizens. Our effort in the Treasury Department
is to make progress toward those objectives.
I t is our purpose in the Treasury to help provide the proper economic climate in America. The fiscal policy is very important in
determining that climate, which is intangible, but has a direct effect
upon the lives of each of us every day. I t is our purpose to establish
and maintain such fiscal policies as will permit America to continue
to grow and reach even higher standards of living for all its people.
What I have said means about nine things:
238
1953 REPORT OF THE SECRETARY OF THE TREASURY
1. T h a t we will have a sound and stable dollar, not one of declining
value.
2. That we do not spend more than we earn.
3. That we pay a little down on our debts from time to time instead
of rapidly borrowing more.
4. T h a t we keep bur credit good by properly managing the debts
we already have.
5. That slowly but surely and definitely we reduce the too-heavy
burden of taxes which, buried in the cost of everything that we buy, are
stifling initiative and increasing the cost of living.
6. That we maintain free markets in.which the great American
consumer can buy what he needs when he wants it and choose for
himself what he will buy at prices he is willing to pay. • .
7. That producers are free to strive to produce more, better, and
cheaper goods to compete for the consumer's favor in buying their
particular products in competition with everything else.
8. That we protect the savings of the old, their insurance, and their
pensions.
9. And above all, that we preserve for the young the great symbol
of America, the opportunity to advance and improve themselves t o
the limit of their own abilities and their own hard work and endeavors.
This is the objective of the long-range planning of the Treasury
team, and it is to this task that the Treasury team will devote its full
strength and all of its time and energies.
As has been said by President Eisenhower, a balanced budget is an
essential first step in checking further depreciation in the buying
power of the dollar. The President also pointed out that reduction
of taxes would be justified only as we show that we can succeed in
bringing the budget under control. As the budget is balanced and
inflation checked, the tax burden of today that stifles initiative can
then be eased.
I n furtherance of the program laid down by President Eisenhower^
the Treasury is now making a complete review of the tax structure.
I t seems obvious that we must develop a system of taxation which
will allow the greatest growth of our Nation. This will call for a
readjustment in present taxes, removal of inequities, and simplification of our tax laws and regulations.
There are three other basic principles which are guiding the plans
of the Treasury Department as an arm of the Administration. A s
our economy is a sensitive mechanism, we must be cautious about:hasty=
action. As President Eisenhower put i t :
Our goals can be clear. Our start toward them can be immediate—but action
must be gradual.
I n the second place, we feel too great a part of the national debt
comes due in too short a time. The Treasury Department has already
undertaken a program of extending part of this debt over longer
periods and gradually placing greater amounts in the hands of longerterm investors. I n the third place, we recognize that differences in
policy between the Treasury and the Federal Reserve Board in the
past have encouraged inflation. The Treasury is now working with
the Federal Reserve Board with a single purpose, to serve the whole
EXHIBITS
239
Nation by policies designed to stabilize the economy and encourage
individual initiative.
This, in general, is the broad basis upon which we at the Treasury
are now working to further the objectives of the new administration.
Exhibit 37.—Address by Secretary of the Treasury Humphrey before members
of the Associated Press, New York City, April 20, 1953
There is no reason to fear peace.
We are not headed for depression.
Some people in this country are talking as though they were afraid of peace.
Peace is what we are working and striving to attain. To achieve peace we are
helping our friends and strengthening our own defenses, on the theory that an
ounce of prevention is worth a pound of cure. In peace America grew great.
.It was in peace that we grew strong and rich and accumulated the homes, plants,
farms, mines, and transportation, that saw us through two wars. It was wars
that brought us debt and taxes and inflation.
Why then should any one fear peace? The reason as I understand it is that
some people fear for the strength of our own economic position if Government
spending for defense is reduced. They fear a free economy devoted to the pursuits
of peace. Such thinking is entirely unjustified. We are not going to have a
depression in America whether we have an armistice, a real peace, or continue to
develop a proper and balanced posture of defense. There is no reason for a
depression unless we fail ourselves to do the things we ought to do and lack the
courage and foresight to do them.
There will be readjustments, of course. There are always readjustments taking
place in any active economy, sometimes to the advantage or detriment of one
group and sometimes to another. But depression. No. We cannot preserve our
way of hfe through another long, deep depression and we must never permit it
to occur.
The resources and the resourcefulness of our country are such that the dismal
days of depression need not occur unless we ourselves, we American citizens, fail
to have the strength and fortitude to avoid the excesses of speculative boom and
deal with readjustments when they are necessary.
For several years past we have been treading a dangerous path, one from which
we have now turned. It is not too late to make the turn and avoid the inevitable
consequences for which we were directly headed. For twenty years we have
been consistently following unhealthy pohcies that induced inflation, depreciated
our currency, and threatened to exhaust our credit. Over that period our dollar
has shrunk froin the hundred cents we started with to approximately fifty cents
today. We have artificially manipulated our interest rates and have actually
printed billions of dollars of current indebtedness which is only narrowly removed
from printing money. As a result of vacillating foreign policies we found ourselves at war in Korea and in the midst.of a feverishly improvised program of
vast mihtary spending. We found that a so-called police action had turned into
a real war.
We now find ourselves with over 267 billion dollars in total indebtedness. Of
this amount 32 bilhon dollars matures every ninety days, and there are over 175
billion dollars of total maturities in less than five years. We have inherited
outstanding obligations and unsatisfied authorizations to spend Government
funds of 81 bilhon dollars which will have to be paid in revenues in 1954 and
future years. We were handed a proposed budget for next year's exp(3nditures
in excess of 78 billion dollars, which involves a 10 billion dollar deficit over the
anticipated revenues. In addition to deficits of 4 billion in '52; 6 billion in '53,
and 10 billion in '54 we found that the proposed future programs contemplated
billions of dollars of deficits in each of the next several years. We have a tax
structure that is already so high that it is adding tremendously to our cost of
living and threatening to destroy the incentive to work and save and invest.
This is our legacy. , This is what we face today.
It is far from a pretty picture. But it is by no means an impossible one in
view of the great strength of our country and the vigor and resourcefulness of our
people. Our inheritance of obligations both immediate and planned is staggering,
but not yet beyond our powers of control. Accumulations of 20 years cannot be
removed in 90 days. It will take rigid self-discipline and determined action.
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195 3 REPORT OF THE SECRETARY OF THE TREASURY
But over a period of time, if we resolutely hold our course to definite objectives
it need give us no fear.
What is it we have been so hurriedly preparing to preserve? Is it just our lives?
No. What we are really trying to preserve is our American way of life. That is
what we have fought for over the years. That is what we must always preserve
and always protect. Confronted with a crisis, we hastened to protect it from
outside aggression without regard to cost in a feverish rush to preparedness.
But we must not forget that our way of life is threatened, not from one, but from
two sources at the same time. It can be lost just as completely by economic
deterioration from within as by aggression from without. In fact, economic
deterioration will not only destroy our way of hfe, but it will destroy the very
means by which we seek to protect it from aggression. It is the economic strength
of America that has supplied the sinews for ourselves and for our allies to fight
two great wars. We are confronted, not with a problem, but with a dilemma,
which simply means two problems at the same time. We must seek and find
that delicate balance which will give us the necessary military preparedness for
defense against outside attack while always continuing to maintain our economic
strength at home. Those are dual problems and must be simultaneously solved.
The first step in solving them is to achieve a sound currency. History demonstrates that whenever currency deterioration has started it tends to continue at
an ever increasing rate, the faster the further it goes. Unless courageous, determined, corrective action is taken in time it finally speeds entirely out of control and finishes in utter collapse. The first half of the depreciation of our dollar
has already occurred. The programs and conditions which this administration
inherited would have accelerated that pace. Stopping that spiral is imperative.
One essential to accomplish this goal is to bring our Federal expenditures under
control and at the earliest possible time balance them with our income. This
cannot be done in a minute with such large future obligations already contracted
for. But it is not too late, if we are tough enough, to make real and early progress
in that direction and start at once. Fear and indecision never make for efficiency.
Haste makes waste. More defense for less money is perfectly practical and a
possible accomplishment. Neither can this be done in a minute, but it is in the
cards and on the way. Deliberate, not timid, carefully planned objectives, with
price tags attached and efficiently pursued both for ourselves and our allies will
provide a posture of defense against outside aggression that can and will be
maintained over whatever period may be required. This will protect us more
adequately from threat from abroad than blowing first hot and then cold in extremes of emotion as we have been doing since World War II. Talk of truce
in Korea, or even an actual truce, will not have an early important influence on
the rate of inilitary spending. We have a big program to complete in any event
to attain a proper, permanent posture of defense for America.
Control of our expenses is vital to our success, but that is only part of the
task. Equally important in balancing the budget is the amount of income we
have to spend. That involves taxes, and that is more a matter of my own immediate concern. Also, that is where the American people must do their part.
Taxes should not be reduced until expenses are under control. Both should come
down together, but only as a balance is obtainable. There is no easy way to
correct our fiscal excesses of past years. We must stand and take it all along the
line. However, that does not mean that no rehef from present taxation, which
is far too high, can be anticipated. Just the opposite is true. Taxes must come
down. It's simply a matter of timing geared to reduction of expense. Both
are too high and both must be reduced. In addition there must be a radical
revision of our tax system to better provide the incentives for the creation of more
jobs for more people and for the making of more better and cheaper goods for
all the people. Taxes are all included in the cost of living, no matter what form
they take, but they are more destructive of initiative in some forms than others.
Taxes today contribute greatly to high costs and the high prices of everything
we buy. The present tax system threatens to stifle initiative, expansion, and
ultimately jobs. A better balanced system is required.
The reduction of taxes, moreover, is one of the best guarantees we have
against the fear of depression, in the event that peace makes possible curtailment of Government defense spending. It is essential that, as Government expenses are brought under control, as waste is eliminated, and as Government
spending is gradually reduced, that taxes must also be reduced as rapidly as
Government spending declines. It we return to the citizens as rapidly as possible the savings we make in Government expenses the people will have the
EXHIBITS
241
money to spend for themselves in their owii way what the Government has been
spending—or wasting—for them. The people can spend their own money for
their own account and in their own way for what they want much better than
the Government can spend it for them. The scale of living for all the people
will increase, the demand for production will continue, jobs will be plentiful
and everyone will be better off.
Plans for increased expenditures of funds for civilian needs are already under
way in many quarters and many more will follow if it appears that the opportunity for effectively doing so is approaching. The planning divisions of several
governmental departments are preparing for studies. The Commerce Department has already issued one fine report ''Markets After the Defense Expansion"
and is engaged in further study. Many associations of business, farmers, and
labor organizations should and will be giving active thought to alternate plans
that will best serve the interests, not only of their own members, but of all the
people.
After the last war we decreased the rate of total Government expenditures
in just two years from $98.7 billion in 1945 to $39.3 bilhon in 1947.
Our deficit was decreased in the same period from a deficit of $51 billion in
1945 to surpluses in 1947 and 1948.
Defense spending itself was reduced from $90.5 billion in 1945 to $16.8 billion
plus about $5 billion of foreign aid in the same two years. We have no such
tremendous reductions to contemplate or gaps to fill now. Our plant is already
geared to increased civilian production.
Full production in many lines where plant capacity has been recently so greatly
increased will require real sales effort and bring highly competitive times in
several lines.
But do we fear competition? That is what America stands for. Competition is the hfe of trade. It is what has made our American system. More and
better goods at less cdst for more people is our national slogan. Our greatest
pride is our imagination, resourcefulness and ingenuity in production, sales, and
distribution. Let's all prepare to give them a chance under whatever the conditions may be and see if again they will not produce the brightest day we have
yet seen in America.
An equally important fundamental to preserve the soundness of our money
and flourishing trade is the management of our huge debt. The way in which
it is handled can also have an important bearing upon economic conditions and
the creation of good or bad times. A stable currency is essential to an everexpanding level of employment and a sound prosperity. If the debt is so managed as to increase unduly the available money supply,, foster the overextension
of credit and depreciate the value of the dollar it can contribute greatly toward
pushing us right back into the inflationary spiral of recent times. If, on the
other hand, the debt is so managed that it drains the savings of the people too
rapidly and in too large amounts so as to unduly restrict credit, depress prices,
and deprive industry of the funds required for full operation and expansion,
then it can contribute to depression. Here again balance and timing are of
first concern, and wise and careful handling of refinancing our enormous debt
structure is of the greatest importance.
This administration believes in the American way of life and in a free market
economy. It believes that a most powerful influence over the years has been the
accumulated effect of the industry and efforts of so many of our people to advance
their own interests independently and in their own ways. This way of life has
withstood wars and political manipulations and experiments of all kinds. It will
overcome all of our burdens of today. It is because of the accumulative desires
and the ambitions of the vast number of our citizens to so live their lives, that by
their own endeavors they continually advance their own positions that we are
what we are today. We are in good hands as long as the great American consumer is free from, artificial restraint and can freely decide what he will buy, when
he will buy, and what prices he is willing to pay. That means that the productive
and inventive power and the ingenuity of all America is in competition for that
consumer's dollar and must devote itself to the creation of more and better
things at less cost in Vying for his favor.
However, freedom for an individual or for a nation must be jealously guarded
and carries with it corresponding obligations. The Golden Rule still is fundamental in human relations. Freedom for the citizen involves equal responsibility
of the citizen, each for himself to see that he wholly fulfills it. He must use this
freedom for his own advancement only to the extent that it does not trample
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1953 REPORT OF THE SECRETARY OF THE TREASURY
upon the rights of his neighbor and enhances the common good. It is the responsibility of every citizen of this country, of business men, farmers, labor, and all
of you here today in accepting your freedom to accept the responsibility that
goes with it. If the American people really want stability they must all contribute to it, in the prices they, charge, in the wages they demand and in everything that they do. They must exercise self-restraint from making quick turns
to the detriment of others and promote in every way possible the long-term
thinking and planning that is for the ultimate good of all the people.
As President Eisenhower said in his great speech in Washington last Thursday
noon:
''The peace we seek, founded upon decent trust and cooperative effort among
nations, can be fortified—not by weapons of war—but by wheat and by cotton;
by milk and by wool; by meat and by. timber; and by rice.
"These are words that translate into every language on earth.
"These are needs that challenge this world in arms. * * * *
"This Government is ready to ask its people to join with all nations in devoting
a substantial percentage of the savings achieved by disarmament to a fund for
world aid and reconstruction. The purposes of this great work would be: to help
other peoples to develop the undeveloped areas of the world, to stimulate profitable and fair world trade, to assist all peoples to know the blessings of productive
freedom.
"The monuments to this new kind of war would be these: roads and schools,
hospitals and homes, food and health.
"We are ready, in short, to dedicate.our strength to serving the needs, rather
than the fears, of the world."
Peace is what we all want. It is nothing to fear, nor is there any reason for
depression. Adjustments, yes. But not depression. So long as we maintain
the soundness of our money; attain that nice balance between achieving security
from aggression and maintaining economic strength; eliminate waste and handle
our fiscal affairs with wisdom, America can look forward to good jobs at good
pay and real advances in our scale of living. We can have a stronger economy
based on sounder fundamental conditions and with greater opportunity for individual and collective future security than we have known in many years.
I thank you very rnuch for this opportunity of appearing before you today. I
appreciate it very much indeed.
Exhibit 38.—Address by Secretary of the Treasury Humphrey at the Governors'
Conference, Seattle, Wash., August 3, 1953
Because somebody saved, America grew productive, prosperous, and powerful.
Who are the savers in this country and who borrows the money?
Why do they save?
What stimulates saving and what deters it?
Who benefits from saving and why is it so important?
These are some of the questions that all of us should think through and understand better when we are discussing such controversial subjects as higher interest
rates and sound, honest money because they are directly related to each other
and just as directly related to the productivity, prosperity, and power of America.
Let us think of them in order for a moment, in the light of the facts and experience.
Who are the savers in America?
Strangely enough, there are more savers in this country than there are borrowers of money (excluding of course the Government itself), so that actually
there are more people who receive higher interest than there are those who pay
it. At once you say, "I doubt that statement," and I think I know the reason
why. Obviously a man who has bought furniture, household appliances, or an
automobile on credit payments is frequently reminded when each payment becomes due that he owes that money and must pay both the principal and the
interest. The same is true of the man with a mortgage on his house or farm, or
any other borrowers of money. But the saver in many cases has not so direct a
contact, and oftentimes does not realize how directly he is affected.
Of course, a man who owns a mortgage and receives interest and payments on
it—and there are millions of them—or a landlord who receives rent, or a depositor
in a savings bank, or a shareholder in a building and loan association, or any one
of a number of others who have direct obligations owed to them, realizes just as
effectively as^ do the debtors what a higher interest rate can mean to him. But
EXHIBITS
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there are millions of other Americans—all those millions who carry any kind of
insurance and millions who are looking forward to pensions or retirement payments or other forms of future receipts, patients in hospitals, beneficiaries of
charitable organizations, and all endowed institutions—who do not realize how
directly a higher interest rate benefits them. But it does so just the same.
Millions and millions of our people receive interest in one form or another.
More than 45 million families and 122 million individuals have investments such
as life insurance, savings accounts, E bonds, annuities, and pensions, publicly
owned stocks. Government bonds, privately held stocks, real estate mortgages,
and corporate bonds.
When a higher interest rate is paid it does not go just to a few bankers, as
some of our Senators and others who have commented on this subject would
lead you to believe, but it goes to benefit directly and to encourage the savings
of millions and millions of others.
Why do people save? What stimulates them to do so, and what deters them
from it? There are many stimulants to saving stemming from the sterling
qualities of self-reliance and protection of one's own future and that of one's
family, which is such a strong American characteristic. These include the desire
to own your own home or farm, hoping some day to be your own boss, to go into
business for yourself, to have a little nest egg laid away for a rainy day, saving
for an education, and many, many other reasons—too many to enumerate.
They are all effective but they all are diminished if money when saved earns little,
if anything; and conversely, they are intensified if a fair rate of interest is returned. In fact, perhaps the most direct stimulant to saving- is the return from
earnings on the money, whether it comes directly or through extra benefits on
insurance, pensions, or in other forms.
But of even greater significance is the soundness and honesty of the money
that is saved. Unless the people can believe in the continued honesty of their
dollar, if they fear that over a few years it will greatly depreciate or even disappear in value, no other incentive to saving is of much avail. Fair interest and
honest money, the value of which can be depended upon over the years, combine to form the greatest incentives and the essential requii-ements which induce
people to save.
Now, who also benefits from savings indirectly?
Of course, as we have said, the millions who have insurance and pensions and
savings deposits and property in any form are benefited directly through ownership of their savings. Also those who benefit from all endowed charitable, educational, and other such institutions, and many others in many other ways.
But what of the country as a whole? What of those who have not saved but live
and work in America?
Savings have made America. Because somebody saved, we have jobs, we have
all kinds of "things for better living. We have food, transportation, and everything that each of us has each day, not only for daily necessities and comforts,
but for livelihood itself.
Did you ever stop to think why Americans have a higher standard of hving
than others in the world? Why American productivity is greater than the
productivity of any other nation? Why we are so powerful and strong? Just
by themselves an American's two hands are no stronger, no better, not much
more effective than those of the citizen of any other nation. Why is it then
that American hands can do so much more than any other hands in all this
world? Perhaps an American's hands can do more partly because of more
widespread education in this country.
But there is a much more basic reason without which the highest educational
level would be unproductive. The real reason is the fact that somebody saved.
Because somebody saved there were funds available which attracted expert
management to invent, design, and build eflScient machinery, factories, mills,
explore for and develop mines and oil wells, provide transportation, and power
plants, which through management and organization put tools, equipment, and
tremendous power into every pair of hands in this country backed up by thousands of dollars of investment, to multiply by tens, twenties, and hundreds the
strength, the ability, and the effectiveness of those American hands as compared
with any other hands elsewhere.
That is why, and the real reason why, Americans can create so much more
than others in this world.
Because we can create more we have more, and that is why we have the highest standard of living on earth and stand in the earth's most powerful position.
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1953 REPORT OF TPIE SECRETARY OF THE TREASURY
Because somebody saved, Americans h a v e jobs today. Because somebody saved
Americans h a v e and are w h a t they are today.
A skilled mechanic who, in his spare time, decides to build a new kitchen on
his house with t h e help of a neighbor or a friend, takes great pride when this job
is finished and thinks he did it himself—but did he? How much help did he
get because others h a d previously saved? H e worked with common tools, b u t
t h e head of his hammer, his nails, chisel, plane, and saw required great steel mills
before he could h a v e t h e m . T h e lumber t h a t he used required logging operations and saw mills; his floor coverings and walls required building material
operations; t h e p a i n t came from chemical p l a n t s ; t h e ice box, stove, washing
machine, and fixtures m e a n t copper mines, iron ore and coal mines, steel and
brass p l a n t s a n d manufacturing operations, and m a n y of t h e materials came long
distances in ships, over railroads or in trucks, which in t u r n required more steel,
more metals, and more p l a n t s ; and so it goes.
T h a t single kitchen which t h a t m a n t h o u g h t he built by himself required millions and millions of dollars of savings and t h e employment of thousands of
people who, unseen by him, lent a helping h a n d t h a t made his kitchen possible.
All those jobs which built t h a t kitchen were created by and dependent upon t h e
fact t h a t somebody saved.
There is no one in America who is not b e t t e r off t h a n he otherwise would be
because somebody saved, even though he m a y not yet h a v e done so himself.
T h a t is why fair interest rates and sound, honest money are of benefit to every
m a n , woman, and child in this land. T h a t is why any manipulation or restriction t h a t unduly depresses a fair r a t e of interest, or t h a t tends in any way to
depreciate and lessen t h e value of t h e American dollar, is directly to t h e disadvantage and t h r e a t e n s t h e very existence of life as it is in America today.
D o not let anyone fool you into thinking t h a t no one benefits from fair interest rates b u t some banker. Do not let- anyone fool you into believing t h a t running Government deficits, increasing inflation, and depreciating t h e value of our
money is not directly harmful to every citizen.
When nobody saves, when nobody has any money to help to p u t tools a n d
power into American hands, they will again be on t h e road to becoming no better
t h a n t h e h a n d s of t h e savage.
N o t only t h e prosperity of this country, not only t h e creation of more jobs in
this country, b u t t h e military security of this country as well as t h e economic
security are all inextricably tied into stimulating and not deterring t h e simple
fact t h a t somebody saves.
Against this background, I should like to talk for a , m o m e n t about some of
our current policies.
I should like to emphasize again t h a t this administration does not have, and
never h a s had, a " h a r d m o n e y " policy, as our critics sometimes charge, meaning
as t h e y ' s a y hard-to-get money and h a r d times.
I n s t e a d of h a r d money t h e goal of this administration is h o n e s t money.
By "honest m o n e y " we mean money t h a t will buy as much next week, next
m o n t h , and next year as it will buy t o d a y .
If by better handling of t h e Government's financial m a t t e r s , this administration
can provide more honest money it will be a great service for t h e laborer, t h e office
worker, t h e pensioner—in fact for every citizen.
Americans by tradition expect honesty in all things. This administration is
determined to p u t an end to further decline in t h e value of our money and provide
again an honest dollar.
T h e Federal Reserve System has t h e main responsibility for monetary policy
in this Government. This System is nonpartisan, and since the accord with t h e
Treasury in 1951, t h e Federal Reserve System has been helping to promote an
honest dollar by not artificially enlarging t h e supply of money for t h e purpose of
keeping t h e interest rates on Government issues low. T h e new administration
has confirmed this policy and assured t h e Federal Reserve System t h a t it will
have t h e prime responsibility for maintaining the money and credit situation free
of artificial restraints in t h e best interests of all Americans.
T h e Federal Reserve has no hard money policy. I t has simply allowed t h e
demand for money to have its normal and n a t u r a l effect and respond to t h e law
of supply and d e m a n d . I t has supplied additional funds to keep pace with
normal growth.
T h e Treasury's main role in this business of keeping honest money lies in its
h a n d h n g of t h e public d e b t . T h a t d e b t is now over $272 billion, and t h e m a n n e r
in which refinancing and t h e placement of new issues is handled can affect t h e
EXHIBITS
245
entire Nation's well-being. T h e Treasury is trying to make the d e b t sounder by
gradually extending t h e length of its maturities. Now nearly three-quarters of
t h e d e b t m a t u r e s within less t h a n five years.
I n April we took a first step in trying to convert some of this into sounder and
less inflationary issues by p u t t i n g out a 30-year bond a t an interest r a t e of 3)^4
percent. T h a t r a t e was higher t h a n t h e coupon rate for previous issues b u t it
reflected t h e going r a t e a t t h e time of issue as fixed by the current daily m a r k e t
purchases and sales a t t h e time t h e bonds were sold. Gradually and a t opportune
times further long-term issues will be sold, b u t care will always be exercised not
to press t h e m a r k e t unduly in competition with other State, municipal, and private
financing.
I n t h e p a s t supposed savings made by artificially holding down the interest r a t e
involved a tremendous increase in the cost of everything through the shrinkage
in t h e value of t h e dollar.
An honest dollar means a lot to you Governors, too. J u s t compare in your
minds w h a t it cost a few years ago to build a two-lane concrete highway or a
schoolhouse, or improvements of any kind with the costs of today. And a similar
story goes down t h e line of all State, county, and municipal expenses. T h e lack
of good, honest money or t h e presence of inflation has caused large increases in
t h e a m o u n t s of money you have to raise to do t h e things t h a t you have to do.
On t h e national scale, it cost t h e States about 50 percent more to operate in
1953 t h a n it cost in 1946.
Higher interest rates on borrowed money are quickly noticed and resisted.
B u t t h e stealthy capture by inflation of so much pf the buying power of your
dollar over t h e p a s t few years is something which is much more important.
State and local governments are not just borrowers; they are investors, too.
We are glad to find t h a t your pension and retirement funds are so interested in
t h e purchase of Government securities. Your financial people have found t h a t
there is no better place to p u t short-term funds t h a n in our Treasury bills, certificates, and notes. We had an interesting and successful meeting with a number
of State fiscal officers a t t h e Treasury in May of this year. State and local governm e n t s own more t h a n $11 billion of United States Government securities a t the
present time. T h a t is almost twice as much as they held a t the end of the war,
a n d 20 times as much as t h e y held before t h e war began. We are working with
your financial officers to better meet their requirements and encourage their
purchases of our securities.
Another m a t t e r t h a t is of great importance to you as Governors and to us in
t h e new administration, is the establishment of better relationships between t h e
Federal, State, and local governments.
On July 10 President Eisenhower signed the bill which creates a Commission
on Intergovernmental Relations to make a thorough study of the relationships
between t h e Federal Government and t h e States and their political subdivisions.
We realize t h a t during the past t w e n t y years particularly the Federal Governm e n t has come into m a n y fields, which under the Constitution are the primary
responsibility of State a n d local governments. This has resulted in duplication
a n d waste a n d blurred the responsibilit}^ of local governments. A major area
of this sort of development has been the growth of Federal grants-in-aid for more
t h a n 30 programs a t present involving Federal expenditure of more t h a n $2
billion a year. I n some cases t h e Federal Government has apportioned fixed
a m o u n t s among the States; in others it meets State expenditures; and in a few
it finances the entire State expenditure. While these grants have greatly stimulated some State activities, t h e y have complicated State finances and often made
it difficult for t h e States to provide funds for other i m p o r t a n t services.
I t is t h e hope of this administration t h a t the new Cominission on Intergovernm e n t a l Relations will come up with recommendations for straightening out t h e
lines of authority, a n d the proper areas of action for both State a n d Federal
governments, so t h a t friction, duplication, a n d waste can be eliminated. I t is
our hope, and I a m sure it is your hope, t h a t we can obtain a sounder relationship
between all divisions of government in the Nation.
I t is sometimes said t h a t t h e Federal Government has come into some t r a d i tionally State activities because of the failure of other levels of government t o
provide services which citizens demanded. I t is the philosophy of this administration t h a t a t all levels of government we m u s t t r y to develop mor-3 the traits
of individual responsibility, saving, enterprise, a n d initiative—the traits which
have made this Nation great.
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1953 REPORT OF THE SECRETARY OF THE TREASURY
We have a solemn trust to see to it that these traits in individuals, which have
made America, are fostered and allowed to develop and grow. In that way
America will be stronger against all possible foes. It will provide more and
better things for more people than we have ever dreamed of before.
The thrift and savings of our forefathers laid the foundations upon which all
that we now have has been built. We have incurred tremendous debts but they
are not overpowering if intelligently and carefully managed. Let us continue to
build a stronger, better America based on those simple, time-proven virtues which
have stood us in such good stead in our hour of need. Let us always remember
how much all that we have in our life every day was created by the self-reliance,
industry, and initiative of millions of Americans—and because somebody saved.
Exhibit 39.—Address by Secretary ofthe Treasury Humphrey before the American
Bankers Association, Washington, D. C., September 22, 1953
The three pillars of sound money
The decision of the American Bankers Association to hold this year's convention
here in Washington was made at your sessions three years ago. Many things can
can happen in three years and many things have happened. A new Republican
administration is here and I as Secretary of the Treasury wish you a warm welcome.
You have done and are doing a magnificent work in assisting the Treasury particulary in the distribution of savings bonds. Nothing is more important in the
Treasury's plans and few things are of greater significance in our whole economy.
We thank you and rely upon your further intensified efforts.
Since you as bankers are concerned intimately every, day with the money problems of this Nation, I am going to take the liberty this morning of talking for
a few moments about what this administration is trying to do to achieve sound
money. I say sound, not hard but honest money.
Sound money is based upon three principal pillars—a proper budget policy,
a properly functioning Federal Reserve System, and proper debt management.
This administration is working constantly to strengthen all three pillars. Our
goal in each of these areas is clear. If we have not achieved our goal overnight,
it is not only because of the size of the job itself but also because we realize that
our economy is a very sensitive mechanism and we must proceed carefully, but.
always stead^y, toward the goal we seek. Too drastic and precipitous action
might react badly in many ways. We must approach our objective cautiously
but resolutely and always press toward it.
The budget.—The first pillar—and one which we have already made substantial
progress in strengthening—is the budget pillar. As you gentlemen well know,
deficit financing—that is, spending more than you take in—means more and more
borrowing and debts which in times of high einployment and inconies lead to
inflationary pressures and unsound money. When a government spends more
than it takes in, it has to borrow to pay its bills. When a government borrows
from the banks, it creates more credit, increases the money supply, and thus helps
cause inflation. This is what we are trying to check.
The midyear review of the 1954 fiscal budget showed some real progress being
made in getting the budget in hand. Estimated expenditures have been reduced
by nearly $6>r billion under the spending estimates this administration found
upon taking office in Jahuary. In addition, income was overestimated by more
than a billion dollars. So that the prospective deficit has really been cut from
over $11 billion to less than $4 bilhon.
Eighty-one billion dollars of C. O. D. orders which were placed by the Government from one to three years ago will come due in the next year or two and must
be paid for. These inherited obligations make it impossible to balance the
budget overnight, but even these forward obligations will be cut this year by more
than $9 billion, according to present planning.
As our midyear budget review showed, we have turned the corner in attempting
to get our Government's finances in hand. For the first time in the past few years
we are planning to spend less this year than in the year before. The sharply rising
curve in Federal spending has now turned downward. This is a very encouraging
development. If we can reach a current balance in our cash income and cash
expenditures by the end of this fiscal year, it will be much better than we had
dared to hope for six months or so ago.
The budget review we announced a month ago also is a turning point because
EXHIBITS
247
for the first time since 1948 we have total appropriations which are less than
estimated receipts for the year. This points to future reductions in both spending
and taxation.
For this encouraging start, the administration is deeply indebted to the Congress
and to the various departments and agencies of Government for their wholehearted
cooperation. Unless some unexpected event arises which substantially changes
the need for money, we believe that we are finally on our way toward getting the
budget under control. Of course, this is all based upon estimates—estimates
which we hope are realized—but this business of estimating how much the Government is going to take in and pay out has a great many pitfalls.
Estimating a year ahead in a business this size is more than risky and a small
percent of error in our huge figures can mean the difference of a great deal of money.
For instance, over 70 percent of our expenditures are for national security
programs, and even a relatively small estimating error can mean hundreds of
inillions of dollars. For these programs alone we are spending about a billion
dollars a week. There are other programs, too, where the relative margin of
error is even greater than it is for the military, although there may not be so
many dollars involved. Take the Commodity Credit Corporation for example.
In order to figure its net outlays in advance you have to not only estimate the
size of the various crops but also just how the farm price support program is going
to work out in the year ahead and, even more important, how much of it will be
handled by the banks instead of the Treasury. In the last fiscal year (1953)
the budget estimate was about $800 million for Commodity Credit but when the
year closed it actually turned out to be about $1 billion more. That is just one
illustration. There are many, many others.
Every banker knows that the matter of estimating budget expenditures is
further complicated by the necessity for estimating the distribution of those
expenditures from month to month—and even day by day in some instances—
and preparing to have sufficient funds on hand to be able to meet current requirements. You all appreciate that that is why we cannot run our cash balances too
low—a point we made in the debt limit discussion. It is sometimes hard to realize
that if our cash runs down too much, a few days of unexpectedly heavy expenditures, or an unpredictable shift of a few days in tax receipts, might easily force
the Treasury to do borrowing at a time when conditions in the money market
were not propitious or in amounts that might substantially exceed our estimated
borrowings. Every banker knows that some real elasticity in such circumstances
is only prudent management. That was the basis for our request for raising the
debt limit.
We were not seeking to remove any limitation on or deterrent to greater spending. We have demonstrated, we hope, to everyone our insistent interest in and
demand for economy and getting our money's worth, but because we are responsible
for the Government's fiscal policies we must have the elasticity required to plan
them in the best way. The operation of the Mills Plan, with which you are all
familiar, requires the payment of 90 percent of the corporate tax money in the
first half of next calendar year. In accordance with the practices established
by our predecessors when the plan was first inaugurated, tax anticipation notes
in the amount of several billion dollars must be issued in the last half of the
calendar year, when only 10 percent of corporate taxes are received, against the
90 percent to be received in the following spring. This makes a temporary increase in the Government debt a practical necessity for a short period even
though a cash balance in the annual expenditure is achieved, and under present
laws there is no way to avoid it.
The great and really important reason, however, why it is most difficult to cut
expenditures radically and bring both a balanced budget and a tax reduction
into quick being at the same time relates to our national security. Without due
consideration for it, the rapid reduction of expenses would be comparatively
easy. But with the real possibility of an atomic Pearl Harbor hanging directly
over our heads, and with the knowledge of the Russian capability to produce an
even more potent weapon, national security is a matter of first concern.
I do not mean that hope of reduction in expenditures and taxes must be abandoned. Quite the contrary. But the necessity for caution and planning and
assurance that reductions are justified before they are made is paramount. A
balance between our military and our economic security must be achieved. The
ability, the ingenuity, the management, planning, and experience of all Americans,
under the present able leadership of our Defense Department, I am sure will
devise and provide means of accomplishing stronger defense for less money as
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19.53 REPORT OF THE SECRETARY OF THE TREASURY
time goes on. We cannot move as rapidly as we would like, b u t our course is
plain, our objective is definite, a n d we will achieve it with only the time necessary
to be sure of the safety of our actions as we move toward it.
The Federal Reserve System.—The second pillar of sound money is a properly
functioning Federal Reserve System. This is another way of saying effective
monetary policy. The balance between the money and credit supply a n d t h e
actual flow of goods in commerce is best maintained by letting the price of money
rise and fall with the demand for money. At the same time our Federal Reserve
Systein can and should use its powers to keep the m a r k e t for- credit orderly a n d
to avoid excesses in either direction, to avoid either inflation or deflation.
In the years preceding the M a r c h 1951 accord, the Federal Reserve System,
under Treasury domination, contributed substantially to inflation by artificial
manipulation of t h e value of Government securities. During a n d after World
War I I , the Federal Reserve System lost much of its independence. I t was used
by the Treasury to raise unprecedented ainounts of money, a n d during the war
this requirement completely overshadowed monetary policy. As long as the war
was on and Government controls kept wages a n d prices p r e t t y well in line, there
wasn't so m u c h trouble: B u t when in 1946 direct controls were removed without
also concurrently releasing t h e Federal Reserve, the excesses of the war years
brought inflation a n d hardship to millions of Americans.
I n the years from 1946 to 1951, the Federal Reserve was a prisoner of the
Treasury policy in handling the national debt. Instead of allowing t h e natural
increases in interest rates, the Federal Reserve focused major attention on making
sure t h a t the Treasury could handle the debt at low rates. This was not in the
best interests of t h e country as a whole. I t resulted in the absence of effective
m o n e t a r y policy until the accord of March 1951.,
As you gentlemen well know, t h e M a r c h 1951 accord partly restored effective
m o n e t a r y policy to its rightful place in our economy. I t laid t h e groundwork for
t h e policy which t h e present administration is pledged to continue.
I should also note t h a t the Federal Reserve System has no " h a r d " money
policy. I t is a good money policy. I t is free to allow the demand for money t o
have its normal a n d natural effect a n d to supply funds to keep pace with normal
growth. I t believes as we do t h a t good money makes good times.
Debi management.—^^The third a n d final pillar is proper debt management. As
of the m o m e n t our debt is more t h a n $273 billion—which is a terrific a m o u n t of
debt. The manner in which this debt is h a n d l e d — t h a t is, m a t u r i n g issues refinanced a n d new issues placed—has a very substantial bearing upon the wellbeing of our Nation's economy.
Nearly three-quarters of this debt matures within less t h a n five years or is
redeemable a t t h e holder's option. One of the things we are trying to do is to
extend t h a t average m a t u r i t y gradually.
We took a first step in this direction back in April by p u t t i n g out a 30-year
bond a t 3% percent. T h a t r a t e was higher t h a n t h e rate for previous issues, b u t
it reflected the going rate a t t h e time of the issue as determined by t h e daily
current m a r k e t purchases a n d sales of outstanding Government securities. Earlier
this m o n t h we h a d an encouraging response to a proposal which allowed a choice
between 1 a n d 3K-year maturities in refinancing an issue of $7.9 billion. About
$3 billion of the total exchanged was voluntarily placed in the longer t e r m security.
I t is our firm intention to offer more interm.ediate a n d long-term issues a t
opportune times in the future. We will use care, of course, not to press t h e m a r k e t
in competition with State, municipal, a n d private financing which is a t a peak
of demand a t the present time.
Too rapid m o v e m e n t on our p a r t a t this time in crowding into this m a r k e t and
increasing t h e already enormous demand for longer t e r m funds might very well
still further unduly press u p on t h e interest rates for all loans a n d even deny
m a n y other governmental and private borrowers an o p p o r t u n i t y to obtain t h e
necessary funds.
I t is also our goal t o move a t opportune times a portion of t h e debt out of t h e
banks into t h e hands of private investors.
R a n d o l p h Burgess, who is known to most of you and who is t h e Treasury's
chief officer in this m a t t e r of debt management, will talk to you in more detail
a n d more scientifically, I am sure, tomorrow a b o u t this very i m p o r t a n t subject.
Before I leave it, however, I wish to make known to you m y very great appreciation for t h e work t h a t Mr. Burgess is doing not only for t h e Treasury b u t for
t h e whole country in his very intelligent, patient, and wise counsel in this very
difficult m a t t e r of handling our public debt.
EXHIBITS
249
The current outlook.—Now I want to say just a word about the current outlook.
My crystal ball is no bigger or brighter than yours. Indeed the composite
knowledge from so many localities represented in this room is far superior to
anything we know. We are most anxious to learn from you. The decline in the
stock market is heralded by some as a sure sign of disaster. I cannot believe that
that is so. It may well be that, as the fear of inflation declines, some switching
is taking place from stocks to bonds or cash which the holders have not dared to
make during the past period of growing inflation. It may also be that there is
some fear of declining earnings as certain supplies more nearly approach demand
and goods become available. That is nothing to shiver about. In our great
and growing economy some adjustment is consta,ntly going on. Wherever adjustment is required, let's face it with confidence and get at it.
I do not believe in blind faith. If trouble is possible, just the opposite is
indicated. Keep your ej^es open. Seek out the soft spot and see what can be
done about it. For over two years now, from quarter to quarter businessmen
have been expecting and predicting some downturn. It has not materialized in
many lines because Government and private spending has been increasing faster
than new productive capacity came in. Government spending now appears to
be on the road to reduction. That is what the American people want and demand.
But in spite of all we can do and all the savings we can make, a relatively small
reduction is the most that we can hope to accomplish quickly. That means that
there will still be a tremendous amount of money to be currently pumped into
the economy. And furthermore it is the definite policy of this administration,
through tax reductions, to return to the people for them to spend for themselves
all the real savings in Government spending which can be reasonably anticipated.
As I promised at the time, the excess profits tax will expire on December 31st,
and there will be no request for renewal. At the same time an average of 10
percent reduction in individual income taxes is scheduled to go into effect, and
it will become effective. Many further adjustments in taxes are now under
consideration by the Ways and Means Committee and the Treasury for submission to the next Congress.
The great additions to producing capacity in several lines which have been
stimulated by Government action over the past few years are now becoming
available. The volume of goods we can now produce is far greater than ever
before. Lower levels of operation in some lines will develop more material than
we have ever had, and it may well be that in some cases this output may be all
that the country needs for awhile. But does this mean catastrophe? Our
volume of production and employment can be higher than ever and we may still
have some capacity in reserve. High volume but good supply—that means
competition, efficiency, and more value for the consumer's dollar. Surely we
have not deteriorated in this country so that all we can see is calamity if the day
of allocations and the order-taker is passing and we again have to develop a
salesman.
It cannot be that Americans can fear a free competitive economy. That is
what w^e have thrived on. That is how we grew great. The necessity for a little
more active selling never hurt anyone. A little more quality, a little more value
for the customer has given us the best merchandise in the world. A little more
production from the same amount of human effort through organization, management, ingenuity and invention, labor power, and tools has given us higher and
higher standards of living. Surely we are not fearful that we cannot do it again.
It is the American way. Bankers, too, can do their part. You too can and
should look forward with confidence. Your service can be improved. You can
do that little extra for your customer to help him do his share. And if we all do
all we should; America will inarch forward on sounder ground than we have had
under our feet for some time.
I can assure you that this Government is dedicated to the maintenance of a
high level of employment and production, and it will pursue policies to foster
that end.
Conclusion.—I have described what I consider to be the three pillars of sound
money. They are familiar to all of you. They are objectives which we have
pursued and will continue to pursue dihgently in the months ahead. The
achievement of sound money is one of the most important charges placed upon
this administration. It is important because sound money lies at the very base
of our national existence. Sound money is fundamental for saving and the creation of jobs.
Because Americans have saved, we have developed our national resources.
We have the scientists, the managers, and all the people who make possible the
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195 3 REPORT OF THE SECRETARY OF THE TREASURY
production of complicated machinery, t h e people who build and work in factories,
t h e farmers who have p u t modern equipment to such great use, t h e technicians,
mechanics, and workmen who h a v e made our great power p l a n t s and transport a t i o n systems possible. All these things and t h e employment they provide
would not have been possible if the savings of the people had not been available
to finance t h e m .
T h e n why have these millions of people saved and w h a t m u s t we do so t h a t
they will keep on saving? Sound money is an essential to keep people saving
money. Without assurance in the worth of their money in the future, as well as
t h e ability to obtain a fair rate of income on it when it is saved, people are either
going to save less or not a t all. No one will save if he fears t h a t t h e money he
saves will be worth less and less as time goes on or may even become worthless
entirely.
T h e great productive power t h a t is in a pair of American hands t o d a y rests in
t h e fact t h a t Americans have saved. With sound money, Americans will keep
saving and make possible further investments which will develop more employm e n t and even greater and better things for a more fruitful life for all.
Our national security is also involved. Sound mone}^ is of t h e u t m o s t importance to it. Without sound- money and without the sound economy t h a t
sound money produces, t h e great productive power of America will deteriorate,
and it is America's productive power when mobilized t h a t has won two wars and
now provides the greatest deterrent to aggression throughout t h e entire world.
Sound money is t h e . b a s i s for both our economic and our military security.
Sound money is essential for the future of America.
A prosperous nation—which means continuing high levels of employment and
production—can only be assured by sound money, for prosperity t h a t is not solidly
based on sound money is illusory, fleeting and sure to end in disaster. We shall
continue to press resolutely toward our goal of high employment and sustained
prosperity.
Exhibit 40.—Address by Secretary o f t h e Treasury H u m p h r e y before the Investm e n t B a n k e r s Association of America, Hollywood, Fla., D e c e m b e r 1, 1953
This administration is dedicated to t h e accomplishment of two great goals.
They a r e :
T h a t we h a v e military strength of sufficient power n o t only for our own defense b u t also to help promote peace in t h e world.
And t h a t we maintain an economy of sufficient strength and productive power
to continuously support t h a t military posture.
We are fully aware of t h e vital need to provide all the inilitary strength t h a t is
required for t h e defense of our Nation. We are equally aware of t h e fact t h a t
without a healthy economy continuous maintenance of this military strength is
impossible.
President Eisenhower, in his State of t h e Union Message two weeks after assuming office, pointed out t h a t this administration would strive to develop fiscal
and economic pohcies which would reinforce military strength by making more
secure t h e Nation's economic health and resources. T h e President, in t h a t
message, outlined six objectives in fiscal and economic policies which would be
sought.
These objectives were:
First, to reduce t h e planned deficits of t h e previous administration and t h e n
a t t h e earliest possible time balance t h e budget by reducing Federal expenditures
to t h e very minimum within t h e limits of safety;
Second, to meet t h e huge costs of our defense;
Third, to properly manage t h e burden of our inheritance of d e b t and
obligations;
Fourth, to check t h e menace of inflation;
Fifth, t o work toward t h e earliest possible reduction of t h e tax burden, remove
inequalities, cover omissions, a n d reconstruct the t a x laws to lessen their restrictive effect upon t h e vigorous growth of our economy;
Sixth, t o remove t h e strait jacket of wage, price, a n d other controls a n d
directives which theri held the country hidebound a n d m a k e constructive plans
t o encourage t h e initiative of free citizens.
Some very substantial progress has been made t o w a r d t h e accomphshment of
these objectives in the ten m o n t h s this administration has been in office.
B u t before considering this progress, let's look a t some of t h e inheritances to
EXHIBITS
251
which this administration fell heir, which made our tasks more difficult in the
fiscal and economic fields.
Among the more serious of the legacies we inherited last January were: (1)
The huge pubhc debt, (2) the restrictive debt hmit, (3) the $81 bilhon in C. 0. D.
orders, (4) extravagance in Government, (5) the staggering tax burden, (6) a
rigidly controlled economy, and (7) on top of it all, an unending costly war of
stalemate in Korea.
A brief look at each inheritance will develop the difficult conditions confronting
us when our start was made to reach the objectives set forth in the State of the
Union Message.
The public debt.—The public debt is now practically at the limit of $275 billion.
In addition to inheriting a debt of enormous size, we also inherited a debt that
had been badly managed.
As you well know, nearly three-quarters of the debt we inherited in January
matures within less than five years or is redeemable at the holder's option, with
too large a proportion in the hands of banks rather than distributed to long-term
investors.
Both of these conditions affect the supply of credit. They are inflationary.
They have contributed to cheapening the value of the dollar.
Pegging the price of Government securities and the manner of refinancing and ^
placing of new issues by the past administration have been important contributing ^
causes to the infiation which resulted in the heartless theft of hard-earned savings
from millions of Americans as the.dollar declined from 100 cents to 52 cents in
purchasing power in the short span of only the last 14 3^ears.
And ironically enough, this same policy which produced inflation and devalued
the dollar resulted in our paying so much more for what we bought that we now
have much more total debt to carry and eventually pay than would otherwise
have been the case.
The debt limit.—This is a financial inheritance which gives us great concern.
The present law requires the payment of the great bulk of corporation taxes in
the first half of the calendar year. When first enacted a few years ago, this law
substantially increased Government receipts in the first half of that particular
calendar year. This was the last half of the then current fiscal year, and so this
disproportionately larger collection of taxes was used to substantially reduce a
budget deficit in that year.
The practice then began of issuing tax anticipation bills in the fall when tax
collections were low against expected receipts the following spring when corporate
tax collections were high. This means that Governinent borrowing temporarily
goes up in the fall and comes down in the spring, and so automatically forces
increased borrowing over at least a six-month period. This fixed inheritance has
made the present debt limit too restrictive.
When we asked Congress last summer to raise the debt limit, we pointed out
that the change would enable the Government to handle its fiscal affairs in more
orderly, businesshke fashion, doing what we should do at the time when we should
do it, without technical hmitations on planning and carrying out the best possible
fiscal policies. This still holds true, and we are being hurt by this hmitation in
the meantime.
The danger of this specific inheritance was foreseen by the President, who, only
two weeks after taking office last January, in the same State of the Union Message,
stated that before the end of the fiscal year 1954 the total Government debt might
well exceed the existing debt limit.
The C. 0. D. orders.—When this administration came into office, it found about
$81 iDillion of orders placed by the former administration from one to three years
previously for goods to be delivered this year, next year, and even the year
after—all to be paid for when delivered, without providing money for the
payment.
This 81-billion-dollar legacy without any provision .whatsoever for its payment
now creates a most burdensome factor in raising cash to pay the Government's
bills. These C. 0. D. orders must, of course, be paid for in addition to all the
current expenses of the Government. They increase the problem of the debt
limit as well as the difficulty of balancing the budget quickly.
Extravagance in Government.—A habit of extravagance in some Government
agencies is part of the burden of our financial inheritance.
Some Government agencies perform vital functions and are well run.
Others have acquired habits of extravagance over the past twenty years of
free and easy spending.
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1953 REPORT OF THE SECRETARY OF THE TREASURY
This administration is determined to cut out careless spending. First, we
m u s t continually review every activity of government to see if it is actually
necessary. Second, we m u s t continue to review necessary activities of governm e n t to see t h a t extravagance and waste are eliminated in t h e running of indispensable agencies, both civilian and militaryi Third, we are trying to develop
more dollar-consciousness on t h e p a r t of all Government employees, b o t h in
a n d out of uniform.
All our efforts in cutting out extravagance are based on t h e simple knowledge
t h a t every dollar t h e Government spends comes not from some mysterious pool
of wealth b u t from t h e toil and savings of American citizens who deserve and
expect a full dollar's worth for every dollar t a k e n from t h e m to support their
Government.
The tax burden.—Our inheritance in t h e field of taxation is a staggering one.
I t is staggering because of its size, due to inherited obhgations and t h e deficit
financing of recent years.
I t is staggering because of inequalities and deliberately restrictive provisions,
which, in addition to t h e very size of t h e t a x program, inhibit growth a n d incentive
a n d deter initiative and development of a vigorous free economy.
I n 17 of t h e 20 fiscal years from 1933 to 1952, t h e Government operated with
a deficit. Conversely, in only three of those t w e n t y years did t h e Government
live within its income.
So, excessive planned deficits were a p a r t of our inheritance—and t a x burden.
T h e fiscal year 1953, in which we entered office, ended with a deficit of more t h a n
$9 billion. There was a planned deficit budgeted by t h e previous administration
for us of nearly $10 billion for fiscal 1954, which, it soon became evident, would
be more t h a n $11 billion because t h e income h a d been overestimated.
T o t a l appropriations authorized from fiscal year 1950 through fiscal year 1953,
plus those requested in t h e 1954 T r u m a n budget, provided for spending which
would exceed t h e income in those five years by nearly $100 billion. At t h e same
time, t a x expirations were being written into law to lower Government income.
By 1955, when t h e y planned for Government spending to reach its peak, planned
t a x reductions would have begun to reduce Government income bj^ almost $8
billion annually. T h e deficits t h a t would h a v e been incurred under this program
would h a v e been so large t h a t we might well never have recovered from t h e bur- .
dens t h u s piled on us.
Controls.—The country was throttled with controls—controls over prices a n d
wages, with all m a n n e r of directives a n d directions issued by bureaus a n d boards
from Washington, affecting, restricting, and directing t h e daily lives a n d activities
of every citizen a n d family in t h e land.
War in Korea.—In addition to and overshadowing all else was t h e grim conflict in Korea, taking t h e lives of American boys in a stalemate t h a t h a d been
dragging endlessly, hopelessly, b u t not bloodlessly, on and on for nearly three
long, horrible years for almost every home in this land. T h e financial burden
of Korea alone piling deficit on deficit, debt on debt, and t a x on tax, built up
commitments t o continue for years in advance.
These were some of t h e hard financial facts to which we fell heir and to which
t h e President addressed himself when he took office.
What, then, is this administration's record of progress in t h e eleven months
it has been working toward t h e accomplishment of our objectives?
First.—We are on our way toward getting t h e budget of t h e Federal Governm e n t under control. I t is no easy task, a n d cannot be too rapidl}^ accomplished.
T h e major reason why it is extremely difficult to balance this budget as rapidly
as we would like is t h a t about 70 percent of all t h e money we spend in Government
is for security—that is, for our military, our foreign operations, and atomic energy
programs. About half of t h e remaining a m o u n t is made up of fixed charges,
interest, a n d obligations fixed by law. This leaves only 12 to 15 percent for t h e
cost of all of t h e rest of Government.
Government spending ballooned during t h e past few years in t h e security area.
If great reductions are to be made, they will have to be made largely in t h a t area
because it is such a large percentage of our total expense.
We cannot swing a broadax in cutting these expenses if by so doing it affects t h e
security of our country.
R a p i d reductions in security expenditures can be m a d e only in two w a y s : First,
by eliminating extravagance, arid, second, by getting more defense for less money.
Extravagance in some military operations has been frequently a p p a r e n t . This
can and m u s t be eliminated. B u t this is a relatively small saving, and can only be
EXHIBITS
253
eliminated over some little period of time. A new spirit of dollar-consciousness in
the minds of both civilian and military personnel will become more and more
effective as time goes on.
Big reductions in security spending can only come from perfecting a new and
more effective defense program which costs less money. This, too, takes time and
tremendous planning, work, and effort.
Control of spending is essential, because we know that indefinite deficit financing
spurs the forces of inflation and finally cheats every family in America.
We have cut the prospective deficit for the current fiscal year from more than
$11 billion to less than $4 billion.
The problem in the fiscal year beginning next July 1, however, is even more
difficult. Present estimates show that should spending continue at the present
rate it will exceed our estimated income, after termination of the excess profits tax
and reduction of individual taxes on December 31, by eight or nine billion dollars
in this coming fiscal year.
We have but four alternatives:
The Government can accept an eight or nine billion dollar deficit in fiscal 1955,
The Government can cut expenses.
The Government can raise additional taxes.
Or the Government can adopt some combination of some or all of the three.
We have not abandoned effort or hope for an early balanced budget.—But the
inheritance which we found of tremendous spending obligations for present and
future years make this goal of budget balance one that cannot be achieved as
rapidly as we all might wish. Only by continuous detailed work and effort can
we get nearer and nearer to it and eventually accomplish our objective.
Our dollar has depreciated half of its worth in less than fifteen years. That is
fast depreciation. But, more important, history shows that the early stages of
currency depreciation and inflation always is slower than the latter part. It is
high time expenditures must be controlled.
We had a $9 billion deficit for the fiscal year ending five months after this
administration took office. If we had accepted the $11 billion deficit that the past
administration planned for this fiscal year we now are in; and if we do not reduce
the deficits that would surelj^ result from the planning of the previous administration for the years ahead, the results would be disastrous.
The solution of this dilemma is a most urgent problem.
It means finding and maintaining that delicate balance between security from
attack from abroad and a strong economy here a t home. We must balance the
cost of military security with the ability of a strong economy to pay the bill.
Indeed we must do more than plan our defense on a crisis-to-crisis basis. We
must do more than plan on the basis of a short and all-out effort for a limited
period of time. AVe must plan our defense and the ability to sustain it for the
long pull, for an indefinite number of years, not knowing when, if ever, the critical
moment may appear.
Thus a sound defense and a sound economy for the long-pull is our objective.
Second.—We can and we must spend whatever we have to spend.to defend
ourselves. But we know that our defense must be measured not by its cost but
by its wisdom.
We must have a fluid and continually modernized S3^stem of defense, which
the country can long afford to-maintain within the limits of its economy.
Third.—This administration is doing two things to make our nearly $275 billion
debt less inflationary and less dangerous to the value of money and our economy.
We are extending the inaturity of the debt by placing longer term issues whenever conditions permit, and as rapidly as possible we are moving more of the
debt away from the banks and into the hands of long-term investors.
We cannot always move on both fronts at the same time. We must be careful
not to dislocate the sensitive balance of our economy, but our goal is clear and
we are working toward it.
We have had but a single objective in plans for our debt management. We
have never changed that objective. We are seeking sound, honest American
money. We will continue to seek it in our handling of this too huge debt, as
well as in all other fiscal and econoinic policies which have a bearing upon the
value of that dollar.
But we must approach it with care and caution and we must adjust our operatipns to always respond to changing market conditions.
Halting inflationary pressures is hke stopping an automobile going down an
icy hill. If you slam on the brake, you spin around and snaash into a telephone
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1953 REPORT OF THE SECRETARY OF THE TREASURY
pole. As you well know if properly done, you alternately appl}^ the brake a little,
t h e n release it a little, and feel your way, bringing pressure gradually until you
finally come to a stop.
I n F e b r u a r y owners of $9 billion m a t u r i n g certificates were given t h e chance
t o exchange their holdings for a bond of six years m a t u r i t y instead of t h e usual
one-3^ear certificate. In April t h e Treasury offered a 30-year bond, the first marketable long-term bond since 1945. I n September a 3H-year note was offered,
a n d in October a new cash offering of 8-year bonds was made. I n December,
$ 1 ^ billion of 5-year bonds were issued.
The net result of our debt management so far in 1953 has been to finance a huge
inherited deficit with little or no increase in b a n k holdings of Government securities, a n d so without any increase in inflationary pressures due to t h a t cause.
Ownership of Government securities by investors outside the banks, in fact,
increased by $4 billion the first nine months of this year, while holdings of commercial and Federal Reserve Banks dropped a half billion dollars.
Fourth.—The purchasing power of the American dollar dropped from 100 cents
in 1939 to 52 cents in 1953. This is a m a t t e r of cold and tragic record.
This has been a cruel hardship upon t h e millions of Americans who have saved
money, either in savings accounts, in insurance, or in retirement, fraternal or
pension plans.
The administration is determined to halt further cheapening of t h e dollar.
This has been accomplished at least temporarily. There has been a change of
only one-half of one cent in the purchasing power of the dollar during the past
year. This is real proof of gaining stability.
Fifth.—Taxes are being reduced by this administration.
The t a x reductions which wih go into effect on December 31 would not have
been possible except for the reductions in spending which this administration has
been able to achieve since last J a n u a r y .
Let there be no misuiiderstanding about this simple fact. The elimination of
the excess profits t a x and the 10 percent cut in personal income taxes on J a n u a r y 1
are possible only because this administration was able to cut Government spending
by billions of dollars in its first few months in office!
Additional t a x reductions are desired by everyone and are necessary for the
continued growth of our economy. This Nation cannot long endure as a land
of o p p o r t u n i t y under t h e restrictive taxes which we inherited.
But taxes can be further reduced only as expenditures are further reduced.
And expenditures can be reduced only as consistent with maintaining a defense
adequate to meet the dangers which confront us.
The entire t a x system, however, is being revised to remove inherited obstacles
to growth and incentive, under a joint undertaking of the Treasury and the
proper committees of the Congress. We cannot afford as much reduction as we
would all like iinmediately, but we cari set a p a t t e r n of reduction on which a
modest start will p r o m p t l y be made, with provision for additional further reductions as rapidly as reductions in expenditures—consistent with security—indicate
t h a t t h e y are justified.
Sixth.—As t h e State of t h e Union Message suggested, needless and stifiing
controls were lifted almost as soon as we assumed office. They h a d failed to keep
down t h e cost of living. They were curbing initiative and enterprise. T h e
ending of controls was a calculated risk. B u t runaway infiation did not result,
as our critics h a d gloomily predicted.
This administration believes t h a t t h e average American can do more for himself—if he is allowed to do so—than t h e Government can do for him. Competitive
enterprise, free initiative, t h e courage to t a k e a chance, t h e opportunity to better
oneself by effort, constructive work and invention—these have m a d e America
great.
I t is t h e collective effort of 160 million Americans, each for himself striving to
improve his lot, advance his children, and improve t h e position of each succeeding
generation, t h a t all taken together has been a power to create more things for more
people, for higher and higher standards of living for all, t h a n ever has been known
in this world before.
Opportunity is t h e rightful heritage of our children. I t m u s t be protected and
guarded and handed on.
Korea.—Shooting and bloodshed in Korea are ended, a t least for t h e time being,
a n d t h e tension in t h e homes throughout America is lessened. I n its place our
every effort is a t work to fashion a lasting, sound, a n d equitable peace, a n d sub-
EXHIBITS
255
stitute reconstruction for destruction in that war-torn land. It is our fervent
hope that out of it may come a permanent and constructive settlement..
Conclusion.—This then was our inheritance of fiscal burdens accumulated
over 20 years.
.These are our objectives.
Our accomplishments are real. They are a good start toward substantial
progress, have yet far to go, but are far enough already to give us pride in the past
few inonths of effort and real hope for greater things to come.
If only real peace can result in Korea to dissipate anxiety for our sons it will also
help to relieve our financial pressures and may even be a first step toward accomplishing the real and lasting peace so craved throughout the world.
May Divine Providence guide us ever toward peace and give us the strength,
the wisdom, and the courage to realistically face facts as we see them and act
vigorously with fear or favor for none.
Exhibit 41.—Statement by Secretary of the Treasury Humphrey, April 13, 1953,
on the 30-year 3l^ percent Treasury bonds
In answer to inquiries on the statement of the nine Senators, Secretary of the
Treasury George M. Humphrey made the following statement:
"The new issue of 30-year 3}4% bonds is one step in a program of extending part
of the debt over longer periods and gradually placing greater amounts in the hands
of longer term investors announced by President Eisenhower in his State of the
Union Message.
"The concentration of short-term debt in the banks by the previous administration was one of the causes of inflation in the cost of living which has cost the
American people billions of dollars. A gradual placing of more securities in the
hands of nonbank investors is a necessary step for economic stability.
"The sale of long-term bonds to these investors carries a somewhat higher
interest rate, but this cost will be offset many times over if it lessens the cost and
disorganization of inflation. The increased interest cost is partly recovered in
taxation. To the extent that the interest, on these bonds goes to insurance
companies, savings banks, pension funds, and other forms of the people's savings,
it will benefit the millions of families who have been most damaged by inflation
and by inadequate return on savings because of artificially low interest rates.
"As far as deflation is concerned, while a few prices have declined recently, the
cost of living is near its postwar high, employment is higher than ever before and
unemployment is very small. With continued heavy military expenditures, the
Government is still operating at a deficit."
Exhibit 42.—Statement by Secretary of the Treasury Humphrey, June 24, 1953,
on the Federal Reserve reduction of reserve requirements
In answer to inquiries on the Federal Reserve reduction of reserve requirements
Treasury Secretary Humphrey said:
"The Federal Reserve Board acted on its own responsibility but after full consultation with the Treasury. Its action is an orderly continuation of the standing
policy of providing the reserves needed for seasonal demands of business and
finance and for necessary Treasury financing. • The action is entirely consistent
with the policy of restraint of inflation without too drastic credit restrictions."
Exhibit 43.—Statement by Secretary of the Treasury Humphrey, August 3, 1953,
on the postponement of action on increasing the debt limit
The Senate Finance Committee has decided to hold for later action the request
of the administration for an increase in the debt hmit which has already been
passed by the House of Representatives.
This administration has stated time] and [again [that it will do everything in its
power to further reduce expenditures which will not jeopardize the security of this
country. It will reexamine its programs and continue to work at such reductions
every day, every week and every month during the year.
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195 3 REPORT OF THE SECRETARY OF THE TREASURY
However, this administration inherited such a large amount of obligations contracted for during the past few years for which no money was provided and which
will have to be paid for during the coming months that we must raise additional
cash to pay for them as they come due. This is in addition to paying the current
expenses of the Government which have just been voted by this Congiess.
The present debt limit severely restricts flexibility and will more and more
limit our ability to administer the financial affairs of the Government. We asked
that the debt limit be raised only so that we could better handle the Government's requirements for raising inoney to pay for these past obligations. It does
not in any sense iriean the slightest retreat from our determination, which already
has been clearly demonstrated, to cut down on spending at every possible turn.
We will make every effort to comply with the demand of the Senate Finance
Committee to postpone the necessity for action by it as long as we can and until
the next regular session of the Congress if possible.
Exhibit 44.—Address by Under Secretary of the Treasury Folsom before the
Special Tax Conference of the National Industrial Conference Board, New York
City, April 16, 1953
While it is not yet possible to make any definite statement about either the
prospects for tax reduction or the details of the administration's long-range tax
program, I am glad to have this opportunity to talk to you about some of our
problems and to indicate some of the objectives which we have developed during
the past three months in the Treasury.
Secretary Humphrey in his statement before the Treasury Subcommittee on
Appropriations stated the general goal of the Treasury as follows:
"It is our purpose in the Treasury to help provide the proper economic climate
in America. The fiscal policy is very iinportant in determining that climate
which is intangible but has a direct effect upon the lives of each of us every day.
It is our purpose to establish and maintain such fiscal policies as will permit
America to continue to grow and reach even higher standards of living for all its
people."
This first problem is, of course, the immediate one of getting control of the
budgetary situation. We were confronted with a prospective deficit of $5.9 billion
in the fiscal year ending this June, and with a budgeted deficit of $9.9 billion for
the next fiscal year. It now appears that receipts for the current fiscal year will be
substantially below the estimates contained in President Truman's Budget Message of January. Though the amount involved is no greater than is likely to
occur at times in view of the difficulties of forecasting revenue receipts, the error is
on the wrong side.
The budgetary deficit for fiscal year 1954 was based upon the assumption that
tax reductions would go into effect as scheduled under existing legislation. The
excess profits tax is due to expire on June 30; this would involve an annual loss
in taxes of a little over $2 billion. Its expiration has come to be tied up with
H. R. 1, which would advance the scheduled December 31 cutback on personal
income tax of June 30, with a loss of revenue in the affected six months of about
$1.5 billion, or $3 billion a year. The corporation income tax rate, under present
law, will drop from 52 to 47 percent on March 31, 1954, resulting in a yearly
revenue loss of about $2 bilhon. Also, on March 31, 1954, certain excise taxes,
which bring in about $1 billion a year, are due to be reduced. These four changes
would result in an annual decline in tax revenue of about $8 billion.
The deficit figures which I have cited are the familiar ones from the so-called
administrative or conventional budget. The January estimates of the deficits
in the cash budget were $1.9 and $6.6 billion for the current fiscal year and 1954,
respectively.
For many purposes, the position of the cash budget is iinportant since it indicates the net impact of the Governinent's receipts and expenditures on the
country's economic activities. On a short-run basis, a balance in the cash budget
may be taken to indicate that the Government is paying its way by taxes and
not pumping any new inoney or credit into the country's econoinic system.
Most of the differences between the two budgets are accounted for by additions
to the trust account in the old-age insurance and other retirement funds. Under
these systems funds have been collected on a contributory basis in excess of the
payments. For instance, under the old-age insurance plan, there is now a balance
of $17 billion resulting from the excess of receipts since 1936, including interest
EXHIBITS
257
over the expenditures. I t is now generally agreed t h a t further large additions
t o this fund are not necessary a n d it is expected t h a t with t h e increase in expenditures t h a t t h e system will gradually reach a pay-as-you-go basis. Under these
conditions, the difference between the cash and administrative budgets will also
gradually decline.
These reserve funds are invested exclusively in United States Government
securities. I t is.rather surprising t h a t criticism still exists to the effect t h a t these
excess receipts after being invested in Treasury securities are used to p a y for
governmental activities. I t should be clear upon reflection t h a t United States
Government securities are the only proper form of investment for these funds.
I t would be foolish to hoard the cash and it would not be wise to invest these
Government funds in private securities. The proceeds of the sales of these
securities to the t r u s t fund are used in the same way as the proceeds of sales of
Government securities to private investors, and if these sums had not been
available t h r o u g h the t r u s t funds it would have been riecessary to sell United
States Government securities in probably the same amounts to private investors.
Regardless of which budget concept is used the deficit projected for next year
would be seriously inflationary, especially with t h e very high level of business
activities now prevailing. I n line with objectives of the administration to halt
t h e inflation which has so seriously been cutting into the real value of the dollar
for more t h a n a decade, assurance t h a t a balanced budget was in sight has been
stated by President Eisenhower to be necessary before t a x reduction could be
made safely.
An intensive review of budgets has been proceeding since J a n u a r y 21 in all
d e p a r t m e n t s . Until the expenditure figures are finally determined, judgment On
t h e proper timing of t a x reduction must be suspended.
Though there is still uncertainty as to when recommendations for t a x reductions m a y be made safely, there is no doubt or disagreement as to their desirability
and to the direction of the first reductions.
I t is not necessary to elaborate on the defect of the so-called excess profits tax.
Almost everyone is agreed on this subject. Any long continuation,of this form
of taxation could not be justified because it is incompatible with healthy economic
growth.
A reduction in individual incoine taxes is of great importance because of the
very heavy t a x burdens now pressing on people at all income levels. Again, I
need not elaborate on the fact t h a t tax rates are close to the all-time high in most
h)rackets, with levels t h a t at m a n y points exceed even the peak rates reached
during either of the two World Wars. T h e expenditures arising from the defense
einergency require and justif}^ such taxes as are necessary to avoid inflationary
deficits, b u t when tax burdens are as onerous as t h e y now are, the strictest economy,
is also necessary to keep these burdens at the minimum consistent with national
safety. We want to return as much spending as possible from Government to
private hands.
Bej^ond these two immediate problems, we have the more fundamental one of
a t t e m p t i n g to work out a structure of taxation which will have the least possible
inequities and a t the same time impose minimum restrictions on the countrj^'s
economic system. You will note t h a t I have in effect referred to t h e least bad,
rather t h a n the best, tax S3^stem. I t is, I think, i m p o r t a n t to keep in mind t h e
fact t h a t no tax system can be positively good. I t is inevitably burdensome and
restrictive. We can hope only to minimize the impact of the sacrifices and t h e
consequences of the restrictions.
T h e criteria for modification of the tax system were stated by President Eisenhower in his State of the Union Message when he said:
" . . . We must develop a system of taxation which will impose t h e least possible obstacle to the dynamic growth of t h e countr3^ This includes particularl3^
real opportunity for the growth of small businesses. Many readjustments in
existing taxes will be necessary to serve these objectives and also to remove existing inequities. Clarification and simplification in the tax laws as well as t h e
regulations will be u n d e r t a k e n . "
T h e most basic issue in an3^ t a x structure is the balance between the different
major sources of revenue. During most of our country's history, we have relied
on customs, t h e sale of public lands, and excises. After t h e adoption of t h e Sixteenth Amendment in 1913, income taxation, both individual and corporate, developed rapidly under t h e financial pressures of the first World War. I t has been
the principal source of revenue since 1918, with t h e exception of a few years in
the 1930's when income tax revenues dried up during t h e depths of the depression.
273013—54
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195 3 REPORT OF THE SECRETARY OF THE TREASURY
Individual income taxation is considered by many to be the ideal form of taxation because it is direct in its impact and because the rates and definition of
income can be adjusted to whatever may be the prevailing concepts of ability to
pay. If only modest revenue were required, taxes on individual incomes inight
well be used as virtually the sole source. Since, however, the pressure of threats
from abroad and the national desire to carry on a considerable variety of domestic
governmental functions make it necessary to secure large total revenues, a dominant rehance on any single form of taxation is likely to lead to its breakdown.
Corporate income taxation is the second major source of taxation in this country.
This tax also may be pushed to a breaking point.
Corporate profits, when distributed as dividends, are the necessary reward to
the many millions of stockholders whose investments have provided the equity
capital upon which our whole industrial S3'^stem has been built. Without adequate dividends to justify continuing investment, we should have to look to a
drying up of our traditional pattern of formation and expansion of industry.
To the extent that corporate profits are not distributed as dividends, they constitute additional capital for expansion by existing successful companies. Thus,
whether distributed or retained, reasonable legitimate profits are a part of the
foundation of our whole econornic system.
The critical point in corporate taxation cannot be predicted in advance or
determined with any high degree of accuracy. I suggest, however, that at rates
around 50 percent it becomes a major and not a minor factor in business considerations.
Excise taxation constitutes the third principal source of revenue in this country,
and in this area we have both immediate and long-run problems.
Excise taxes are now imposed in a not very systematic manner on a variety of
things, some of which are true luxuries and some of which are ver3^ common
necessities. Furthermore, some of the items taxed are produced by prosperous
industries while others are supplied by industries that are in some distress even
at the present general high levels of business.
In view of total revenue needs, it appears that continuing rehance will have to
be placed on excise taxation. Excise taxes in the United States bring in a relatively small proportion of total tax revenues in comparison with other countries.
In the fiscal 3^ear 1952, we received 13.7 percent from all excises combined, and
only 7.4 percent from excises other than those on tobacco and beer, wine, and
liquor. By contrast, Canada, in fiscal 3''ear 1952, secured 24.2 percent of total
Federal tax revenues from excises and 15.2 percent from those on other than
tobacco and intoxicating beverages. The greater reliance on excises in Canada
has not been unrelated to the abilit3^ to reduce income tax rates substantially
as was done recently in that country.
In developing a proper balance among the three principal sources of revenue,
individual income, corporate income, and excise taxation, we must be careful riot
to adopt doctrinaire attitudes concerning the supposed advantages of any one
form. No tax is without inequities or repressive effects. AVhen rates are low,
the inequities and adverse economic consequences may not be too serious; but as
rates become higher, the bad features of any one form of taxation become intolerable. A diversification of sources of revenue is likely to give a-better approximation to an acceptable system than can exist when an3^ one source is pushed to
excessive levels.
In general, I believe that the individual income tax should be relied on as the
principal source of revenue, and it should be used to give the desired degree of
progression to the whole tax system. This progression should, needless to say,
be based on reasoned judgments and not be punitive or confiscatory. But so
long as total revenue requirements are large, a broad and diversified tax system
will minimize both inequities and repressive economic pressures.
When one turns from" the general subject of balance among the major forms
of taxation to consider more detailed and technical aspects of particular forms of
taxation, several problems are conspicuous. I shall mention a few of them
briefly.
One of the first subjects we are examining is the whole area of the tax treatment
of pension and retirement plans and of the so-called fringe benefits. Various
discriminations have developed over the past several years, with results that are
quite illogical. In this area we need, above all other things, clarification and
simplification.
Another principal topic is that of the proper treatment of depreciation in computing the taxable income of business. The problem here is one of timing; how
EXHIBITS
259
rapidly should an investment in plant and equipment be written off? I n t h e
long run, t h e same t o t a l a m o u n t will be charged as an expense under any of
various systems, b u t t h e speed of permissible writing off m a y have a profound
effect on t h e willingness to incur t h e inevitable risks t h a t arise in investments in
fixed assets.
We hope to be able to permit greater discretion by m a n a g e m e n t in the timing
of depreciation deductions. I n t h e long run, some liberalization of present rules,
we are satisfied, will increase t o t a l investment, t h e national income and, incidentally, t o t a l tax revenues a t any given level of t a x rates. We are clear on t h e
objective. T h e problem is one of t h e m e t h o d of change and t h e timing of its
adoption. Some liberalization m a y be m a d e in t h e regulations, while others
m a y require legislation.
T h e subject of t h e proper t r e a t m e n t of capital gains and losses is a perennial
one. Bona fide long-term capital gains arie clearly quite different t h a n ordinary
income; they represent a tax-paying capacity b u t t h e y do not consitute income
in any ordinary sense. To encourage risky investment and to permit fluidity in
investment markets, t h e rates of tax on such gains m u s t be kept a t reasonable
levels. However, a substantially lower r a t e of t a x on capital gains t h a n on
ordinary income provides a t e m p t a t i o n t o create various sorts of artificial devices
to convert ordinary incbme into capital gains. Our analysis in this area includes
consideration of definitions, rates, holding periods, and t h e t r e a t m e n t of capital
losses.
There are m a n y problems in t h e field of tax-exempt activities. Charitable and
educational organizations have properly been m a d e tax-exempt, but abuses m a y
develop when t h e tax-exempt status is used as a cloak to cover competitive
business activities. T h e complex subject of t h e t a x t r e a t m e n t of cooperative
associations requires special study, especially in view of t h e present high level
of tax rates.
T h e issuance a n d use of tax-exempt securities also raises problems concerning
both t h e fairness and t h e economic effects of t h e t a x system. The lower rates
of r e t u r n on such securities in t h e m a r k e t by no means reflect their tax a d v a n t a g e
to very high bracket investors. T h e fact t h a t t h e tax-free securities exist diverts
investment funds from the field of private enterprise where they are most needed.
A new problem has arisen in connection with t h e use of tax-exempt securities to '
finance municipally owned industrial plants.
T h e commission on intergovernmental relations proposed by President Eisenhower will presumably review t h e whole subject of Federal-State-local t a x and
fiscal relations. T h e Treasury would participate in t h e examination of this
subject.
T h e proper taxation of income derived abroad raises difficult and i m p o r t a n t
problems of t a x policy. International double taxation should clearly be avoided.
The provisions for crediting foreign income taxes against t h e United States income
tax represents one a t t e m p t to remove such double taxation. The present t r e a t ment, however, m a y not be adequate. Modifications of t h e existing law m u s t be
m a d e with care, however, to prevent t h e creation of loopholes t h r o u g h which
domestic income is in some way converted into tax-exempt foreign income.
T h e abuses arising under t h e rule adopted in 1951 by which earned income
a t t r i b u t a b l e to activities abroad by anyone who is outside t h e country for 17 out
of 18 m o n t h s is a conspicuous example of t h e need for care in creating a new provision in t h e law. Secretary H u m p h r e y has already recommended changes in
t h a t p a r t of t h e law to remove t h e abuses.
Expense accounts m a y also be abused by those in position to take a d v a n t a g e
of them. Their use and misuse require close scrutiny.
I shall not t a k e time to list further specific problems in t h e formulation of tax
policy. I hope t h a t our approach to such problems and our point of view will
be apparent from t h e foregoing examples. Our objectives are: (1) To simplify
t h e system as much as we can, (2) to remove inequities, and (3) to develop
a system which will impose t h e least obstacles t o . t h e economic growth of t h e
country.
Action on some of t h e foregoing technical points will bring in additional revenue.
On others, it will involve revenue losses of various sizes. I n view, of t h e very
tight budget position, some of t h e reforms which are clearly desirable m a y have
to be postponed or introduced on a limited scale. We hope to have a few things
done this year; a good m a n y m a y be done next year, and others will have to go
over until there has been substantial reduction in expenditures.
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1953 REPORT OF THE SECRETARY OF THE TREASURY
F r o m m y comments you will appreciate t h e fact t h a t t h e investigations and
planning on t a x m a t t e r s a t t h e Treasury are being carried out on a considerable
scale. Fortunately, there have been over t h e past several years a good m a n y
excellent studies and proposals on t a x policies. T h e trouble in t h e past has been
a lack of action, n o t of study. We are now consulting with various groups which
h a v e been examining t h e operation of our t a x system.
T h e financial and economic aspects of t h e wprk in t h e Treasury is under t h e
direction of Professor D a n Smith, who is on leave from t h e H a r v a r d Business
School to supervise our new Analysis Staff. On t h e legal side, Mr. K e n n e t h
Gemmill of Philadelphia has just jo.ined t h e Treasury to supervise t h e Legal
Advisory Staff. We are also adding some industrial accountants and men with
experience in t h e Bureau of I n t e r n a l Revenue to t h e Analysis Staff. We will
t h u s be able to have all problems a n d proposals reviewed by lawyers, economists,
accpuntants, and administrators with practical experience in t h e field.
I n our own investigations in t h e Treasury, we are very h a p p y to be able to
work closely with t h e staff' of t h e Congressional Joint Committee on I n t e r n a l
Revenue Taxation and t h e staffs of t h e House Ways a n d Means Committee and
t h e Senate Finance Committee. T h e Treasury policy officials a n d staff are also
working closely with officials of t h e Bureau of I n t e r n a l Revenue. Collaboration
between congressional. Bureau of I n t e r n a l Revenue, a n d Treasury groups should
speed up t h e process of securing changes in t h e law which are sound from a policy
standpoint a n d administratively feasible.
W h a t e v e r suggestions we make to Congress for tax legislation will be t h e result
of t h e most careful possible study in an effort to determine w h a t is for t h e good
of t h e entire Nation. Wh^n we do make those recommendations, it is within
t h e power of Congress to do with t h e m as it m a y see fit. Congress has t h a t full
responsibility.
As a final point, I should like to comment briefly on t h e subject of t h e administration of t h e t a x laws. T h e policy of this administration is to interpret t h e laws
fairly a n d without a n y bias or a t t e m p t to secure indirectly something t h a t has
not been authorized by t h e Congress. This a t t i t u d e has already been made clear
under t h e able a n d vigorous leadership of Commissioner Andrews. W i t h t a x
laws a n d business transactions as complex as they are, there are m a n y opportunities t o twist t h e administration of t h e law to reflect t h e bias or social philosop h y of an administrative group. We shall earnestly endeavor to avoid all such
misuses of administrative discretion and to remove such examples as now exist.
We shall administer t h e law as it is, not as some of us might think it should be.
Changes in t h e law should be made by t h e Congress, not by administrative fiat.
And in t h e process of collecting t h e revenue fairly and honestly, it is as much to
t h e credit of a revenue agent to discover t h a t a taxpayer has made an over- '
p a y m e n t as it is to discover a deficiency and collect an additional tax.
I wish t h a t we could foresee enough reduction in experiditures in t h e immediate
future to permit us to recommend all t h e adjustments which we find desirable.
Simplification a n d removal of inequities a n d t h e repressive features of our t a x
laws are our objectives. We shall proceed as p r o m p t l y as we can with recognition
t h a t our recommendations m u s t be consistent with our primary objective of
maintaining a sound budget position.
Exhibit 45.—Address by Deputy to the Secretary Burgess before the National
Association of M u t u a l Savings Banks, Washington, D . C , M a y 12, 1953
T h e question of how governments should borrow inoney is m a n y centuries
old. Should the3^ borrow from investment bankers, as t h e kings did from t h e
Rothschilds; should they borrow from t h e b a n k s ; or should they go to the people,
as in our great AVar Loan Drives? Should they "rig the m a r k e t " so as to borrow
very cheaply?
The new adininistration is fortunate in having for its guidance two recent
congressional inquiries into this subject by subcommittees of the Joint Committee
on t h e Economic Report. The subcommittee of 1950 was headed by Senator
Paul Douglas; t h a t of 1952 by Congressman AVright P a t m a n .
Both committees agreed on certain conclusions. One was t h a t the Federal
Reserve System should be freed " t o restrict credit a n d raise interest rates for
general stabilization purposes—even if t h e cost should prove to be a significant
increase in service charges on the Federal d e b t . "
EXHIBITS
261
The reports a n d the testimony brought out t h e fact t h a t when the Treasury
meets a deficit b3^ borrowing from the banks, it is inflationary^-creates more
money—tends to raise the cost of living.
„
Bank borrowing m a y be cheap in terms of interest cost to the Treasury. B u t
it is exceedingly expensive for the country as a whole, as all Americans whp have
been h u r t by inflationary prices in the past decade should know.
T h e reasons are simple b u t deserve spelling out.
AVhen the Treasury sells short-term securities to banks the rnoney supply is
increased by the a m o u n t of the borrowing. There is more money—but there is
no increase in the things people can buy for their own use. Borrowing outside
of t h e banks, on t h e other hand, reaches genuine savings. Money which might
have gone into other investment outlets goes instead into Governments. T h e
T r e a s u r y competes for available loan funds rather t h a n creating new money.
This avoids inflation—it keeps the price of food, clothing, a n d shelter from
going u p .
These sirnple principles constitute the bases for the program of the Treasury
D e p a r t m e n t for financing the public debt. I t was the violation of these principles by the previous administration which was one of the major causes of inflation in tbe cost of living, which cut the buying power of the dollar in half since
just before AVorld AVar I L The policy of financing the Government by placing
short-term securities in t h e banks a n d then calling upon the Federal Reserve
Systein to support the price of Government securities in the inarket h a d much
the sarne effect as printing so much money. I t made it impossible for the Federal
Reserve S3^stern to exercise its statutor3^ duties towards stabilizing the economy
for the benefit of the people.
T h e first rule of Treasury policy today is t h a t the Federal Reserve System
shall be free to exercise its policy without interference. This mearis, of course,
t h a t the T r e a s u r y m u s t sell its securities in the inarket at the going rate of interest, a n d not a t an artificial rate supported by the Federal Reserve System.
T h e second rule is t h a t more Government securities m u s t be sold to nonbank
investors. Too rnuch of the debt is now concentrated in the banks. This cannot
be changed a b r u p t l y ; b u t over a period, gradually, it is proposed to distribute the
debt more widely as a necessary step for economic stability.
The sale of long-term bonds to investors, of course, carries a somewhat higher
interest rate t h a n the sale of short-term securities to banks. B u t this cost will
be offset m a n y times over if it lessens the risk of inflation—higher prices for all—
or deflation, which has often m e a n t depression. I t should be noted t h a t the
larger interest p a y m e n t s which the Treasury will be making on these bonds will
be going principally to insurance companies, savings banks, pension funds, and
individuals, a n d will benefit, in this way, millions of families who have been
damaged by inflation a n d by inadequate r e t u r n on their savings because of
artificially low rnoney rates.
These, then, are the principles of the Treasury in its new program of financing.
I can perhaps best illustrate how these principles work by telling you why and
how we decided to issue a billion dollars of 30-3^ear 3 K % bonds.
To finance t h e deficit up to J u n e 30, we needed a t least two billion dollars of
new money. We h a d two choices. We could have borrowed it all from t h e
banks—on short t e r m a t fairly low rates. T h a t would have increased t h e money
supply—run t h e risk of further inflation—further cheapening of t h e dollar, with
all of us paying more for t h e things we buy.
T h e other choice was to t r y to borrow from investors outside t h e banks. We
explored t h a t carefully. We canvassed t h e insurance companies, t h e savings
banks, t h e pension funds—public a n d private—and other possible investors.
We found we could sell some long-term bonds—about a billion dohars worth—
a t a 3K percent rate. AVe did not make t h e r a t e ; t h a t was set by t h e m a r k e t .
T h e reason it was as high as 3 ^ percent is t h a t last year and this year more
people were trying to borrow long-term money t h a n ever before in t h e history
of t h e country. Rates have been rising for more t h a n two years. T h e old law
of supply and demand is forcing interest rates higher. Also, t h e Federal Reserve
System, since it partially regained its freedom in 1951, has been keeping t h e money
m a r k e t tight.
This financing has been breaking new ground. The 3K percent bond was
t h e first long-term marketable issue since 1945, a n d t h e first without Federal
Reserve price pegs for a much longer period.
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1953 REPORT OF THE SECRETARY OF THE TREASURY
Three conclusions may be drawn. First, there is available a substantial
amount of investment money which can be reached with a bond carrying a
competitive interest rate. Even in the bill market the number of nonbank
buyers has risen with the rate.
Second, the long-term market has been overloaded because too many people
have been trying to borrow at the same time. A delay of some projects would
be wholesorrie both for the market and the business situation. Time will be
needed for absorption of the new issues. In the meantime the Treasury will
proceed cautiously, though it should not always be at the end of the queue, and
so forced into inflationary bank financing.
Third, the free rider, accustomed to pegged markets, had a wholesome lesson,
but must be more carefully screened the next time.
As to the timing of the issue, the question has been raised whether this longterm financing by the Treasury may not be a depressing influence at a time when
there is danger of deflation.
While there have been declines in certain agricultural prices, and here and there
other weak spots in the economy, the fact remains that unemployment is at a
minimum, the index of production made a new high record in the latest reported
month, personal income for the Nation has reached a new high rate of $282,500,000,000 a year, and the cost of living is within one percent of its all-time high.
Deflation is as 3^et a guess, not a reality.
The rest of the money we need before June 30 we are getting by selling more
Treasury bills. Considerable corporation money is available to buy these bills,
and we hope a relatively small part will go to the banks.
One market not congested is that for United States savings bonds. They
constitute one of the best ways of borrowing money for the Government. They
are good for the borrower, too. The Treasury is grateful to savings banks and
other organizations which are cooperating so vigorously in the sale of these bonds.
It is largely through all of your voluntary efforts that we have $36 billion of
E and H bonds outstanding today.
Exhibit 46.—Address by Deputy to the Secretary Burgess before the American
Bankers Association, Washington, D. C , September 23, 1953
The shape of the debt
The Treasury has a fine collection of portraits of former Secretaries, which
are available to furnish its offices. When I moved into my historic office, I asked
for the portrait of Carter Glass of Virginia, and he hangs on the wall behind me,
looking over my shoulder. If I can turn around and look him in the eye without
quailing, I am satisfied.
Carter Glass beheved in sound money, vigorously, tenaciously, and, at times,
explosively. The Federal Reserve System, which he fathered, is this country's
best instrument for sound money, as Secretary Humphrey suggested yesterday.
Carter Glass constantly reminds me of two principles.
One is that sound, honest money today, as always, is cherished and promoted
by distinguished men of both parties.
The other is that the Treasury's role in maintaining sound money can be
realized only in close and daily cooperation with a free Federal Reserve System.
That cooperation has been present in full measure this year. I believe there is no
finer body of devoted public servants than the men and women in the Fedeiral
Reserve Board and Banks; they have proved it once more, as the3^ have worked
with the Treasury in recent months.
For years, I have known the public debt, but in the past nine months, since
I became her slave, I have learned more of her tricks. She is a tough old bird to
handle. She pokes her way into every cranny of American life, and she goes
around interfering with all sorts of people.
The public debt levies interest payments on every one of us as taxpayers. But
her most serious misbehavior is the way she disrupts the flow of our economic
life when she gets out of hand. In the war, she and her wicked economic side
partners caused inflation, and, even since 1946, she and they got out of control
and put the cost of living up 35 percent. She breaks into the money market and
the investment markets and disturbs the peace. She seems to be always under
foot.
We should, however, remind ourselves that this character, like the girl with the
curl on her forehead, can be good as well as horrid.
EXHIBITS
263
Our public debt today is, in part, a symbol of a great war which we and our
partners won.
Almost everyone in this room is a holder of part of the debt in the form of
savings bonds or other Treasury obligations. These bonds are among our most
prized and satisfying possessions. In this uncertain world, they give us a sense
of assurance and security. They may fairly be called the world's best investment.
The interest paid on the Government debt is not just a cost to the people; it is
income to millions of individuals, either directly or through life insurance and
savings accounts. When rates rise, the benefits as well as the costs increase.
In candor we would admit, however, that, from a broad economic point of view,
the faults of our present huge debt far more than offset its virtues.
In the long run, the only real solutiori is gradually to reduce the debt. That
is the American way. We have always done it before, and I believe we will again.
Until we live in a more peaceful world, progress in this direction will be slow,
though we have started moving in the right direction.
Also, our ability to carry the debt depends on growth. If we nourish a dynamic
economy of free men, so that our strength grows steadily and surely, the debt
won't seem as big. That is the lesson of history.'
There is a third course—to inflate—to so increase the national income by price
inflation that the debt seems relatively smaller. That is a form of partial repudiation, a reduction of the real value of our bonds and our money. That is what
has been done—and what we are stopping. We want growth and not inflation.
Meantime, before we reduce the debt, we have to live with her.
The program
In his State of the Union Message on February 2nd, President Eisenhower, in
dealing with the national debt, said:
"* * .* It is clear that too great a part of the national debt becomes due in too
short a time. The Department of the Treasury will undertake—indeed has undertaken—at suitable times a program of extending part of the debt over longer
periods and gradually placing greater amounts in the hands of longer-term
investors.
"* * * Past differences in policy between the Treasury and the Federal Reserve
Board have helped to encourage inflation. Henceforth, I expect that their single
purpose shall be to serve the whole Natiori by policies designed to stabilize the
economy and encourage the free play of our people's genius for individual initiative. * * *"
Facts
The facts of the shape of the debt are a matter of public record.
In 1953, the Treasury has had to finance maturities and redemptions of over
$60 billion and a deficit of $9 to $10 billion. Thus, a sum equal to one-fourth of
the national debt had to be financed in a year. Before the end of the year, we
shall have gone to the market, either for refunding or raising cash, nine times,
exclusive of weekly offerings of Treasury bills.
Nearly three-quarters of the debt matures, either definitely or optionally,
within five years.
A substantial part of the inflation, which doubled the price level and cut the
buying power of the dollar in half in 13 years, was due to financing too much of
the debt at short-term through the banks and so creating bank credit, in effect,
printing money. The total money supply, currency and bank deposits, swelled
from less than $65 billion in 1939 to $195 billion in December 1952. This printing
press operation doubled the price level—the cost of living—more than doubled
the price of a house—of a piece of beef, or a suit of clothes. Every person in the
country was hurt in one way or another and especially people who saved or who
lived on fixed or sluggish incomes. The only gainers were the speculators or
the pressure groups which kept their own incomes a jump ahead of the trend,
These facts, with which you are all familiar, were the reasons for the President's program of debt management.
Two principles of debt management
Now a few words as to the framework in which debt managemerit operates.
It is not just a mechanical problem, nor is it just a problem of finding markets.
The national debt is woven into every corner of our economic life. What can be
done with the debt depends on the stream of incomes and expenditures and savings
and investrnent. And, in turn, what is done with the debt has a vigorous impact
on the whole financial life of the country and on the welfare of all the people.
264
195 3 REPORT OF THE SECRETARY OF THE TREASURY
Therefore, debt m a n a g e m e n t cannot be conducted in a v a c u u m b u t is related
to t h e country's economic life. And I suggest t h a t there are two great principles
which form the objective and t h e framework for decisions on the debt.
The first is to avoid inflation or deflation. T h a t means to manage the debt
in t h e interest of sound, honest money which retains a fairly stable buying power.
T h a t a p p a r e n t l y simple s t a t e m e n t covers a lot of territory. I t is s h o r t h a n d for
a seething mass of operations by which t h e Treasury p u m p s money out to p a y its
bills—takes money out of the m a r k e t as it collects taxes a n d borrows, dealing
each time with t h o u s a n d s of banks a n d millions of individuals.
If the Treasury has to borrow money too often in t h e course of a year, it has
no elbow room to t u r n around; it is constantly off balance and keeps t h e m a r k e t
off balance. Even worse, a continuous stream of Treasury borrowing leaves no.
space in the m a r k e t for t h e Federal Reserve System to operate, when it needs to
make a policy move t o resist inflation. The Reserve System cannot serve two
masters at the sarne t i m e ; it can't lend necessary aid to Treasury financing and,
a t t h e same time, tighten money t o check inflation in the broad public interest.
The amount, t h e character, t h e placing, a n d t h e timing pf public debt moves
add u p to pressure for inflation or deflation. We want t o avoid both.
The second great principle of debt m a n a g e m e n t is t h a t it should aid and not
impair t h e dynamic growth of t h e economy. I t must not impede the free flow
of funds into business enterprise. I t s policies should encourage saving, for saving
provides t h e capital basic t o econornic growth.
Operations in 1953
I n accordance with the foregoing principles, our problem in 1953 was not just
one of finding out what securities the m a r k e t would t a k e at what rate, b u t it was
also one of making an appraisal of the econoinic situation t o make sure t h a t our
operations would stimulate neither inflation nor deflation. This m e a n t , in fact,
deciding our policy in cooperation with t h e Federal Reserve System, whose d u t y
it is under the law to administer the money supply with these same objectives.
By a n y objective test, the country was at or near the t o p of one of t h e greatest
booms America, had ever known. The production index of the Federal Reserve
Board was making new high peacetime records m o n t h b y m o n t h a n d was 10
percent higher t h a n the year before. The national income measured in inflation
dollars was steadil3^ climbing and was $20 billion larger t h a n a year ago.
There was full a n d overtime employment.
Private b a n k credit was still rising, particularly in the fields of consumer credit
a n d real estate credit, in a way t h a t was giving concern to m a n y careful observers.
H e a v y deficit financing faced us, a n d direct controls were being lifted.
The principal offsetting tendency was weakness in some agricultural prices,
due to large crops a n d diminished exports.
I n the j u d g m e n t of the Federal Reserve System, there were still inflationary
pressures; t h e Reserve Banks raised their discount rates early in t h e year and t h e
System was pursuing a general policy of credit restraint.
W h a t this all added up to was t h a t the Treasury ought to finance its deficit
a n d handle its refunding in such a way as t o avoid an increase in b a n k credit
t h r o u g h our operations. This m e a n t financing with securities t h a t could s t a n d
on their own feet without Federal Reserve support and which would be t a k e n
largely by- n o n b a n k investors.
Accordingly, we m a d e an analysis of t h e availability of funds. AVe were
greatly aided in our s t u d y by a nation-wide committee of the American Bankers
Association, a similar committee of t h e I n v e s t m e n t Bankers Association, and committees representing t h e savings banks, life insurance companies and bv other
groups and individuals.
I t was clear from this analysis t h a t there were two pools of funds which we could
draw upon outside t h e commercial banks. There was a limited a m o u n t of longt e r m money available in the h a n d s of insurance companies, savings banks, p e n sion funds, and other private and institutional investors prepared to buy a properly
priced long-term Government bond. AVe, therefore, offered such a bond in April
a t t h e going m a r k e t yield, which was t h e lowest yield a t which it could be sold—
3^4 percent. T h e bond was substantially oversubscribed but, for two and a half
m o n t h s after its issuance, dipped below p a r due to a variety of causes, including
especially t h e huge volume of new financing by corporations, states a n d municipalities, which p u t in t h e m a r k e t $7 billion of new securities in t h e first six m o n t h s
of t h e year—a larger a m o u n t t h a n ever before. T h e 3J^4 percent bond h a s now
regained a satisfactory position in t h e m a r k e t .
EXHIBITS
265
The only other substantial pool of nonbank funds was in the hands of corporations and other nonbank short-term investors. We provided securities which
would attract that money in the form of Treasury bills and tax anticipation
certificates.
The net result was that we have been able to finance this year's huge deficit
without any net increase in bank holdings of Government securities and, hence,
without any increase in inflationary pressures due to that cause.
From time to time the banks have been most helpful in the initial sale of new
issues both through their own purchases and handling purchases for their customers. Steady absorption of bills and certificates by business and other buyers has,
in turn, reduced bank holdings.
In addition to the financing for new money, a short and modest step has been
made in stretching out maturities in refunding issues by giving holders a choice
between one-year and somewhat longer maturities. We should have liked to
have moved further in this direction, but market conditions did not justify it.
As it is, the few steps we have taken toward spreading out the debt, together
with other pressures for funds and the Federal Reserve policy of mild credit restraint, have caused some jolts and bumps in the market. Some of these have
been unpleasant, particularly for holders of long-term Government bonds, who
have seen the prices of their bonds depreciate in the market. Most holders, including bankers, have taken the price change in good spirit and with understanding, as one of the normal risks of investment.
Fortunately also, the adjustment to freer markets and more realistic rates was
begun several years ago and especially since the accord reached by the Federal
Reserve System and the Treasury in the spring of 1951. For example, the longest
2}^ percent bonds were selhng above 106 in April 1946; they were down to 95}^
in January 1953, dropped below 90 early in June, and are now back up above 93 K.
You can't move from an inflationary flnancing policy to a sound one without
some readjustment. Sound, honest money cannot be achieved without paying
some price, and it is worth the price.
Looldng ahead <^
The steps taken so far in funding the debt hardly show in the totals. With
this huge debt, getting shorter day by day, you have to run fast to keep even.
In 1954, we shall still have to refund a quarter of the debt.
But it is not as bad as it looks.
• First, the budget picture is greatly improved. The newly released figures
discussed yesterday by Secretary Humphrey means that there is real hope that
we may be nearly through with raising cash to finance a deficit. Without new
cash to raise, we and the market will be freer to deal with refunding.
Second, the market has now shown evidence that it has weathered a readjustment to higher yields and is able to stand on its own feet without price props.
Third, experience shows us that, over a period, there are substantial amounts
of funds available for investment in United States Government long-term bonds
at fair rates. Let me name a few sources.
(a) Government trust funds are absorbing $3 billion a year of Government
securities—a large part of which may be considered long-term funding, such as
go into pension and insurance funds.
(b) State and local governments buy about three quarters of a billion a 3^ear
of United States Governments, about half of it for pension funds.
(c) Individuals and other pension and trust funds are steady though not large
buyers.
(d) Insurance companies and savings banks are potential buyers at present
yields.
(e) Individual buyers of savings bonds have this year, been buying more E
and H savings bonds than they are cashing in. We believe, with your cooperation, these sales can be increased substantially.
A steady flow of funds such as these will, over a period of years, absorb substantial amounts of long-term bonds, especially at times when other financing is
lighter.
Lengthening the debt can apply to the banks, too, as well as to nonbank investors. In 1939, before World War II, the average maturity of Governments
held by the banks was nine years. Today, it is three years.
The Government debt would be more orderly; the dangers of inflation and deflation would be reduced; the risk of interfering with the stead3^ flow of funds into
266
1953 REPORT OF THE SECRETARY OF THE TREASURY
productive use would be less, if t h e bank-held Government debt were smaller and
b e t t e r distributed over a period of 3^ears. The experience of the September refunding offers hope t h a t , under suitable conditions, this can be brought about.
Summary
There is every reasori to look forward with confidence to this country's ability
t o p u t its financial house in better order without a n y serious disruption of credit
or m a r k e t s . The stream of the Nation's savings is huge—larger t h a n ever before;
the credit base is secure; the banking systern is sound. AVith a reasonable assurance of sound, honest money of stable bu3ang power there is no better investment
t h a n securities of the United States Government. The banks, insurance cornpanies, a n d other financial institutions, businesses, and individuals have shown
both their capacity and desire to cooperate with their Government-in this effort.
The speed with which the national debt can be redistributed will have t o depend on t h e rate of the flow of savings; the pressure of d e m a n d for funds from
other sources; and t h e state of the money rnarket. You can't force free markets,
a n d the Treasury has no intention of doing so. I t took a long time, a huge war,
a n d a huge defense prograin t o get us where we are. I t will t a k e time t o readjust.
In this process we shah always have as our objective, sound money and economic stability, avoiding either inflation or deflation, and encouraging a n d not
impairing the steady, forward growth of the country's activity.
I t is our belief t h a t a sound debt policy will itself make for greater confidence,
stimulate enterprise, and contribute to t h e well-being of all t h e people.
AA^e can do no better at this time t h a n to recall the words of George AA^ashington
in his Farwell Address:
"As a very i m p o r t a n t source of strength a n d securit3^, cherish public credit.
One m e t h o d of preserving it is to use it as sparingl37 as possible; avoiding occasions
of expense by cultivating peace, but remembering also t h a t timely disbursements
t o prepare for danger frequently prevent much, greater disbursements to repel it;
avoiding likewise t h e accumulation of debt, not only by shunning occasions of
expense, b u t by vigorous exertions in time of peace to discharge t h e debts which
unavoidable wars m a y have occasioned, not ungenerously throwing upon posterity
the burden which we'ourselves ought to bear."
Exhibit 47.—Address by Deputy to the Secretary Burgess before the National
Foreign T r a d e Convention, New York City, November 10, 1953
T r a d e changes and monetary policy
After I h a d accepted t h e invitation to appear here t o d a y I decided, with some
trepidatiori, t o read a stateinent which I made to this same organization just 15
years ago this month. You can understand my trepidation. I n t h e decade and
a half t h a t has elapsed since t h a t time man3^ things have happened. Great
changes have come over t h e world.
But I found the 1938 s t a t e m e n t timely for it dealt with the two major economic
problems of the world today, unstable currencies and trade barriers. These two
were t h e n a n d are now t h e two great economic obstacles to progress.
T r a d e barriers
As t o t r a d e barriers, we were faced in 1938 with t h e prospect t h a t new techniques of restricting t r a d e — t h e Hitlerian barter deals and quota systems—might
become p e r m a n e n t a n d dominate the world trading picture. I t seemd possible
t h a t all semblance of a single Avorld m a r k e t might disappear, and t h a t t h e individual t r a d e r might be reduced t o case-by-case a t t e m p t s to place an order here and
an order there, with no prospect of continuity or s t a b i h t y of policy. Today, in
1953, t h e q u o t a a n d the barter deal are still with us, and are widespread. I n one
large a n d unfortunate sector of the world these devices and m a n y more are,
furthermore, used as instruments of political aggression.
We have, however, made progress since 1938, in spite of war. First, most of
t h e i m p o r t a n t nations of t h e free world have declared their intention to do away
with quotas a n d barter deals a n d similar administrative restraints upon t r a d e a t
t h e earliest possible moment. We should not underestimate this development.
Those of you who were actively engaged in world t r a d e before t h e war will recall
EXHIBITS
267
that the nations which had been foremost in developing these techniques were
declaring them to be "the way of the future" and many other nations,
resorting to these devices in self-defense, were coming to think that they would
necessarily become the cornerstones of world trading practices. Now, at least,
we in the free world abjure them in principle.
The second reason for hope is that our Trade Agreements Program, which I
cited as a favorable development in 1938, has continued to chip away at unnecessary trade restrictions here and abroad. The mutual give and take of tariff
negotiations under this program has further reduced the barriers which hamper
foreign trade. Our exporters have benefited by the reduction of tariff's abroad.
Foreign exporters have benefited by reduction of tariffs here. Consumers in
both areas have benefited through lower costs.
The general public, here or overseas, does not fully appreciate the extent to
which the United States has played its part in this cooperative effort. The facts
are shown in a recent short study on this subject made by the Tariff Commission
in Washington. The Coinmission has found that during the period of the Trade
Agreements Program duties have been reduced on commodities accounting for
90 percent of the total value of our dutiable imports. Rates have been reduced
on more than 3,000 items. If the Trade Agreements Program had not been in
effect the study estimates that our tariffs in 1952 would have amounted to 10
percent of the value of our total imports and more than 24 percent of the value
of our dutiable irnports. With the Trade Agreements Program in effect, however,
the 1952 rates were in fact only half as high, 5 percent of total imports and 12
percent of dutiable imports. In 1952 more than one-half our imports were subject to duties of 10 percent or less; without the Trade Agreements Program the
figure would have been one-third of our total imports. In 1952 only 6 percent of
our imports carried duties of more than 30 percent—without the Trade Agreements Program the figure would have been 25 percent of our imports. This has
been done gradually and realistically, piece-by-piece, without any serious damage
to American business, but on the contrary to its benefit.
I know that our friends in foreign countries will say that the United States
still has excessive tariffs; particularly on certain types of manufactured goods.
We should always be ready to review the facts carefully. But at the same time,
it is only fair to look at the record and to realize, from figures such as those cited,
that the United States has taken a leading part in trying to free the world from
unnecessary trade restrictions.
The third reason for hope for the future lies in the openminded approach to
the trade problem which we are undertaking under the leadership of the President.
In 1938 I pointed out that in the circumstances then existing, typified by the great
strength of the United States, the most favorable developnient for the United
States would be one "in which, with an expanding total tra,de, our imports of
foreign goods would gain relative to our exports." This statement is, if anything,
more forcefully applicable to our position in 1953 than it was in 1938. Our
relative economic strength has increased tremendously. What is called for,
I believe, is a complete new look at our trade and investment policy to ascertain
how we can best conduct ourselves in the light of our preponderant economic
strength. This is precisely what Presiderit Eisenhower has set about to do. The
Commission on Foreign Economic Policy, whose membership is drawn from the
Congress and" the general public, and which has the benefit of the leadership of
Mr. Clarence Randall, is now engaged in an intensive review of this very subject.
Trade barriers are still with us and they present complex problems. But we
have rejected in principle the most arbitrary kinds of trade restrictions; we
are continuing to chip away at the barriers through our Trade Agreements Program; and we are undertaking a dispassionate and objective study of the kind of
world trade policy which best fits the position of our country.
Currency stability
Now as to unstable currencies. When I appeared before this group in 1938 I
observed that we were perhaps finding our way out of the morass of competitive
devaluations which was the curse of the depression years. There is as much
reason and I hope better reason to be optimistic in 1953. Fifteen years ago I
was encouraged by two things. The first was the fact that the United States
Treasury had maintained the dollar'at a fixed gold value for nearly 5 years. The
inaintenance of this stable value had unquestionably lessened the confusion and
disorder among currencies and facilitated trade. The power in the law for the
adrninistration to change the value of the dollar has now expired and the dollar
268
1953 REPORT OF THE SECRETARY OF THE TREASURY
is more firmly committed to the present gold value. That is good for monetary
stability through the world. It is good for honest money.
The second thing which gave me encouragement in 1938 was the Tripartite
Agreement, which was designed to place a check on competitive devaluations,
avoid arbitrary and erratic exchange movements, and promote a fuller mutual
understanding among the participants. In 1953 we have improved considerably
upon that mechanism. Fifty-five countries of the world are now joined together
in the Monetary Fund with the stated purpose of avoiding competitive devaluations and erratic exchange movements. This organization exerts a constant
beneficent pressure and stimulus towards honest international money.
Unstable and regimented currencies still remain, however, a foremost problem
for the international trader. In the period since the war this problem of unstable
currencies has in some respects been exactly the opposite of that which troubled us
in the 1930's. The problem which faces the Arnerican trader today is not so
much the prospect of competitive devaluations, but the problem of inflation and
overvalued foreign currencies, which lead to balance of payments difficulties and
force countries to take arbitrary and sudden steps, in both the trade and exchange
field, to shut out the goods of free currency countries.
As I say, these problems remain. Internal inflation and the related overstimulation of demand have created exchange difficulties, sometimes called "the dollar
shortage," which still persist in many countries of the world. Whereas competitive
devaluation was the curse of the 1930's, inflation has been the curse of the postwar period.
But here again there is reason for hope. In the first place there is today a
much more widespread understanding, not only on the part of those in positions of
responsibility, but also among the general public, that unsound internal monetary
practices lead to foreign exchange difficulties. There is a rapidly spreading recognition of the fact that sound money at home leads to a strong currency abroad, and
to a stable and prosperous international trade. Country after country has demonstrated at one time or another that a sound budget and prudent control of the
rnoney supply and credit facilities, with realistic interest rates, lead rapidly and
directly to an expanding international trade. It is an important lesson to have
learned.
My second reason for optimism is that in the past year the vexing problems of
trade imbalance and exchange difficulties have eased considerably. Europe as a
whole, the keystone of the free world economy outside of this Continent, has
attained a measure of stability which has permitted it to balance its dollar accounts
and even to build up reserves considerably, this in the face of increased expenditures for defense. It would not be prudent for us to bank too much upon this
gain, for two reasons: In the first place, some of the financial gains of the recent
past have resulted frorn those very restrictions on the import of dollar goods
which we seek to eliminate. Secondly, we all know that similar gains in the past
have been rapidly dissipated by a relaxation of efforts to withstand internal inflation. We are well justified, however, in taking some encouragement from improvement which has occurred. A part of it, at least, is firmly based on sound monetary
and fiscal practices and irnproved competitive ability.
In summary, the major countries of the free world are pledged to follow orderly
international exchange practices; throughout the free world, including the United
States, there has appeared a vigorous trend toward halting the creeping inflation
which followed war inflation and trade balances have shown marked improvement. We may hope that these favorable developments can be continued and
strengthened.
Problems ahead
Now as to the prospects for the immediate future. I will touch upon three
problems, which I should like to put in the form of questions which have to be
answered.
The first question is this: Are our friends overseas justified in fearing a recession
in this country which will disrupt their efforts to maintain a healthy level of
exports?
I know that you. have all seen evidences of this fear. Countries which believe
that their exports may suddenly decline because of a recession in this country are
inhibited from taking the courageous steps which would be beneficial both to them
and to us. For this reason, a continuing high and reasonably stable level of
economic activity in the United States is perhaps the best contribution we can
make tp the world economy.
EXHIBITS
269
Having said that, let me make one thing clear. It is not, and it never can be,
the policy of this country to inflate the American economy as an offset to inflation abroad. To put it another way, there is no sound way of assuring a large
American demand for foreign goods regardless of their price. We appear to
be entering a period of increasingly competitive world trade in which each country's
power to compete will rest on its industrial costs and the soundness or unsoundness
of its internal fiscal and monetary policies. We are committed to a policy of
sound money in the United States, we will not be inflexible in the conduct of our
monetary and economic affairs, but we seek to avoid either a crippling inflation
or an equally crippling deflation in this country. We recognize that our very
size in the economic picture makes even a mild recession here a matter of concern
to foreign countries, and we are resolved to do our best to maintain a healthy,
stable, and growing economy here since we know that it benefits us as much as it
does our foreign friends. In this process there will be periods of tight money as
well as easy money and even at the best some fiuctuations in. business volume.
They are the earmarks of a dynamic economy.
My second question in this: Are the members of this group, and the American
public as a whole, ready to accept a balancing of the international accounts of the
United States?
We have only two alternatives. We can maintain a high level of exports by
continuing to pour out vast sums of the taxpayers' money in the form of grants
and credits to foreign countries. This policy leads to additional burdens upon the
Treasury, to unbalanced budgets, to the inflationary forces which ultimately
will cripple our economy. But the alternative, if we are to continue to expand
our exports, is to accept the goods and services which foreign countries, in free
and fair competition, are able to sell in our market and competing markets abroad.
I am sure that this is a question which will be of major concern.to the Randall
Commission, and I shall not attempt here to anticipate the findings of that group.
My third and last question, and I think it presents a real challenge, is this:
Is the American foreign trader ready for convertibility of foreign currencies?
Throughout the postwar period the reestablishment of conditions of convertibility and nondiscriminatory multilateral trade has been a major aim of theUnited
States Government and it has continuously had the support, in those endeavors,
of groups like the National Foreign Trade Couricil. While it would be rash to
make any predictions into the future, it seems apparent that today our foreign
friends are closer to achieving that convertibility than at any time since the end of
the war. I do not know when and how the return to convertibility will be achieved.
It will certainly not come from unilateral action taken only by the United States.
More specifically, it would not be realistic to expect that this goal can be achieved
by reduction of United States tariffs alone. The complete elimination of each and
every American tariff would not be sufficient to launch the world on a new era of
stable and lasting convertibility.
As I have said earlier, the Randall Commission is studying this general problem
of our tariff barriers. In addition to whatever we may do about our tariffs there
are other developments which may assist our foreign friends in stabilizing and
freeing their currencies. An expanding American economy will require more raw
materials and foodstuffs from abroad. The increase of American tourist expenditures, already substantial, may be expected to continue. AVe will continue to
buy foreign gold as it is offered to us, and gold production is increasing overseas.
All of these things should, through time, strengthen the position of friendly
nations overseas.
But the crucial steps toward the goal of convertibility will have to be taken
by those countries themselves. Through increases of efficiency, through a concentrated effort to expand exports of goods and services, and more importantly
by a constant vigilance with regard to internal financial stability, our foreign
friends can improve their competitive position in world trade, and also attract
an increasing amount of private American investment.
It is important for American traders to recognize, as we enter into a period when
convertibility becomes more possible, that the word "convertibility" is only a sort
of shorthand phrase which is intended to depict a certain kind of world. It means
a world in which foreign countries have succeeded in balancing their international
accounts, and have every prospect of keeping them in balance. It means a world
in which a foreign country's goods can compete with American goods in its own
domestic market, in the United States market, and in third markets throughout
the world. Convertibility rneans, therefore, a situation in which the American
exporter faces a much keener type of competition than he has faced thus far in
^^
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270
1953 REPORT OF THE SECRETARY OF THE TREASURY
t h e postwar period. I t is t h e opposite of t h e situation of recent years, when an
unlimited d e m a n d for American goods was financed, in large part, by American
dollars t a k e n from American taxpayers. Is t h e American foreign t r a d e r ready
for this kind of a world?
T h e r e seems to me reason for confidence. When our friends overseas become
a b l e — t h r o u g h increases in productivity, through more careful attention t o costs
and, more importantly, through sound monetary and fiscal practices—to balance
t h e i r international accounts a n d overcome their foreign exchange problems, I do
not believe t h a t t h e American exporter will be driven from world m a r k e t s . With
our enterprise a n d our productivity a n d our marketing a b i h t y Americans will
win a fair share of any m a r k e t which is open in the m a n n e r which convertibihty
implies.
T h e other side of t h e shield is t h a t with good convertible money through t h e
free world, m a r k e t s now nearly closed will be opened t o American goods, t h e t o t a l
volume of t r a d e will be stimulated, a n d our m u t u a l building up of greater economic
strerigth will increase our power to resist aggression.
Exhibit 48.—Statement by Deputy to the Secretary Burgess before the Senate
Banking Committee, M a y 20, 1953, on loans to small business
1. Under present conditions, there should be some single governmental agency
authorized to m a k e loans to small business, acting as a lender of last resort a n d
as a kind of safety valve for t h e review of exceptional cases.
2. This agency should not compete with other lenders, b u t should support and
. supplement t h e m .
3. Loans by this agency should avoid subsidizing marginal concerns which might
offer unfair a n d dangerous competition to other business.
4. This agency should use t h e m i n i m u m a m o u n t of Government money, a n d
t o t h a t end should, as far as possible, extend credit in t h e form of guarantees to
other lenders, a n d should use t h e available credit machinery of t h e b a n k s a n d t h e
Federal Reserve Banks.
5. T h e Reconstruction Finance Corporation should be terminated.
6. T h e lending policy of the Government's lending agencies should be consistent
with national credit a n d fiscal policies.
7. As an aid in accomplishing these objectives, loans by t h e agency should be
under t h e general supervision of t h e Loan Policy Board, of which t h e Secretaries
of t h e Treasury a n d Commerce should be niembers.
Organization and Procedure
Exhibit 49.—Treasury D e p a r t m e n t orders relating to organization and procedure
No.
15,
REVISED
MAY
14,
1953,
SUPERVISION
GUARD
OF E N G R A V I N G AND
PRINTING
FORCE
By virtue of t h e authority vested in me as Secretary of t h e Treasury by Reorganization Plan N o . 26 of 1950, there is hereby transferred from t h e Chief of the
United States Secret Service t o t h e Director of t h e Bureau of Engraving a n d
Printing responsibility for t h e supervision of and jurisdiction over t h e guard force
assigned t o protect t h e Bureau of Engraving a n d Printing a n d its annex, including
t h e guard force assigned t o t h e Armored Truck Division. T h e provisions of
Treasury D e p a r t m e n t Order N o . 15, dated April 30, 1937, are modified
accordingly.
Although t h e Chief of t h e United States Secret Service is relieved of his responsibility for t h e supervision of the guard force of t h e Bureau of Engraving a n d
Printing, he is directed to institute a system for t h e annual inspection by the
Secret Service of t h e adequacy of t h e Bureau of Engraving a n d Printing guard
force. T h e annual inspection shall also include t h e guard forces under t h e supervision of t h e Director of t h e Bureau of t h e Mint. T h e results of these inspections
shall be reported to me through t h e Assistant Secretary of t h e Treasury responsible
for t h e supervision of t h e United States Secret Service.
This order shall become effective July 1, 1953.
H. CHAPMAN ROSE,
Acting Secretary of the Treasury.
EXHIBITS
No.
82, REVISED AUGUST 11, 1952,
271
RULES TO GOVERN LOYALTY PROCEDURES ^
Rule 1. Basis and scope of rules.—(a) The regulations and directives duly promulgated by and under the authority of the Loyalty Review Board, Civil Service
Commission, in accord with the provisions of Executive Order 9835, as amended,
set forth in Title 5, Chapter II, of the Code of Federal Regulations, constitute the
basic and controlling regulations to govern all loyalty adjudication procedures in
the Treasury Department. The following statement of procedures is therefore
promulgated in accordance therewith.
(b) These rules shall govern the adjudication of each loyalty case involving an
incumbent or excepted employee (hereinafter referred to as '.'employee") of the
Treasury Department, or an excepted applicant for employment in the Treasury
Department as these terms are defined below. Loyalty cases of applicants for and
appointees to positions in the competitive service as these terms are defined below
are under the jurisdiction of Regional Loyalty Boards of the Civil Service
Comrnission.
(c) The following terms shall have the following meanings:
"Applicant"—a person who has applied for a position in the competitive
service but has not entered on duty.
"Appointee"—a person who received a conditional appointment (see Section
2.112 of Civil Service Commission regulations) in the competitive service, on or
after October 1, 1947, in connection with which appointment the condition has not
expired or been removed by Commission action. This category includes persons
who receive competitive appointments by inter-Agency transfer or by conversion.
"Excepted applicant"—a perspn who has applied for a position excepted from
the competitive service but has not entered on duty.
"Excepted employee"—a person appointed at any time to a position excepted
from the competitive service.
"Incumbent employee"—(1) a person who was appointed in the competitive
service prior to October 1, 1947, and who has not received, in addition, a conditional appointment on or after October 1, 1947 (see definition of appointee above);
and (2) a person in connection with whose conditional appointment (see Section
2.112 of Civil Service Commission regulations) on or after October 1, 1947, the
condition has expired or been removed by Commission action.
"Preference eligible"—an employee entitled to the benefits of Section 14 of
the Veterans Preference Act of 1944.
"Complete file"—all reports of investigation or other inquiry, all charges and
interrogatories, all transcripts of hearings and exhibits, all memoranda analyzing
the evidence or setting forth conclusions, findings, recommendations, determinations, decisions, or other actions in cases and all affidavits, supporting documents,
correspondence or memoranda in connection with the investigation, determination,
decision, and closing of any case or cases.
Rule 2. Establishment of Board.—A Loyalty Board is hereby established in the
Treasury Department, pursuant to the provisions of Executive Order 9835, as
amended. It shall be the duty of the Board to adjudicate loyalty cases involving
incumbent and excepted employees and excepted applicants, and to otherwise
assist the Secretary in fulfilling his responsibilities with respect to employee
loyalty under provisions of Executive Order 9835, as amended; Section 9A of the
Hatch Act, 53 Stat. 1148 (5 U. S. C. 118i); the several appropriation acts relating
to the Treasury Department; civil service laws, regulations, and directives; and
any other laws, orders, regulations, and directives with respect to employee
loyalty hereafter enacted or promulgated.
Rule 3. Composition of Board; meeting place; procedures.—(a) The Treasury
Department Loyalty Board shall consist of three members appointed by the
Secretary of the Treasury.
(6) Except as provided in (c), below, the Loyalt3^ Board shall be comppsed of
the Director of Personnel, an attorney appointed from the Office of the General
Counsel, and one other rnember. The Secretary will designate an alternate for
each member who may serve in his principal's place when necessary, and will
designate a secretary for the Loyalty Board. The Director of Persormel or his
alternate shall serve as chairman.
(c) AVhenever he deems it necessary or expedient, the Secretary will designate
the menibership of the Board and alternates from among any other emplo3^ees of
1 This order supersedes Treasury Department Order No. 82, Revised March 19, 1948.
272
19 53 REPORT OF THE SECRETARY OF THE TREASURY
the Treasury Department, and he will designate one of the members to act as
chairman.
{d) The Board will meet in Washington, D. C , or, when necessary or expedient, at such other place or places as the Board may select.
(e) Subject to the provisions of these rules and other applicable laws, orders,
regulations, and directives, the Board is authorized to establish its own procedures.
Determinations of the Board shall be by majority vote.
Rule 4. Standard; activities and associations.—(a) The standard for the refusal
of employment or the removal from employment in the Treasury Department on
grounds relating to loyalty shall be the standard prescribed by Executive Order
9835, as aimended by Executive Order 10241, which is that, on all the evidence,
there is a reasonable doubt as to the loyalty of the person involveid to the Government of the United States. The decision shall be reached after consideration of
the complete file, arguments, briefs, and testimony presented.
(6) As specified in Executive Order 9835, as amended, activities and associations
of an employee which may be considered in connection with the determination of
reasonable doubt may include one or more of the following:
1. Sabotage, espionage or attempts or preparations therefor, or knowingly
associating with spies or saboteurs;
2. Treasori or^ sedition or advocacy thereof;
3. Advocacy of revolution or force or violence to alter the constitutional
form of government of the United States;
4. Intentional, unauthorized disclosure to any person, under circurnstances
which may indicate disloyalty to the United States, of documents or information
of a confidential or nonpublic cnaracter obtained by the person making the disclosure as a result of his employment by the Government of the United States,
or prior to his employment;
5. Performing or attempting to perform his duties, or otherwise acting, so as
to serve the interests* of another government in preference to the interests of the
United States;
6. Membership in, affiliation with or sympathetic association with any foreign
or domestic organization, association, movement, group or combination of persons, designated by the Attorney General as totalitarian, fascist, communist, or
subversive, or as having adopted a policy of advocating or approving the commission of acts of force or violence to deny other persons their rights under the
Constitution of the United States, or as seeking to alter the form of government
of the United States by unconstitutional means.
(c) Present membership in any of the organizations designated by the Attorney
General as being within the scope of Section 9A of the Hatch Act or as seeking to
alter the form of government of the United States by unconstitutional means,
or present advocacy by an individual of the overthrow of the Government of the
United States by force or violence, makes mandatory the removal of the employee,
or the refusal of ernployment to the applicant.
(d) Activity of an alleged disloyal nature on the part of an individual that
occurs within or in connection with an organization not on the Attorney General's
list, as well as any alleged disloyal activity on the part of an individual not connected with any organization, may be given consideration in the determination
made by the Board with respect to the loyalty of any employee.
Rule 5. Initiation of action.—(a) All cases in which a report of a loyalty investigation is referred to the Department for consideration pursuant to Executive
Order 9835, as amended, shall be referred to the Treasury Department Loyalty
Board, which shall take action on every case so referred.
(6) If the head of a bureau, division, or office receives derogatory information
with respect to the loyalty of any employee, he shall advise the Director of Personnel of that fact and shall transmit to him the derogatory information. The
Director of Personnel shall refer the information to the Loyalty Board, which
may request the FBI to investigate if appropriate.
Rule 6. Initial consideration of case.—(a) The Board shall consider the reports
of investigation in light of the standard set forth in .Rule 4 (a), above, and shall
determine whether such reports warrant a finding clearly favorable to the individual or appear to call for further processing of the case with a view to possible
removal action.
(6) The Board may request further investigation in any case if such action
appears to be necessary. In making a request for further investigation, the Board
shall, in so far as practicable, be specific as to the additional information required.
(c) If the Board deems it advisable or necessary to obtain information or clarifi-
EXHIBITS
273
cation of certain matters from an individual whose case is before the Board prior
to reaching a conclusion as to whether the case should be closed favorably, whether
charges should be made, or further investigation should be requested from the
Federal Bureau of Investigation, the individual may be given the opportunit3^, if
he so desires, to answer questions by written interrogatories issued by the Board,
but not otherwise.
Rule 7. Determination without hearing.—If the Board reaches a clearly favorable
conclusion after its consideration of a case as provided in Rule 6, it shall make its
determination as provided in Rule 14 and notify the Director of Personnel thereof.
Rule 8. Notice of proposed removal action.—In all cases in which the evidence
indicates that removal action may be warranted on the grounds that there is
reasonable doubt as to the loyalty of the employee to the United States, the Board
shall serve the employee by registered mail with a ^Titten notice stating the charges
against him in factual detail, to the extent permitted by security considerations,
and advising him of proposed removal action. The notice shall have attached
triereto a copy of these rules, shall specifically cite rules 10, 11, 12 (c) and 12 (d),
and shall state the authority or authorrties (Executive Order 9835, as amended,
and any applicable statutes, such as Section 9A of the LCatch Act and/or Section
14 of the Veteran's Preference Act of 1944) under which the notice is being sent,
the work and pay status in which the employee will be carried during the perioci
of the notice and until the determination of the Board, and, unless there is reasonable cause to believe the employee to be guilty of a crime for which a sentence of
imprisonment can be imposed, the fact that the proposed removal action will not
become effective in less than 30 full calendar days (excluding the day of receipt of
notice) from the date of receipt by the employee of the notice as evidenced by the
postal return receipt.
Rule 9. Action in cases of excepted applicants.—In all cases of excepted applicants in which the evidence indicates that refusal of employment may be warranted, the Board shall serve the applicant with a written interrogatory stating
tne nature of the evidence against him in factual detail, setting forth with particularity the facts and circumstances involved, so far as security considerations
permit. The letter accorapanying the interrogatory shall have attaclied thereto
a copy of these rules, shall specifically cite rules 10, 11, 12 (c) and 12 {d) and shall
state the authority or authorities (Executive Order 9835, as amended, and any
applicable statutes) under which the interrogatory is being sent. After giving
the excepted applicant the foregoing interrogatory, the Board shall proceed as
hereinafter provided in the case of an employee served with a statement of charges.
Rule 10. Right of employee to reply.—The employee shall have the right to
reply to the charges in writing, under oath or affirmation, within 10 days from
the date the statement of charges is received by him as evidenced by the postal
return receipt.
Rule 11. Right of employee to a hearing.—(a) An employee against whom charges
have been preferred shall have the right to a hearing before the Loyalty Board,
provided he notifies the Chairman of the Board of nis desire for a hearing within
the time allowed by tnese rules for a reply.
(6) If the individual does not reply within the time allowed by these rules, the
Board shall consider the case on the complete file, make its determination as provided in rule 14, and notify the appropriate authority so that proper action may
be taken. However, no inference or presumptiori should be assumed by the Board
because of the failure or refusal of an individual to reply to an interrogatory or
notice of charges. Despite his failure or refusal to reply, "the Board shall furnish
the individual a notice of the time and place when the Board proposes to consider
his case, in order that the individual and his counsel or representative may appear
if he so desires.
(c) If the individual does not reply but if he or his counsel or representative
requests a hearing before the Board, he shall be granted such.
{d) If the individual answers in writing but does not request a hearing, the
Board shall then consider the case on the complete file (including such answer),
make its determination as provided in rule 14, and notify the appropriate authority
so that proper action may be taken. Before making the determination, however,
a Board in its discretion may, if a hearing is deemed necessary, request the individual to appear for a hearing, but the Board cannot require hiin to appear, and
no inference or presumption should be assumed by the Board because of the failure
or refusal of an individual to appear for a hearing.
(e) In any case in which an employee or his representative requests a hearing
within the time allowed by these rules, the chairman of the Board shall fix a place
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19
274
1953 REPORT OF THE SECRETARY OF THE TREASURY
and time for the hearing, which time shall give the employee reasonable opportunity to prepare for the hearing and in any event shall be not less than 15 days
from the day on which the employee is notified, as evidenced by the postal return
receipt, of the time and place of the hearing. The notice of hearing shall inform
the employee that any and all evidence which he desires to submit in the matter
must be submitted to the Loyalty Board at the hearing, and that additional matter may not, as of right, be introduced on appeal.
Rule 12. Conduct of hearings.—(a) Hearings shall be held at the time and place
specified by the Board in accordance with these rules, and shall be private. Attendance shall be limited to representatives of the Department who are directly
connected with the adjudication of the case, representatives of the Loyalty Review Board, and the employee, his counsel or representative, and the witness who
is testifying. The three members of the Board shall be present at all hearings.
(6) The General Counsel shall designate an attorney, who shall be known as
the Hearing Advocate, to assist in the preparation of the charges and in the presentation of the case to the Board.
(c) An employee who requests a hearing in accordance with these rules may
personally appear with or without counsel or a representative of his choice, or his
case may be presented by his counsel or representative: Provided, however, Thsit
the attorney or representative shall not be an attorney or employee of the immediate office of the General Counsel of the Treasury.
(d) An employee who requests a hearing shall have the right to appear at the
hearing with witnesses and present evidence and to cross-examine witnesses called
by the Board, or for the Board by the Hearing Advocate.
(e) The hearing shall begin with the reading or introduction of the letter of
charges and the interrogatory, if any, and the employee will thereupon be informed
of his right to participate in trie hearing, be represented by counsel or other representative of. his own choosing, and present witnesses in his behalf. A statement
shall also be made that the transcript of hearing will not include all rnaterial in the
file of the case, in that it will not include reports of investigation conducted by the
Federal Bureau of Investigation, which are confidential; that the transcript will
not contain information concerning the identity of confidential informants or information that will reveal the source of confidential evidence; and that transcript
will contain only the evidence in the letter of charges, if any, and the evidence
actually taken at the hearing.
(/) Both the Government and the applicant or employee may introduce such
evidence as the Board may deem proper in the particular case. The Board shall
take into consideration the fact that the applicant or employee may have been
handicapped in his defense by the nondisclosure to him of confidential information
or by the lack of opportunity to cross-examine persons constituting such sources
of information.
(g) Testimony before the Board shall be under oath or affirmation.
(h) The Board shall keep a written record of its proceedings, including a transcript of the testimony. The employee personally or by his counsel or representative shall be entitled to inspect the transcript and, upon request, shall be
furnished with a copy of the transcript. Reporting of testimony given at hearings
shall be done by a person or persons designated by the Board. No other transcripts shall be made.
Rule 13. Action hy Board.—(a) Upon completion of a hearing, or after the time
allowed by these rules to request a hearing has elapsed and the Board has decided
not to hold a hearing, the Board shall in closed session, with only members or their
alternates present, consider the case on the basis of the complete file including the
answer to the charges and the hearing (if one has been held), and shall make its
determination in the case as provided in rule 14, and shall notify the Director of
Personnel so that appropriate action may be taken.
(b) If the determination by the Board is favorable to the employee, the employee
shall be so informed in writing and the case shall be closed.
(c) If the determination by the Board is that on all the evidence there is a
reasonable doubt as to the loyalty of the employee to the Government of the
United States, the Chairman of the Board shall serve the employee by registered
mail with a written notice to that effect. The notice shall inform the employee
that he has a right to appeal the Board's action to the Secretary, as provided in rule
15 within 10 calendar days from the receipt of notice of the Board's determination
as evidenced by the postal return receipt. Immediate steps may be taken to
suspend the employee without pay pending appeal to the Secretary, as provided
EXHIBITS
275
in this rule, and appeal to the Loyalty Review Board, Civil Service Commission,
as provided in rule 16.
(d) Immediate steps will be taken to remove an employee who does not appeal
within the specified time from a determination by the Board that there is a
reasonable doubt as to his loy^alty to the Government of the United States,
Rule 14. Records of determination.—(a) The determination by the Board shall
be made in writing and shall be signed by the members of the Board. It shall
state rnerely the action taken and shall be made a permanent part of the file in
every case. In making its determination in every unfavorable case, the Board
shall state in writing whether or not the case falls within the purview of Section
9A of the Hatch Act and the applicable appropriation act.
(b) The Board shall prepare a supplementary statement givirig the reasons for
its decision, which shall be made a part of the confidential file. This statement
shall not be a part of the written decision in the case and shall in no instance be
furnished to the employee or his counsel or representative,
(c) In any notice of decision referred to in rule 7 where an interrogatory has
been sent, in rule 11, in subsections (b) and (c) of rule 13, or in subsection (6) of
rule 16, where notice has not been first received from the Loyalty Review Board
that the case has been duly post-audited and the determination found to be in
accordance with the directives of the Lo3'^alty Review Board, the notice of decision
to the individual shall advise him that the decision of the Loyalty- Board is subject
to post-audit by the Loyalty Review Board on the record transmitted with respect
to matters of procedure and also to the right of the Loyalty Review Board to
institute a review of the case on the merits. The individual shall also be advised
that in event of a review of the case on its merits, he will be given a due opportunity
to be heard.
Rule 15. Appeal to the Secretary.—(a) An employee who files an appeal with the
Secretary as provided in rule 13 (c) shall have the right, if requested in the appeal,
to appear before the Secretary (or other officer of the Department designated by
the Secretary to hear and consider the appeal) with or without counsel or a representative and to be heard.
(6) The Secretary may in any case designate another officer of the Department,
other than one who served on the Loyalty Board which considered the case, to
hear and consider an appeal in place of the Secretary.
(c) If an appellant requests a hearing, the Secretary (or other officer designated
by the Secretary to hear and consider the appeal) will set a time and place for
the hearing and notify the appellant by registered mail, securing a postal return
receipt.
(d) At the hearing on appeal, oral and written arguments may be submitted
to the Secretary (or other officer designated by the Secretary) by or on behalf of
the appellant and by the Hearing Advocate. No evidence which was not presented to the Loyalty Board may, as of right, be introduced on appeal to the
Secretary, and on such appeals additional evidence will be received only in exceptional circumstances and in the discretion of the Secretary (or other officer designated by the Secretary).
(e) Subject to the provisions of these rules and other applicable laws, orders,
regulations, and directives, the Secretary (or other officer designated by him)
may fix the scope and extent of the hearing on appeal.
(/) A written record shall be kept of the proceedings on appeal, including a
transcript of the testimony of any witnesses, and shall be made a part of the file
of the case.
(gf) In case an appeal is heard or considered by an officer other than the Secretary, such officer shall, after considering the appeal and reviewing the complete
file of the case, transmit the complete file to the Secretary with his written comments and recommendations.
Rule 16. Action by Secretary and Loyalty Review Board.—(a) After considering
an appeal and reviewing the complete file of the case, or after receiving the complete file of the case following consideration of an appeal by another officer designated by him, the Secretary will decide whether the decision of the Loyalty Board
should be sustained or reversed.
(6) If the decision of the Secretary is favorable to the employee, the Secretary
will so notify the employee by registered mail, securing a postal return receipt,
and the case shall be closed.
(c) If the decision of the Secretary is unfavorable to the employee, the Secretary
will notify the employee thereof by registered mail, securing apostal return receipt.
This notice shall also inform the employee that he may file an appeal in writing
276
1953 REPORT OF THE SECRETARY OF THE TREASURY
with the Loyalty Review Board, Civil Service Commission, within 20 calendar
days after receipt of the notice of the decision of the Secretar3^ as evidenced by
the postal return receipt, and of the procedure to be followed in making such
appeal. In the case of persons living outside the continental limits of the United
States, 30 calendar days will be allowed for an appeal to the Loyalty Review
Board.
(d) If within the time allowed by these rules the employee appeals to the
Loyalty Review Board, Civil Service Commission, he shall continue to be suspended but no further action looking toward removal shall be taken until the
recommendations of the Loyalty Review Board have been considered by the
Secretary. If within the time allowed by these rules the employee does not
appeal to the Loyalty Review Board, Civil Service Commission, he shall be removed in accordance with the Secretary's decision.
(e) If an employee sends notice of an appeal to the Loyalty Review Board,
Civil Service Commission, he shall forthwith give notice thereof to the Secretary
of the Treasury.
(/) After consideration of the findings and recommendations of the Loyalty
Review Board of the Civil Service Commission with respect to the employee's
appeal to the Loyalty Review Board, the Secretary will direct that the employee
be removed or that he be restored to duty.
JOHN W . SNYDER,
Secretary of ihe Treasury.
No. 107, REVISED OCTOBER 15, 1952, AUTHORITY TO AFFIX TREASURY SEAL
By virtue of the authority vested in me as Secretary of the Treasury, including
the authority conferred by Section 161 of the Revised Statutes, it is hereby ordered
that:
1. Except as provided for in paragraph 2, the following officers are authorized
to affix the Seal of the Treasury Department in the authentication of originals and
copies of books, records, papers, writings, and documents of the Department, for
all purposes, including the purposes authorized by 28 U. S. C. 1733 (6):
(a) Iri the Office of Administrative Services:
(1) Director of Administrative Services
(2) Chief, Division of Office Services
(3) Records Administration Officer, Division of Office Services
(5) In the Bureau of Internal Revenue:
(1) Commissioner of Internal Revenue
(2) Head, and Assistant Head, Audit Division
(3) Head, and Assistant Head, Audit Services Branch, Audit Division
(4) Chief, Returns Inspection and Bankruptcy Section, Audit Services
Branch, Audit Division
2. Copies of documents which are to be published in the Federal Register may
be certified only by the officers named in paragraph 1 (a) of this order.
3. The Director of Administrative Services and the Commissioner of Internal
Revenue are authorized to retain custody of the dies of the Treasury Seal now in
their possession.
JOHN W . SNYDER,
Secretary of ihe Treasury.
No. 126, REVISED AUGUST 29, 1952, DESIGNATION OF ACTING GENERAL COUNSEL
In the absence of the General Counsel for the Treasury Department, John K.
Carlock,. Assistant General Counsel, is designated to serve as Acting General
Counsel.
JOHN W . SNYDER,
Secretary of the Treasury.
EXHIBITS
No.
129,
277
REVISED DECEMBER 11, 1952, ORDER OF SUCCESSION FOR TREASURY
DEPARTMENT OFFICERS
Under authority conferred upon me by Section 161 of the Revised Statutes
(5 U. S. C. 22) and Reorganization Plan No. 26 of 1950, it is hereby ordered as
follows:
Paragraph "^"—Office of the Secretary
The following officers of the Treasury Department, in the order of succession
enumerated, shall act as Secretary of the Treasury during the absence or disability
of the Secretary of the Treasury, or when there is a vacancy in such office, unless
otherwise directed by the President of the United States:
1. Under Secretary of the Treasury.
2. Senior Assistant Secretary of the Treasury,
3. Assistant Secretary of the Treasury,
4. General Counsel for the Treasury.
Paragraph "JB"—Bureau of Accounts
The following officers of the Bureau of Accounts, in the order of succession
enumerated, shall act as Cominissioner of Accounts during the absence or disability
of the Commissioner of Accounts, or when there is a vacancy in such office:
1. Associate Commissioner of Accounts.
2. Deputy Commissioner of Accounts.
3. Chief Disbursing Officer,
4. Assistant Deputy Commissioner of Accounts,
5. Senior Assistant Chief Disbursing Officer,
6. Assistant Chief Disbursing Officer.
7. Executive Assistant to the Commissioner.
8. Special Assistant to the Associate Cominissioner.
9. Senior Member of Commissioner's Technical Planning and Advisory
Staff.
10. Assistant Commissioner for Administration.
11. Technical Assistant to the Commissioner.
12. Regional Disbursing Officer, New York, N. Y.
13. Regional Disbursing Officer, Philadelphia, Pa.
14. Regional Disbursing Officer, Atlanta, Ga,
15. Regional Disbursing Officer, Minneapolis, Minn.
Paragraph "C"—Bureau of Customs
The following officers of Customs, in the order of succession enumerated, shall
act as Commissioner of Customs during the absence or disability of the Commissioner of Customs, or when there is a vacancy in such office:
1. Assistant Commissioner of Customs,
2. Deputy Commissioner of Customs for Investigations.
3. Deputy Commissioner of Customs for Appraisement Administration.
4. Chief, Division of Classification, Entry, and Value.
5. Chief, Division of Drawback, Enforcement and Quota.
6. Chief, Division of Marine Administration.
7. Deputy Commissioner of Customs for Management and Controls.
8. Collector of Customs, New York, N, Y.
9. Assistant Collector of Customs, New York, N. Y,
10. Collector of Customs, Tampa, Fla,
11. Assistant Collector of Customs, Tampa, Fla.
12. Collector of Customs, St. Louis, Mo.
Paragraph "7)"—Bureau of Engraving and Printing
The following officers of the Bureau of Engraving and Printing, in the order of
succession enumerated, shall act as Director during the absence or disability of the
Director, or when there is a vacancy in such office:
1. Associate Director,
2. Assistant Director.
3. Chief, Research and Development Engineering.
278
1953 REPORT OF THE SECRETARY OF THE TREASURY
Paragraph "£/"—Bureau of Internal Revenue
The following officers of the Bureau of Internal Revenue, in the order of succession enumerated, shall act as Commissioner of Internal Revenue during the
absence or disability of the Commissioner of Internal Revenue, or when there is a
vacancy in such office:
1. Assistant Commissioner—Operations.
2. Assistant Commissioner—Technical,
3. Assistant Commissioner—Inspection,
4. Assistant to the Commissioner,
5. Administrative Assistant to the Commissioner.
6. District Commissioner of Internal Revenue,. Denver, Colo.
7. District Commissioner of Internal Revenue, Atlanta, Ga.
8. District Commissioner of Internal Revenue, Louisville, Ky,
9. District Commissioner of Internal Revenue, Dallas, Tex.
10. District Commissioner of Internal Revenue, St, Louis, Mo.
Paragraph "F"—Bureau of the Mint
The follpwing officers of the Bureau of the Mint, in the order of succession
enumerated, shall act as Director of the Mint during the absence or disability of
the Director, or when there is a vacancy in such office:
1, Assistant Director of the Mint.
2, Chief Accountant,
3, Chief, Gold and Silver Division,
4, Superintendent, U, S, Mint, Denver, Colo.
5, Superintendent, U. S. Mint, Philadelphia, Pa.
6, Superintendent, U. S. Mint, San Francisco, Calif.'
Paragraph "(?"—Bureau of Narcotics
The following officers of the Bureau of Narcotics, in the order of succession
enumerated, shall act as Commissioner of Narcotics during the absence or disability of the Commissioner of Narcotics, or when there is a vacancy in such office:
1, Deputy Commissioner, Washington, D, C,
2, Assistant to the Commissioner, Washington, D, C.
3. Chief Counsel, Washington, D. C.
4. District Supervisor, Chicago, 111.
Paragraph "iiT"—Bureau of the Public Debt
The following officers of the Bureau of the Public Debt, in the order of succession
enumerated, shall act as Commissioner of the Public Debt during the absence or
disability of the Commissioner of the Public Debt, or when there is a vacancy in
such office:
1. Assistant Commissioner of the Public Debt.
2. Deputy Commissioner of the Public Debt in charge of the AVashington
Office.
3. Deputy Commissioner of the Public Debt in charge of the Chicago Office.
4. Assistant Deputy Commissioner of the Public Debt in charge of the
Chicago Office.
Paragraph "7"—Office of the Comptroller of the Currency
The following officers of the Office of the Comptroller of the Currency, in the
order of succession enumerated, shall act as Comptroller of the Currency during
the absence or disability of the Comptroller of the Currency, or when there is a
vacancy in such office:
1, First Deputy Comptroller,
2, Second Deputy Comptroller.
3, Third Deputy Comptroller.
4, District Chief Examiner, Atlanta, Ga,
5, District Chief Examiner, Cleveland, Ohio.
Paragraph "/"—Office of International Finance
The following officers of the Office of International Finance, in the order of
succession enumerated, shall act as Director of the Office of International Finance
during the absence or disability of the Director of the Office of International
Finance, or when there is a vacancy in such office:
1, Deputy Director of the Office of International Finance,
2. Assistant Director of the Office of International Finance,
3, Chief, British Commonwealth and Middle East Division.
4. Chief, Stabilization Fund, Gold and Silver Division.
EXHIBITS
279
Paragraph "i^"—Office of the Treasurer of the United States
The following officers of the Office of the Treasurer of the United States, in the
order of succession enumerated, shall act as Treasurer of the United States during
the absence or disability of the Treasurer of the United States, or when there is a
vacancy in such office, unless some other provision shall have been made by the
President of the United States for the performance of such functions pursuant
to 5 U. S. C. 6:
1. Assistant Treasurer.
2. Deputy and Acting Treasurer.
3. Assistant Deputy Treasurer.
4. Chief, Cash Division.
5. Chief, Division of General Accounts.
6. Chief, Accounting Division.
7. Budget Officer,
Paragraph "L"—United States Coast Guard
The following officers of the U, S, Coast Guard, in the order of succession
enumerated, shall act as Commandant during the absence or disability of the
Commandant, or when there is a vacancy in such office:
1. Assistant Commandant.
2. Officers of the grade of rear admiral, whose assignment to duty is not
restricted by law and who are assigned to and present for duty at Coast
. Guard Headquarters, in the order of their precedence in grade.
3. Field officers, in the order of their precedence in grade, under the conditions prescribed in Coast Guard Mobilization Planning Memorandum
(classified).
Paragraph "M"—United States Secret Service
The following officers of the U. S. Secret Service, in the order of succession
enumerated, shall act as Chief during the absence or disability of the Chief, or
when there is a vacancy in such office:
1. Assistant Chief.
2. Executive Aide to the Chief.
3. Inspector—Region 1.
4. Inspector—Region 2, .
5. Inspector—Region 3.
6. Inspector—Region 4.
7. Special Agent in Charge—New York, N. Y.
8. Special Agent in Charge—Chicago, Ih.
9. Special Agent in Charge—Kansas City, Mo.
10. Special Agent in Charge—San Francisco, Calif.
11. Special Agent in Charge—Louisville, Ky.
12. Special Agent in Charge—Little Rock, Ark.
Paragraph ' W — U n i t e d States Savings Bonds Division
The following officers of the U. S. Saving Bonds Division, in the order of succession enumerated, shall act as National Director during the absence or disability
of the National Director, or when there is a vacancy in such office:
1. Director of Sales Operations Branch,
2. Director of Program Development Branch.
3. Director of Advertising and Promotion Branch,
4. State Director, U. S. Savings Bonds Division, Columbus, Ohio.
5. State Director, U. S, Savings Bonds Division, Oklahoma City, Okla,
6. State Director, U. S. Savings Bonds Division, Jefferson City, Mo.
Paragraph "0"—Foreign Assets Control
The following officers of Foreign Assets Control, in the order of succession
enumerated, shall act as Director during the absence or disability of the Director,
or when there is a vacancy in such office:
1. Acting Director.
2. Chief Counsel.
3. Assistant to the Director.
This order supersedes and revokes Treasury Department Order No. 129,
Revised, dated April 16, 1951.
JOHN AV. SNYDER,
Secreiary of the Treasury.
280
No.
19 5 3 REPORT OF T H E SECRETARY OF T H E
145,
REVISED,
M A Y 6,
1953,
TREASURY
D E L E G A T I O N O F F U N C T I O N S P E R T A I N I N G TO
CLAIMS
B y virtue of t h e a u t h o r i t y vested in t h e Secretary of t h e Treasury by Reorganization Plan No. 26 of 1950, the following delegation of functions is hereby
made:
1. To t h e head of each bureau:
(a) The functions authorized by 28 U. S. C. 2672, to consider, ascertain,
adjust, determine, settle, a n d p a y claims for rnoney damages of $1,000 or less,
for injury, loss, or death, caused by t h e negligent or wrongful act or omission of
a n y employee of t h e bureau concerned; and
(h) The functions authorized by the act of December 28, 1922, 42 Stat. 1066,
to consider, ascertain, adjust, a n d determine claims,
2. To t h e C o m m a n d a n t , United States Coast Guard:
(a) The functions authorized by 14 U. S. C. 645, to consider, adjust, determine, settle, a n d p a y in an a m o u n t not in excess of $1,000, claims incident to
activities of t h e Coast Guard, and to prescribe regulations pertaining t h e r e t o ;
(6) The functions authorized by 14 U, S. C. 646, to consider, ascertain,
adjust, compromise, settle, and pay claims for- damages caused by vessels in t h e
Coast Guard service, a n d for compensation for towage a n d salvage services,
where t h e settlement of any such claim does not exceed $3,000; and
(c) The functions authorized by 14 U. S. C. 647, to consider, ascertain,
adjust, determine, compromise, or settle claims for damage to property of the
United States, where t h e settlement of any such claim does not exceed $3,000.
The a u t h o r i t y herein delegated t o t h e heads of bureaus a n d to the C o m m a n d a n t
of the Coast Guard m a y be redelegated by t h e m to an3^ officer or employee of their
respective bureaus.
M . B . FOLSOM,
Acting Secreiary of ihe Treasury.
No.
148,
R E V I S E D F E B R U A R Y 19, 1953, S U P E R V I S I O N OF B U R E A U S OF T H E T R E A S URY D E P A R T M E N T ^
1. The following assignments of bureaus of the Treasury D e p a r t m e n t are
hereby ordered:
Under Secretary (Mr. Marion B . Folsom):
Bureau of I n t e r n a l Revenue.
Analysis Staff.
Office of Tax Legislative Counsel.
Mr. Folsom shall h a v e general supervision over the functions assigned to
Administrative Assistant Secretary Parsons, who shall supervise t h e following:
Administrative Assistant Secretary (Mr. William W. Parsons):
Office of Budget.
Office of Personnel.
Office of Administrative Services.
Bureau of Engraving and Printing.
D e p u t y to t h e Secretary (Mr. AV. R a n d o l p h Burgess)—
Mr. Burgess shall have general supervision over t h e functions assigned to
Assistant Secretar3^ Overby a n d Fiscal Assistant Secretary Bartelt, who shall
continue to supervise t h e following bureaus:
Assistant Secretary (Mr,- Andrew N . Overby):
Office of I n t e r n a t i o n a l Finance (including Foreign Assets Control).
United States Savings Bonds Division,
Office of t h e Comptroller of t h e Currency,
Fiscal Assistant Secretary (Mr. E d w a r d F . Bartelt):
Bureau of Accounts,
Office of t h e Treasurer.
Bureau of t h e Public D e b t .
Assistant Secretary (Mr, H . C h a p m a n Rose):
Bureau of Customs.
United States Coast Guard.
'See order No, 170-2.
EXHIBITS
281
Bureau of the Mint,
United States Secret Service,
Bureau of Narcotics.
Information Service.
Enforcement,
General Counsel (Mr. Elbert P. Tuttle):
Legal Division,
2. In case of the absence or sickness of the Secretary, the Under Secretary
will act as Secretary of the Treasury,. In case of the absence or sickness of the
Secretary and the Under Secretary, the following will act as Secretary of the
Treasury in the order indicated:
Assistant Secretary Rose.
Assistant Secretary Overby.
General Counsel.
3. In case of the absence or sickness of the Fiscal Assistant Secretary, or a
vacancy in that office. Assistant Secretary Overby will act as Fiscal Assistant
Secretary.
4. This order supersedes Treasury Department Order No. 148, dated January
31, 1952, and all other orders and circulars previously issued with reference to
the supervision of bureaus of the Treasury Department.
This order shall become effective on March 1, 1953.
G. M. HUMPHREY,
Secretary of the Treasury.
Nos.
150-6
TO 150-27, RELATING TO REORGANIZATION AND OTHER
AFFECTING THE BUREAU OF INTERNAL REVENUE
MATTERS
N O . 1 5 0 - 6 , S E P T E M B E R 4, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by Reorgariization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952:
1. Abolition of existing offices.—The abolition of the offices of Collector of
Internal Revenue and Deputy Collector for the Maryland, Virginia, and West
Virginia Collection Districts shall become effective as of 12 o'clock midnight,
September 7, 1952.
2. Estaiblishment of District Commissioner.—Effective as of 12:01 a. m., September 8, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Baltimore District, and which shall
be comprised of Puerto Rico, Virgin Islands of the United States, the District of
Columbia, and the States of Maryland, Virginia, and AVest Virginia.
3. Location of headquarters.—The headquarters office shall be located in the city
of Baltimore, Maryland.
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m,, September 8, 1952, there are hereby created the following offices within
the Baltimore District:
(a) Director of Internal Revenue for the Collection District of Maryland (as
presently constituted). The headquarters of such office shall be located in Baltimore, Md., and the office shall have the operating title of Director of Internal
Revenue, Baltimore. •
(6) Director of Internal Revenue for the Collection District of Virginia (as
presently constituted). The headquarters of such office shall be located in
Richmond, Va., and the office shall have the operating title of Director of Internal
Revenue, Richmond.
(c) Director of Internal Revenue for the Collection .District of West Virginia
(as presently constituted). The headquarters of such office shall be located in
Parkersburg, W. Va., and the office shall have the operating title of Director of
Internal Revenue, Parkersburg.
E. H. FOLEY,
Acting Secretary of the Treasury.
1 See order No. 150-26.
282
19 53 REPORT OF THE SECRETARY OF THE TREASURY
NO. 150-7, ^ S E P T E M B E R " 1 7 , 1952.1
By virtue of t h e a u t h o r i t y vested in me as Secretary of t h e Treasury by Reorganization Plan No. 26 of 1950, Reorganization Plan No. 1 of 1952, Section 3650
(a) of t h e Internal Revenue Code, a n d Executive Order 10289, dated September
19, 1951, it is ordered as follows:
. 1 . Abolition of existing offices.^The abolition, of t h e offices of Collector of
i n t e r n a l Revenue a n d D e p u t y Collector for t h e F o u r t e e n t h , Twenty-first, arid
Twenty-eighth Collection Districts of New York shall become effective as of 12
o'clock midnight, September 21, 1952.
2, Establishment of District Commissioner.—Effective as of 12:01.a. m., September 22, 1952, there is hereby established an office of District. Commissioner of
I n t e r n a l Revenue, which shall be known as t h e Buffalo District, a n d which shall
be comprised of t h e territory presently comprising t h e Fourteenth, Twenty-first,
a n d Twenty-eighth Internal Revenue Collection Districts of New York, with the
exception of the territories known as t h e Counties of Bronx, Rockland, a n d
Westchester.
3, Location of headquarters.—The headquarters office shall be located in Buffalo,
New York.
o
4, Extension of area of New York City District.^—^^ective as of J a n u a r y 1, 1953,
t h e territories known as t h e Counties of Bronx, Rockland, a n d Westchester,
within t h e State of New York, shall be, a n d t h e y are hereby, a t t a c h e d t o a n d
m a d e a p a r t of t h e New York City District, established by Treasury D e p a r t m e n t
Order No, 150-4, dated June 23, 1952, for all purposes authorized by the internal
revenue laws of t h e United States.
5, Bronx, Rockland, and Westchester Counties transferred to Third Collection
District of New York.—Effective as of J a n u a r y 1, 1953, t h e territories known as
t h e Counties of Bronx, Rockland, a n d AVestchester, now coinprising a p a r t of t h e
F o u r t e e n t h Internal Revenue Collection District of New York, shall be, and t h e y
are hereby, transferred t o and made a p a r t o f t h e Third I n t e r n a l Revenue Collection District of New York for all purposes authorized by t h e internal revenue
laws of t h e United States,
6, Establishment of offices of Director of IrUernal Revenue.—Effective as of 12:01
a. m., September 22, 1952, there are hereby created the following offices within
t h e Buffalo District:
(a) Director of Internal Revenue for t h e F o u r t e e n t h Collection District of
New York (as presently constituted). The headquarters of such.office shall be
located in Albany, N . Y,, a n d t h e office shall have t h e operating title Of Director
of Interrial Revenue, Albany.
(b) Director of I n t e r n a l Revenue for t h e Twenty-first Collection District of
New York (as presently constituted). The headquarters of such office shall be
located in Syracuse, N, Y., a n d t h e office shall have t h e operating title of Director
of Internal Revenue, Syracuse.
(c) Director of I n t e r n a l Revenue for the Twenty-eighth Collection District
of New York (as presently constituted), The h e a d q u a r t e r s of such office shall be
located in Buffalo, N, Y,, a n d t h e office shall have t h e operating title of Director
of Internal Revenue, Buffalo.
JOHN W .
SNYDER,
Secretary of the Treasury.
N O . 160-7, AMENDED DECEMBER 24, 1952 ^
By virtue of t h e a u t h o r i t y vested in me as Secretary of t h e Treasury by Reorganization Plan No, 26 of 1950, Reorganization Plan No, 1 of 1952, Section 3650
(a) of t h e I n t e r n a l Revenue Code, and. Executive Order 10269, d a t e d Septembej
19, 1951:
::
1. I n order t h a t t h e territories known as t h e Counties of Bronx, Rockland, a n d
AVestchester, within t h e State of New York, shall comprise p a r t of t h e F o u r t e e n t h
I n t e r n a l Revenue Collection District of New York until July 1, 1953, paragraphs
4 a n d 5 of Treasury D e p a r t m e n t Order No. 150-7, dated September 17, 1952,
are each amended by striking " J a n u a r y 1, 1953," a n d inserting in lieu thereof
" J u l y 1, 1953,"
2. This order shall be effective J a n u a r y 1, 1953.
E.
H.
FOLEY,
Acting Secretary of ihe Treasury.
1 See order No. 150-26.
EXHIBITS
283
NO. 150-8, SEPTEMBER 29, 1952 ^
By virtue of t h e a u t h o r i t y vested in me as Secretary of the Treasury by Reorganization Plan N o . 26 of 1950 a n d Reorganization Plan N o . 1 of 1952 it is ordered
as follows:
1. Abolition of existing offices.-—The abolition of t h e offices of Collector of I n ternal Revenue and D e p u t y Collector for t h e Connecticut, Maine, Massachusetts,
New Hampshire, Rhode Island, and Vermont CoUection Districts shall become
effective as of 12 o'clock midnight, October 5, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. m., October
6, 1952, there is hereby established an office of District Commissioner of I n t e r n a l
Revenue, which shall be known as t h e Boston District, and which shall be comprised of the States of Connecticut, Maine, Massachusetts, New Hampshire,
Rhode Island, and Vermont.
3. Location of headquarters.—The headquarters office shall be located in t h e
city of Boston, Mass.
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., October 6, 1952, there are hereby created the following offices within t h e
Boston District:
(a) Director of I n t e r n a l Revenue for t h e Cpllection District of Connecticut
(as presently constituted). The headquarters of such.office shall be located in
Hartford, Conn., a n d t h e office shall have the operating title of Director of I n t e r n a l
Revenue, Hartford.
(b) Director of I n t e r n a l Revenue for the Collection District of Maine (as
presently constituted). The headquarters of such office shall be located in Augusta, Maine, and the office shall have the operating title of Director of I n t e r n a l
Revenue, Augusta.
(c) Director of I n t e r n a l Revenue for t h e Collection District of Massachusetts
(as presently constituted). The headquarters of such office shall be located in
Boston, Mass., and the office shall have the operating title of Director of Internal
Revenue, Boston.
(d) Director of I n t e r n a l Revenue for t h e Collection District of New H a m p shire (as presently constituted). The headquarters of such office shall be located
in Portsmouth, N . H., and t h e office shall have t h e operating title of Director of
Internal Revenue, P o r t s m o u t h .
(e) Director'of I n t e r n a l Revenue for the Collection District of Rhode Island
(as presently constituted). The headquarters of such office shall be located in
Providence, R. I., and the office shall have the operating title of Director of I n t e r n a l
Revenue, Providence.
(/) JDirector of I n t e r n a l Revenue for t h e Collection District of Vermont (as
presently constituted). The headquarters of such office shall be located in Burlington, Vt., and the office shall have the operating title of Director of I n t e r n a l
Revenue, Burlington.
J O H N W . SNYDER,
Secretary of the Treasury.
NO. 150-9, OCTOBER 8, 19521
By virtue of t h e a u t h o r i t y vested in me as Secretary of the Treasury by Reorganization Plan No. 26 of 1950 and Reorganization Plan N o . 1 of 1952, it is
ordered as follows:
1. Abolition of existing offices.—The abolition of the offices of Collector of Internal Revenue and D e p u t y Collector for the Iowa, Minnesota, Nebraska, N o r t h
D a k o t a , and South D a k o t a Collection Districts shall becorrie effective as of 12
o'clock midnight, October 19, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. m., October
20, 1952, there is hereby established an office of District Commissioner of I n t e r n a l
Revenue, which shall be known as the St. Paul District, and which shall be comprised of the States of Iowa, Minnesota, Nebraska, N o r t h D a k o t a , and South
Dakota.
3. Location of headquarters.—The headquarters office shall be located in t h e
city of St. Paul, Minn.
J See order No. 150-26.
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1953 REPORT OF THE SECRETARY OF THE TREASURY
4. Establishment of offices of Director of Internal Revenue.—Effective as of
12:01 a. m., October 20, 1952, there are hereby created t h e following offices within
t h e St. P a u l District:
(a) Director of I n t e r n a l Revenue for t h e Collection District of Iowa (as
presently constituted). The headquarters of such office shall be located in Des
Moines, Iowa, and t h e office shall have t h e operating title of Director of I n t e r n a l
Revenue, Des Moines.
(6) Director of Internal Revenue for the Collection District of Minnesota
(as presently constituted). The headquarters of such office shall be located in
St. Paul, Minn., a n d the office shall have the operating title of Director of I n t e r n a l
Revenue, St. Paul.
(c) Director of I n t e r n a l Revenue for t h e Collection District of Nebraska (as
presently constituted). The headquarters of such office shall be located in
Omaha, Nebr., a n d the office shall have t h e operating title of Director of I n t e r n a l
Revenue, Omaha.
(d) Director of I n t e r n a l Revenue for the Collection District of N o r t h
D a k o t a (as presently constituted). The headquarters of such office shall be
located in Fargo, N. Dak., a n d the office shall have the operating title of Director
of I n t e r n a l Revenue, Fargo.
(e) Director of I n t e r n a l Revenue for the Collection District of South D a k o t a
(as presently constituted). The headquarters of such office shall be located in
Aberdeen, S. Dak,, and the office shall have the operating title of Director of
I n t e r n a l Revenue, Aberdeen,
J O H N W . SNYDER,
Secretary of the Treasury.
NO. 150-10, OCTOBER 9, 1952 ^
By virtue of t h e a u t h o r i t y vested in me as Secretar3^ of the Treasury by Reorganization Plan No, 26 of 1950 a n d Reorganization Plan No, 1 of 1952:
1. Abolition of existing offices.—The abolition of t h e office of Collector of
I n t e r n a l Revenue arid D e p u t y Collector for t h e AA^isconsin Collection District
shall become effective as of 12 o'clock midnight, October 20, 1952.
2. Establishment of office of Director of Internal Revenue.—Effective as of 12:01
a. rn., October 21, 1952, there is hereby created, within the Chicago District, the
office of Director of I n t e r n a l Revenue for the Collection District of AA^'isconsin (as
presently constituted). The headquarters of such office shall be located in
Milwaukee, Wis., a n d t h e office shall have t h e operating title of Director of
I n t e r n a l Revenue.
3. Extension of area of Chicago District.—Effective as of 12:01 a. m., October
21, 1952, the State of AVisconsin, shall be, a n d it is hereby, a t t a c h e d t o a n d made
a p a r t of t h e Chicago District, established by Treasury Departrnent Order No.
150-3, dated M a y 15, 1952, for all purposes authorized by t h e internal revenue
laws of the United States.
J O H N AV. SNYDER,
Secretary of the Treasury.
NO. 150-11, OCTOBER 8, 1952 ^
By virtue of t h e a u t h o r i t y vested in me as Secretary of t h e Treasury by Reorganization Plan No. 26 of 1950 a n d Reorganization P l a n No. 1 of 1952, it is ordered
as follows:
1. Abolition of existing offices.—The abolition of t h e offices of Collector of
I n t e r n a l Revenue and D e p u t y Collector for t h e Florida, Georgia, N o r t h Carolina,
a n d South Carolina Collection Districts shall become effective as of 12 o'clock
midnight, October 22, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. in., October
23, 1952, there is hereby established an office of District Commissioner of I n t e r n a l
Revenue, which shall be known as t h e A t l a n t a District, a n d which shall be comprised of the States of Florida, Georgia, N o r t h Carolina, a n d South Carolina, a n d
t h e Canal Zone.
3. Location of headquarters.—The headquarters office shall be located in the
city of Atlanta, Ga.
1 See oraejr No, 150-26.
EXHIBITS
285
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a, m., October 23, 1952, there are hereby created t h e following offices within t h e
Atlanta District:
(a) Director of I n t e r n a l Revenue for the Collection District of Florida (as
presently constituted). T h e headquarters of such office shall be located in J a c k sonville, Fla., a n d the office shall have the operating title of Director of I n t e r n a l
Revenue, Jacksonville.
(b) Director of I n t e r n a l Revenue for the Collection District of Georgia (as.
presently constituted). The headquarters of such office shall be located in
Atlanta, Ga., a n d the office shall have the operating title of Director of I n t e r n a l
Revenue, Atlanta.
(c) Director of Internal Revenue for the Collection District of North Carolina
(as presently constituted). T h e h e a d q u a r t e r s of such office shall be located in
Greensboro, N . C , and t h e office shall have t h e operating title of Director of
Internal Revenue, Greensboro.
(fi) Director of I n t e r n a l Revenue for the Collection District ot South Carolina
(as presently constituted). T h e headquarters of such office shall be located in
Columbia, S, C , and the office shall have the operating title of Director of I n t e r n a l
Revenue, Columbia.
J O H N W . SNYDER,
Secretary of the Treasury.
NO. 150-12, OCTOBER 8, 1952 ^
By virtue of the a u t h o r i t y vested in me as Secretary of the Treasury by
Reorganization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952, it is
ordered as follows:
1. Abolition of existing offices.—The abolition of the offices of Collector of
I n t e r n a l Revenue and D e p u t y Collector for t h e Indiana, Kentucky, and Tennessee
Collection Districts shall become effective as of 12 o'clock midnight, October 23,
1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. m,, October
24, 1952, there is hereby established an office of District Commissioner of I n t e r n a l
Revenue, which shall be known as t h e Louisville District, and which shall be
comprised of t h e States of Indiana, Kentucky, and^Tennessee,
3. Location of headquarters.—The headquarters office shall be located in the
City of Louisville, Ky.
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a, m,, October 24, 1952, there are hereby created the following offices within t h e
Louisville District:
(a) Director of I n t e r n a l Revenue for the Collection- District of I n d i a n a (as
presently constituted). T h e h e a d q u a r t e r s of such office shall be located in
Indianapolis, Ind,, and t h e office shall have t h e operating title of Director of
I n t e r n a l Revenue, Indianapolis,
(6) Director of I n t e r n a l Revenue for t h e Collection District of K e n t u c k y (as
presently constituted). T h e headquarters of such office shall be located in
Louisville, Ky,, and the office shall have the operating title of Director of I n t e r n a l
Revenue, Louisville.
(c) Director of I n t e r n a l Revenue for the Collection District of Tennessee (as
presently constituted). T h e headquarters of such office shall be located in
Nashville, Tenn., and the office shall have t h e operating title of Director of
I n t e r n a l Revenue, Nashville.
J O H N W . SNYDER,
Secretary of the Treasury.
NO. 150-13, OCTOBER 28, 1952 ^
By virtue of t h e au thori t3^ vested in me as Secretary of t h e Treasury by
Reorganization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952:
1. Abolition of existing offices.—The abolition of t h e offices of Collector of
I n t e r n a l Revenue and D e p u t y Collector for the Idaho, M o n t a n a , Oregon, a n d
Washington Collection Districts shall become effective as of 12 o'clock midnight,
October 30, 1952.
Recorder No. 150-26.
286
1953 REPORT OF THE SECRETARY OF THE TREAStTRl/
2. Esiablishment of District Commissioner.—Effective as of 12:01 a, m,, October
31, 1952, there is hereby established an office of District Commissioner of Internal
Revenue, which shall be known as the Seattle District, and which shall be comprised of Idaho, Montana, Oregon, and Washington, and the Territory of Alaska,
3. Location of headquarters.—The headquarters office shall be located in the
city of Seattle, Wash,
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., October 31, 1952, there are hereby created the following offices within the
Seattle District:
(a) Director of Internal Revenue for the Collection District of Idaho (as
presently consututed). The headquarters of such office shall be located in Boise,
Idaho, and the office shall have the operating title of Director of Internal Revenue,
Boise.
(Jb)' Director of Internal Revenue for the Collection District of Montana (as
presently constituted). The headquarters of such office shall be located in
Helena, Mont., and the office shall have the operating title of Director of Internal
Revenue, Helena.
(c) Director of Internal Revenue for the Collection District of Oregon (as
presently constituted). The headquarters of such office shall be located in
Portland, Oreg., and the office shall have the operating title of Director of Internal
Revenue, Portland.
{d) Director of Internal Revenue for the Collection District of Washington
(as presently constituted). The headquarters of such office shall be located in
Seattle, Wash,, and the office shall have the operating title of Director of Internal
Revenue, Seattle.
E. H. FOLEY,
Acting Secretary of the Treasury.
NO, 150-13, REVISED DECEMBER 4, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by
Reorganization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952 and
in order to change the headquarters of.the office of the Director of Internal
Revenue for the Collection District of Washington (as presently constituted)
from Seattle, AVash,, to Tacorna, Wash,, the last sentence of Treasury Department
Order No. 150-13, dated October 28, 1952, is amended, effective January 1, 1953,
to read as follows:
"The headquarters of such office shall be located in Tacoma, Wash,, and the
office shall have the operating title of Director of Internal Revenue, Tacoma."
JOHN W . SNYDER,
Secretary of the Treasury.
NO. 150-14, NOVEMBER 7, 1952 1
By virtue of the authority vested in me as Secretary of the Treasury by
Reorganization Plan No. 26 of 1950 and. Reorganization Plan No. 1 of 1952:
1. Abolition of existing offices.—The abolition of the offices of Collector of
Internal Revenue and Deputy Collector for the Delaware, New Jersey, and
Pennsylvania Collection Districts shall become effective as of 12 o'clock midnight,
November 11, 1952.
2. Establishment of^ District Commissioner.—Effective as of 12:01 a. m., November 12, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Philadelphia District, and which
shall be comprised of the States of Delaware, New Jersey, and Pennsylvania.
3. Location of headquarters.—The headquarters office shall be located in the
city of Philadelphia, Pa,
4. Establishment of offices of Director of Internal Revenue.—Effective as of
12:01 a. m., November 12, 1952, there are hereby created the following offices
within the Philadelphia District:
(a) Director of Internal Revenue for the Collection District of Delaware
(as presently constituted). The headquarters of such office shall be located in
Wilmington, Del., and the office shall have the operating title of Director of
Internal Revenue, Wilmington.
1 See order No. 150-26.
EXHIBITS
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287
(b) Director of I n t e r n a l .Revenue for t h e First Collection District of New
Jersey (as presently constituted). T h e headquarters of such office shall be
located in Camden, N . J., a n d t h e office shall have t h e operating title of Director
of Internal Revenue, Camden.
<
(c) Director of Internal Revenue for the Fifth Collection District of New
Jersey (as presently constituted). T h e headquarters of such office shall be
located in Newark, N . J., a n d the office shall have the operating title of Director of
I n t e r n a l Revenue, Newark.
(d) Director of Internal Revenue for the First Collection District of Pennsylvania (as presently constituted). T h e headquarters of such office shall be
located in Philadelphia, Pa., a n d the office shall have the operating title of
Director of I n t e r n a l Revenue, Philadelphia,
(e) Director of Internal Revenue for the Twelfth Collection District of
Pennsylvania (as presently constituted). T h e headquarters of such office shall
be located in Scranton, Pa., and the office shall have the operating title of
Director of Internal Revenue, Scranton.
( / ) Director of I n t e r n a l Revenue for t h e T w e n t y - t h i r d Collection District
of Pennsylvania (as presently constituted). T h e headquarters of such office
shall be located in Pittsburgh, Pa., and t h e office shall have t h e operating title
of Director of Internal Revenue, Pittsburgh.
E, H, F O L E Y ,
Acting Secretary of the Treasury.
NO,. 150-15, NOVEMBER 14, 1952^
By virtue of t h e a u t h o r i t y vested in me as Secretary of t h e Treasury by Reorganization Plan N o , 26 of 1950 and Reorganization Plan No, 1 of 1952:
1. Abolition of existing offices.—-The abolition of t h e offices' of Collector of
I n t e r n a l Revenue a n d D e p u t y Collector for t h e Collection Districts of Arkansas
a n d Kansas a n d t h e First a n d Sixth Collection Districts of Missouri shall become
effective as of 12 o'clock midnight, November 17, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. m., November 18, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as t h e St. Louis District, a n d which shall
be comprised of t h e States of Arkansas, Kansas, a n d Missouri.
3. Location of headquarters.—The headquarters office shall be located in t h e
city of St. Louis, Mo.
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., November 18, 1*952, there are hereby created t h e following offices within
t h e St. Louis District:
(a) Director of I n t e r n a l Revenue for t h e Collection District of Arkansas (as
presently constituted). T h e headquarters of such office shall be located in Little
Rock, Ark., a n d t h e office shall h a v e t h e operating title of Director of I n t e r n a l
Revenue, Little Rock.
(6) Director of I n t e r n a l Revenue for t h e Collection District of Kansas (as
presently constituted), T h e headquarters of such office shall be located in Wichita,
Kans., a n d t h e office shall have t h e operating title of Director of Internal Revenue,
AVichita.
(c). Director of Internal Revenue for t h e First Collection District of Missouri
(as presently constituted). T h e headquarters of such office shall be located in
St. Louis, Mo., a n d t h e office shall have the operating title of Director of I n t e r n a l
Revenue, St. Louis.
{d) Director of I n t e r n a l Revenue for t h e Sixth Collection District of Missouri
(as presently constituted). T h e headquarters of such office shall be located in
Kansas City, Mo., a n d t h e office shall have t h e operating title of Director of I n ternal Revenue, Kansas City.
E.H.FOLEY,
Acting Secretary of the Treasury.
1 See order No. 150-26.
288
1953 REPORT OF THE SECRETARY OF THE TREASURY
NO. 150-16, NOVEMBER 14, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by Reorganization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952:
1. Abolition of existing oifices.—The abolition of the offices of Collector of Internal Revenue and Deputy Collector for the Oklahoma Collection District and
the First and Second Collection Districts of Texas shall become effective as of 12
o'clock midnight, November 18, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a. m,, November 19, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Dallas District, and which shall be
comprised of the States of Oklahoma and Texas,
3. Location of headquarters.—The headquarters office shall be located in the
city of Dallas, Tex,
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., November 19, 1952, there are hereby created the following offices within
the Dallas District:
(a) Director of Internal Revenue for the Collection District of Oklahoma (as
presently constituted). The headquarters of such office shall be located in
Oklahoma City, Okla., and the office shall have the operating title of Director of
Internal Revenue, Oklahoma City,
(6) Director of Internal Revenue for the First Collection District of Texas
(as presently constituted). The headquarters of such office shall be located in
Austin, Tex., and the office shall have the operating title of Director of Internal
Revenue, Austin.
(c) Director of Internal Revenue for the Second Collection District of Texas
(as presently constituted). The headquarters of such office shall be located in
Dallas, Tex,, and the office shall have the operating title of Director of Internal
Revenue, Dallas.
E. H. FOLEY,
Acting Secretary of ihe Treasury.
NO, 150-17, NOVEMBER 17, 1952
By virtue of the authority vested in me by Reorganization Plan No. 26 of 1950,
there are hereby transferred to Assistant Secretary John S, Graham all functions
now authorized to be performed by the Commissioner of Internal Revenue,
AVithout limitation this authority includes authority to delegate functions hereby
transferred and to amend or cancel existing delegations heretofore made by the
Commissioner pursuant to Treasury Department Order No. 150-2, May 15, 1952.
In the absence of such cancellation or amendment, those delegations of the
Commissioner shall remain in effect.
In the performance of the functions herein delegated, Mr, Graham is designated
as Acting Commissioner of Internal Revenue,
This order shall become effective as of 12:01 a, m,, November 19, 1952.
JOHN W .
SNYDER,
Secretary of ihe Treasury.
N O . 150-18, NOVEMBER 18, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by Reorganization Plan No. 26 of 1950 and Reorganization Plan No. 1 of 1952:
1. Abolition of existing offices.—The abolition of the.offices of Collector of
Internal Revenue and Deputy Collector for the Alabama, Louisiana, and Mississippi Collection Districts shall become effective as of 12 o'clock midnight, November 19, 1952,
2. Establishment of District Commissioner.—Effective as of 12:01 a, m., November 20, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Birmingham District, and which
shall be comprised of the States of Alabama, Louisiana, and Mississippi.
3. Location of headquarters.—The headquarters office shall be located in the
city of Birmingham, Ala.
1 See order No. 150-26.
EXHIBITS
289
4. Establishment of offices of Director of Internal Revenue.—Effective as of
12:01 a. m., November 20, 1952, there are hereby created the following offices
within the Birmingham District:
(a) Director of Internal Revenue for the Collection District of Alabama
(as presently constituted). The headquarters of such office shall be located in
Birmingham, Ala., and the office shall have the operating title of Director of
Internal Revenue, Birmingham.
(h) Director of Internal Revenue for the Collection District of Louisiana
(as presently constitiited). The headquarters of such office shall be located in
New Orleans, La., and the office shall have the operating title of Director of
Internal Revenue, New Orleans,
(c) Director of Internal Revenue for the Collection District of Mississippi
(as presently constituted). The headquarters of such office shall be located in
Jackson, Miss., and the office shall have the operating title of Director of Internal
Revenue, Jackson,
JOHN W . SNYDER,
Secretary of the Treasury.
NO. 150-19, NOVEMBER 21, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by Reorganization Plan No, 26 of 1950 and Reorganization Plan No. 1 of 1952:
1, Abolition of existing offices.—The abolition of the offices of Collector of
Internal Revenue and Deputy Collector for the Arizona, Colorado, New Mexico,
Utah, and AVyoming Collection Districts shall become effective as of 12 o'clock
midnight, November 24, 1952.
2, Establishment of District Commissioner.—Effective as of 12:01 a. m., November 25, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Denver District, and which shall
be comprised of the States of Arizona, Colorado, New Mexico, Utah, and Wyoming.
3," Location of headquarters.—The headquarters office shall be located in the
city of Denver, Colo.
4, Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., November 25, 1952, there are hereby created the following offices within
the Denver District:
(a) Director of Internal Revenue for the Collection District of Arizona
(as presently constituted). The headquarters of such office shall be located in
Phoenix, Ariz'., and the office shall have the operating title of Director of Internal
Revenue, Phoenix.
(6) Director of Internal Revenue for the Collection District of Colorado
(as presently constituted). The headquarters of such office shall be located in
Denver, Colo., and the office shall have the operating title of Director of Internal
Revenue, Denver,
(c) Director of Internal Revenue for the Collection District of New Mexico
(as presently constituted). The headquarters of such office shall be located in
Albuquerque, N. Mex,, and the office shall have the operating title of Director of
Internal Revenue, Albuquerque,
(d) Director of Internal Revenue for the Collection District of Utah (as
presently constituted). The headquarters of such office shall be located in Salt
Lake City, Utah, and the office shall have the operating title of Director of
Internal Revenue, Salt Lake City.
(e) Director of Internal Revenue for the Collection District of Wyoming
(as presently constituted). The headquarters of such office shall be located in
Cheyenne, Wyo., and the office shall have the operating title of Director of Internal Revenue, Cheyenne,
E, H, FOLEY,
Acting Secretary of the Treasury.
1 See order No. 150-26.
273013—54
20
290
1953
REPORT OF T H E SECRETARY OF T H E
TREASURY
NO. 150-20, NOVEMBER 21, 1952 ^
By virtue of t h e authority vested in me as Secretary of the Treasury by Reorganization Plan No. 26 of 1950 and Reorganization Plan N o . 1 of 1952:
1. Abolition of existing offices.—The abolition of the offices of Collector of
Internal Revenue and D e p u t y Collector for t h e First and Sixth Collection Districts of California, and t h e Collection Districts of Hawaii and N e v a d a shall
become effective as of 12 o'clock midnight, November 25, 1952,
2. Establishment of District Commissioner.—^Effective as of 12:01 a. m., November 26, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Los Angeles District, and which
shall be comprised of California and N e v a d a and t h e Territory of Hawaii.
3. Location of headquarters.—The headquarters office shall be located in t h e
city of Los Angeles, Calif.
4. Establishment of offices of Director of Internal Revenue.—Effective as of 12:01
a. m., November 26, 1952, there are hereby created the following offices within
t h e Los Angeles District:
(a) Director of Internal Revenue for t h e First Collection District of California (as presently constituted). T h e headquarters of such office shall be located
in San Francisco, Calif., and t h e office shall have t h e operating title of Director
of Internal Revenue, San Francisco.
(6) Director of Internal Revenue for the Sixth Collection District of California (as presently constituted). T h e headquarters of such office shall be located
in Los Angeles, Calif., and the office shall have the operating title of Director of
Internal Revenue, Los Angeles.
(c) Director of Internal Reveriue for the Collection District of Hawaii (as
presently constituted). The headquarters of such office shall be located in H o n o lulu, T. H., and the office shall have the operating title of Director of Internal
Revenue, Honolulu.
(d) Director of I n t e r n a l Revenue for t h e Collection District of N e v a d a (as
presently constituted). The headquarters of such office shall be located in Reno,
Nev,, and the office shall have the operating title of Director of Internal Revenue,
Reno,
E, H, F O L E Y ,
Acting Secretary of the Treasury.
N O , 150-21, NOVEMBER 21, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by R e organization Plan No, 26 of 1950 a n d Reorganization Plan No. 1 of 1952:
1. Abolition of existing offices.—The abolition of the offices of Collector of Internal Revenue and D e p u t y Collector for the Ohio Collection Districts shall
become effective as of 12 o'clock midnight, November 30, 1952.
2. Establishment of District Commissioner.—Effective as of 12:01 a, m,, D e cember 1, 1952, there is hereby established an office of District Commissioner of
Internal Revenue, which shall be known as the Cleveland District, and which
shall be comprised of the State of Ohio,
3, Location of headquarters.—The headquarters office shall be located in the
city of Cleveland, Ohio.
4, Establishment of Offices of Director of Internal Revenue.—Effective as of 12:01
a, in., December 1, 1952, there are hereby created the following offices within the
Cleveland District:
(a) Director of Internal Revenue for the First Collection District of Ohio
(as presently constituted). The headquarters of such office shall be located in
Cincinnati, Ohio, and the office shall have the operating title of Director of
Internal Revenue, Cincinnati,
(b) Director of Internal Revenue for the T e n t h Collection District of Ohio
(as presently constituted). The headquarters of such office shall be located in
Toledo, Ohio, and the office shall have the operating title of Director of Internal
Revenue, Toledo.
(c) Director of Internal Revenue for the Eleventh Collection District of
Ohio (as presently constituted). The headquarters of such office shall be located
in Columbus, Ohio, and the office shall have the operating title of Director of
I n t e r n a l Revenue, Columbus.
I ,^ee order No. 150-26,
BXHIBITS
291
(d) Director of Internal Revenue for the Eighteenth Collection District of
Ohio (as presently constituted). The headquarters of such office shall be located
in Cleveland, Ohio, and the office shall have the operating title of Director of Internal Revenue, Cleveland.
E. H. FOLEY,
Acting Secretary of the Treasury.
NO. 150-22, NOVEMBER 21, 1952 ^
By virtue of the authority vested in me as Secretary of the Treasury by Reorganization Plan No. 26 of 1950 and Reorganization Plan No, 1 of 1952:
1. Abolition of existing offices.—The abolition of the offices of Collector of Internal Revenue and Deputy Collector for the Michigan Collection District shall
become effective as of 12 o'clock midnight, November 30, 1952,
2. Establishment of District Commissioner.—Effective as of 12:01 a, m., December 1, 1952, there is hereby established an office of District Commissioner of Internal Revenue, which shall be known as the Detroit District, and which shall
be comprised of tho State of Michigan,
3. Location of headquarters.—The headquarters office shall be located in the
city of Detroit, Mich.
4. Establishment of office of Director of Internal Revenue.—Effective as of 12:01
a. m., Deceinber 1, 1952, there is hereby created within the Detroit District the
office of Director of Internal Revenue for the Collection District of Michigan (as
presently constituted). The headquarters of such office shall be located in
Detroit,' Mich., and the office shall have the operating title of Director of Internal
Revenue, Detroit.
E. H. FOLEY,
Acting Secretary of the Treasury,
N O . 150-23, JANUARY 20, 1953
By virtue of the authority vested in me by Reorganization Plan No. 26 of 1950,
the functions transferred to Assistant Secretary John S. Graham by Treasury
Department Order No. 150-17, dated November 17, 1952, are hereby transferred
to Justin F, Winkle, Assistant Commissioner of the Bureau of Internal Revenue,
for the period between the effective date hereof and the time at which a Commissioner of Internal Revenue shall next take office. At the time of the Commissioner's taking office the authority of Mr. Winkle to perform such functions
under this order shall cease, and such functions shall, by virtue hereof, be thereafter performed by the Commissioner.
In the performance of the functions herein delegated Mr. Winkle is designated
as Acting Commissioner of Internal Revenue.
This order shall become effective as of 12:01 a. m,, January 21, 1953.
A. N.
OVERBY,
Acting Secretary of the Treasury,
NO. 150-24, APRIL 10, 1953
By virtue of the authority vested in me as Secretary of the Treasury:
1. Abolition of certain existing offices.—The offices of Assistant to the Commissioner and Administrative Assistant to the Commissioner in the Bureau of Internal
Revenue, as established in Treasury Department Order No. 150-5, dated July
29, 1952, are abolished.
, •
2. Establishment of new offices.—It is determined, pursuant to Section 2 of
Reorganization Plan No. 1 of 1952, that there shall be in the Washington Headquarters Office of the Bureau of Internal Revenue, additional offices having titles
as follows:
Deputy Commissioner of Internal Revenue.
Assistant Commissioner of Internal Revenue (Administration).
Assistant Commissioner of Internal Revenue (Planning).
M.
B.
FOLSOM,
Acting Secretary of ihe Treasury.
1 See order No. 150-26.
292
1953 REPORT OF THE SECRETARY OF THE TREASURY.
NO. 150-25, JUNE 1, 1953
By virtue of the authority vested in me by Reorganization Plan No. 26 of
1950, there are hereby transferred to t h e Commissioner of Internal Revenue all
t h e functions of the Secretary of t h e Treasury, t h e Under Secretary of the Treasury, or any Assistant Secretary of t h e Treasury under Section 3761 (a) of the
I n t e r n a l Revenue Code with respect to the compromise of any case, and the
functions of the General Counsel under Section 3761 (b) of the Internal Revenue
Code with respect to t h e compromise of any case in which the unpaid a m o u n t
of t a x (including any interest, penalty, additional a m o u n t or addition to t h e
tax) is less t h a n $500.
This order continues the delegation made by Treasury D e p a r t m e n t Order
N o . 124, dated August 22, 1950, which is hereby superseded.
T h e functions herein transferred may be delegated by the Commissioner to
subordinates in the Bureau of Internal Revenue in such manner as he shall from
time to time direct.
G.
M.
HUMPHREY,
Secretary of the Treasury.
NO. 150-26, JUNE 15, 1953
By virtue of the authority vested in me as Secretary of the Treasury, it is hereby
ordered:
1. Regional Commissioner of Internal Revenue.—Each office of District Commissioner of Internal Revenue shall bear t h e operating title of "Regional Commissioner of Internal R e v e n u e , " identified by the name of the city in which the
headquarters office is located.
2. District Director of Internal Revenue.—The title of each office of Director of
I n t e r n a l Revenue shall be changed to "District Director of I n t e r n a l R e v e n u e , "
identified by t h e name of t h e city or subdivision thereof in which the h e a d q u a r t e r s
office is located,
3. Establishment of offices and boundaries of Regional Commissioner—
(a) Atlanta.—There is established a n office of Regional Commissioner of
Internal Revenue, Atlanta, which shall be comprised of the States of Alabama,
Florida, Georgia, Mississippi, N o r t h Carolina, South Carolina, and Tennessee,
and the Canal Zone. T h e headquarters office shall be in Atlanta, Ga
{b) Boston.—There is established a n office of Regional Commissioner of
Internal Revenue, Boston, which shall be comprised of the States of Connecticut,
Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont, T h e
headquarters office shall be in Boston, Mass.
(c) Chicago.—There is estabhshed an office of Regional Commissioner of
Internal Revenue, Chicago, which shall be comprised of t h e States of Ilhnois,
Michigan, and Wisconsin. T h e headquarters office shall be in Chicago, 111.
{d) Cincinnati.—There is established an office of Regional Commissioner of
Internal Revenue, Cincinnati, which shall be comprised of t h e States of Indiana,
Kentucky, Ohio, Virginia, and West Virginia. T h e headquarters office shall be
in Cincinnati, Ohio.
(e) Dallas.—There is established an office of Regional Commissioner of
I n t e r n a l Revenue, Dallas, which shall be comprised of t h e States of Arkansas,
Louisiana, Oklahoma, New Mexico, and Texas. T h e h e a d q u a r t e r s office shall
be in Dallas, Tex,
(/) New York City.—There is established an office of Regional Commissioner
of Internal Revenue, New York City, which shall be comprised of t h e State of
New York and Puerto Rico and Virgin Islands of the United States. T h e headquarters office shall be in New York, N . Y.
(gf) Omaha.—There is established an office of Regional Commissioner of
I n t e r n a l Revenue, Omaha, which shall be comprised of the States of Colorado,
Iowa, Kansas, Minnesota, Missouri, Nebraska, N o r t h D a k o t a , South D a k o t a ,
a n d Wyoming, T h e headquarters office shall be in Omaha, Nebr,
(h) Philadelphia.—There is established an office of Regional Commissioner
of I n t e r n a l Revenue, Philadelphia, which shall be comprised of t h e States of
Delaware, Maryland, New Jersey, and Pennsylvania, and t h e District of Columbia, T h e headquarters office shall be in Philadelphia, P a .
{i) San Francisco.—There is established an office of Regional Commissioner
of Internal Revenue, San Francisco, which shall be comprised of t h e States of
Arizona, California, Idaho, Montana, Nevada, Oregon, Utah, and Washington,
EXHIBITS
293
and t h e Territories of Alaska and Hawaii. T h e h e a d q u a r t e r s office shall be in
San Francisco, Calif.
4. Abolition of certain offices of District Commissioner.—The offices of District
Commissioner of I n t e r n a l Revenue established prior to t h e effective date of this
order are abolished.
5. Regional office in which office of District Director included.—The office of any
District Director of I n t e r n a l Revenue included within t h e territory comprising
the office of a Regional Commissioner of I n t e r n a l Revenue shall be included
within t h e office of such Regional Commissioner.
6. Internal revenue districts.—Each district established p u r s u a n t to Section
3650 of the Internal Revenue Code shall be known as an internal revenue district
and shall be identified by t h e name of the city or subdivision thereof in which t h e
headquarters office of t h e District Director of Internal Revenue is located^
7. Puerto Rico and Virgin Islands of United Staies included in Internal Revenue
District, Lower Manhattan.—Puerto Rico and t h e Virgin Islands of the United
States, now comprising a p a r t of the I n t e r n a l Revenue District, Baltimore, shall
be and they are transferred to and made a p a r t of the I n t e r n a l Revenue District,
Lower M a n h a t t a n .
8. Inconsistent provision.—Any provision of any order inconsistent with any
provision of this order is modified to t h e extent of such inconsistency.
9. Effective date.—This order shall be effective July 1, 1953.
M.
B.
FOLSOM,
Acting Secretary of ihe Treasury.
N O . 150-27, JUNE 26, 1953
By virtue of t h e a u t h o r i t y vested in me b y Reorganization Plan No. 26 of
1950, a u t h o r i t y is hereby delegated to t h e Commissioner of I n t e r n a l Revenue to
approve all personnel actions effecting appointments, reinstatements, promotions
a n d transfers to positions in t h e Bureau of I n t e r n a l Revenue except to t h e
following:
D e p u t y Commissioner.
Assistant Commissioner.
The a u t h o r i t y herein delegated to the Commissioner of I n t e r n a l Revenue m a y
be redelegated b y him t o officials in t h e Bureau of I n t e r n a l Revenue.
T h e provisions of Personnel Circular No. 109 (Revised) dated March 19, 1951,
are revised accordingly by this order.
G. M. H U M P H R E Y ,
Secretary of the Treasury.
No.
154,
A U G U S T 7, 1952, D E L E G A T I O N O F F U N C T I O N S I N U . S . C O A S T G U A R D
DISABILITY RETIREMENT CASES
By virtue of t h e a u t h o r i t y vested in me by Reorganization Plan No. 26 of 1950
a n d 14 U. S. C. 631, t h e powers, duties, a n d functions vested in me by Title IV of
t h e Career Compensation Act of 1949, as amended, to make final determinations
a n d to t a k e final action in cases of members of t h e United States Coast G u a r d
processed for physical disability retirement are hereby transferred and conferred
upon t h e C o m m a n d a n t , United States Coast Guard.
J O H N AV. S N Y D E R ,
Secretary of ihe Treasury.
N O , 155, A U G U S T 22, 1952, D E L E G A T I O N O F A U T H O R I T Y T O N E G O T I A T E C E R T A I N
CONTRACTS FOR T H E B U R E A U O F E N G R A V I N G AND P R I N T I N G
1, P u r s u a n t to a delegation of a u t h o r i t y , August 12, 1952, from t h e Administ r a t o r of General Services to t h e Secretary of t h e Treasury under Section 302 (a)
of t h e Federal P r o p e r t y a n d Administrative Services Act of 1949, 63 Stat. 377;
p u r s u a n t to a u t h o r i t y of Section 307 (a) thereof; b u t subject to certain limitations
of Section 307 (b) (such limitations being set out in p a r a g r a p h 3 hereof) a u t h o r i t y is
hereby delegated to t h e Director of t h e Bureau of. Engraving a n d Printing t o
negotiate, without advertising, contracts a n d purchases p u r s u a n t to Section 302
(c) (2), (4), (9), (10), a n d (12) of t h e act in connection with t h e current p r o g r a m
294
195 3 REPORT OF THE SECRETARY OF THE TREASURY
for modernization of the equipment and operations of the Bureau of Engraving
and Printing.
2. The a u t h o r i t y t h u s delegated to t h e Director of t h e Bureau of Engraving
a n d Printing shall be exercised by him personally or t h r o u g h such responsible
subordinates as he m a y designate, and shall be exercised in accordance with all
applicable limitations in t h e act, including Section 307, a n d in accordance with
applicable policies, procedures, and controls prescribed by t h e General Services
Administration.
3, In accordance with Section 307 (b) of t h e act, (1) a u t h o r i t y to m a k e t h e
determinations specified in Section 302 vc) (12) (relating to standardization and
interchangeability of technical equipment) and, (2) with respect t o contracts
which will require t h e expenditure of more t h a n $25,000, authority to m a k e t h e
determinations'specified in Section 302 (c) (10) (relating to experimental a n d
developmental work and supplies) is not delegated, and remains in t h e Secretary.
J O H N W . SNYDER,
Secreiary of the Treasury.
No,
156,
SEPTEMBER
24,
1952,
DELEGATION
OF G E N E R A L
AUTHORITY
OVER
F U N C T I O N S I N T H E B U R E A U OP ACCOUNTS
By virtue of the a u t h o r i t y vested in me by Reorganization Plan No. 26 of 1950,
there are hereby transferred to t h e Commissioner of Accounts, to t h e extent not
heretofore transferred to him, the functions of all officers, employees, a n d agencies
of t h e Bureau of Accounts,
The functions herein transferred m a y be delegated by t h e Commissioner to
subordinates in t h e Bureau of Accounts in such m a n n e r as he shall from time to
time direct.
This order shall become effective as of October 1, 1952.
JOHN W .
SNYDER,
Secretary of the Treasury.
No.
157, O C T O B E R 1, 1952,
D E L E G A T I O N OF F U N C T I O N S R E L A T I N G TO M A R I H U A N A
ORDER
FORMS
By virtue of t h e a u t h o r i t y vested in me by Reorganization Plan No. 26 of 1950,
there are hereby transferred to t h e Commissioner of Customs a n d t h e Commissioner of Narcotics, to be exercised by either of t h e m separately, t h e functions
relating to notice a n d d e m a n d to produce order forms for m a r i h u a n a under
Section 2593 of the Internal Revenue Code.
The functions herein transferred m a y be delegated by t h e Commissioner of
Customs and t h e Commissioner of Narcotics to subordinates in.their respective
bureaus.
E.
H.
FOLEY,
Acting Secretary of the Treasury.
No.
158,
MENT
O C T O B E R 17,
OFFICERS
TO
1952,
AUTHORIZATION FOR C E R T A I N T R E A S U R Y
AVITNESS T H E
ASSIGNMENT
OF R E G I S T E R E D
DEPART-
ISSUES
OF
B O N D S AND N O T E S
D e p a r t m e n t Circular No. 300, as amended, prescribing regulations with respect
to United States bonds and notes, makes provision for t h e assignment of registered
issues a t t h e Treasury D e p a r t m e n t . The following officers are hereby authorized
to witness such assignments:
T h e Secretary of t h e Treasury.
T h e Under Secretary of t h e Treasury.
T h e several Assistant Secretaries of t h e Treasury.
T h e Commissioner of t h e Public D e b t .
T h e Assistant Commissioner of the Public Debt,
T h e D e p u t y Commissioner of t h e Public D e b t .
T h e Chief of the Division of Loans a n d Currency, Bureau of the Public Debt.
T h e Assistant Chief of t h e Division of Loans a n d Currency,
EXHIBITS
295
T h e Treasurer of t h e United States.
The Assistant Treasurer of t h e United States.
T h e D e p u t y and Acting Treasurer of the United States.
The Assistant D e p u t y Treasurer of the United States.
The Chief of the Division of Securities, Office of t h e Treasurer of the United
States.
T h e Assistant Chief of t h e Division of Securities.
No other officers in the Treasury D e p a r t m e n t a t Washington are authorized
to witness t h e assignments of registered issues of t h e United States,
The attention of all officers authorized to witness assignments is called to t h e
D e p a r t m e n t ' s requirement t h a t the witnessing officer must make certification
t h a t the person executing t h e assignment appeared personally before him, t h a t
such person was known or proved to him to be the payee of the particular security
assigned, or his duly constituted assign, a n d t h a t such person executed the
transfer, acknowledging it to be his free act and deed. Witnessing officers will
be held to strict accountability in those respects, and will be expected to respond
in respect to any losses resulting from w a n t of care on their part. The witnessing
officer must affix to t h e assignment his official signature, title, and address, and
the date of t h e assignment.
This order supersedes the order of J u n e 10, 1936.
JOHN W .
SNYDER,
Secretary of ihe Treasury.
No.
159,
O C T O B E R 27,
1952,
C O A S T G U A R D A U X I L I A R Y I N S I G N I A AND U N I F O R M
By virtue of the a u t h o r i t y vested in me b3^ Reorganization Plan No. 26 of 1950,
the a u t h o r i t y conferred upon the Secretary of the Treasury by 14 U. S. C. 891 to
prescribe suitable insignia a n d uniforms which m a y be worn by members of the
Coast G u a r d Auxiliary is hereby delegated to the C o m m a n d a n t , United States
Coast Guard,
J O H N W . SNYDER,
Secretary of the Treasury, .
N o . 160, N O V E M B E R 17, 1952,
I N S T R U C T I O N S P E R T A I N I N G TO C L A S S I F I E D S E C U R I T Y
INFORMATION
1. The purpose of this order is to establish current policy for internal delegations
of a u t h o r i t y a n d to provide further implementing instructions for the administration in the Treasury D e p a r t m e n t of Executive Order No. 10290, which prescribed
m i n i m u m standards for the classification, transmission, a n d handling of classified
security information.
2. No document originated a n d controlled for security classification in the
Treasury D e p a r t m e n t m a y be classified as security information subject to the
Executive order unless it contains official information of the United States Governm e n t which requires safeguarding in order to protect the national security. Regardless of the importance of such a document, the security information designation m a y be use
@FedFRASER