Full text of Press Releases of the United States Department of the Treasury : Volume 41

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TREASURY DEPARTMENT
Comptroller of the Currency
Washington
FOR RELEASE, MORNING- NEWSPAPERS,
Tuesday, April 7» 19^2.

Press Service
No. 31-°

--------

During the month ended March

Jl,

19^2, authorizations were

issued to receivers for payments of dividends to the creditors of
fifteen insolvent national banks.

Dividends so authorized will

effect total distributions of # 3 ,293»753
have proved claims aggregating $^-l,393» ^
of

7.96

percent.

authorized were

97»° 62 claimants who

7>

or

an average payment

The minimum and maximum percentages of dividends

^.^5

percent and

12.69

percent, while the smallest

and largest payments involved in dividend authorizations during
the month were $31,553 and $63^*900,

respectively.

dividends authorized during the month,

Of the fifteen

twelve were for final

dividend payments and three were for final and partial interest
dividend payments.

Dividend payments so authorized during the

month ended March 3^» 19^2, were as follows:

-

2

-

DIVIDEM) PAYMENTS TO CREDITORS OF INSOLVENT NATIONAL
BANKS AUTHORIZED DURING THE MONTH ENDED
_________________ MARCH 31» 19^2___________________

Name and Location of Bank

Date
Nature of
Dividend Authorized

Commercial National Bank
Washington, D. C.

Final

Seventh Street Savings Bk
Washington, D. C.

Number and
Percentage
of Dividend
Authorized

Distribution
of Funds by
Dividend
Authorized

Total
Percentage
Authorized
Dividends
to Date

Number of
Claimants

Amount
Claims
Proved

5 th

12.57$ $

703,200

82.57$

11,227

$ 5 .594.500

Final
Partial Int. 3-19-42

5 th

1 1 .8 $

121+,100

106 .g $

2.695

1 ,0 52,10 0

The National Bank of
Pontiac, Illinois

Final

3-18-1+2

6 th

7*150

52,200

72 .65$

2,76 6

729.500

The Rockford Nat’l Bk
Rockford, Illinois

Final

3-9-42

7 th

12.6956

1+56,700

gl+.69$

11,887

3.598,500

The Citizens Nat’l Bk of
Kokomo, Indiana

Final

3-13-42

7 th

3 .53 $

78.500

90 .197 $

6 ,9 19

2 ,387,000

Peoples-Ticonic Nat’l Bk
Waterville, Maine

Final

3-17-42

5 th

1+.32 $

233,000

89.32 $

10,085

5.393.800

The Ticonic Nat’l Bank
Waterville, Maine

Final

3-6-42

2 nd

5 .736$

31.553

1

550,087

The American NB & Tr Co
Benton Harbor, Mich.

Final
Partial Int. 3-10-1+2

Sth

5 .0 $

75.700

1+.500

1 ,514,900

The Commercial NB & Tr Co
St. Joseph, Michigan

Final

7 th

5-33%

11+3,500

5 .69 7

2 ,396,100

3-23-42

3-10-1+2

16 .736 $
10 1$
76 .49$

- 3 ~

Name and Location of Bank

DIVIDEND PAYMENTS TO CREDITORS OP INSOLVENT NATIONAL
BANKS AUTHORIZED DURING THE MONTH ENDED
MARCH 31* 1942
____________________ Continued_____________________
Total
Number and Distribution Percentage
Percentage of Funds by
Authorized
Date
Nature of
of Dividend Dividend
Dividends
Dividend
Authorized Authorized Authorized
to Date

Final

3 -3 1 -te

5th

9-92$

The Duquesne Nat’l Bk
Pittsburgh, Pennsylvania

Final

3-26-42

6th

The First Nat’l Bk of
Verona, Pennsylvania

Final

3-24-42

The Central Nat’l Bank
Spartanburg, S. C.

834,900

84.92#

20,142

$ 8,416,100

4.45$

154,200

94.45$

2,791

3,466,900

5th

6.5#

99.4oo

69 .O#

5 .2^5

1 ,529.600

Final
Partial int.3-18-42

7 th

7.38$

71

1 ,635,600

First Nat’l Bank
Spartanburg, S. C.

Final

3-27-42

6 th

-

The Diamond Nat'l Bank
Pittsburgh, Pennsylvania

7U>

4,250

1 ,602,600

First National Bank
Logan, West Virginia

Final

3-24-42

6 th

4.84$.
P

79.84#

3.986

1 ,526,200

-o O o -

$

Number of
Claimants

Amount
Claims
Proved

-

120 ,70 0
112 ,2 0 0
v

73.900

10 2 .38#

M

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, April 6, 19*1-2.

.

Press Service
No. 31-1

Secretary of the Treasury Morgenthau today announced that
the subscription bookB for the current offering of 1/2 percent
Treasury Certificates of Indebtedness of Series A-19^2 will close
at the close of business today, April

6.

Subscriptions addressed to a Federal Reserve Bank, or
Branch, or to the Treasury Department,

and placed in the mall

before 12 o fclock midnight,Monday, April

6,

will be considered

as having been entered before the close of the subscription books.
Announcement of the amount of subscriptions and the basis
of allotment will probably be made on Friday, April 10.

-oOo-

TREASURY DEPARTMENT
Washington
Press Service
No, 31-2

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, April 7» 19*12»_________

V6A2
The Secretary of the Treasury announced last evening that the
tenders for $150,000,000,
to be dated April

8

or thereabouts,

of 72-day Treasury bills,

and to mature June 19, 19*1-2, which were offered

on April 3, were opened at the Federal Reserve Banks on April

6.

The details of this issue are as follows:
Total applied for - 1333,669,000
Total accepted
- 150 ,*1-1*1-,000
Range of accepted bids:

(Excepting one tender of $20,000)

Equivalent
rate
approximately
O.I
5O percent
.t
11
11
a
II
0.280
“
Average
Price - 99*9^7

(91

h

0.26*4-

"

percent of the amount bid for at the low price was accepted)

-0 O 0 -

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, April 7. 1942«

j>ress Service
No. 31-3

The .Bureau of Customs announced today that due to changes in classification
upon appraisement of Peruvian cotton authorized for entry to the extent of the
quotas for the twelve months commencing September 20, 1941, provided for in the
President1s proclamations of September 5, 1939, and December 19, 1940, these quotas
are now found to be unfilled, as follows:
Established
Quota
(Pounds)

Approximate Unfilled
Balance - (Pounds)
jj

Peruvian cotton of less than
1-1/8 inches staple (other
than harsh or rough cotton
of less than 3/4 inch staple
chiefly used in manufacture
of blankets and blanketing,
and other than 1inters)
Peruvian cotton of 1-1/8 inches
or more but less than 1-11/16
inches staple (other than
linters)

247,952

151,000

2,056,299

146,000

To afford importers an equal opportunity to present for quota allocation
Peruvian cotton which may be awaiting entry under the quotas, the collectors of
customs have been instructed to provide for the simultaneous presentation of
entries for consumption and warehouse withdrawals for consumption covering such
cotton on April 15, 1942, at 12 noon, Eastern War Time, 11 A. M., Central War
Time, 10 A. M., Mountain War Time, and 9 A. M., Pacific War Time.
If entries and withdrawals for consumption presented at that moment of time
cover quantities of Peruvian cotton in excess of the quotas, the quantities which
may be admitted to entry under the quotas will be prorated oh the basis of the
quantities presented for entry. If the quotas are not filled at the moment of
reopening, entries and withdrawals presented thereafter will be authorized for
acceptance within the quotas in the order of the time of their presentation in
proper form. No quota status will attach at the reopening of the quotas by reason
of the presentation of an entry or withdrawal prior to April 15, 1942.

-oOo*

Statement of Randolph Paul,
Tax Adviser to the Secretary of the Treasury,
Before the Committee on Ways and Means
of the House of Representatives
on percentage depletion and related allowances
April 16, 1942
In statements before your committee on March 3, 1942,
the Treasury recommended the elimination of (1) percentage
depletion and (2) the privilege available to the oil and
gas and mining industries of expensing development costs.1/
Several witnesses have appeared before your committee in ~
opposition to these recommendations. I should like now
to present evidence supporting the Treasury1s position and
to refute the arguments made by the representatives of
these industries in favor of existing provisions of the
statute.
I.

ELIMINATION OF PERCENTAGE DEPLETION

The Treasury believes that the favored treatment to
a particular industrial group involved in percentage
depletion should not be retained in an all-out war tax
1/

For oil and gas wells, the Regulations give the tax­
payer the option of charging "intangible development
costs" to expense, or to capital account to be re­
covered through depletion. The Regulations define
"intangible development costs" as mvages, fuel,
repairs, hauling, supplies, etc., incident to and
* necessary for the drilling of wells." [Regulations
103, Sec. 19.23 (m)-16]
For mines, the Regulations provide that all develop­
ment costs may be charged to expense except develop­
ment costs in excess of receipts while the mine is in
the development stage. The latter shall be charged
to capital account recoverable through depletion,
[Sec. 19.23 (m)-15]. Development costs for mines are
. expenditures incurred in the development of the mine
other than expenditures on depreciable property.

31-4

program. Percentage depletion does not appreciably
stimulate exploration and discovery. It is not essential
to the maintenance of the output of stripper wells. Its
elimination will in no way endanger the supply of raw
materials needed for the war effort. The continuance of
the special privilege involved in percentage depletion
would"allow the oil and mineral industries to escape their
fair share of the tax burden at a time when millions of
small taxpayers are being asked to save and sacrifice
for the winning of the war-. The continuance of the pro^
vision at such a time cannot but adversely affect the
M
Of the American
mo:
It is. estimated that at 1942 business levels and
proposed 1942 tax rates the elimination of percentage
depletion and the substitution of cost depletion will
■v, revenue dj Pi 7 million, i/
pproximately
increase tne
75 percent of this total i: accounted Tor by oil and gas
sulphur, metal, and oal mines,
■4b- Ü
properties,
percentage depletion is a special privilege
combined normal and
The 1941 Revenue Act levied
ncome of corporanet
surtax rate of 31 percent on the
tions irf excess of $25,000. In addition, an excess
profits tax was imposed with rates ranging up to^OO percent. Yet many oil companies pay extremely low income
taxes, and most oil companies pay no excess profits taxes.
Some actual examples of oil companies that made provision
for Federal income taxes of less than 31 percent of net
Income are listed in Exhibit 1. Each of the four ma jor
et aj ide fo: Federal
jted in that exh
oil companies
income and excess profits taxes less than 26 percent of
its 1941 net income reported to stockholders. The 13
minor companies, w ich generali speaking were engo
... Eed
more exclu: ively^jin production, se t aside an even smaller
,4 ot mi one, the percentage varying from 18 percent to
part
as little as 2 percent.
The striking difference between the percentage of
income absorbed by taxes for these companies and the

1/ At existing rates the revenue Increase is estimated at
$87 million.

- 3 statutory tax rates is to some extent attributable to
differences between book income and taxable income
common to all corporations. In the main, however, it
is attributable to the special percentage depletion.
The companies ordinarily report.depletion td their
stockholders on a cost basis, but receive for tax
purposes a very much larger allowance of percentage
depletion.
Despite the statutory provision limiting percent­
age depletion to 50 percent of the net income from each
property, the use of percentage depletion instead of
cost depletion enables many companies to cut their
taxable income by much more than 50 percent. 1/ Exhibit
2 gives a few actual examples.
For the first~tWo com­
panies cited, percentage depletion converted sizable
net incomes into deficits, for the third company, it
reduced net income by more than 75 percent, for"the
fourth company, It almost completely wiped out net in­
come. The examples given in this exhibit are not
untypical.
The amount treed irom taxation through percentage
depletion bears little or no relation to the"actual
cost of the depleted property. Percentage depletion
continues even after IQCfpercent of the cost of the
property has been recovered. For example, one of the
leading oil companies in the East Texas field still
has in the^ground more than three-opuarters of the
original oil reserves in 10 oil properties. Yet this
company has recovered through percentage depletion,
and the related option to expense intangible develop­
ment expense, more than the entire cost of the property
1/

Reductions in taxable income by more than 50 percent,
despite the statutory limitation, are possible because
the law specifies that percentage depletion be computed
with respect to each property separately. Consequently,
after the taxable income of properties showing net
income^has been reduced by a maximum of 50 percent by
depletion allowances, it can be reduced still further
by the deduction of losses on other properties.

- 4 and of intangible development. If, on the remaining
reserves, this company should obtain depletion allow­
ances at the rate enjoyed thus far, the aggregate
deductions for depletion would approximate five times
the cos of the properties, and the aggregate deduction
for both depletion and intangible development costs
would approximate three times th cost of the properties
plus intangible development costs. (Exhibit 3
B.

The elimination of percentage depletion will
not endanger the supply of raw materials needed
for "the war effort

The claim that the elimination of percentage
depletion will endanger the supply of raw materials
needed for the war effort cannot be accepted.
1,

The oil industry

a. Production and reserves. The production of
crude oil in 1941'was the highest in our history. At
the same time the known reserves of crude oil increased
to an all-time high. Total reserves of 20.3 billion
barrels were about fifteen times the output in 1941.
(Exhibit 4) Even the record output- of 1.4 billion barre Is in 1941 was below the maximum achievable. The
production of oil in at least some States, including
is still proceeding under proration regulations
Texa
designed to reduce output to probable market demand.
--------------

j

j_

CP

jl

e -J

While military requirements for oil products in
1942 will increase very substantially over 1941, civilian
consumption will decrease greatly because of the transpor­
tation and rubber shortage, so that total consumption is
not likely to expand and may even decline. The loss of
oil-producing areas in the Far East wil ■throw a greater
burden upon American oil resources; but the shortage of
tankers will make it necessary to replace the supplies
formerly produced in these areas by restricting civilian
consumption rather than by expanding production in this
country. Recent increases in the seriousness of the^
transportation shortage have already led to a reduction

- F> of production. The Office of Petroleum Coordinator
early in March ordered a widespread
.ction in output
V.
throughout the Southwest. 1/ Later, the State authori­
ties in Texas ordered 18 shutdown days in April. This
marks the first time in the history o; proration in
Texas that the oil wells have been ordered to shut down
for more days than they are permitted to produce. 2/
It is clear that the p r o V em of oil supply is a problem
of transportation and"not of production or limited
r erves.
b. Stripper wells. Witnesses opposing the Treasury’s
recommendations" have claimed that their adoption would
lead to the widespread abandonment of stripper wells -- the
wells with relatively low output and high cost of production,
C1.ear. y, the elimination of percentage depletion would not
have any such effect. Most stripper wells produce small
amounts of oil under conditions that leave little or no
book profit. The operators of such wells get little, if
any, benefit from percentage depletion .because of the
statutory limitation of percentage depletion to 50 percent
oi net Income from the property. The continued operation
of these properties cannot be dependent on the continu­
ance of percentage depletion. They
continued in opera­
tion because current revenues exceed ”out of pocket” costs,
although they may not exceed total cost, including deprecia­
tion, depletion, and overhead.
In a sample study, based on the tax returns for a
large number of properties in Pennsylvania, it has been
found that of the properties producing fewer than 400
barrels a year nearly one-half showed no net Income even
before any allowance for depletion, ,.Olese
:Tl
properties get
no percentage depletion under existing law. Other properfies get only
-o a negligible amount of depletion because of
tixe
percent n< income limitation. Only one out of
twelve properties got percentage depletion equal t o -27-1/2
percent of gross income, the maximum amount allowed by
/

W o 1 '1

Street Journal, March 5, 1942.

Oil and Gas Journal, April 2, 1942, p. 16.

6
existing lav/. In order to qualify for this maximum
percentage depletion allowance, these properties had to
have net incomes in excess of two times 27-1/2 percent
or 55 percent of gross income. Such a large margin of
profit is not characteristic of the stripper well. The
salvation of the stripper well industry lies in advances
in crude oil prices rather than the nercentap*e depletion
provision.
In support of the claim that the elimination of
percentage depletion would lead to the abandonment of
stripper wells, it has been maintained that the provision
for percentage depletion introduced in the Revenue Act
of 1926 led to a substantial increase in production from
the eastern part of the United States. It is true that
there was a substantial increase in the production of
cruae oil m Pennsylvania and New York after 1926. However,
this increase seems directly traceable to the development
of water flooding methods, methods that were first permitted
by local lav/ in 1921, 1/ The resulting increase in produc­
tion manifested itself prior to the enactment of percentage
depletion. Between 1921 and 1926 there was a steady in­
crease in production, the increases being minor from 1921
to 1924, but substantial from 1924 to 1925, and again
from 1925 to 1926. Naturally, the full effect of this
new technique for extracting oil was not felt at once
and continued to operate after 1926. (Exhibit 5)
c. The effect of price. The effect of percentage
depletion on production is negligible compared to the
effect of price changes. In 1941 the tax relief attribu­
table to percentage depletion amounted to about 5 cents
per barrel of oil. In that year the price of oil went up
8 cents a barrel. In Pennsylvania it rose by even more -since August, 1940, by 90 cents a barrel including a recent
increase of 25/ per barrel granted by the Office of Price
Administration to stimulate output in that area.
1/

Pennsylvania Statutes 1920, 16, 268a-3, Acts 1921,
p. 912,3 (amended 1929, page 821).

7
2.

The mining industry

The conditions of supply vary widely for different
metals. Some are in abundant supply; others are limited
as to known deposits; still others, like aluminum and
manganese, are limited by the availability of power,
processing plants, and materials for exploitation, for
example, explosives and mining equipment made of steel.
These variations in supply conditions have been
recognized by the agencies dealing with the problem of
war production. In the case of some metals, premium
prices have been established to stimulate production;
in other cases direct assistance in adding to equipment
for recovery has been extended. This approach clearly
indicates the diversity of situations in the mineral
industry and the difficulty of trying to accomplish
specific results by any general tax relief such as
percentage depletion.
Representatives of the mining industry have pointed
out that the acceleration of production for war purposes
will subject the industry to greatly increased income
and excess profits taxes at the time when it is exhaust­
ing reserves that might be produced in later years under
lower tax rates. The Treasury is aware that producers
of exhaustible mineral resources face a special problem
in increasing production by using available reserves,
and is studying methods of providing appropriate relief
under the excess profits tax. This problem, which in­
volves both price policy and tax policy, affects all
producers in the industry and not only the relatively
few who now benefit from percentage depletion. Any
solution of this problem' should be applicable to the
large number of producers who now get no benefit from
percentage depletion as well as to those who do.
C . Percentage depletion cannot be justified as
a stimulus to exploration aria"discovery
The original enactment of discovery depletion in
1918 was prompted by a fear of mineral shortages and the
desire of Congress to stimulate the discovery of mineral

-

8

-

properties and compensate for the hazard involved in
prospecting. 1/ The shift to percentage depletion in
1926 was in the interest of simplicity of administra­
tion; problems involved in determining which taxpayer
was entitled to the benefit of the discovery, the
exact date when the discovery was made, and the value
of discovery wells within 30 days of discovery were
difficult and led to extensive controversy.
YJc now know that the 1918 fear of oil shortages
was unfounded. It is also clear that we did not need
this special discovery provision to obtain exploitation
of our natural resources, and that the provision has
been extremely costly in terms of the revenue. It is
not true that the development occurring between 1918
and the present time has been the result of tax in­
centives. It has been due principally to high prices
and improvements in the technique of discovery.

1.

The oil industry.

a.
The importance of o t h e r factors. The tre­
mendous post-war"expansion of the oil industry is
attributable to the factors mentioned and not, as
witnesses before your Committee have claimed, to the
enactment of the discovery depletion provision by
Congress in the 1918 Act. During this period the
automobile industry expanded enormously. The extended
use of automotive transportation created a strong
demand for oil products which led, in turn, to a high
level of crude oil prices; it also stimulated technical
advances to raise the gasoline recovery ratio. It was
these factors, and not percentage depletion, that ac­
counted for the increase in reserves and in output.
i.
The influence of price. The importance of
the price of oii products in stimulating or retarding
the search for oil is clearly reveaHed by Exhibit 6

1/ Senate Report No. 617, 65th Cong., 3rd Session, p. 6.
Senate Document No. 280, 65th Cong,, 2nd Session,
p . 6.

9 and Chart 1 which shows for the period 1917 to 1941
the number of wells drilled and the average price of
oil per barrel. In all except five of the twenty-five
years covered by the exhibit the number of wells
drilled changed in the same direction as the average
price per barrel, rising when the price rose and de­
clining when the price declined.
ii. The influence of technical developments.
While price changes have been the major stimulus"to
the search for newr oil the effectiveness of this
search has also depended in large part upon develop­
ments in the technique of discovery and on pure
chance. Immediately after the first World War there
was a great advance in the application of scientific
knowledge to the discovery of oil. According to
a study by the National Research Project, scientific
approaches have accounted for an increasing proportion
of oil discoveries, while wildcatting based on
"hunches" has become relatively less significant.
According to this study, the ultimate production from
wells discovered by scientific methods between 1922 .
and 1938 was estimated at about 14 billion barrels,
whereas the corresponding figure for wells, discovered
by other methods was only slightly over 5 billion bet .
barrels. (Exhibit 7) The application of scientific
knowledge to the search for oil has not, however, re­
duced the discovery of oil to a routine matter. The
unusual strike, such as that in East Texas, respects
neither price nor technology. Such exceptionally
fortunate discoveries of large pools are naturally
irregular. Provisions enacted in the -law cannot make
them otherwise.
iii. The influence of war priorities. Percentage
depletion should' be a particularly negligible factor
in the discovery of oil during the war period. The
shortage of steel has led the Wrar Production Board to
restrict the use of steel in drilling oil wells to
such an extent that drilling will be curtailed by
about 40 percent In 1942. This restriction is limited
primarily"’to the drilling of development wells raf-her

Chart I

NUMBER OF W E L L S DRILLED FOR OIL AND GAS
AND PRICE OF CR U D E PETROLEUM, 1917-1941

Office of the Secretary of the Treasury
Division of Tax R esearch

c _ 426

-

10

than discovery or wildcat wells. The latter have been
granted a priority rating of A-2, the former of A-8.
In addition, the Office of Petroleum Coordinator is
urging the industry to drill at least 4,000 wildcat
wells in 1942 compared with 3,100 drilled last year,
even though the total number of wells drilled will
probably be reduced from 32,000 in 1941 to fewer than
19,000 in 1942. The forced restriction in the drilling
of development wells will release substantial funds for
the drilling of the wildcat wells. The saving from the
drilling of fewer development wells in 1942 will exceed
the cost of all wildcat wells expected to be drilled in
1942. The shortages necessitating curtailments in the
drilling of development wells are likely to continue,
and, indeed, to be intensified during the entire war
period.
b . The ineffectiveness of percentage depletion
as a stimulus to the prospector
Even if percentage depletion’contributed to the
stimulation of exploration and discovery — and we do
not agree that it does -- it would be an extremely
wasteful and costly method. It would have been cheaper
for the Government to have paid the entire cost of
drilling all the dry holes classified as wildcat wells
in 1941. The estimated cost of drilling these holes
was about $50 million, 1/ the estimated loss in revenue

1/

Ir

At the Hearings on the Cole Bill reported in Oil
Weekly for March 2, 1942, (p. 14), it was estimated
that In 1941, 3,113 wildcat wells were drilled of
which 486 were successful, and 2,627 were dry holes.
At an average drilling cost of $17,300 per hole
(reported for 1935 in Petroleum and Nature.1 Ga s
Production, National Research Project, Works Progress
Administration, p. 203) these dry holes involved an
expenditure of $45,447,000. At an average cost per
hole of $20,000 (an outside figure allowing for
possible increases in cost) the 2,627 dry holes in
1941 represented a total drilling cost of $52,540,000.

-

11

from percentage depletion attributable to oil and gas
wells was more than $65 million. The reason why per­
centage depletion is so ineffective a stimulus is that
a large part of the benefit accrues not to prospectors
but to operators and royalty ‘owners.
i. The operator. Twenty major integrated compa­
nies have been reported to account for about 53 percent
of the total crude petroleum production of the United
States. While data for these 20 companies are not
available, it was estimated that the major companies
in 1941 accounted for only 25 percent of the wildcat
wells drilled and 36 percent of the footage drilled. 1/
Their share in the direct benefits of percentage deple­
tion is much larger than their share in the prospecting
for new oil, since they frequently purchase properties
with potentialities which have been established by the
activities of independent prospectors.
ii. The royalty owner. Royalty owners who bear
little or none of the cost ’of prospecting obtain dis­
proportionate benefits from percentage depletion.
They have little or no investment to charge against
income, which makes the percentage depletion allowance
particularly valuable to them. The benefits^of per­
centage depletion to royalty owners are confined
largely to taxpayers having ownership prior to the
discovery of oil. Purchasers of royalty interests in
developed properties ordinarily pay a sufficiently high
price to entitle them to larger depletion allowances
under cost depletion than under percentage depletion.
c . Other provisions favoring the prospector
There are several statutory provisions designed
to provide relief to the prospector. The Mineral Lands
Leasing Act of 1920 provides that successful completion
of a well on the public lands entitles the prospector

1/
~~

Hearings on the Cole Bill reported in Oil Weekly
for March 2, 1942.

to a lease at a royalty rate of 5 percent -- less
than half the customary commercial royalty of 124percent. Section 105 of the Internal Revenue Code
limits the surtax imposed by Section 12 to 30 percent
of the selling price In the case of
oil or gas
property, the principal value of wh: .cù has been demonstrated by discovery work done by the taxpayer.
Finally, Section 721 of the Code provides for relief
under the excess profits tax in the case of abnormal
income resulting from exploration, discovery, and
prospecting.
2.

The mining industry

The unimportance of percentage depletion in
stimulating discovery and exploration is even clearer
with respect to the mining industry thr;n in the case
of the oil industry. The development of mining
properties in the field of the basic metals has
passed beyond the stage of prospecting risk and ad­
venture, and has settled down to a predictable,
scientific, and commercial business enterprise in­
volving the use of low-grade ores.
Except for the metals that have more recently
become of commercial importance, domestic deposits of
high grade ores were fully explored many years ago.
Growing demand and technological development, further
stimulated by the war emergency, have led to more
extensive exploration of low-grade ores. This cannot
be termed "discovery”, since the deposits for the
most part have been known to exist. A recent proposal
by the Secretary of the Interior calls for a program
of extensive exploration of additional low-grade ores
-- to be carried out at Government expense. 1/ More­
over, most mineral deposits -- including metals of
more recent .commercial importance -- are not developed
by original•prospectors; their development requires
large amounts of capital and is of necessity undertaken
by established enterprises._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
1/
~

Department of the Interior, Press Release,
Februairy 16, 1942.

- 13
D.

Percentage depletion cannot be justified by
any special risks in the oil industry

The hazardous character of the oil industry has
been cited as a reason for retaining the specially
favorable tax treatment accorded the industry through
percentage depletion. The possibility that percentage
depletion may permit the recovery of considerably more
than the actual cost of exploration and development of
a productive well has been said to be justifiable on
the ground that the excess is needed to compensate for
the cost incurred in connection with wells that never
become productive.
The answer is that percentage depletion is largely
ineffective in accomplishing the desired objective and
that the law contains other provisions for the offset­
ting of losses against gains. Further, the past two
decades have seen changes in the organization of the
oil industry that have made it better able to bear the
risks of prospecting. Larger companies have become
more important and have shouldered a larger part of
the costs of prospecting.
a.

Provisions for the offsetting of losses
against profits

Percentage depletion is of no help to the operator
who loses his capital in repeated unsuccessful ventures,
since he gets the benefit of percentage depletion only
if he develops property that yields a net income. On
the other hand/ the operator who engages in both success
ful and unsuccessful ventures is permitted, both under
the present law and the Treasury’s proposals, to offset
the- cost of dry holes and unproductive leases against
current income from productive property; he may also
carry forward operating losses for two years. Conse­
quently, even without percentage depletion, provision
is made for the offsetting of losses on unsuccessful
ventures against gains in successful ventures. No
satisfactory reason has been offered why one operator
should be permitted to recover more than his capital
investment because another has lost his capital.

- 14
b . Changes in the structure of the industry
During the twenty years of discovery and per­
centage depletion the structure of the oil industry
has changed substantially. The industry is now in
a much better position to offset losses against income
from successful wells, and thus to distribute the
prospecting risk. Domestic production of crude
petroleum in 1941 was about four times as great as
in 1918. The estimated investment in crude petroleum
production of $5.7 billion in 1935, together with
investment in transportation, refining, and marketing,
makes the combined petroleum industry the fourth
largest in the country in terms of investment.
(Exhibit 8) The gross investment in petroleum
properties, plant and equipment more than doubled
from 1921 to 1938, increasing from $6.5 billion to
$14.8 billion. , (Exhibit 9)
This increase in the size of the industry has
been accompanied by the integration of production
with transportation, refining and marketing with the
result that the risks of prospecting are actually
distributed over a very large aggregation of capital.
Twenty major integrated companies have been reported
to account for about 53 percent of the crude petroleum
production of the United States, 72 percent of the
mileage of crude oil pipe lines, 87 percent of the
tonnage of oil tankers, 76 percent of the crude oil
refining capacity, and 80 percent of the gasoline
sales of the entire petroleum industry in the United
States. (Exhibit 10) This integration is^the develop­
ment of recent years* Six important refining and
marketing organizations that owned no important producing
properties in 1918 now account for 38 percent of the
crude petroleum production of the 20 major companies and
16 percent of the national total. (Exhibit 11)
Although these large producers account for a
smaller share of prospecting and exploration than of
production, they now bear more of the cost of explora­
tion, either directly or indirectly, then they did when
discovery depletion was first enacted. The use of

- 15 so-called scientific methods for locating oil deposits,
deeper well drilling, and other^factors increasing
capital requirements have tended to favor the large
operator. Large producers also make what are termed
dry hole contributions to independent wildcatters and
purchase leases in prospect areas from the wildcatter.
Loan! to “mance drilling
Concern has been expressed that the elimination of
percentage depletion would make it difficult to borrow
money to finance dri .ni or oil. The testimony presented to this Committee has indicated that bank loans
are commonly made only on the basis of productive-proper­
ties. The servicing of such loans depends on the ability
of the operator to recover his capital investment and to
earn a sufficient margin over his operating costs to pay
interest on the loan. The Treasury^proposal would in no
way interfere with the recovery of the capital investment
since depreciation and depletion allowances would be^per­
mitted equal to the amount invested. Moreover, the interest,
paid on the loan is an allowable deduction from gross income
in computing taxable income. Consequently, percentage
depletion does not benefit the taxpayer unless his income
exceeds the amount needed to repay capital cost^and to pay
interest on outstanding loans, i.e., unless he is a good
credit risk without the benefit of percentage depletion.
E.

iminat ion of percentage depletion will
The
ImpTiTy the computat .on of the tax

Percentage depletion is not a simple method of
computing the dep tion allowance. Under existing law
percentage depletion is computed separately for each^
property. This involves serious difficulty, first, m
_.ermining the price of the product at the property,
nd, second, in allocating expenses. The extensive

-

16

-

litigation 1/ that has resulted from the necessity of
computing percentage depletion for each property separately
is sufficient evidence of its complexity. Moreover, the
provision for percentage depletion has not obviated the
necessity of computing depletion based on cost. Since
taxpayers have the option of using the one or the other
basis, they generally compute cost depletion in order to
protect themselves. Further, in their reports to stock­
holders, corporations ordinarily use cost depletion rather
than percentage depletion.
F.

Percentage depletion is not justified as an offset
to the heavy burdens of other taxes

It is claimed that special relief from the income tax
in the form of percentage depletion is justified because
the oil industry now bears a heavy tax burden in the form
of gasoline taxes, property taxes, and State production
or severance taxes. This claim cannot be accepted. Neither
the property nor the production taxes are restricted to the
They affect other industries as well
oil industry alone
particular industry,
and justify no special re lief for th
peculiar
to
the oil industry,
While the gasoline taxes are
part "by the consumer rather than
they are borne in
the producer.
1/

Palmer vs. Bender, 287, U.S. 551; Twin Bell Oil
Syndicate, 293 U.S. 312; Vinton Petroleum Company
of Texas, certiorari denied, 293 U.S. 601; Consumers
NaturalTras Co., certiorari denied, 296 U.S. 634; J *J«
Perkins, 302 U7S. 655;' Mountain Producers Corporation,
U U 2 ^ 0 . 681; Bankline Oil Co.. SoiTU.S. 362; Thomas A.
O ’Donnell, 303 U.S. 370; "WITshire Oil Co., 308 U.S* wj
J'.~~Sfeve~Anderson, 60 S. TMTT 952; ~ErBe~0Tl Land Develop­
ment Co., 53 S. Ct. 621; Atlas Milling Co.,'29~Fed. Supp
M S T E o c ky Mountain Oil Co., 36 B.T. a T 365; Montreal
Mining Co.7 41 B.T.A. 399; Mirabel Quicksilver Co.,? 41
B.T.A? 401; Sheridan-Wyoming Coal Co., U.S. Ct. of
Appeals for Dist. of Columbia^ 7768-Decided 12-31-41.

II.

ELIMINATION OF THE INTANGIBLE DEVELOPMENT
EXPENSE OPTION

The Regulations now give taxpayers the option of
expensing intangible development costs of oil and gas
properties. They also permit the expensing of the
development costs of mines except the excess of costs
over receipts for mines that have not yet reached the
state of production. This excess must be charged to
capital account to be recovered through depletion. It
is recommended by the Treasury that the expensing, of
development costs be eliminated and that all development
costs of productive properties be capitalized. Companies
that elect to expense intangible development costs for
tax purposes frequently capitalize intangible development
costs in their reports to stockholders. Intangible
development costs are a proper capital asset for purposes
of reports to stockholders; they are likewise a proper
capital asset for tax purposes.
u.
4*
It is estimated at levels of business for the calendar
year 1942 and at the proposed tax rates that the elimina­
tion of the expensing of development costs alone,, without
the elimination of percentage depletion, would increase
the revenue by $84 million. 1/ The combined effect of
eliminating percentage depletion and the expensing of
development costs would be to increase the revenue by
$206 million. 1/
Under the existing law, a taxpayer who uses percentage
depletion and who is not subiec-t to the net income limitation gets the same depletion allowance, whether he capital­
izes his development expenses
or deducts them currently
as
-L
v
expense. Expensing his development costs gives him an
additional deduction; capitalizing them does not. The
expensing of development costs is, therefore, equivalent
to allowing a double deduction, once when the costs are
incurred, and once through percentage depletion. (For
illustration of excessive allowances, see Exhibit 3)
1/ At existing rates the estimates are $63 million and
$155 million respectively.

If percentage depletion were eliminated and cost
depletion substituted, the, option of expensing develop­
ment costs would not involve a double deduction. In
that case, if development costs were capitalized, they
would be included in the base to be depleted and would
be recovered through depletion allowances; if the costs
were expensed, the base to be depleted would be smaller
and hence the depletion allowance less.
Expensing of development costs should be eliminated,
however, regardless of the action taken with respect to
percentage depletion. This privilege is not permitted
to other groups for comparable capital outlays. The
drilling cost of a productive well, for example, is a
capital investment in the same way as the cost of a build­
ing or of equipment to a small retailer or manufacturer.
There seems no-"more justification for allowing the capital
investment in the fell to be deducted from current gross
income than for ¡¡Slowing the retailer or manufacturer to
deduct his capital investment from his gross income at
the time when the investment is made.
The original option for oil and gas wells dates back
to 1917. The regulations .contemplated development work
done directly by an operator; they are written in terms
of exp endi tur e s by an op erato r on wages, fuel, and other
items. The trend in the industry since the adoption of
the regulations has been toward drilling by independent
contractors. The decisions of the Board of Tax Appeals 1/
suggest that under the regulations operators may no longer
be entitled to expense development costs where the operator
does not drill the well himself, but pays a fixed price
under a contract. The Treasury is reluctant to continue
the option in force in view of these administrative and
legal problems.

1/ Retsal Drilling Co., 42 B.T.A., 1,057, and W. D. Ambrose,
42 B.T.A. ,- '1,405, •[Pending C.C.Á.-5)

f

19 It may be suggested that the expensing of develop­
ment costs could be disallowed merely by changing the"
Regulations. It might be claimed, however, that the
interpretation given by the Regulations has- become imbedded
In the statute, since it is of long standing and has been
retained unchanged in the Regulations concomitant with
several re-enactments of the basic legislation. 1/ To
avoid controversy, it would be best to eliminate The ex­
pensing of development costs by statute rather than by
amending: the Regulations.
to expen se intangib le
to on t:he grounds that
s
e
g regat ing such expense
taxpayers would have difficulty in
from others. xHO
perience of th -Bureail 1of Internal
Revenue does not
port this claim.# Stai~ejtilents have he en
made bvit the Indep<
Drillers Association that more than
80 percent oi all
lls are drilled by members of their
Association. Most
Mo s of these are drilled at a fixed price
under a contract that differentiates intangible costs from
others.
U.C V C X U jJ-lHC - i i U

tri

OUCOO

-L ido

U C t-il

U U j " O 1C

POSSIBLE ALTERNATIVES TO THE ELIMINATION OF PERCENTAGE
DEPLETE

The Treasury is firmly convinced that percentage deple­
tion should he completely eliminated. However, in case your
Committee prefers partial retention and modif I cation of
percentage depletion to its elimination, I should like to
make some suggestions along; that line.
A.

Continuanee of percentage depletion for stripper
wells~an5 marginal mines only

If your Committee desires to continue percentage deple­
tion for stripper wells and marginal mines, this might he
accomplished by the following:
a. Oil ____
and _gas
Permit Ipere
_ _ _ _properties.
________
-age deple­
tion at tho rate of 'So percent~of net income from the property
for taxpayers who operate oil or gas wells on which the unrestrictcd'production Is not more than 1-1/4 barrels, per
1/ Griswold f A Summary of the Regulations problem, 54
Harvard Law Tie view 398, 1941.

20

-

ner day and on which the net income from the property
(computed without allor/ance for. depletion) is not more
than 10 percent of the gross income from the property*
This allowance shall he restricted to taxpayers who hear
the actual burden of the cost of operating the property.
h. Mines. Permit percentage depletion at the rate
of 25 percent of net income from the property, for tax­
payers who operate mines on which the net income from the
property (computed without allowance for depletion) is
not more than 10 percent of t h e ,gross income from such
property. This allowance shall ’he restricted to taxpayers
who hear the actual burden of the cost of operating the
property.
B.
1.

Treatment of new discoveries.

Proposal

If your Committee 'should desire to continue percentage
depletion not only for stripper wells and marginal mines hut
also for new discoveries, this might be accomplished by the
following provisions for properties becoming productive
after December 31, 1341,
a. Oil and gas properties. On future discoveries
of new pools^ allow depletion not to exceed 27-1/2 percent
(or a lesser percentage) of gross income to taxpayers con­
tributing the equivalent of 25 cents or more per foot of
hole drilled for wells less than 6,000 feet in depth and'
50 cents per foot of hole drilled for wells in excess of
such depth.
b. Metal mines. On metal mines hereafter discovered,
allow 10 percent of gross income for taxpayers who bear the
burden of the cost of exploration, development, and opera­
tion of the property.
c. Non-metal and coal mines. For non-metal mines,
including coal mines, hereafter discovered, allow 5 per­
cent of ogross
income for taxpayers
who bear the burden
i. c/
of cost of exploration, development, and operation of
the property.

21
If these allowances were made, the present limitation
of percentage depletion to 50 percent of the net income of
the property (computed before deduction of depletion) should
he retained.
2.

Reasons for the proposal

Tax incentives for stimulating desirable industrial
developments can be justified only if they are effective
in terms *of their cost to the public. Accordingly, if
it is desired to continue tax incentives to encourage
discoveries in minimi:
such incentives should
O -properties,
L'"~ “r
be denied properties ths t will be developed in the ordì: iary
course of extending the recovery of known commercially
profitable üiineral deposits
It is suggested that for oil and gas wells this can
be done by defining a discovery as a ’'pool’1 outside of
the limits of a previously discovered and proven oil or
gas pool. It is suggested further that the benefits of
discovery allowances be limited to those contributing
substantially towara the cost of the exploration of a
new pool. Per sons who, through fortuitous circumstances,
s the beneficiaries of mineral deposits
find thems
discovered bj others, have made no economic contribution,
For thi reason, it is proposed that a minimum financial
contribution be required varying with the depth of the well.
It Is suggested that for mines the definition of
discovery used in the present Regulations 1/ be adopted.
The benefits might be limited to taxpayers*”who bear the
cost of exploration, development, and operation of the
property.
C.
1.

Special treatmen

of existing properties

Proposal

If, further, your committee desires to accord special
treatment to all taxpayers who developed properties prior
to January 1, 1942, this could be accomplished by the
f o11owing prop o sa1:
1/

Regulations 103, Section 19.23 (m) -3,

-

22

a. Oil and gas properties. Permit percentage
depletion at the rate of 15 percent of gross income for
taxpayers who elected to charge intangible drilling and
development costs to capital account in prior years* and
at the rate of 5 percent of gross income for taxpayers
who elected to charge such costs to expense.
h* Metal mines. Permit percentage depletion at
the rate of 10 percent of gross income for metal mines
of taxpayers who capitalized intangible development
costs in.prior years, and at the rate of 5 percent for
taxpayers who charged such costs to expense.
Non-metal mines including coal mines. Permit
percentage depletion at the rate of b percent of gross
income^for non-metal mines of taxpayers who capitalized
intangible development costs in prior years, and at the
rate of 2 i percent for taxpayers who charged such costs
to expense.
If these allowances were made, the present limita­
tion of percentage depletion to 50 percent of the net
income^of the property (computed before deduction of
depletion) should be reduced to 25 percent.
Moreover, if percentage depletion were continued for
mines, it should not be required that taxpayers make a
binding election in order to secure the percentage de­
pletion allowance.
Reasons for proposal
The reduced rates. The available evidence
suggests that the present rates applicable to gross
income in computing percentage depletion are much more
generous than is justified in view of the costs of ac­
quiring properties and of developing them. As shown in
Exhibit 12 for 1934 the U. S. Department* of Interior re­
ported that cost depletion amounted to about 7 i percent
of the average selling price, and intangible develop­
ment costs, on a capitalized basis, amounted to about
6 percent.

oo
¿SO
The increase in tax rates since these percentage
provisions were enacted make them far more generous
now than they were when enacted. For example, the 1936
normal tax on corporations reached a maximum rate of
15 percent. Under this rate there was a tax saving of
4.1 cents attributable to the 27i-cent depletion allow­
ance permitted from each dollar of gross income. 1/ If
the taxpayer’s net income was 75 percent of his gross
income, the tax saving amounted to 5s percent of net
income. Under the proposed tax rates and with only a •
5 percent depletion allowance, the corresponding tax
saving would be 5.9 percent of net income if the tax­
payer were in the highest excess profits tax bracket.
In general, the possible tax saving under the proposed
tax rates and the proposed percentage depletion allow­
ances exceeds the tax saving under the 1936 rates and
percentage depletion allowances.
b. The differential rates, The proposed lower
percentage allowance io; 'taxpayers who expensed development costs is intended to compensate for HULi< advantage
they gained by exercising the option of expensing such
costs. Taxpayers who expensed development costs have no
capitalized amount to be depleted, whereas taxpayers who
capitalized such costs have such an unrecovered capital.
o
1q

CH
O

For oil and gas mine s, the sugges ted differential
sug O0*Poted differential
is 10 percent. The size
is based on preliminary d a t a s u t )pli 6 Cl by the Tariff
Commission from its curre nt sun r e j on the costs of producing crude petroleum. Accord: n S' to this survey, the
costs
annual deductions under tjLO IÎI0Tvxion of capitalizing
-L
w
currently average about 10 percent of gross income.
Reduction m the net income limitation. At
present, percentage"Te~pTetien üîJ oi anees are limited to
50 percent of net income. If perc ntage depletion were
to be continued on existing properties and the. rates
suggested above were to be substituted for the present
1/

Since there was an undistributed profits tax in
1936, this estimate assumes that all income was
paid out, .

24
provision, this limitation should be reduced to 25 per­
cent. Unless this is done, a considerable part of the
effect of reducing the gross income percentages would
be lost, since for many taxpayers the net income per­
centage rather than the gross income percentage is the
effective limit to the amount of depletion they can
deduct.
IV.

CONCLUSION

The Treasury has made many studies of percentage
depletion and related allowances in the past several
years. It has given careful consideration to the ob­
jections repeatedly advanced against the elimination
of these special allowances. These objections have been
re-examined in the light of the special needs for the
war program. It is found that the elimination of per­
centage depletion and the expensing of development costs
will not interfere with the war effort, will yield about
$206 million of much needed revenue, and will remove
from the statute a long standing and inequitable privi­
lege. Thus, it will contribute'substantially to the war
effort in terms of national morale.

E X H IB IT 1
N et incom e and p r o v i s i o n f o r F e d e r a l incom e t a x e s o f
s e le c t e d o i l com panies f o r 1 9 4 1 , w it h p r o v i s i o n f o r F e d e r a l
incom e t a x e s l e s s th a n 3 1 p e r c e n t o f n e t incom e,
a s r e p o r t e d i n M oody* s I n d u s t r i a l s Sup p lem ent

Company

.

:
N e t incom e
: b e fo re F e d e ra l
:
ta xe s

P r o v is io n
Taxes
f o r F e d e ra l
a p e rce n t
incom e t a x e s 1/ o f n e t income

Ma.jor C om panies
P h i l l i p s P e tro le u m Co.
S k e l l y O i l Co.
T e x a s C o r p o r a t io n
U n io n O i l Co. o f C a l i f o r n i a

$ 2 3 , 5 15 ,5 3 5
7 ,6 7 9 ,8 2 6
6 7 ,7 0 4 , 6 8 1
7 ,7 0 0 , 7 3 2

$ 6 ,0 7 8 , 5 5 3
l, 7 6 6 , 0 p 0
1 5 ,8 3 0 ,0 0 0
1 ,4 6 1 , 5 0 0

25.8;
2 3 .O
2 3 .4
I 9 .O

M in o r C om p anies
B is h o p O i l C o.
D e v o n ia n O i l Co.
H o u sto n O i l Co. o f T e x a s
K i r b y P e tro le u m Co.
N o r t h A m e ric a n O i l C o n s o lid a t e d
P ly m o u th O i l Co.
R e p u b lic N a t u r a l G as Co. 3/
R e p u b lic P e tro le u m
S u p e r io r O i l Co.
T e x a s G u l f P r o d u c in g Co.
U n i v e r s a l C o n s o lid a t e d O i l Co.
W e l l in g t o n O i l Co.
W il c o x O i l and G as Co.

S o u rc e :

5 6 ,5 6 2
7 1 0 ,9 0 7
1 ,2 3 5 ,4 0 0
1 8 6 ,0 3 0
2 0 7 ,1 0 1
1 ,7 3 4 ,5 9 0
7 4 5 ,7 5 9
1 2 2 ,6 9 5
1 6 4 ,5 0 3
3 4 0 ,9 9 4
3 5 0 ,1 2 3
2 0 8 ,5 9 4
3 4 9 ,2 5 4

1 ,4 0 0
1 6 ,5 7 4 2/
2 4 ,3 0 3
1 8 ,6 0 9 2 /
37,0 0 0 2 /

6 3,356
8 5 ,6 0 0
1 5 ,6 1 9
1 8 ,0 0 0
2 4 ,2 6 4
4 1 ,2 5 0

2/
2J

2/
4/

15 ,9 4 8
9,500 2 /

2 .5
2 .3
2 .0
1 0 .0
1 7 .9
3 .7
1 1 .5
1 2 .7
1 0 .9
7 .1
1 1 .8
7 .6
2 .7

M oody* s I n d u s t r i a l s Su p p le m e n t t h r o u g h M a rc h 2 8, 194.2.
1/

2/
3/
4/

F o r P h i l l i p s P e tro le u m C o . , in c l u d e s $ 3 0 8 ,1 0 0 f o r e x c e s s p r o f i t s
t a x e s ; no o t h e r company i n t h i s t a b le rep orte d , s e p a r a t e ly
r e s e r v e s f o r e x c e ss p r o f i t s t a x e s .
M ay in c l u d e S t a t e incom e t a x e s .
F i s c a l y e a r e n d in g Jun e 3 0 , 1 94 1 .
R e s e r v e e s t a b l i s h e d f o r F e d e r a l t a x e s , shown i n r e p o r t e d b a la n c e
sh e e t.

E x h ib it 2

N et incom e o f s e le c t e d o i l com p an ie s r e p o r t e d
f o r in com e t a x p u r p o s e s com pared "with n e t incom e
on th e b a s i s o f c o s t d e p l e t i o n
( i n th o u sa n d s of d o lla r s )

Company:

Year

:

D e p le t io n c la im e d :
f o r incom e t a x
:
p u rp o se s 1/
:

C o st
:
d e p le t io n :

T a x a b le n e t:
incom e r e - :
p o rte d 2/
:

N e t incom e
b a se d on c o s t
d e p le t io n 2/

A

1937

9 ,8 0 0

600

-5 ,0 0 0

4 ,2 0 0

B

1937

1 0 ,1 0 0

2 ,9 0 0

-5 ,9 0 0

1 ,3 0 0

C

1937

3 ,6 0 0

400

800

4 ,0 0 0

D

1938

5 ,3 0 0

1 ,9 0 0

6

3 ,4 0 0

So u rc e :

Form 1 1 2 0 , C o r p o r a t io n Incom e T a x R e t u r n

1/

U nder p e r c e n ta g e d e p le t i o n p r i v i l e g e s

2/

A f t e r d e d u c tio n o f 85$ o f d iv id e n d s r e c e iv e d

E X H IB IT 3

P e rc e n ta g e d e p le t io n and i n t a n g i b l e develop m en t c o s t s
o f a l e a d i n g o i l company f o r 10 o i l p r o p e r t i e s
i n th e E a s t T e x a s f i e l d

1.

C o s t o f p r o p e r t i e s ( i n c l u d i n g a d d it io n s
to c o s t )

$ 3,0 0 1 ,3 1 8

2.

D e p le t io n s u s t a i n e d on c o s t

3.

D e p le t io n a llo w e d u n d e r e x i s t i n g la w

4.

R a t io o f d e p le t io n a llo w e d to c o s t o f
p ro p e rtie s

1 2 1 .1 $

5.

I n t a n g i b l e d evelop m en t c o s t s e x p e n se d

3 ,0 8 3 , 2 7 1

6.

T o t a l d e d u c t io n s f o r d e p le t io n and
i n t a n g i b l e d evelop m en t c o s t s

6 ,7 1 8 ,8 1 5

C o st o f p r o p e r t ie s p lu s in t a n g ib le
d evelop m en t c o s t s

6 ,0 8 4 ,5 8 9

7.

8.

9.

R a t i o o f t o t a l d e d u c t io n s t o c o s t o f
p r o p e r t i e s p l u s i n t a n g i b l e d e v e lo p ­
ment c o s t s

7 0 1 ,6 0 4
3 ,6 3 5 ,5 4 4

1 1 0 .4 #

O r ig in a l o i l re se rv e s (b a r r e ls )

6 4 ,4 0 8 , 0 0 0

10.

R e m a in in g o i l r e s e r v e s ( b a r r e l s )

4 8 ,7 0 4 ,5 3 3

11.

P e rc e n t o f o r i g i n a l r e s e r v e s re m a in in g

So u rce :

7 5 .6 #

S c h e d u le s f i l e d w it h incom e t a x r e t u r n s 1 9 3 1 -1 9 3 7 .

%

E X H IB IT 4

United States petroleum production, consumption, imports, exports, and estimated reserves

1926 - 19kl
(Millions of barrels)

Year

:

Imports : Exports : Estimated
Production:
Domestic consumption
,
of
of
:
:reserves of
of
crude oil: All oils : Gasoline : Duel Oil : crude oil : crude oil :crude oil if

1926
1927
1928
1929
19 3 O

771
901
901
1,007
898

780
8O3
861
940
927

267
305
339
383
398

340
339
384
4i5
369

60
58
80
79
62

15
l6
19
26
24

19 3 1
1932
1933
1934
1935

851
785
906
90S
997

903
835
868
92O
984

408
378
38O
4i0
435

335
308
324
340
367

47
45
32
36
32

26
27
37
4l
51

12,177
il

1 ,1 0 0
1,279
1,214
1.2 6 5
1,352
1,392

1,093
1 ,1 7 0
I .1 3 7
1 ,2 3 1
I .323
1M 3

482
519
523
556
589
660

4li
442
409
458
500
1/

32
27
26
33
43
a

50
67
77
72
52
ll

13 .0 6 3
15,507
17.348
18,483
19,025
20,300

1936
1937
19 3 S
1939
I9Ì+O
19 Ul 2/
Source:

y
y

5/
y

5/

Petroleum Pacts and Figures

l/ End of year figures, estimated by American Petroleum Institute. Includes only re­
serves in known and proved fields, and recoverable by production methods then known.
2f Estimated by Oil and G-as Journal, January 29* 1942.
Data not made public.
4/ No comparable estimate available.

E X H IB IT 5

P r o d u c t io n o f cru d e o i l i n P e n n s y lv a n ia
and New Y o r k a n d a v e ra g e p r ic e
1 91 1 - 1929

Year

P r o d u c t io n
( i n th o u sa n d s o f
b a r re ls }

A v e ra g e p r ic e
Penna, cru d e
(p e r b a r r e l)

1911
1912
1913
1 91 4
1915
1 91 6
1917
1918
1919
1920
1 921
1 92 2
1923
1 92 4
1925
1 926
1 927
1 92 8
1929

9 ,2 0 1
8 ,7 1 3
8 ,8 6 5
9 ,1 0 9
8 ,7 2 6
8,4.67
8 ,6 1 3
8 ,2 1 7
8 ,9 8 8
8, j>44
8 ,4 0 6
8 ,4 2 5
8 ,8 5 9
8 ,9 2 6
9 ,7 9 2
1 0 ,9 1 7
1 1 ,7 6 8
1 2 ,5 5 9
1 5 ,1 9 7

$ 1 .3 2
1 .6 4
2 .4 9
1 .9 1
1 .5 9

S o u rc e :

1

2 .5 2
3 .2 5
4 .0 0
4 .1 5
5 .9 7
3 .3 3
3 .2 1
3 .3 3
3 .6 1
3 .6 2
3 .5 6
3 .0 6
3 .2 7
3 .7 9

B u re a u o f M in e s , M i n e r a l s Y e a rb o o k ,
1 9 1 1 -1 9 2 9 .

EXHIBIT 6

T o t a l number o f w e l l s d r i l l e d f o r o i l and ga s and
U * S . a v e ra g e p r ic e o f cru d e p e t ro le u m a t th e w e lls ,
1 91 7 - 1941

s
:
:

Year

2 3 ,¿0 7
2 5 ,6 8 7
2 9 ,1 7 3
3 3 ,9 1 1
2 1 ,9 3 7
2 4 ,6 8 9
2 V -3 S
2 1 ,8 8 8
2 5 ,6 2 3
2 9 ,3 1 9
2 4 ,1 4 3
OO 9 0 1
a .a *y yyo.

1917
1918
1919
1 92 0
1 921
1922
1923
1924
1925
1926
1927
1 928
1929
1 930
1931
1932
1933
1934
1 93 5
1936
1937
1 93 8
1 93 9
1940
1941

S o u rc e s

l/

T o tal
w e lls
d r ille d

2 6 ,3 5 6
2 1 ,2 4 0
1 2 ,4 3 2
1 5 ,0 4 0
1 2 ,3 1 2
1 8 ,1 9 7
2 1 ,4 2 0
2 5 ,8 9 0
3 3 ,0 7 5
2 7 *4 9 3
2 7 ,7 1 7
3 0 ,0 4 0
3 2 ,1 4 0

1917
(19a)

For

U. S . a v e ra g e p r ic e
o f cru d e p e tro le u m
per b a rre l
1 .5 6
1 .9 8
2 .1 0
3 .0 8
1 .7 3
1 .6 1
1 .3 4
1 .4 3
1 .0 0
1 .8 8
1 .3 0
1 1 ri
/
1 .2 7
1 .1 9
f >•co
.8 7
.6 7
1 .0 0
.9 7
1 .0 9
1 .1 8
1 .1 3
1 .0 2
1 .0 2
1 .1 0 1/

- 1 9 3 9 , P e tro le u m F a c t s and F ig u r e s
79 a n d 32; (1 9 3 7 ) pp. 79 and W *
F o r 1940 a n d 1 94 1 , d a t a on num ber o f w e l l s
fro m O i l and Gas J o u r n a l, J a n u a ry 2 9, 1942,
d a ta on a v e ra g e p r i c e fro m the B u re a u o f H i n e s ♦

P r e li m i n a r y .

EXHIBIT 7

Number of oil fields discovered with more than 1 million barrels of ultimate production
and ultimate production, by method of discovery, 1922 - 1938
Number o f o i l f i e l d s
Year

i

1922
1923

G eo- .
lo g ic a l

:
G eo: . p h y s ic a l

: Random
: d r illin g

Ik

13

-

26

192*4

1925
1926
1927

-

1
2
3

19
27
23
34
2*4
IS
9

1928

1929
I 93 O
I 93 I
1932
1933

1934

1
10
8

8
8
1
2
4
3
2
3
1
3

10

k

1

1*4

1

-

26

18

58

30

1
k

33

3

:

T otal
22
21
27
22
33

29
37
37
23
20
15
21

*45

1937

56
63

1933

73

6*4

2

92
97
ill
li*4

T o t a l 1 9 2 2 -1 9 3 8 5 12

23*4

50

796

1935

1936

Source:

.

m

k

U lt im a t e p r o d u c t io n ( m i l l i o n s o f b b l s . )
: T otal
Geo­
Geo­
: G e o l o g ic a l : Random ;
T otal
lo g ic a l
p h y s ic a l :
and
:d r i l l i n g :
:G e o p h y s ic a l:

343
532
550

544
1 ,7 0 3
6 *4*4
2 , 36 s

8*47
166
55

152
180
335

-

5
8
208
90
S3
*4*4

363
13

3^3
532
550

549
1 ,7 1 1
852
2 , 45 s

5O I
1*4-8
17
7
2*43
22

930

7
83

210

3.4 30 1 /

k is

7^7
3^

Includes East Texas discovery.

567
556
1,9 5 4
87*4

2,465
1 ,0 1 3
3 , 6*40
1 ,1 6 5
199

87

267

623

1 ,0 0 8
1 ,3 1 5
796
1 ,0 8 5
8O5

30
8
11
7

812

1 3 ,9 9 2

5 ,2 9 7

1 9 ,2 8 8

680

635
'kzk
331
281

754
52 *+

1 0 ,1 3 8

3 .8 5 4

372

-

1

Petroleum and Natural Gas Production, National Research Project, Works Progress Administration,
July 1939, pp. 336-7.
Note: Due to rounding, the sum of the individual items will not add to totals in all cases.
if

8*4*4
680

267
1,0 0 9
1.3 4 5
80*4

1.0 9 6

E X H IB IT 8

G r o s s in v e s t m e n t i n th e A m e ric a n p e t ro le u m i n d u s t r y ,
b y d i v i s i o n s o f th e i n d u s t r y , 1935

D iv is io n

P r o d u c in g
N a t u r a l g a s o lin e
T r a n s p o r t a t io n
R e fin in g
M a r k e t in g
T otal

: G r o s s in v e s t m e n t :
î ( in m illio n s o f :
î
d o lla rs )
:

$ 5 *6 6 5
270
2 ,1 2 7
3 *4 0 0
1 ,8 1 4
1 3 ,2 7 6

P e rc e n t
of to tal

4 2 .7 $
2 .0
1 6 .0
2 5 .6
I 3 .7
1 0 0 .0

S o u r c e j T .N . E . C . H e a r in g s , P a r t 14A* p. 7 70 1 .

EXHIBIT 9

G r o s s in v e s t m e n t i n p r o p e r t i e s , p l a n t and e q u ip ­
ment o f th e A m e ric a n p e t ro le u m i n d u s t r y ,
1 9 2 1 - 1933

Year

1 92 1
1 922
1923
192 A
1925
1926
1927
192S
1929
1930
1931

1932
19 33
1934
19 35
1936
1937

1938

So u rce :

G r o s s in v e s tm e n t
( in m illio n s o f
d o lla r s )

6 ,5 50
7 ,8 7 7
8 ,0 0 0
9 ,1 5 1
9 ,5 0 0
1 0 ,0 0 0
1 0 , 5 0 0 -,
1 1 ,0 0 0
1 1 ,5 0 0
1 2 ,0 0 0
1 2 ,1 0 0
1 2 ,2 0 0

12 ,3 0 0
1 2 ,7 0 0
1 3 ,2 7 6
1 3 ,7 7 5
1 4 ,5 2 5
1 4 ,7 5 0

T . N . E . C . H e a r in g s ,
P a r t 14A, p. 7 7 0 0 .

EXHIBIT 10
Relative importance of twenty major oil companies in the petroleum

industry of the United States

Year or
date

Domestic production of crude petroleum
(in thousands of barrels)

:
:

1937

Mileage of crude oil pipe lines:
Trunk line
Gathering line
Total

June 30, 193b
II
it
II

Oil tankers:
Number
Deadweight tonnage

Sept. 30 , 1938
il
ti
tt

Daily crude oil refining capacity
(in thousand barrels of crude
oil input)
Sales of gasoline
(in thousand barrels)

Source:

Jan. 1, 1938

19 3 g

All
companies

:
:

Twenty
major
oil
companies

:Ratio of twenty
: major oil
:companies to
:all companies

1 ,279 ,16 0

6 7 1,9 9 2

57.820
52,760
110 ,5 8 0

4 9 ,3 7 1
30,284
79.655

85.4
5 7 .4
7 2.0

396
4 ,168,450

333
3 ,634,650

84.1
8 7.2

52.5c
h

4,351-2

3 .29 I .5

75 .6

509,665 1 /

407,689 2/

80.0

Temporary National Economic Committee Hearings, Petroleum Industry, Part l4-A, pp. 7714,

7720, 7730, 7731» 7*17.
if Total U. S. gasoline consumption^
2/ Includes only 18 companies.

EXHIBIT 11
Gross production in 1938 of major oil companies having
no important producing properties in 1918 1/

Name of company

: 1938 production
: (in thousands of
ï
barrels)

Atlantic Refining Co.

1 5 ,4 1 7

Continental Oil Co.

27,337

Socony Vacuum Oil £ 0 . 2/

58,481

Standard Oil Co. (Ind.)

37,401

Standard Oil Co. (N. J.)

60,620

Standard Oil Co. (Ohio)
Total for 6 companies

199,617

Total for 20 major companies

528,437

Total for 6 companies as a
percent of total for 20
major companies
U. S. Total
Total for 6 companies as a
percent of total for U. S.

Source:

1/

2/

1/

____2Ê1

37.8$

1 ,2 14 ,3 5 5 y

16,1$

Production data from TNEC Hearings.
Part H-A, p. 7779.

Information as to crude production of companies
in 1918 from description of company's operations
in Moody*s, 1919*
Standard Oil of New York, a component of Socony
Vacuum Oil Company, acquired Important producing
properties in 1918,
Petroleum Facts and Figures. 1941, p. 64

E X H IB IT 12
D e p le t io n ,

î D e p le t io n

î In t a n g ib le
: d evelop m en t
:
co st
î
2/

:
: '■ Average
: s e llin g
p r ic e
î

1931

$ .0 8 4

1932

.0 8 1

#
o
VjJ

Year

i n t a n g i b l e develop m en t c o s t , and a v e ra g e s e l l i n g
p r i c e o f cru d e p e tro le u m 1/
1 9 3 1 - 1934.

.8 5 8

1933

#073

.0 5 4

.6 7 8

1934

.0 7 4

.0 6 0

.9 8 4

So u rce :

$ .0 3 7

% .64 3

U# S . D epartm ent o f I n t e r i o r , P e tro le u m A d m in i s t r a t i v e B o a rd , ’’R e p o rt on th e C o st o f P r o d u c in g
Crude P e t r o le u m , " 1935«

1/

A v e ra g e c o s t i s b a se d u p on "com pany i n t e r e s t "
o il, or
a p p r o x im a t e ly 7 / 8 o f th e t o t a l cru d e p e tro le u m p ro d u c t io n #

2/

A s r e p o r t e d b y p r o d u c e r s e a s t o f th e M i s s i s s i p p i #
For
p r o d u c e r s w e st o f th e M i s s i s s i p p i th e r e p o r t e d c o s t s were
c h a rg e d to c a p i t a l and a m o rtize d #

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
W e d n e s d a y , April 8, 1942.

Press Service
Nft >1-5

The Secretary of the Treasury Henry Llorgenthau, Jr., an­
nounced today that the Treasury Department had been asked to work
out^some means for making the free silver stocks of the Treasury
available for use in connection with war production and thereby
release substantial amounts of vitally needed copper. The General
Counsel of the Treasury, after study of the problem, has concluded
that there is legal authority to lend-lease the free silver stocks
of the Treasury for this purpose. The Attorney General concurs
in this view.
Under the plan which has been approved by the President, the
silver would be made available to Government-owned and privately
OYmed plants engaged in war production, particularly aluminum and
magnesium plants. Title to the silver would remain in the Treas­
ury. The silver would not become a part of the products of the
war proauction^plants,nor would the silver be used up. The silver
would be used in the plants (where such articles as bus bars are
now made of copper) so as to permit substantially all of the
silver to be returned to the Treasury after the termination of the
war.
There a 'e at present over .1,360,000,000 ounce of free siiver in the Trea
which can be used for this purpose
It; use
will release more than 40,000 to
of copp> for other war production requirements.
-oOo-

TREASURY DEPARTMENT
Washington
Press Service
No. 31-6

IMMEDIATE RELEASE.
Thursday, April 9, 1 9 * 2 .
for

The Bureau of Customs announced today preliminary figures
showing the quantities of coffee authorized for entry for consumption
under the quotas for the twelve months commencing October 1, 19^1,
provided for in the Inter-American Coffee Agreement, proclaimed by
the President on April 15> 19^1» as follows:

Country of Production

Signatory Countries?
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-signatory Countries?
British Empire, except
Aden and Canada
Kingdom of the Netherlands
and its possessions
Aden, Yemen, and Saudi
Arabia
Other Countries not
signatories of the Inter-American Coffee Agreement

Quota Quantity
(Pounds) 1/

1,401,426,521
475,086,450
30,144,642
12,109,603
18,098,664
22,634,408
96,657,909
80,715,477
41,436,647
3,287,588
74,966,100
32,078,385
3,767,088
38,094,430

Authorized for Entry
Por Consumption
(Pounds)
As of (Dat e)
649,151,930
Mar. 28, 1942
rr
216,980,483
if
26,577,202
M
2,299,009
(Import quota filled)
17,647,846
Mar. 28, 1942
11
41,190,743
11
48,806,680
it
36,144,339
11
997,421
it
20,699,014
if
14,352,501
3,031,529
Apr. 4, 1942 2/
23,569,874
Mar. 28, 1942

17,674,322

(import quota filled)

19,669,574

Mar. 28, 1942

3,872,909

n

12,276,800

1/ Quotas revised effective pebruary 26, 1942
Per telegraphic reports

2/

-oOo-

(import quota filled)

12,038,283
787,809

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE.
Thursday, April 9» 19^2*.

Press Service
No, 3^-7

,

The Bureau of Customs announced today that preliminary reports
from the collectors of customs show .imports of cotton and cotton waste
chargeable to the import quotas established by the President's pro­
clamations of September 5 , 1939, and December 19 , 19^0, as follows,
during the period September 20, 19^1, to March 2g, 19^2, inclusive:
COTTON HAVING- A STAPLE OF LESS THAN lr.ll/l6 INCHES (OTHER THAN HARSH
OR ROUGH COTTON OF LESS THAN 3A INCH IN STAPLE LENGTH AND CHIEFLY
USED IN THE MANUFACTURE OF BLANKETS AND BLANKETING, AND OTHER
LINTERS).
Annual quotas commencing September 20, by Countries of
Origin:
(In P o u n d s )
♦
Staple length less
•Staple length 1-1/8" or more
•
but less than 1-11/16»
than 1-1/8«
J
Country
*
: Imports Sept.
: Imports Sept, t
of
*
Established
1
20, 1941, to
?
Origin
? Established » 20,1941, to
•
t
March 28. 1942
Q;uota
î March 28,1942 l
*
Quota
Egypt and the AngloEgypt ian Sudan .... .
Peru............... .
British India .......*
China............ ...
Mexico ...............
Brazil .......... .
Union of Soviet
Socialist Republics *
Argentina.... «.... ..
Haiti...............
Ecuador .............
Honduras............
Paraguay ............
Colombia............
Iraq ........ ........
British East Africa ...
Netherlands East
Indies ........ ....
Barbados ............
Other British West
Indies 1/ .........
Nigeria .............
Other British West
Africa 2/ ...........
Algeria and Tunisia *..
Other French Africa 3/.

1/
2/
3/
4/

783,816
247,952
2,003,483
1,370,791
8,883,259
618,723
475,124
5,203
237
9,333
752
871
124
195
2,240

43,451,566
96,952 4/ 2,056,299
64,942
69,452
2,626
—
8,883,259
3,808
618,723

203
2
9,333

435
506
—
—
—
—

23,451,240
1,910,299 4/
—
—
—
3

2

6

—

—
—
—
-

29,909

—
145

-

12,554

—

30,139
«*»

-

2,002
1,634
-

—
—

45.656.420
9.677.954
14.516.882
Total
Bermuda,
Jamaica,
Trinidad
and
Tobago,
Other than Barbados,
and
Nigeria.
Other than Gold Coast
Other than Algeria, Tunisia, and Madagascar.
Revised.

25.361.695

71,388
21,321
5,377
16,004
689

w

30

—
-

- 2 COTTON CARD STRIPS, COMBER WASTE, LAP WASTE, SLIVER WASTE, AND ROVINGWASTE, WHETHER OR NOT MANUFACTURED.'OR OTHERWISE ADVANCED IN VALUE.
Annual quotas commencing September 20, by Countries of Origin:
Total quota, provided, however, that not more than 33-1/3 percent
of the quotas shall be filled by cotton wastes other than card
strips and comber wastes made from cottons of 1 - 3/16 inches or
more in staple length in the case of the following countries:
United Kingdom, France, Netherlands, Switzerland, Belgium,
Germany and Italy:

Country of
Origin
United Kingdom ....
Candda ..........
Prance ..........
British India .....
Netherlands ......
Switzerland ......
Belgium.........
Japan...........
China...........
Egypt...........
Cuba .............
Germany.........
Italy...........

Total

U

: Established
: TOTAL QUOTA

(In P o u n d s )
TOTAL IMPORTS
: Established
Sept. 20, 1941, l 33-1/3& of
to Mar. 28. 1942 ! Total Quota

4,323,457
239,690
227,420
69,627
68,240
44,388
38,559
341,535
17,322
8,135
6,544
76,329
21,263

434
231,615

5*482,509

—

Imports Sept.
20, 1941, to
Mar.28.19421/

1,441,152

434

75,807

w*

69,627
—
*.

22,747
14,796
12,853

—
*.

*-*

—

mm
mm
mm

—

—

25,443
7,088

-

301,676

1,599,886

434

Included in total imports, column 2.

~o0o~

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING- NEWSPAPERS,
Thursday, April 9> 19^2.

Press Service
No. 31~^

Secretary Morgenthau today announced that hereafter Elmer
L. Irey will devote full time to coordinating activities of the
enforcement branches of the Treasury Department.
Mr. Irey has been serving as Chief of the Intelligence Unit
of the Bureau of Internal Revenue in addition to supervising the
coordination work.

The new assignment relieves him of the

Intelligence Unit responsibility.
As Chief Coordinator of the Treasury Law Enforcement Agencies
Mr. 'Irey will perform liaison work between and coordinate the
investigative work of the Secret Service Division, the Bureau of
Narcotics, the Customs Agency Service, the Enforcement Division of
the Alcohol Tax Unit, the Intelligence Unit, and the Investigative
Division of Foreign Funds Control, and will maintain contacts in
the development of important cases.

He will report directly to

Herbert E. Gaston, Assistant Secretary of the Treasury,
Mr. Irey came to the Bureau of Internal Revenue in 1919»
after twelve years in the postal inspection service.

With a nucleus

of five men from the postal personnel, he established the Intelli­
gence Unit, which has been responsible for collecting many millions
of dollars of additional taxes and penalties, and has resulted in
successful prosecution of a number of notorious characters.
The Intelligence Unit has been a potent force in the war
against racketeers and other criminals.
Mr. Irey became Chief Coordinator of Treasury Enforcement
Agencies in 1937*
oOo~

TREASURY DEPARTMENT

Washington

*

Press Service
No, 31-9

■ for i m m e d i a t e r e l e a s e .
■Thursday, April 9, Ì9^2<

The Bureau of Customs announced today preliminary figures for
■imports of commodities within the quota limitations provided for
plunder the Philippine Independence Act, as amended by the Act of
August 7, 1939» from the beginning of the quota periods to March 28,
[1942, inclusive,

as follows:

Products of
[Philippine Islands

i

1

Established Quota
Quantity
Period
J

1 Uhli of

: Imports as of
March 28.1942
Quantity
*
J

[Coconut oil

Calendar year

448,000,000

Pound

29,199,054

[Refined sugars

Calendar year

1 1 2 ,000 ,000 )
>1 /
)
)
)
1,792,000,000)

Pound

2,346,712

Pound

43,232,544

P [Sugars other than

ref ined

Calendar year

■Cordage

Calendar year

6,000,000

Pound

323., 997

[Buttons of Pearl or
shell

Calendar year

850,000

Gross

72,057

[Cigars

Calendar year

200,000,000

[Scrap tobacco and
stemmed and unstemmed
filler tobacco

Calendar year

4,500,000

Humber

519,306

Pound

103,850

lL/ The duty-free quota on Philippine Sugars applies to 850,000 long tons, of which
not more than 50,000 long tons may he refined sugars*

-oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE.
Thursday, April 9. 19^-2»

Press Service
No. 31-10

The Bureau of Customs announced today preliminary figures for
imports of commodities within quota limitations provided for under
trade agreements, from the beginning of the quota periods to March 2&,
19^2 , inclusive, as follows:
Commodity

:
Established Quota
: Unit of ?■ Imports as of
*
Quantity
? Quantity 1 Mar. 28. 1942
¡Period & Country

Cattle less than 200
pounds each

Calendar year

Cattle, 700 pounds or
more each (other than
dairy cows)

100,000

Head

15,357

Quarter year from
Jan. 1, 1942
Canada

51,720

Head

46,841

Other countries

8,280

11

(Tariff rate
quota filled)

Whole milk, fresh or sour

Calendar year

3,000,000

Gallon

1,052

Cream, fresh or sour

Calendar year

1,500,000

Gallon

277

Fish, fresh or frozen
filleted, etc., cod,
haddock, hake, pollock,
cusk and rosefish

Calendar year

15,000,000

Pound

2,259,491

White or Irish potatoes
Certified seed

12 months from
Sept. 15, 1941

90,000,000

Pound

29,686,574

12 months from
Sept. 15, 1941

60,000,000

Pound

1,193,197

Other

Cuban filler tobacco,
unstemmed or stemmed
(other than cigarette
leaf tobacco), and
scrap tobacco

Calendar year

22,000,000

Red Cedar shingles

Calendar year

2,617,111

Silver or black foxes,
furs, and articles?
Foxes valued under*
$250 ea. and whole
furs and skins

Month of
March 1942
Canada
Other than Canada

17,500
7,500

Pound
(Unstemmed
equivalent)

5,270,101

Square

861,882

Number
rt

7,020
1,108

- 2

:_____ Established Quota____ i Unit of : Imports as of
Coifanodity________ : Period & Country* Quantity i Quantity ; March 28. 1942
Silver or black foxes,
furs, and articles:
Tails

12 months from
December 1, 1941

5,000

Piece

Paws, heads, or other
separated parts

it

500

Pound

Piece plates

ti

550

Pound

Articles, other than
Piece plates

it

500

Units

Crude petroleum, topped
crude petroleum* and
fuel oil

Calendar year
Venezuela

2» 082,574,771

Netherlands

Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
more than 6$ of
total soluble solids

(Import quota
filled)
None

22.

Gallon

258,769,082

630,097,196

ii

176,460,791

94,662,490

ii

58,218,802

150,868,343

n

100,866,646

Colombia
Other Countries

(Import quota
filled)

1,500,000

Calendar year

o0o~

Gallon

444,002

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE.
Thursday, April 9» 19* 2 *

Press Service
No.

The Bureau of Customs announced today preliminary figures show­
ing the quantities of wheat and wheat flour entered, or withdrawn
from warehouse, for consumption under the import quotas established
In the Presidentfs Proclamation of May 28, 19^1, for the twelve
months commencing May 29, 19^1; as follows:
________

Country of
Origin

:
i
•
i

Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
Hew Zealand
Chile
Netherlands
Argentina
Italy
Cuba
France
Greece
Mexico
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
Guatemala
Braz il
Union of Soviet
Socialist Republics
Belgium

: Wheat flour, semolina,
s crushed or cracked wheat,
e and similar wheat nroducts
•
4
4
Imports
4
Imports
J
May
29, 1941
Established
:
May
29,
1941
to
:
Established •
to
Mar.
28. 1942
Quota
*
March
28.
1942
t
Quota
î
(Pounds)
(Pounds)
(Bushels)
(Bushels)
Wheat

795,000
100
«
100
100
100
2,000
100
1,000
100
-

795,000
*■*
m
—
w
-'
-

-

-

'1,000
100
100
100
100
800,000

«**
m
795,000

-oCa

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
-

3,701,346
5,836
—
5,816
—
—
—
—
97
—
—
-

-

3,713,095

4,000,000

STATEMENT OF RANDOLPH E. PAUL,
TAX A D V IS E R TO THE SECRETARY OF THE TREASURY,
BEFORE THE COMMITTEE ON WAYS AND MEANS
U. S. HOUSE OF R EPR ESEN TAT IVES
A P R IL 1 0 , ’ 1942

I h ave p r e v i o u s l y p r e s e n t e d to th e Com m ittee o u r s u g g e s t io n s w it h r e s p e c t
to the t a x tre a tm e n t o f p e n s io n t r u s t s .
A t t h i s tim e I "b e lie v e i t d e s i r a b l e
b r i e f l y to s t a t e th e r e a s o n s u n d e r l y in g th e se s u g g e s t i o n s .
The p r e s e n t t r e a t ­
ment o f p e n s io n t r u s t s a f f o r d s a t a x s u b s i d y to t h o s e t r u s t s w h ic h meet the
re q u ire m e n ts s e t f o r t h i n th e s t a t u t e .
T h is s u b s id y i s a t the exp en se o f the
g e n e ra l b o d y o f t a x p a y e r s .
I t was g r a n t e d b e c a u se o f th e d e s i r e to im prove
the w e lf a r e o f em ployees b y e n c o u r a g in g th e e s t a b lis h m e n t o f p e n s io n t r u s t s
f o r t h e i r b e n e f it .
O ur p u rp o se i n p r e s e n t i n g o u r s u g g e s t i o n s was to c a r r y
out t h i s o b j e c t iv e o f th e C o n g r e s s b y s u g g e s t i n g v a r i o u s p r o v i s i o n s w h ich
would b o th make th e p r e s e n t s t a t u t e more e f f e c t i v e i n p r o m o t in g the w e lfa re
o f em ployees t h r o u g h su c h t r u s t s and a t the same tim e p r e v e n t u t i l i z a t i o n o f
such t r u s t s f o r t a x avoidance, p u r p o s e s .
T h u s, we s u g g e s t e d t h a t o n ly t h o s e t r u s t s w h ic h a re d e s ig n e d to b e n e f it
la r g e num bers o f e m p loye es s h o u ld be p e r m it t e d t h i s fa v o r e d tre a tm e n t.
( S u g g e s t io n N o. 2 i n M a rc h 23, 1942 S ta te m e n t) T r u s t s w h ic h c o v e r o n ly a few
fa vo re d h i g h - s a l a r i e d em ployees o r e x e c u t iv e s s h o u ld n o t q u a l i f y .
A t the same
time, we r e c o g n is e t h a t su c h exte n de d c o v e ra g e b y i t s e l f w ould be no g u a r a n t y
that th e t r u s t i s d e s ig n e d f o r th e w e lf a r e o f e m p loye es g e n e r a l l y i n vie w o f
the p o s s i b i l i t y o f m a n ip u la t in g the b e n e f i t s u n d e r th e t r u s t .
C o n se q u e n tly ,
we have s u g g e s t e d t h a t th e b e n e f i t s m ust be e xte n de d i n a n o n - d is c r im in a t o r y
f a s h io n , so t h a t the h ig h e r s a l a r i e d em ployees i n the t r u s t ca n n o t be fa v o re d
at the e xp e n se o f th e lo w e r s a l a r i e d e m p loye es.
( S u g g e s t io n N o . 3) These
s u g g e s t io n s a t th e same tim e w ould o p e ra te to s a f e g u a r d the p e n s io n p r o v i s i o n
a g a in s t i t s u s e a s a t a x a v o id a n c e d e v ic e .
O ur s u g g e s t i o n t h a t th e t r u s t s h o u ld p r o v id e f o r v e s t i n g o f th e em ployer*
c o n t r ib u t io n s , a s w e ll a s th e e m p lo y e e *s c o n t r i b u t i o n s , was f o r the p u rp o se o f
b e n e f it in g th e em ployees c o v e re d b y th e t r u s t .
At th e p r e s e n t tim e an employ«*
who le a v e s th e com pany’ s em ploy, e i t h e r v o l u n t a r i l y o r i n v o l u n t a r i l y , , u n d e r
many t r u s t s f o r f e i t s h i s b e n e f it from th e e m p lo y e r’ s c o n t r i b u t i o n s .
O ur
s u g g e s t io n was d e s ig n e d to m it ig a t e su c h h a r d s h ip s b y p r o v i d i n g some b e n e f it
in the c a se o f su ch em p loyees who had been i n the com p an y’ s s e r v i c e f o r some
time.
( S u g g e s t io n No. l )
However, we r e c o g n iz e t h a t a n y p la n o f v e s t i n g
which may be ad o p ted must be one w h ic h d oes n ot a f f e c t a d v e r s e ly the i n t e r e s t s
o f the e n t i r e g ro u p o f em p loyees u n d e r a p la n w h ic h i s p r e s e n t l y f u n c t io n in g
and w h ic h i s n o t a d e v ic e f o r t a x a v o id a n c e .

~ 2F i n a l l y , we h a ve s u g g e s t e d t h a t th e p e n s io n s w h ic h may he p a id on a c c o u n t
o f the e m p lo y e r 's c o n t r i b u t i o n from t r u s t s g i v e n t h i s t a x tre a tm e n t s h o u ld n o t
exceed $ 7 ,5 0 0 a y e a r ,
( S u g g e s t io n No. 4 )
We b e l ie v e t h a t the g e n e r a l b od y o f
ta x p a y e rs s h o u ld n o t be c a l l e d upon to s u b s i d i z e p e n s io n s i n e x c e ss o f th a t
amount.
Su ch l a r g e p e n s io n s w ould r e p r e s e n t a d i s t o r t i o n o f the m ajor
o b je c t iv e o f th e C o n g r e s s i n p r o v i d i n g t h i s s p e c i a l tre a tm e n t, f o r th e y w ould
g iv e to a few fa v o re d p e r s o n s v e r y h i g h p e n s io n s a t th e expense o f the p u b l ic .

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday, April 10, 1 ^ 2 ,

!, ,Tenders. ;will •be r,eoelvad at: Federal' R e a e W e BankeÎ arid Branches
lip,,to the, olos.lng -hour,; .two. ’o ‘clock: p„’ mv, ¿Sas&ern? •war ' t i m e ,'^onda^
April X3? 1S,t 2. ’ ^ehders^.wi;!,!' .not be d e c e i v e d at? "the Treasury* Dep:art£; ment,, 1ifashihgto:ri,,,: .Sach^ tenderiimust be for an even ^ul'tlple h ’f $ 1 ,o 6;0,
arid"'the'price offered must' be expressed on the baais ^f? 100 ; with ribt
more than three decimals, e. g., 99.925,
Fractions may not be used.
It ls:urged,,that, tenders, be mad,e on the pointed forms" and ’
f 6W a r d e d In
I the speclal^'enVelppes: which, will: be supplied? by Federal'-Reserve Banks
or Branches' pin appllqatip|i{therefor. ;
'#'
r&
#f J f y
Tenders will be received without deposit from Incorporated
banks and trust companies and from responsible and recognized dealers
In Investment securities.
Tenders from others must be accompanied
by payment of 10 percent of the face amount of Treasury bills applied
for, unless the tenders are accompanied by an express guaranty of
payment by an Incorporated bank Or trust company.
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
I announcement will be made by the Secretary of the Treasury of the
j 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.
Payment of accepted tenders at the prices
Ioffered must be made or completed at the Federal Reserve Bank in cash
or other immediately available funds on April 15, 19^2, provided,
however, any qualified depositary will be permitted to make payment
by credit for Treasury bills allotted to It for itself and its
.customers up to any amount for which it shall be qualified in excess
1of existing deposits when so notified by the Federal Reserve Bank of
,its District.
31-12

(Over)

- 2 The income derived from Treasury bills, whether interest or
gain from, the sale or other discos it ian of, the bil ls^:.shall. not ^hav e
anY èxemptióri, as such, and loss from the sale or other disposition
of- .Treasury, bills ¿shall, .not.
any, ¿
s
p
e
c
i
a
l
v
Under Federal* ta^'Acts now or hereafter enacted.
The bills snail be
subject to estate,./.inheritahoe,; gift>,, or other, excise, taxes,,' whether
Federal 'or State, but shall be exempt from all taxation now or here­
after imposed on the principal or Interest: thereof, by any- State:, P f
any Of the' possessions of thè United States, or by any local taxing
authority. ,JPor purposes ..of, taxation -the amount of .discount atjxhioh
Treasury hills are originally sold b y the United States shall be
considered, to, he interest:*
Under,,S.ections,.^and ;11£ \
°i-^e
Internai ReVênuë Code, as amended by Section 115 of the Revenue Act
of 19U-1, the amount of discount at which; bills, issued hereunder ape
sold shall not b e ‘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/), iasuhd,be^eunder
nee# Inc l u d e ;1'h’his'income' tax. return/ only-r the,difference between the
prlcb paid'for 'su'Ch, bills ; :whether" on original.; issue.or. o n tsubsequent
purchase ',’Ï and- thè amount ’actually- received' either upon sale, or m
r edémp t ioh V‘At ;:mat uri t y ’:during, the.,taxâbl e y far .for swhl c hi th e; r e tur n
is. made; das ordinary <ga.ln ‘ •lo?8 *
*- .. ! : , v a
’ wT réasüry. Department lG incul ar N o.f tófc» as ^ amended,, a n d 1thi s
• rtòtlcè; prescribe the terms of thé* Treasury *bil Is £and; govern.; the v.
conditions of their issue.
Copiés of the circular may be obtained
from/a^y Federal Reserve .Bank *
B r a n c h * -,
•»£ ‘Xf iw
.

«òOo-

■i■>•

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*

«

>..

' '1 : -

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■ ,

.
i ,

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y

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eh

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,.;-,v;-ï: i

TREASURY* DEPARTMENT
Comptroller of the Currency
Washington

FOR RELEASE, MORNING- NEWSPAPERS
Saturday, April 11, 19*+2

Press Service
^o.

During the month of March, 19^2 > the'liquidation
of seven insolvent national banks was completed and the
affairs of such receiverships finally closed.
Total disbursements, including offsets allowed,
to depositors and other creditors of these seven receiver­
ships, amounted to $11,3*9,785» while dividends paid to
unsecured creditors amounted to an average of 73-3^ percent
of their claims.

Total costs of liquidation of these

receiverships averaged 9*^7 percent of total collections
from all sources including offsets allowed.
Dividend distributions to all creditors of all
active receiverships during the month of March, amounted
to- $1 ,$92,32^,

Data as to results of liquidation of the

receiverships finally closed during the month are as
follows:

INSOLVENT NATIONAL BANKS LIQUIDATED AND FINALLY CLOSED
__________ DURING- THE MONTH OF MARCH, 1942___________

Name and Location of Bank

Date of
Failure

Total
Disbursements
to Creditors
Including
Offsets Allowed

North Capital Savings Bank
Washington, D. C.

7 -1 ^ 3 2

4

National City Bank
Ottawa, Illinois

10 -6 -3 1

First National Bank
Portsmouth, Ohio

Percent
Dividends
Declared
to All
Claimants

Capital
Stock at
Date of
Failure

Cash, Assets.
Uncollected stock
Assessments, etc.-.
Returned to
Shareholders

90,000

- 0 -

67.-65/6

200.000

-.0 -

4,170,810

si.79^

400,000

- 0 -

5 - 8-31+

1 ,3 2 9 ,0 12

95*33^

150,000

- Q -

Merchants National Bank
Pottsville, Pa.

10 - 1 2 -3 4

2,37^.208

$3 .33 %

125,000

- 0 -

Citizens National Bank
Shenandoah, Pa.

12 - 19 -3 4

1,509,003

83 .3%

100,000

- 0 -

First National Bank
Elizabethton, Tenn.

10 - 1 9 -3 1

585,780

75,000

- 0 -

532,*+99

36 .64/6

888,473

12 - 19 - 33

First National Bank
Beaver Falls, Pa.

18 .45 $
00O00

$

TREASURY DEPARTMENT
Washington
FOR IMM E D I A T E RELEASE,
F r i d a y , A p r i l 10, 1 9 ^ 2 .

Secretary
the

subscription

offering
of

figures

and

Treasury

received

subscriptions
up

to

and

were

all o t t e d ^6 percent,

where

than

in f u l l .

$ 2 5 ,0 0 0

necessary,
Details

of

f o r the

cash

Indebtedness

announced when

final

about

over

$25,000
but

with adjustments,

$1,009 denomination.
subscriptions

reports

and

a re r e c e i v e d

R e s erve Banks,
-cOo-

in

$66,000,000,

p e r c e n t a g e basis,

subscription,

show

Subscriptions

in a m o u n t s

on a s t r a i g h t

on a n y one

to

Reserve Banks

$3, 062, 000, 000.

Subscriptions

to t h e
as

Federal

$ 2 5 ,0 0 0 , t o t a l i n g

Including

allotted

less

of a l l o t m e n t

Certificates

from the

aggregate

were

not

the b a s i s

today announced

A~19^2,
Reports

amounts

the T r e a s u r y M o r g e n t h a u

of 1/2 percent

Series

that

of

Press Service
No.31~l^

allotments
fro m the

will be

Federal

TREASURY DEPARTMENT
C o m p t r o l l e r of the C u r r e n c y
Washington
Press Service
No. 3 1 - 1 5

FOR RELEASE, MORNING NEWSPAPERS,
S a t u r d ay, A p r i l 11, 1942,

N e g o t i a t i o n s l e a d i n g t o t h e c l o s i n g of t h e l a r g e s t b a n k
r e c e i v e r s h i p in t h e h i s t o r y o f t h e U n i t e d S t a t e s , T h e F i r s t
N a t i o n a l B a n k - D e t r o i t , of D e t r o i t , M i c h i g a n , w e r e a n n o u n c e d
t o n i g h t in a j oint s t a t e m e n t i s s u e d b y t h e C o m p t r o l l e r of t h e
C u r r e n c y , P r e s t o n D e l a n o , a n d S e n a t o r P r e n t i s s M. B r o w n of
Michigan.
T h e r e m a i n i n g a s s e t s o f t h i s r e c e i v e r s h i p , w h i c h h a d an
o r i g i n a l b o o k v a l u e o f o v e r $ 5 0 0 ,0 0 0 ,0 0 0 , w i l l be d i s p o s e d of
t h r o u g h a b u l k s a l e t o a g r o u p r e p r e s e n t a t i v e of D e t r o i t ’s
leading industries.

the

This
E. D.

g r o u p is h e a d e d b y J o s e p h B.
Ford Company.

Sehlotman,

Chairman

of

U n d e r t h e p l a n c o n t e m p l a t e d , t h e d e p o s i t o r s , a l l of w h o m
have already had r e t u r n e d to t h e m 100
o f t h e i r f u n d s in t h e
b a n k at t h e t i m e o f c l o s i n g , w i l l be o f f e r e d t h e o p t i o n of an
i m m e d i a t e p a y m e n t of a s u b s t a n t i a l i n t e r e s t d i v i d e n d on t h e
p r i n c i p a l a m o u n t of t h e i r d e p o s i t s , or t h e o p p o r t u n i t y to
p a r t i c i p a t e in t h e f u r t h e r l i q u i d a t i o n b y t h e C o m m i t t e e of
t h e b a n k ’s r e m a i n i n g a s s e t s .
Any values remaining after the
claim's o f d e p o s i t o r s h a v e b e e n s e t t l e d w i l l i n u r e to t h e
b a n k ’s s t o c k h o l d e r s ,

%

T h e C o m p t r o l l e r o f t h e C u r r e n c y , t h e s t a t e m e n t said, has
a c c e p t e d t h e o f f e r of t h e c o m m i t t e e , w h i c h m u s t b e s u b m i t t e d
to t h e c o u r t s f o r f i n a l a p p r o v a l .
W h i l e t h e a s s e t l i q u i d a t i o n of t h e b a n k h a s b e e n s u b s t a n ­
t i a l l y c o m p l e t e d , t h e r e r e m a i n s a l a r g e v o l u m e of a s s e t s of
v a r i o u s t y p e s , it w a s said, i n c l u d i n g 2 0 0 0 p a r c e l s of i m p r o v e d
r e a l e s t a te; m o r e t h a n 8 0 0 0 r e a l e s t a t e c o n t r a c t s f o r s a l e a n d
man y h u ndreds of notes, judgments, and other types of assets.
The statement declared that the tentative agreement reached
between the C o m p t r o l l e r of the C u r r e n c y and the committee would
p e r m i t t h e r e c e i v e r t o p a y a b o u t t w o - t h i r d s of a l l i n t e r e s t
a c c r u e d on d e p o s i t c l a i m s s i n c e t h e b a n k s u s p e n d e d b u s i n e s s on
F e b r u a r y 11, 1933.
The First National Bank-Detroit
$400,000,000 divided among more than

(o v e r )

h a d d e p o s i t s of m o r e t h a n
6 0 0 , 0 0 0 d e p o s i t o r s w h e n it

-

2

-

•folded its d o o r s .
D e p o s i t o r s h o l d i n g claims u n d e r $3 0 0 got 100
p e r c e n t o n t h e i r m o n e y in 1 9 3 5 b y t h e s a l e of t h e r r c l a i m s t o a
s y n d i c a t e o f l a r g e depositors..
These claims numoered about

450,000.
D u r i n g t h e n i n e y e a r s t h e b a n k w a s in r e c e i v e r s h i p a l l
d e p o s i t o r s r e c e i v e d 100 p e r c e n t of t h e i r claims.
Presently
t h e i r o n l y i n t e r e s t in t h e b a n k ' s a s s e t s is t h r o u g h t h e m e d i u m
o f i n t e r e s t a c c r u e d on d e p o s i t s s i n c e t h e d a t e o f s u s p e n s i o n 9
years-ago.
The receivership

has

beer

a d m i n i s b e r e d b y B.

1933
- 0O 0-

C.

S c h r a m since

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, April 1*4-, 19^2.
---- --- ------------VT37S2—

Press Service
No. *51-16

The Secretary of the Treasury announced last evening that the
tenders for $ 150 ,000,000, or thereabouts, of
to be dated April 15 and to mature July

15 ,

91 -day

Treasury bills,

19*12, which were offered

on April 10, were opened at the Federal Reserve Banks on April

13 ,

The details of this issue are as follows:
Total applied for - $311,219,000
Total accepted
- 150,073,000
Range of accepted bids:

(Excepting two tenders totaling
$ 150 ,000)

High - 99.960 Equivalent rate approximately 0.I5S percent
Low
- 99.922
"
M
w
O. 3O9
"
Average
Price - 99,929
"
*
*
0.2S1
«

(16

percent of the amount bid for at the low price was accepted)

-0 O 0 -

TREASURY DEPARTMENT
Washington

(The following address by Randolph E. Paul, Assistant
to the Secretary, before the National Association of
Insurance Agents at the Hotel Pennsylvania in New York
City is scheduled for delivery at f p . m . , Eastern War
Time, Tuesday, April 1^, 19^2, and is for release at
that time. )

I accepted your very kind invitation to address you this even­
ing on one condition.
The condition was that I should not be obliged
to discuss thé very difficult question which interests you most, the
taxation of insurance companies other than life.
I hope you will not
think that I am running away from difficulties when I avoid this
subject. We are wrestling with the problem in the Treasury and we
hope that the Revenue Act of 19^2 when it is enacted will contain a
provision that is not too much to your distaste,
I want to appeal to you this evening, not in your capacity as
leading Insurance men, but rather in your capacity as American
citizens.
In that capacity you are vitally interested in taxation.
That interest may have its grim check**writing moments, but there are
also moments of compensation.
For I am sure that the high taxes you
pay now, and will pay under the Revenue Act of 19^2, will be more
willingly paid than any taxes you have ever paid.
Most of us have
come to realize the meaning of some prophetic words of the late
Mr. Justice Holmes uttered many years ago.
The Secretary of the
Justice asked him, ”D o n ft you hate to pay taxes?” The hot response
was, ”No, young feller, I like to pay taxes.
With them I buy
civilization.H
I say “most of u s ” have come to realize what Holmes meant.
Unfortunately, not all of us.
No one sincerely concerned with the
future of civilization — as we define that term — could be wholly
without misgiving if he attended the public hearings now being held
by the Ways and Means Committee.
Hardly a witness falls to pay what
Lewellyn has called “mandarin courtesy” to the doctrine that we must
sacrifice to pay for the war. After an assertion of unbounded
patriotism, many witnesses then proceed to the task of explaining how
the sacrifices should be made by the other fellow.
As Sidney Smith
has remarked, ”It is remarkable with what equanimity and fortitude
we bear the sacrifices of our neighbors.”
I wondered a little whether I should try this evening to dis­
cuss the entire Treasury tax program, and I decided against any such
ambitious undertaking.
We may disagree on some points, but you will
certainly agree with me that the Treasury program covers more ground
than I could cover in fifteen minutes.
So I decided to select one
important aspect of the program, which I thought would interest you

31-17

a?
:r fi?d u? ? n_ willcil
ated more heat than light. •

public discussion so far has gener­
+
5

I refer to the controversial subject of sales taxation.
The
8al r . ta^ is
o f the best examP l © s O f willingness to have taxes
Paid by the other*fellow — in this case the fellow least able to
Pay.
IB one of the reasons underlying the Treasuryfs opposition
to the salesJ;ax* But there are other reasons, and I would like to
tell you^ln the few moments available to me the basis of the
Treasury1s position.
*
On the regressive character of the sales tax let me reneat som*
^words used by the Secretary of the Treasury.
In his statement to the
I Ways and Means Committee on March 3, 19^2, the Secretary said
"The
| general sales tax falls on scarce and plentiful commodities alike
It sorlkes at necessaries arid luxuries alike.
& b compared with the
taxes proposed In this program, It bears disproportionately on the
low income groups whose Incomes are almost wholly spent on consumer
the standardSif n v i n g ! » ’ regre88lve and encroaches harmfully upon
¡File^ ? ecrem ary *s P ° s^^^-0n in the language I have quoted is
a T o ? 1?W lncome p ouP s are now carrying a heavy burden
of taxation.
A single man with an income of ¿750 per year is now
a com^ 1 2 ed Federal, State, and local tax burden of about
$1 ^5 , and a married couple with an income of $ 1,500 is subject to a
iederal, State, and local tax burden of $ 250.

1

If we imposed a general retail sales tax on consumer purchases
large enough to equal 10 percent of the income of a person with
consumer income under $ 500, the tax would amount to only 6 percent
&nd
5°0 ' and 3
o f a* income
Ih Would have 8X1 effect similar to imposing an income
ithout exemption at the rate of 10 percent on an income of $ 500,
x ™ o m e o f $ 2,500 and at 3 percent on an income
r
^dea
fantastic when we consider Imposing such
/ ncvme.tax^
but that 18 the way the salee tax would
distribute the tax
burden.
kbove ¿?o°nnn

t r v t i l l 0 ’? 0 0 '

eJfe nfed Pot § °
the statistician to learn how little relation
ba^' S i ! nif?,?a % t?,Jblllty t0 p a y ‘ The man wh0 ®«flt spend for the
life every o e n t he can scrape together is certainly
2 3 better aba.e to pay taxes than the mrtn who can buy the necessaries,
ome luxuries to boot, and who then has money left for other things.
v
^ues^l°n Is n°t just a matter of fairness and equity.
It
is b aq economics to reduce the standard of living of persons who
even now are not able to purchase enough consumers« goods to maintain
:
ef?i6l*noy,
r
f° reduce further the standard of llvn«1L 0f
low inccme groups through a sales tax would increase elekdecrease anility to produce.
Possibly it would be necessary
0 supplement their income by Government relief and subsidies.
*Q

-3 “
Some opponents of the Treasury program say that we must forget
principles of tax Justice and tax the small incomes because only thus
can we curb Inflation.
Much of the demand for a general sales tax
probably springs from the mistaken assumption that the bulk of
increased national income is going to defense workers in low brackets
who escape the income tax.
There is no basis for this assumption.
All available figures indicate that most of the Increase is going to
persons who are now subject to the income tax.
The most effective
and the most equitable way to tap these increased incomes is through
the income tax.

I
I

■
■

■

)

Moreover, this argument assumes that the Treasury tax program
consists solely of direct income taxation.
This is not true.
The
Federal tax system contains two additional instruments for combating
Inflation.
I refer to the social security program and the excise
taxes.
The $2 billion Increase in the social security taxes proposed
by the President in his Budget Message of January 5 , 19^2, would fall
primarily on wage earners.
It would exercise a strong deflationary
influence in the case of persons not now subject to income tax.
Also, the Treasury tax proposals to Congress reach the income of
persons below the personal exemptions through the $1 ,300,000,000 of
new excise taxes,
Most of this additional sum comes from tobacco,
liquor, and gasoline.
These commodities are directly or indirectly
consumed by all income classes.
With the increase, the total Federal
excises would amount to $4-, 700,000,000.
In addition, the Treasury’s war savings bonds and stamps are
designed to reach the group below the income tax exemptions as well
as Income taxpayers.
The program for selling bonds and stamps is
being developed along the lines of voluntary payroll deduction.
It
is anticipated that a substantial percentage of incomes in the lower
levels will be withdrawn through savings of those who are able to
save, while a flexible adjustment of contributions to obligations
and family responsibilities will be afforded.
Strong support is
being given this program both by Industry and by all branches of
labor.
I want to repeat -— we should not accept too casually the
assertion that the control of inflation requires taxes upon those
who are unfortunate enough not to be Federal Income taxpayers.
The
estimates of the Office of Price Administration show that the
$13,000,000,000 increase in Income expected for 19*4*2 will be received
very largely b£ persons who will be subject to income tax in 19 *12 .
Moreover, persons with incomes not large enough to be reached by the*
Federal Income tax purchase a much smaller proportion of the total of
durable goods and other very scarce goods than they do of foods and
other relatively plentiful goods.

Another reason for being wary of the sales tax is that it is
entirely possible that it will be a spur to inflation rather than a
curb on inflation.
It would make the problem of wage control, and
I consequently the problem of price control, much more difficult»

~ k Sales taxes are ordinarily added to prices.
Sales taxes are like
other increases in the oost of living; they stimulate workers to
demand higher wages.
In the case of commodities under price ceilings
sales taxes would be Included in costs, and would require the
revision of established ceilings.
The tax on prices paid by farmers
would force an Increase in the parity price of farm products.
As you
know, prices of farm products may not be fixed at less than 110
percent of parity.
Farm prices would therefore be forced up by a
sales tax.
Passing to other considerations, I should like to point out
that the sales tax from a revenue standpoint is a great illusion.
It would not be the money-getter in war-time its advocates claim that
it would be. We are accustomed to thinking in terms of State sales
taxes of 2 percent and 3 percent.
When we approach the problem of
paying for this war, we must think in terms of billions of dollars
of revenue.
To raise $^,500,000,000 a retail sales tax would have to
carry the rate of 10 percent, and such a tax would have to be levied
on food, clothing, medicine
all the tangible goods a person buys.
A retail sales tax of 2 percent would raise only about $1,000,000,000
scarcely enough to justify the tremendous new machinery required for
its collection.
Finally, I should like to ask for a realistic attitude In
connection with problems of administration.
The sales tax advocates
are romantics if they think the tax is easily administered.
We have
no available machinery for administration, as we have for the excise
and the income and estate taxes.
A retail sales tax would cover a
base of about 2,^00,000 taxpayers.
To check the payment of tax by
that number of persons we should heed a large additional force, and
that force would need training and experience before it could operate
effectively.
When man-power is as scarce as it is today, it is folly
to use it for the purpose of policing a vast new system of sales
taxation when other more equitable methods are ours for the asking.
The problem would not be solved by using manufacturers* sales
tax. The number of businesses to be checked would be less, although
still running into the hundreds of thousands.
Many difficult prob­
lems of exemption and valuation arise with a tax imposed on manu­
facturers.
The rates would have to be higher to raise the same
amount of revenue, while the consumer would commonly pay a price
Including not only the tax, but a higher margin of profit due to the
tax. This pyramiding of the tax would involve an added burden.
I hope I have been able to convey the impression that my
opposition to the sales tax is not “lukewarm.“ Some of you may be
for it. The disagreement protected by the dempcratlc process is
always at a peak in tax territory.
In conclusion I can therefore
quote some wistful words of Edmund Burke;
“To tax and to please,
no more than to love and to be wise, is not given to men.“

0O 0

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Wednesday, April 15, 19*12.

Press Service
No. 31-lS

Market transactions in Government securities for Treasury
investment and other accounts in March, 19^2,

resulted in net

purchases of $5,31*1,4-50, Secretary Morgenthau announced today.

-oOo-

Statement of Randolph E, Paul,
Tax Adviser to the Secretary of the Treasury,
B e f o r e t h e W ays and M eans Com m ittee
o f th e H ouse o f R e p r e s e n t a t iv e s
on ta x -e x e m p t s e c u r i t i e s

April ijE>, 1942
I#

THE ECONOMIC IS S U E S

I n h i s sta te m e n t t o y o u r Com m ittee on M a rc h
t a r y o f th e T r e a s u r y recommended th e t a x a t i o n o f
s t a n d in g , a s w e ll a s f u t u r e , i s s u e s o f S t a t e and
I s h o u l d l i k e now t o d i s c u s s t h i s recom m end ation
p r e s e n t s u p p o r t in g e v id e n c e , 1 /

3 * 1 9 4 2 , th e S e c r e ­
i n t e r e s t from o u t­
lo c a l s e c u r it ie s ,
m ore f u l l y and to

The p r e s e n t w ar em ergency m akes th e im m e d ia te e li m i n a t i o n o f
ta x -e x e m p t s e c u r i t i e s an im p o r t a n t s t e p i n so u n d w ar f in a n c e .
Under
w ar c o n d i t i o n s , th e w it h d ra w a l o f th e t a x im m u n ity from f u t u r e i s s u e s
a lo n e w i l l n o t be enou gh. W hat i s r e q u ir e d now i s th e im m ed iate
re m o v a l o f t a x e xe m p tion i n a l l c a s e s i n w h ic h th e F e d e r a l Governm ent
i s n o t bound b y i t s own p le d g e ,
1*

The re v e n u e l o s s fro m t a x e xe m p tion i s

s u b s t a n t ia l

The a n n u a l l o s s i n re v e n u e fro m th e t a x e xe m p tion o f S t a t e and
l o c a l s e c u r i t i e s u n d e r th e r a t e s p ro p o se d b y th e T re a su ry * i s e s t i ­
m ated a t $ 2 7 5 m i l l i o n 2 / , a t 1 9 4 2 l e v e l s o f b u s in e s s ,
2,

The re v e n u e l o s s fro m t a x e xe m p tion w i l l c o n t in u e to in c r e a s e

T h is i s a l a r g e am ount; b u t th e c o n t in u a n c e o f th e e x i s t i n g t a x
e xe m p tio n w o u ld n o t s t a b i l i z e th e re v e n u e l o s s even a t t h a t l a r g e
fig u r e .
I f th e t a x e xe m p tio n w ere rem oved o n l y fro m f u t u r e i s s u e s ,
a c o n s id e r a b l y l a r g e r re v e n u e l o s s c o u ld r e s u l t m e r e ly fro m th e
s h i f t i n g o f o u t s t a n d in g i s s u e s fro m h o l d e r s s u b j e c t t o l i t t l e o r
no incom e t a x e s to t h o s e s u b j e c t t o h ig h e r r a t e s .
O f th e $ 2 0 b i l l i o n o f su c h s e c u r i t i e s o u t s t a n d in g on June 3 0 ,
1 9 4 1 , $ 1 2 , 2 b i l l i o n s were h e ld b y ta x -e x e m p t i n s t i t u t i o n s , g o v e rn ­
m e n ts, b a n k s , in s u r a n c e com p an ie s and, t o a s m a ll e x t e n t , o t h e r
b u s in e s s c o r p o r a t io n s ,
( T a b le 1 & C h a r t 1)
The s e c u r i t i e s o f th e s e
h o l d e r s a re a huge r e s e r v o i r fro m w h ic h i n d i v i d u a l s c o u ld in c r e a s e
t h e i r t a x - f r e e h o l d i n g s b y a s much a s 1 5 0 p e r c e n t , even i f th e t a x
e xe m p tio n p r i v i l e g e w ere im m e d ia t e ly rem oved fro m a l l new i s s u e s .
A d d i t i o n a l s h i f t s a re p o s s i b l e fro m i n d i v i d u a l s i n lo w incom e g ro u p s
t o i n d i v i d u a l s i n h i g h incom e g r o u p s .

y

Some o f th e d e t a i l e d e v id e n c e i s

2/

A t p r e s e n t r a t e s th e l o s s i s

3 1 -1 9

s u p p lie d i n a p p e n d ic e s.

e s tim a te d a t $ 1 8 4 m i l l i o n .

A l l s u c h t r a n s f e r s o f o u t s t a n d in g t a x exem pts to i n d i v i d u a l s w it h
l a r g e in co m e s y i e l d n o t h in g b y w ay o f lo w e r i n t e r e s t r a t e s t o S t a t e o r
l o c a l go v e rn m e n ts*
The b e n e f i t s o f su c h t r a n s f e r s a re c o n fin e d m a in ly
to th e s e l l e r s , who o b t a in w i n d f a l l c a p i t a l g a in s , and to th e b u y e rs
who o b t a in e xe m p tion fro m r e g u l a r and w a rtim e incom e t a x e s .
3*

T a x r a t e in c r e a s e s , s t im u la t e t a x a v o id a n c e

E v e n b e f o r e 1 9 4 1 , th e t r e n d to w a rd th e c o n c e n t r a t io n o f ta x-e xe m p t
s e c u r i t i e s i n th e h a n d s o f i n d i v i d u a l s i n th e u p p e r incom e b r a c k e t s had
become n o t ic e a b le .
S t a t e and l o c a l s e c u r i t i e s h a ve c o n s t it u t e d an
i n c r e a s i n g p e rc e n ta g e o f th e t o t a l a s s e t s o f l a r g e e s t a t e s , and th e re
h a s been a p ro n o u n ce d and c o n s i s t e n t te n d e n c y f o r ta x-e x e m p t s e c u r i t i e s
t o c o n s t i t u t e a g r e a t e r p e rc e n ta g e o f th e l a r g e r th a n o f th e s m a lle r
e sta te s.
F o r n e t e s t a t e s o f $ 1 , 1 0 0 , 0 0 0 and o v e r, States and l o c a l
s e c u r i t i e s a v e ra g e d 6 . 2 p e rc e n t o f th e g r o s s e s t a t e i n 1 9 2 8 and 1 5 * 1
p e rce n t i n 1940.
(T a b le 2 and C h a r t 2 )
We may r e a s o n a b ly e x p e c t a f u r t h e r in c r e a s e i n th e movement o f
ta x -e x e m p t s e c u r i t i e s i n t o th e h a n d s o f t h o s e w it h l a r g e incom es
b e c a u se th e r e c e n t and a n t ic ip a t e d t a x r a t e in c r e a s e s p r o v id e new and
p o w e r fu l m o t iv e s t o i n d i v i d u a l s w i t h l a r g e in co m e s to u se t h i s means
o f t a x a v o id a n c e .
U nder th e 1 9 4 2 t a x r a t e s p ro p o se d b y th e T r e a s u r y ,
an i n d i v i d u a l w it h a s u r t a x n e t incom e o f $ 1 0 0 ,0 0 0 from o t h e r s o u r c e s
w o u ld o b t a in a s l a r g e a n e t r e t u r n , a f t e r t a x e s , fro m a 2 ^ p e rc e n t
m u n ic ip a l bond a s from a t a x a b le in v e s t m e n t y i e l d i n g 2 0 . 8 p e rc e n t.
O th e r i l l u s t r a t i o n s a re p r e s e n t e d i n T a b le 3 *
4#

The o u t s t a n d in g ta x -e x e m p t s e c u r i t i e s w ere n o t p u rc h a se d i n
a n t i c i p a t i o n o f w a r-tim e t a x r a t e s

The c o n tin u a n c e o f th e t a x e xe m p tion o f i n t e r e s t on S t a t e and
l o c a l s e c u r i t i e s e n a b le s th e h o l d e r s o f th e se s e c u r i t i e s t o a v o id
n o t o n l y th e p re -w a r s c a le o f incom e t a x e s , b u t a l s o th e t a x r a t e
in c r e a s e s n e c e s s it a t e d b y th e w a r. M o s t o f th e o u t s t a n d in g bonds
w ore i s s u e d lo n g b e f o re t h e r e c o u ld h a ve been a n y s e r i o u s e x p e c t a t io n
o f w a r - t im e t a x r a t e s .
Of th e $ 2 0 b i l l i o n s o f S t a t e and l o c a l s e c u r i ­
t i e s o u t s t a n d in g , $ 1 4 * 4 b i l l i o n s , o r a lm o st t h r e e - q u a r t e r s o f th e
t o t a l , h a s been o u t s t a n d in g f o r f i v e y e a r s o r m ore, and $ 1 0 ,7 b i l l i o n s ,
o r o v e r h a l f th e t o t a l , f o r t e n y e a r s o r m ore.
( T a b le 4)
T a x e xe m p tion e n a b le s th e h o l d e r s o f S t a t e and l o c a l s e c u r i t i e s
to e n j o y an e xe m p tion f o r w h ic h few , i f a n y, can be s a i d to h a ve p a id
a p r i c e a t a l l com m ensurate w i t h th e b e n e f i t s r e c e iv e d .
I n s o f a r as

- 3 -

th e coupon r a t e s o f i n t e r e s t and th e m a rk e t p r i c e s o f S t a t e and l o c a l
s e c u r i t i e s r e f l e c t e d th e t a x e xe m p tion p r i v i l e g e a t a l l , t h e y r e f l e c t e d
e xe m p tion fro m much lo w e r t a x r a t e s th a n t h o s e i n p r o s p e c t , and, i n
m o st c a s e s , th a n t h o s e a lr e a d y i n f o r c e *
A p e r s o n w it h incom e fro m
o t h e r s o u r c e s o f $ 1 0 0 ,0 0 0 , who p u rc h a se d a 4 p e rc e n t ta x-e xe m p t se c u ­
r i t y i n 1 9 2 9 , o b t a in e d t h e re fro m th e e q u iv a le n t o f a t a x a b le r e t u r n o f
5 .2 6 p e r c e n t u n d e r 1 9 2 9 r a t e s .
U n d er th e r a t e s p ro p o se d b y th e
T r e a s u r y t h i s i n d i v i d u a l w o u ld d e r iv e a s much b e n e f it fro m h i s 4 p e rc e n t
t a x - f r e e bond a s he w o u ld fro m a t a x a b le s e c u r i t y y i e l d i n g 33 1/3 p e r c e n t ,
(T a b le 5).
5«

H o ld e r s o f ta x -e x e m p t s e c u r i t i e s h ave e n jo y e d s u b s t a n t i a l
vd .n d fa l.ls d u r in g r e c e n t y e a r s

B e c a u se o f th e r i s e i n t a x r a t e s , and a l s o b e c a u se o f th e d e c lin e
i n i n t e r e s t r a t e s , m ost h o ld e r s o f ta x -e x e m p t s e c u r i t i e s h a ve e n jo y e d
s u b s t a n t i a l w i n d f a l l s d u r in g r e c e n t y e a r s *
The m o st common r a t e s o f
i n t e r e s t on S t a t e and m u n ic ip a l b o n d s now o u t s t a n d in g a re 4 t o 4 ^ p e r ­
c e n t, w h e re a s th e p r e s e n t m a rk e t y i e l d o f su c h s e c u r i t i e s i s g e n e r a l l y
b e lo w 3 p e r c e n t *
( T a b le 6 and C h a r t 3 )
F o r 1 9 4 1 th e a v e ra g e coupon
r a t e on a l l o u t s t a n d in g S t a t e and l o c a l gove rn m e n t s e c u r i t i e s w as j u s t
o v e r 4 p e r c e n t , w h ile th e S t a n d a r d S t a t i s t i c s .Company* s in d e x o f m uni­
c i p a l bond y i e l d s f o r A p r i l , 1 9 4 2 , was o n ly 2 .4 9 p e r c e n t .
6,

T a x e xe m p tio n r e s u l t s i n in e q u i t a b l e t a x a t i o n

T ax-e xe m p t s e c u r i t i e s p ro d u c e s h a rp i n e q u a l i t i e s i n t a x b u rd e n s.
P e r s o n s w it h incom e fro m p r o p e r t y a re i n a p o s i t i o n to b e n e f i t m ost
fro m t h i s m eans o f t a x a v o id a n c e ; p e r s o n s who d e r i v e t h e i r in co m e s
fro m e a r n in g s b e n e f i t l e a s t .
E v e r y in c r e a s e i n t a x r a t e s i n c r e a s e s
th e im p o rta n c e o f t h e s e i n e q u a l i t i e s .
The d i s c r i m i n a t i o n betw een i n d i v i d u a l s and betw een c l a s s e s o f
i n d i v i d u a l s c o n s t i t u t e s , fro m an e q u it a b le s t a n d p o in t , th e m ost fu n d a ­
m e n ta l o f a l l th e o b j e c t io n s to ta x -e x e m p t s e c u r i t i e s .
A su rve y o f
t# © n ty —| i v e a c t u a l r e t u r n s f o r th e t a x a b le y e a r 1 9 4 0 r e v e a l s how
s t r i k i n g a re t h e d i f f e r e n c e s i n b u rd e n r e s u l t i n g fro m ta x -e x e m p t
s e c u r it ie s .
I f t h e r a t e s c h e d u le p ro p o se d b y th e T r e a s u r y w ere
a p p lie d t o th e ta x -e x e m p t, a s w e l l a s t h e t a x a b le , incom e r e p o r t e d
on t h e s e r e t u r n s , th e a g g re g a t e t a x l i a b i l i t y w o u ld be a lm o st d o u b le d —
$ 2 1 , 4 m i l l i o n , in s t e a d o f $ 1 2 . 5 m i l l i o n .
S e v e r a l o f th e c a s e s sum­
m a riz e d i n T a b le 7 a re s p e c t a c u la r .
I n one c a s e , o u t o f a t o t a l
r e p o r t e d incom e o f a p p r o x im a t e ly $ 974 , 600 , no l e s s th a n $ 6 6 8 ,7 0 0
came fro m S t a t e and l o c a l s e c u r i t i e s .
The t a x i 'l i a b i l i t y u n d e r th e

- 4 -

p ro p o se d r a t e s w o u ld be $ 2 5 4 ,3 0 0 , i f t h e ta x -e x e m p tio n p r i v i l e g e w ere
r e t a in e d , b u t $ 8 5 6 ,1 0 0 , i f th e t a x -e x e m p t io n p r i v i l e g e were rem oved*
I n a se c o n d c a s e , $ 8 1 7 ,4 0 0 o u t o f a t o t a l incom e o f $ 1 , 1 0 6 , 3 0 0 was
i n th e fo rm o f S t a t e and l o c a l i n t e r e s t .
The t a x l i a b i l i t y o f
$ 2 3 9 ,6 0 0 u n d e r p ro p o se d r a t e s w o u ld be r a i s e d t o $ 9 7 5 ,3 0 0 i f th e
e n t i r e incom e w ere t a x a b le .
7*

The prem ium p a id f o r ta x -e x e m p t s e c u r i t i e s d o e s n o t r e f l e c t
th e v a lu e o f th e t a x e xe m p tion

The d i f f e r e n c e s betw een t a x e s p a id . b y r e c i p i e n t s o f t a x a b le and
ta x -e x e m p t incom e w o u ld be l e s s in e q u i t a b l e i f th e h o l d e r s o f t a x exempt s e c u r i t i e s h a d p a id a prem ium t h a t r e f l e c t e d i n f u l l th e v a lu e
o f t h e t a x e xe m p tion . T h i s i s n o t th e c a s e .
The p r i c e t h a t i s s e t
up on t h e ta x -e x e m p t io n p r i v i l e g e i n th e open m a rk e t d i f f e r s s u b s t a n ­
t i a l l y i n m o st c a s e s , and s p e c t a c u l a r l y i n t h e e xtre m e c a s e s , from
th e v a lu e o f th e e xe m p tion p r i v i l e g e to th e i n d i v i d u a l p u r c h a s e r .
The c u r r e n t m a rk e t v a lu e o f th e t a x -e x e m p t io n f e a t u r e o f S t a t e and
l o c a l s e c u r i t i e s i s r o u g h ly , 1 / 2 o f 1 p e r c e n t .
T h i s m eans t h a t an
i n v e s t o r who p u r c h a s e s a m u n ic ip a l bond m ust c o n t e n t h i m s e l f w it h
a y i e l d t h a t i s a b o u t 1 /2 o f 1 p e r c e n t lo w e r , b e f o r e a llo w a n c e f o r
t a x e s , t h a n t h e y i e l d he c o u ld o b t a in fro m a c o r p o r a t e bond o f com­
p a r a b le q u a l i t y .
B u t to an i n d i v i d u a l w i t h a s u r t a x n o t incom e o f
$ 1 5 0 ,0 0 0 , u n d e r th e r a t e s p ro p o se d b y th e T r e a s u r y , th e ta x -e x e m p tio n
f e a t u r e o f t h e m u n ic ip a l bond i s w o rt h f i v e t im e s a s much a s he h a s
to pay f o r i t .
A h i g h g ra d e 3 p e rc e n t c o r p o r a t io n bond p u rc h a se d
a t p a r w o u ld y i e l d him o n l y 3/10 o f 1 p e r c e n t a f t e r incom e t a x e s ,
com pared w it h th e 2 j p e r c e n t t a x - f r e e y i e l d t h a t he c o u ld g e t from
a m u n ic ip a l bond o f a t l e a s t co m p a ra b le q u a l i t y .
The i n v e s t o r p a ys
a h a lf p e rce n t.
I t w o u ld bo w o rth h i s w h ile to p a y a s much a s
2 .7 p e r c e n t .
The v a lu e o f th e t a x —e xe m p tion p r i v i l e g e v a r i e s w it h th e s i z e
o f i n d i v i d u a l in c o m e s.
To a p e r s o n w i t h an incom e b e low th e p e r s o n a l
e x e m p tio n , a 3 p e r c e n t t a x - f r e e s e c u r i t y i s w o rt h no more th a n a t a x ­
a b le s e c u r i t y o f co m p ara b le c o s t .
To a m a r r ie d man w it h no depend­
e n t s , w i t h a n e t incom e o f $ 1 0 , 0 0 0 , th e same 3 p e rc e n t t a x - f r e e
s e c u r i t y i s e q u iv a le n t , u n d e r th e p ro p o se d r a t e s , t o a t a x a b le i s s u e
y ie ld in g 4 *8 4 p e rc e n t.
To a s i m i l a r i n d i v i d u a l w it h a n e t incom e o f
$ 1 0 0 ,0 0 0 , th e 3 p e r c e n t t a x - f r e e s e c u r i t y i s e q u iv a le n t to a t a x a b le
s e c u r i t y y i e l d i n g 2 5 . 0 p e r c e n t ; and t o an i n d i v i d u a l w it h a t a x a b le
incom e o f h a l f a m i l l i o n d o l l a r s , t o a t a x a b le s e c u r i t y y i e l d i n g
30 p e r c e n t .
( T a b le 3)

I f th e volum e o f S t a t e a n d l o c a l s e c u r i t i e s w ere so s m a ll t h a t
th e w h o le amount a v a i l a b l e w as p u rc h a s e d b y i n d i v i d u a l s i n th e u p p e r
incom e b r a c k e t s , th e prem ium p a id f o r t h e s e s e c u r i t i e s i n th e fo rm
o f lo w e r i n t e r e s t r a t e s m ig h t r e f l e c t r o u g h l y th e v a lu e o f th e t a x
e x e m p tio n t o th e p u r c h a s e r s .
How ever, t h e l a r g e r p a r t o f th e o u t ­
s t a n d in g s e c u r i t i e s w as h e ld b y F e d e r a l a n d S t a t e t r u s t fu n d s ,
b a n k s , in s u r a n c e co m p an ie s, a n d o t h e r c o r p o r a t io n s .
( T a b le 1)

Some of these institutional investors enjoy a tax-free status.
To them th e t a x e x e m p tio n f e a t u r e h a s no v a lu e a t a l l .
O th e rs a re
s u b j e c t t o e f f e c t i v e r a t e s o f t a x a t i o n much lo w e r th a n th e r a t e s
im p o se d on incom e r e c e iv e d b y i n d i v i d u a l s i n th e u p p e r incom e
b ra cke ts.
N o r m a lly , th e p r i c e p a id f o r a p r i v i l e g e o f t h i s s o r t
i n t h e open m a rk e t w i l l r e f l e c t th e im p o rta n c e o f t h a t p r i v i l e g e ,
n o t t o t h e m ost u r g e n t , b u t t o th e l e a s t u r g e n t o f t h e a c t u a l
b u ye rs.
T h a t i s t o s a y , th e prem ium p a id f o r th e ta x -e x e m p t s e ­
c u r i t y w i l l r e f l e c t t h e im p o rta n c e o f t h e e x e m p tio n p r i v i l e g e t o
t h o s e among th e b u y e r s t o whom th e p r i v i l e g e i s w o rt h th e l e a s t .
P u r c h a s e s to a v o id t a x e s a r e n o t th e o n l y f a c t o r s a f f e c t i n g
th e y i e l d o f S t a t e a n d l o c a l s e c u r i t i e s .
Some i n v e s t o r s , b e c a u se
o f l e g a l r e q u ir e m e n t s , ' t h e i r d e s i r e f o r g r e a t e r s a f e t y , o r ig n o r a n c e
o f s u p e r i o r a l t e r n a t i v e s , p u rc h a se o r r e t a i n S t a t e and l o c a l s e c u r i ­
t i e s e ve n a t some s a c r i f i c e i n i n t e r e s t r a t e s and w it h o u t a n y r e g a r d
t o th e t a x e x e m p tio n . M any w e a lt h y i n d i v i d u a l s do n o t ch o o se t h e i r
in v e s t m e n t s s o l e l y w it h an eye on n e t y i e l d s a f t e r t a x e s .
T h e y a re
a l s o in f l u e n c e d b y th e d e s i r e t o c o n t r o l p a r t i c u l a r b u s in e s s e n t e r ­
p r i s e s , and r e lu c t a n c e t o a l t e r r a d i c a l l y th e c o m p o s it io n o f l a r g e
b e q u e s t s o r o t h e r l a r g e h o ld in g s , p a r t i c u l a r l y when s u c h an a l t e r ­
a t i o n w o u ld e n t a i l th e l i q u i d a t i o n o f p r o p e r t i e s w it h p o o r m a rk e ts.
The n e t b a la n c e o f t h e s e f a c t o r s h a s been s u c h t h a t w e a lth y
i n d i v i d u a l s h ave c o n s i s t e n t l y been a b le t o p u rc h a s e t a x e xe m p tion
a t b a r g a in p r i c e s .
T h i s f a c t i s r e f l e c t e d i n T a b le s 3 a n d 9 and
C h a r t s 4 a n d 5* w h ic h show th e s p r e a d i n y i e l d betw een c o rp o ra t e
a n d m u n ic ip a l b o n d s i s s m a ll r e l a t i v e t o p o s s i b l e t a x b e n e f i t s .

8 . The removal of the tax exemption will not reduce State and
l o c a l s o v e r e ig n t y
The c la im i s f r e q u e n t l y ma.de t h a t th e re m o v a l q £ t a x e xem p tion
w o u ld u n d e rm in e S t a t e a n d l o c a l s o v e r e ig n t y .
Some p e r s o n s have
a rg u e d a s i f th e a d o p t io n o f t h i s p r o p o s a l w o u ld g iv e th e F e d e r a l
G overnm ent th e pow er t o l e v y s p e c i a l o r d i s c r i m i n a t o r y t a x e s upon
a n y o r a l l o p e r a t io n s o f S t a t e and l o c a l g o v e rn m e n ts.
N o t h in g
c o u ld be f u r t h e r fro m t h e t r u t h .
The e l i m i n a t i o n o f t a x e xe m p tion

-

6-

would not give the Federal Government the right to tax State and
local interest at rates any higher than apply to other forms of
income. It would give the Federal Government no new powers over
the operations of State and local governments.
The securities of local governments in Great Britain do not
enjoy exemption from the income tax of' the central government, nor
do those of the local governments and provinces of Canada or
Australia. Further, in subjecting interest from State and local
securities to the same tax laws that apply to other kinds of
income, the Federal Government would only be doing what all of the
thirty-two States imposing personal income taxes already do them­
selves with respect to the obligations of other States and the
subdivisions thereof. (Table 10)
9.

Elimination of tax exemption would only moderately increase
State and local interest costs

The removal of tax exemption is frequently opposed on the
ground that it would greatly increase State and local interest
costs. These fears appear to be exaggerated. Tax exemption is
only one of the many influences affecting the market rate of inter­
est for State and local securities. Some persons mistakenly
ascribe the whole difference between corporate and municipal bond
yields to the tax exemption privilege. But a large part of the
difference is due to the superior quality or greater safety of
State and local obligations. The differential in yield in favor
of municipal bonds was greater in 1900 , before the adoption of the
Federal income tax, than it is today. (Table 9 )
Although the precise effect of the tax-exemption privilege on
the market interest rate is subject to some difference of opinion,
the Treasury believes that it is somewhere between one-fourth and
five-eighths of one percent. Hence, it is reasonable to suppose
that the removal of the tax-exemption privilege would increase
interest rates on new State and local issues by something less
than one-half of one percent on the average.
The interest costs of outstanding obligations would not be
affected unless and until the obligations were refunded by new
issues. It will be 1970 before 90 percent of the outstanding
State and local obligations have matured. 1/ (Table 11)
1/

The fact that new plus-refunding issues have been appearing at
the rate of a billion a year must not be made the basis for the
expectation that the entire outstanding debt will have been re­
funded in twenty years. A portion of the refunding issues merely
replace securities which in themselves were refunding issues.

- 7 -

I f o t h e r i n t e r e s t r a t e s re m a in e d a t a p p r o x im a t e ly t h e i r p r e s e n t
l e v e l s , th e r e f u n d in g o f o u t s t a n d in g ta x -e x e m p t o b l i g a t i o n s w it h
t a x a b le s e c u r i t i e s w o u ld n o t in c r e a s e th e i n t e r e s t c o s t s o f S t a t e
a n d l o c a l go ve rn m e n ts i n th e v a s t m a j o r i t y o f c a s e s s in c e th e r e ­
m o va l o f th e t a x e xe m p tion w o u ld be more t h a n o f f s e t b y th e d r a s t i c
d e c lin e t h a t h a s ta k e n p la c e i n th e g e n e r a l l e v e l o f i n t e r e s t r a t e s .
I n r e c e n t y e a r s new and r e f u n d in g S t a t e a n d l o c a l i s s u e s have
a v e ra g e d a b o u t $ 1 b i l l i o n a n n u a lly .
I f t h i s volum e s h o u ld c o n tin u e ,
th e im m ed iate e f f e c t o f th e e l i m i n a t i o n o f th e t a x im m u n ity w o u ld
be an in c r e a s e i n S t a t e and l o c a l i n t e r e s t c o s t s o f a b o u t $5 m i l l i o n
d u r in g th e f i r s t y e a r .
E v e n t u a l l y , th e a n n u a l d if f e r e n c e w o u ld
r e a c h a b o u t $ 1 0 0 m i l l i o n s i f th e d eb t o f S t a t e a n d l o c a l gove rn m e n ts
re m a in e d a t i t s r e c e n t l e v e l .
The n e t c o s t to S t a t e and l o c a l g o v e rn m e n ts w o u ld be l e s s th a n
$ 100 m i l l i o n , s in c e t h e y w o u ld o b t a in i n c r e a s e d re v e n u e s fro m th e
a p p l i c a t i o n o f t h e i r incom e t a x e s t o new F e d e r a l i s s u e s , i f C o n g r e s s
c o n s e n t s t o su c h t a x a t i o n .
10<

T a x e xe m p tion s h o u ld be a p p r a is e d a s a j o i n t F e d e r a l, S t a t e .
a n d l o c a l p ro b le m

The i n d i v i d u a l c i t i z e n i s n o t o n ly a c i t i z e n and t a x p a y e r o f
h i s c i t y a n d S t a te | he i s no l e s s a c i t i z e n a n d t a x p a y e r o f h i s
n a t i o n a l gove rn m e n t.
He i s s u b j e c t a t one a n d th e same tim e t o
t a x e s im p o se d b y a l l go ve rn m e n ts, — • F e d e r a l, S t a t e , a n d l o c a l .
The a d d i t i o n a l b u rd e n im p o se d on th e S t a t e and l o c a l go ve rn m e n ts
m ust be b a la n c e d a g a i n s t th e now re ve n u e t h a t v/ould be d e r iv e d fro m
F e d e ra l ta x a tio n .
The n e t b u rd e n on th e t a x p a y e r s o f th e N a t io n
a s a w h o le w i l l n o t be in c r e a s e d b y th e re m o v a l o f th e e xem p tion
p r i v i l e g e . W h e re a s th e im m ed iate d if f e r e n c e i n i n t e r e s t c o s t s to
S t a t e a n d l o c a l go ve rn m e n ts w o u ld be a b o u t $5 m i l l i o n a y e a r and
th e u lt im a t e d if f e r e n c e i n th e n e ig h b o rh o o d o f $ 1 0 0 m i l l i o n a y e a r ,
th e F e d e r a l G overnm ent w ou ld , u n d e r th e p ro p o se d r a t e s f o r 194-2,
a v o id an im m ed iate a n n u a l l o s s i n re v e n u e o f $275 m i l l i o n and th e
p o s s i b i l i t y o f e ven l a r g e r f u t u r e l o s s e s i n re v e n u e .
F i n a l l y , th e
t a x p a y e r s o f th e n a t io n a s a w h o le w o u ld be b e n e f it e d b y th e e l i m i ­
n a t io n o f a n im p o r t a n t so u r c e o f t a x a v o id a n c e , and b y a r e s u l t i n g
in c r e a s e i n th e e q u i t y w i t h w h ic h th e t o t a l t a x lo a d i s d i s t r i b u t e d
among o u r c i t i ze n s *

-

I I .

8

-

THE LLGAL AND CONSTITUTIONAL IS S U E S INVOLVED IN THE PROPOSAL
OF THE TREASURY MARCH 3 , 1 9 4 2 TO E L IM IN A T E T IE EXEMPTION OF
IN T E R E ST ON O BLIG ATIO N S OF STATES AND T H EIR P O L IT IC A L S U B D IV IS IO N S

The C o n g r e s s p o s s e s s e s th e pow er to l e v y a t a x on incom es«
I n t e r e s t p a i d on S t a t e and m u n ic ip a l o b l i g a t i o n s c l e a r l y c o n s t i t u t e s
in co m e.
I.t w o u ld f o l l o w , t h e r e f o r e , t h a t su c h i n t e r e s t i s s u b je c t t o ^ th e
F e d e r a l incom e t a x .
C e r t a i n l y t h e r e i s no p r o v i s i o n o f th e C o n s t i t u t i o n
w h ic h p r o h i b i t s th e i m p o s it io n o f a F e d e r a l incom e t a x upon th e i n t e r e s t
d e r iv e d fro m S t a t e and m u n ic ip a l o b l i g a t i o n s .
The o n l y p o s s i b l e b a s i s
f o r q u e s t io n i n g th e c o n s t i t u t i o n a l v a l i d i t y o f s u c h a t a x i s t h e r e f o r e
th e a s s e r t i o n t h a t th e h o ld e r s o f su c h o b l i g a t i o n s a r c c lo a k e d w it h an
im m u n ity t h a t may be im p lie d fro m th e C o n s t i t u t i o n .
I n 189^ th e
Suprem e C o u r t i n P o l l o c k v . F a rm e rs L o a n & T r u s t C o «, 15/ U .S . 4-29;
1 5 8 U . S . 6 0 1 , s t a t e d t h a t su c h an im m u n ity e x is t e d .
B u t th e f o u n d a t io n s
o f t h i s o p in io n have been so w eakened b y su b se q u e n t d e c is io n s t h a t i t
c a n n o t w it h s t a n d a d i r e c t a t t a c k . W it h i t f a l l s th e o n l y b a r r i e r t o
th e v a l i d i t y o f a F e d e r a l incom e t a x on th e i n t e r e s t r e c e iv e d b y su c h
b o n d h o ld e r s .

A.
The belief that the Poliock decision has no validity today rests
upon these bases: First, it may be argued that the adoption of the
Sixteenth Amendment to the Constitution affirmatively sanctioned taxa­
tion of the income from State obligations, through the express grant
of power to the Congress "to lay and collect taxes on incomes, from
whatever source derived."
Second, every other claim to private immunity from Federal income
taxation, even those formerly recognized by the Court, has now been
rejected. The income derived by Government contractors from their
contracts was denied immunity in Metcalf & Eddy v. Mitchell, 269 U . S .
514 (1 9 2 6 ) a n d James v . D ra v o C o n t r a c t in g C o ., 3 02 U .S . 1 3 4 ( 1 9 3 7 ; ;
th e incom e d e r iv e d b y l e s s e e s o f Governm ent p r o p e r t y from t h e i r le a s e d
p r o p e r t y was d e n ie d im m u n ity i n H c l v e r i n g v . M o u n t a in P ro d u c e rs ^
C o r p o r a t io n , 303 U .S . 3 76 ( 1 9 3 6 ) ; %
incom e d e r iv e d b y F e d e r a l ju d g e s
fro m t h e i r s a l a r y wras i n e f f e c t d e n ie d im m u n ity i n 0 'H a l l e y v .—
— 9U E - >
307 U S . 277 ( 1 9 3 9 ) . M o s t s i g n i f i c a n t o f a l l , S t a t e e m p lo y e e s, who h a d
e n jo y e d u n d e r C o l l e c t o r v . D a y , 1 1 W a ll. 113 ( 1 3 7 0 ) , an im raunity fro m
F e d e r a l incom e t a x a t i o n a n t e d a t in g t h a t g iv e n to th e b o n d h o ld e r b y th e
P e l l o c k c a s e , w ere h e ld i n G ra v e s v . O ’K e e f e , 306 U .S . 466 (1 9 3 9 , to be

- 9 -

s u b j e c t to F e d e r a l incom e t a x a t i o n on t h e i r s a l a r i e s .
L ik e th e S t a t e
e m p lo y e e , th e b o n d h o ld e r o f f e r s s e r v i c e s , h i s c a p i t a l , to th e S t a t e a t
a p r i c e and l i k e the em ployee t h a t p r i c e m ust p a y i t s c o n t r i b u t i o n t o
th e Fed .e ra l r e v e n u e s .
T h ir d , th e t h e o r e t i c a l b a s i s o f th e P o l l o c k d e c i s i o n , t h a t a t a x
on th e incom e fro m S t a t e o b l i g a t i o n s i s e q u iv a le n t to a. t a x on th e
b o n d s th e m s e lv e s a n d t h u s i s a t a x on th e pow er o f th e S t a t e to b o rro w
money, h a s been f l a t l y r e j e c t e d b y th e Suprem e C o u r t .
I n G ra v e s „Vi
0 1K e e f e . J u s t i c e S t o n e s a id ;
”The t h e o r y , w h ic h once won a q u a l i f i e d
a p p r o v a l, t h a t a t a x on incom e i s l e g a l l y o r e c o n o m ic a lly a t a x on i t s
s o u r c e , i s no lo n g e r t e n a b l e . ” I n pla.ee o f t h a t d is c a r d e d t h e o r y t h e r e
h a s been s u b s t i t u t e d b y th e Supreme C o u rt th e v ie w t h a t a n o n - d i s c r i m i n a t-o ry F e d e r a l incom e t a x , d ir e c t e d a t a l l c i t i z e n s a l i k e , i s v a l i d a s
a g a i n s t a r y c la im t o c o n s t i t u t i o n a l im m u n ity b a s e d upon d e a l i n g s Yiith„
S t a t e g o v e rn m e n ts.
T h a t th e econom ic b u rd e n o f a S t a t e s a l e s t a x upon
m a t e r i a l s s o l d to a " c o s t - p l u s - a - f i x c d - f c e ” c o n t r a c t o r w it h th e F e d e r a l
G overnm ent ” i s b u t a. n o rm a l i n c i d e n t o f th e o r g a n i z a t i o n v l t n i n th e
same t e r r i t o r y o f two in d e p e n d e n t t a x i n g s o v e r e i g n t i e s ” was r e c e n t l y
announced" i n Alabam a v . K in g & B o o z e r , 3 1 4 U .S . 1 (1 9 4 1 )»
From t h i s
c a se i t w o u ld f o l l o w t h a t a n y b u rd e n t h a t may be p a s s e d on e c o n o m ic a lly
to S t a t e g o ve rn m e n ts bcca.usc o f a. ta„x up on th e i n t e r e s t d e r iv e d fro m
b o n d s i s s u e d b y su c h go ve rn m e n ts i s b u t th e n o rm a l in c i d e n t o f th e
e x is t e n c e o f two go ve rn m e n ts Y f it h in th e same t e r r i t o r y .
S u c h ail
r e s t r i c t i o n o f th e
i n d i r e c t a n d i n c i d e n t a l e f f e c t d oes n o t w a rra n t
F e d e r a l t a x i n g pow er.
F o u r t h , g r e a t e m p h a sis i s p la.ccd b y th e Suprem e C o u rt i n i t s
r e c e n t o p in io n s on th e d u ty o f a l l i n d i v i d u a l s t o c o n t r ib u t e t h e i r
s h a r e to th e c o s t s o f G overnm ent. E q u a l l y s t r e s s e d i s th e r e c o g n i t i o n
o f th e d a n g e rs in h e r e n t i n p l a n i n g r e s t r i c t i o n s u p on th e F e d e r a l t a x i n g
p ow e r. The C o u rt h a s t h u s c l e a r l y r e c o g n iz e d t h a t r e c o g n i t i o n o f a n y
im m u n ity o n th e p e n t o f t h e h o ld e r s o f S t a t e o b l i g a t i o n s w o u ld r e l i e v e
one g ro u p o f t a x p a y e r s fro m th e d u t y o f f i n a n c i a l s u p p o r t to th e
n a t i o n a l Governm ent a n d c u r t a i l th e s o v e r e ig n pow er o f t h a t Governm ent
t o m a in t a in i t s e x is t e n c e . l/7hen th e i s s u e i s so v ie w e d , th e u r g e n c y o f
o u r p r e s e n t n e e d s f o r re v e n u e , g r e a t e r th a n e v e r b e f o r e , com pels th e
c o n v i c t i o n that, th e Supreme C o u r t w i l l r e f u s e to exempt th e h o ld e r s o f
S t a l e b o n d s fro m t h e i r o b l i g a t i o n s t o th e N a t io n .

xo B.
Some individuals have asserted that while the Federal Govern­
ment may possess the power to tax the interest on future issues of
State and municipal obligations, such power does not extend to the
interest on the outstanding obligations. They support this assertion
by claiming that a contract of exemption exists between the Federal
Government and the holders of such outstanding obligations.
However, no such contract exists. Although the various revenue
acts have excluded from gross income the interest upon such obli­
gations, the exemption provisions in these acts cannot be regarded
as contracts betw een the Federal Government and the States or the
bondholders. This exemption, like any other exemption, is simply
an expression of legislative policy which may be changed at any time.
If such a provision were said to be a contract, on like grounds a
salaried taxpayer might claim he had a binding contract right to the
earned income credit, a father to the credit for dependent children
and so on. In short, to these taxpayers, and to the taxpayer who
possesses State and local obligations, the Federal Government has '
made,, no promises that existing laws would not be changed.
But, it has been asserted, while no contract exists, at least
there is a moral obligation upon the Federal Government not to tax
such interest in view of the exemption existing at the time of their
issuance. But here again the granting of an exemption does not carry
with it the understanding that it will be forever continued. No doubt „
many investors expected a continued tax-free yield when they purchased
the obligations. But it has been pointed out previously that such
expectation did not extend to the high rates necessitated by emergency
conditions. And every taxpayer takes the chance that the rates of tax
and the exemptions thereunder will change. Any other view of the
situation would turn the tax laws into static rules and by thus straitjacketing revenue legislation make it impossible for the Congress to
adapt its tax policies to changing conditions.

c.
Finally, it has been contended that the history of the ratifica­
tion of the Sixteenth Amendment proves that at that time it was the
understanding that the words “from whatever source derived” did not
give to the Congress the power to levy a tax upon interest from State
and local obligations. The communications and speeches of Senators Borah
of Idaho and Root of New York have been cited in an effort to show that

11

Congress did not intend to tax the interest on State and municipal
obligations. It should he noted that this issue was not raised until
after the Amendment had been submitted to the States for ratification.
In fact, there is nothing that was said in the course of the debate in
the Congress from which it may be inferred that a single Member expected
or intended that the income from State and municipal bonds and the
salaries of State and municipal officers and employees should be con­
stitutionally immune under the proposed amendment.
When the Sixteenth Amendment was before the New York State Legis­
lature for ratification, Governor Hughes recommended its rejection on
the ground that the Amendment gave to the Federal Government the right
to tax the interest on State and municipal securities. Senator Root
took the position that the Amendment merely dealt with the problem of
apportionment and did not affect the inherent power of the Federal
Government to tax incomes. In other words, the Sixteenth Amendment
simply permitted Congress to levy an income tax without apportionment
among the several States, and that therefore the Amendment did not give
to the Congress any power that it did not previously have, so that the
rule of the Pollock case was unaffected by its passage. This was also
Senator Borah’s position. While the New York Legislature rejected
the Amendment on Governor Hughes’ advice, it was ratified by that State
after his departure from office. It is thus apparent that at the time
of the ratification of the Sixteenth Amendment by the several States
there was reputable authority on both sides of the question with respect
to the taxability of interest upon State and local obligations.
There is, however, a stronger answer to this contention. As
indicated above, the observations of Senators Borah and Root amount to
the assertion that the Pollock case was unaffected by the adoption of
the Sixteenth Amendment. But the rule of the Pollock case has since
been rejected by the Supreme Court, so that there is no immunity afforded
by the Constitution to the interest on these obligations. In this light
the references to the Sixteenth Amendment become wholly irrelevant.

T a b le 1

T a x-e xe m p t S t a t e and l o c a l s e c u r i t i e s ,
b y c l a s s e s o f h o ld e r , June 30, 1941 1 /

C l a s s o f h o ld e r

In d iv id u a ls 2/
C o m m e rcia l b a n k s
In s u r a n c e com panies
C o r p o r a t io n s o t h e r th a n b a n k s
a n d in s u r a n c e com panies
T ax-e xe m p t h o ld e r s :
F e d e r a l fu n d s
S t a t e a n d l o c a l governm ent
fu n d s /
M u t u a l s a v in g s b a n k s
O th e r ta x -e x e m p t i n s t i t u t i o n s

*

E s t im a t e d am ounts
a t p a r v a lu e
(in b illio n s of
d o lla r s )
7 .8
3 .7
2 .1
.5
.7
4 .1
.5
.6

A l l ta x -e x e m p t h o ld e r s
A l l h o ld e r s

So u rce :

1/
2/
%/

5 .9
2 0 .0

T r e a s u r y B u l l e t i n , F e b r u a r y 1942 a n d A n n u a l
R e p o r t o f th e S e c r e t a r y o f th e T r e a s u r y . 1941»

I n c l u d i n g s e c u r i t i e s o f T e r r i t o r i e s and i n s u l a r p o s s e s ­
s io n s .
I n c l u d i n g e s t a t e s and t r u s t s .
I n c l u d i n g t r u s t , in v e s t m e n t , and s i n k i n g fu n d s , and
h o l d in g s o f T e r r i t o r i a l a n d i n s u l a r g o v e rn m e n ta l fu n d s .

T a b le 2
S t a t e a n d l o c a l governm ent s e c u r i t i e s a s a p e rc e n t
o f g ro s s e sta te , by s iz e c la s s e s o f net e sta te ,
e s t a t e t a x r e t u r n s f i l e d i n 1928-194.0.

o
o

Net e s t a te 1 7 1 i n t h o u s a n d s o f d o l l a r s )
î 1 ,1 0 0
:
500
200
1 00
:
:
and
under s under s under : under
over
: 1 .1 0 0 2/ :
s 500
2 00
:
3 00

F ilin g
year

( S t a t e a n d l o c a l governmtent s e c u r i t i e s a s p e rc e n t
of gro ss e sta te ) 2 /
1 92 8
1 92 9
1 93 0
1931
1932
1933
19341935
1936
1 93 7
1938
1 939
1 94 0

So u rce s
1/
2/
¿/

.

1 .6 #
1 .6
1 .4
1 .9
2 .2
' 2 .9
3 .4
3 .6
3 .0
3 .1
2 .9
3 .2
3 .1

2 .3 £
1 .8
2 .4
2 .5
2 .6
5 .1
4 .4
5 .7
5 .4
5 .3
4 *4
4 *4
3 .6

■"> 1*1cf
K- . I/O
2 .2
3 .0
4 .2
5 .0
6 .6
5 .8
6 .7
6 .3
5 .7
5 .3
7 .1
6 .2

4 .3 $
4 .5
q A
4 .8
8 .3
1 1 .2
1 0 .0
1 1 ,0
8 .2
9 .2
8 .0
1 1 .6
8 .8

C o m p ile d fro m S t a t i s t i c s o f In co m e .

B e fo r e s p e c i f i c e x e m p tio n .
In c lu d e s s e c u r it ie s o f T e r r it o r ie s and in s u la r
p o s s e s s io n s .
G r o s s e s t a t e in c l u d e s ta x -e x e m p t in s u r a n c e .

6 .2 #
6 .0
7 .3
9 .2
1 3 .3
2 1 .9
2 3 .9
1 4 .4
1 2 .5
1 1 .4

1 6 .1
2 2 .7
1 5 .1

Table 3
Gross annual yields from a taxable security equivalent to specified yields from a wholly
tax-exempt security if

Gross

Net income
from other

p JL

¿2

sources

1941
rates

2/
$

2.50

1,000

2,500

annual yield from a taxable
percent
: proposed
; rates

rates

3/

2.50

3.00

2.77
2. 87

3.21

5,000

3 .^ 7

3 -3 2
3.^5

10,000
20,000

3.33
U .3 1

4.03

4. 0 0

50,000
100,000
500,000
1 ,000,000

6 .10

5.56
10.42

5.17
7.32

7. 81
10 , 4 2

20.83
25.00
25.00

H

.36

s e c u r i t y e q u i v a l e n t to a tax--exempt y i e l d of
4 percent
:
•
¡3* p e r c e n t
;
proposed :
1941
: proposed
;
194l

3 percent
: proposed
1941

9. 3 «

12.50
13.64

;

rates
3.00

3 /.

:

rates

3.85

3.50
3.87

4.17
4.84

4.02
4.67

6.67
12,5 0
25.00
30.00
30.00

6.03

;

rates

3/

•

rates

;

rates

3.50
4.49
4.86

4.00

4.00

4.42

5.b5

5.33

5.13
5.5§
6.45

7 . 7s

6.90
9.76

8.89
16 .6 7

4 .60

8.54

14.58

10.94

12.50

S

29.17
35.00

16.67

33.33
40*00

15*91

35.00

18.18

40.00

l4.5

3/

if

It is assumed that both the taxable and the tax-exempt security are bought at par; and that
the income from additional investments, if taxable, would not be large enough to become
subject to a higher rate than that applicable to the first dollar of the additional income.
The calculations apply to a married person with no dependents, and take into account varia­
tions in the personal exemption and earned income credit as well as in tax rates. The
earned income credit is assumed to be unaffected by the additional taxable income except in
those cases where by statutory definition all net income is deemed earned.

2J

Before personal exemption.

Ji/ As presented by Secretary Morgenthau to the Ways and Means Committee, March 3» 19^2.

T a b le 4
S t a t e and l o c a l governm ent s e c u r i t i e s 9 b y
le n g t h o f tim e o u t s t a n d in g , 1/
June 3 0 , 1 9 4 1

L ê n g th o f
tim e o u t s t a n d in g
L e s s th a n
it
ti
it
1!
tl
it
it
It
h
tl
ti
II
it
It
ti
It
it
11

y

2 .3
3 .1
4* 2
4 -9
5 .6
6 .5
7 .3
7 .9
8 .4
9 .3

1 year
2 ye a rs
h
3
it
4
it
5
h
6
it
7
h
8
tt
9
10 »

T o t a l amount o u t s t a n d in g

Source:

E s t im a t e d amount
f in b il l io n s of d o lla r s )

8
8

2 0 .0

■

.

Compiled from data supplied by the Bureau of the Census,
Division of State and Local Government.

Interest-bearing securities only, including those of
territories and insular possessions#

Table 5
Gross annual yield from a taxable security equivalent to
a 4 percent yield from a wholly tax-exempt security,
under tax rates in effect in 1929» 1935* an& 19^1» an&
proposed for 19^-2 1/

Net income
from
other sources 2 /
$

1942
(proposed
rates 3 /)

1929

1935

194 1

1,5 0 0

4.00$

4.oo$

4 .00$

4.00$

2,500

4.oo

4.00

4.42

5.13

5,000

4.02

W17'

4.60

5.56

10,000

4 .1 2

H .3 7

5.33

6.45

20,000

4.4o

M l

6.90

g.S9

50,000

4.g2

5.^0

9 .7 6

16 .6 7

100,000

5.26

8.70

12 .5 0

33.33

500,000

5 .2 6

10 ,0 0

16 .6 7

40.00

1,000,000

5.26

10 .5 3

18. lg

40.00

:

1/ It is assumed that both the taxable and the tax-exempt security
“ are bought at par; and that the income from additional invest­
ments, if taxable, would not be large enough to become subject
to a higher rate than that applicable to the first dollar of
the additional income. The calculations apply to a married
person with no dependents, and take into account variations
in the personal exemption and earned income credit as well as
in tax rates. The earned income credit is assumed to be un­
affected by the additional taxable income except in those cases
where by statutory definition all net income is deemed earned.
2/ B e f o r e p e r s o n a l e xe m p tion .

3/ As presented by Secretary Morgenthau to the Ways and Means
Committee, March 3* 19^2.

Table
Securities

of

States,

and

of

cities

with

more

than

6
100,000

population,

by

interest

rate,

1939

1/

(Am ounts i n th o u sa n d s o f d o l l a r s )

Securities outs tanding, at par value
States, and cities over
:
States
:
100,000 population
: Amount
Percent
Amount
.•Percent of total
of total :

Interest :
rate
:
(Percent) ;

1 .5 0
l* 75
2.0 0
2.25
2 .50
2.75
3.00
3.25
3.50
3.75
4.00
>+.25
4 .50
k 75
5.00
5.25
5.50
5.75
6.00

75,980
1+3,388
131,814
2 3 3 .5 16
11+9 ,171 +
17 7 ,9 0 7
7 1 3 ,1 1 8
402,4 n
848,107
23 0 ,6 17
2 ,267,298
1 ,580,990
1.730,1+79
294,902
706,704
15,809
8 1,9 6 3
14,764
12 0 ,8 7 1

Total

9,819,812

Other rates

1./

75*980
1+3,388
65.153
140,570
50 ,18 8
72,600
3 0 0 ,12 1
136 ,8 39
19 5 ,6 8 1
1 1 7 ,1+33
782,670
3^9,750
1+35,1+85
124,284
227,626
52,328

100.0

3 ,17 0 ,11+6

2.4
1.4
2 .1
4.4
1 .6
2 .3
9-5

66 ,66l
9 2 .91+6
98,986
105,307
>+12,997
265,572
652,426
1 1 3 ,131 +
1,484,628
1,231,240
1 ,291+,991+
17 0 ,6 18
479,078
15,809
8 1,963
14,764
68 ,51+3

6 .2
3*7
24.7
11.0
13*7
3*9
7*2
—
1 .6
10 0 .0

6,649,666

1 ,086,476

166,795

9 19 ,6 8 1

6,999

1,087

5,912

Rates not
reported
Source;

.8
.4
1*3
2.4
1-5
1 .8
7.3
4.1
8.6
2.4
2 3 .1
1 6 .1
17 .6
3*0
7*2
.2
.8
.2
1.2

Cities over 100,000
population
Amount
:Percent of total

Bureau

of

the

Census,

Division

of

State

S e c u r i t i e s o u t s t a n d i n g at c l o s e of f i s c a l
of less t han one y e a r is not included.

and

years

Local
ended

—
1.0
1.4
1*5
1 .6
6 .2
4.0
9*8
1*7
2 2 .3
1 8 .5
1 9 .5
2 .6
7 .2
.3
1.2
.2
1.0
100.0

Government.
in

1939»

Debt

with

original

maturity

$at>le

7

Tax liability assuming interest from State and local government securities (a) tax-exempt and (b) taxable,
under present and proposed individual income tax rates, for 25 selected individuals.

Case

State
and
local
interest

1
2

2 2 1.9
2 3 6 .2

3
4

2 6 0 .4
2 3 0 .9

5
6

226.9
2 15 .0
349.5

7

s
9

10
11
12
13
14
15

16
17
18
19
20
21

: Taxable
: net income : Total
: income
:
from
:
other
: sources if
6 0 1.9
823.8
2 0 7 .9
1 4 8 .9
1 .3 3 7 .5
1 ,0 8 1 . 0
1 4 7 .8
1 4 4 .2

4 4 4 .1
4 0 9 .3
1 ,5 6 8 .4
1 .3 0 7 . 9

8 2 0 .7

335.6

362.8
4 93.7
1 , 656.3

16 2 .7

2 4 9 .8
2 7 5 .1
3 7 3 -6

626 . 8
704.3

3 5 1 .7
3 3 0 .7

113-0
668.7
8 17 .4
394.6
296.5
4o4. 3
3 1 6 .3
3 1 3 .4
356 .5
1 , 0 3 3 .7
17 2 .6
226 .2

7 6 5 .1
3 0 5 .9
2 8 8 .9

376.6
603 .O
1 6 0 .1
9 1 5 .1
2 7 8 .7
1 3 5 .4
4 ,3 2 1 .4

4 1 2 .5

1 .5 3 8 . 1
9 7 4 .6
1 , 10 6 .3
7 7 1 .2
8 9 9 -5
5 6 4 .4
1 .2 3 1 .4
5 9 2 .1
4 9 1 .9
5 . 4 0 5 .1

(in thousands of dollars)
Present rates
Tax liability
Interest : Interest
: taxable
exempt
4 2 4 .2
1 2 6 .4
87 .O
9 9 9 .2

796.6
83.8
8 2 .6
0O5 .O
1 5 8 .1
1 7 5 .9
2 4 9 .9
5 4 9 .4
1 9 8 .6
1 8 6 .6

250 .7
4 2 3 .2
9 4 .8
6 6 6 .8
1 7 9 .2
7 5 .1
3 .3 8 0 . 3

5 9 5 .7

3 0 1.2
276.8
1 ,1 8 1 . 6
9 7 5 .8
2 4 1 .8

Proposed rates 2j

: Revenue loss
from tax
:
: exemption
: 1 7 1 .5
1 7 4 .8
I S 9.8
1 8 2 .4
1 7 9 .2

15 8 .0

339.6
1 , 2 5 1.6

2 5 7 .0
6 4 6 .6

2 7 9 .2
4 4 2 .7
5 0 3 .0
1 ,1 5 7 . 7

1 2 1 .1
266.8

2 0 4 .4

2 5 3 .1

6O8 .3

7 12 .8
8 17 .2

630.6

5 5 3 -2

3 0 2 .5

5 1 4 .2

6 53.0

229.8

3 9 5 .3
9 1 5 .8
4 i6 . 6

3 0 0 .5
2 4 9 .0

2 3 7 .4
2 6 1.8

'• Tax liability
• Revenue loss
: Interest : Interest :
from tax
exempt : taxable :
exemption
521~4
7 2 1.0
199. b
1 6 4 .6
3 7 7 .2
2 12 .6
1 1 3 .6
3 4 8 .0
2 3 4 .4
1 ,1 8 2 . 7
207.8
1 ,3 9 0 .5
1 , 15 6 .0
2 0 4 .1
9 5 1 .9
1 1 0 .2
3 0 3 .7
19 3 .5
10 7 .8
4 2 2 .4
3 i4 . 6
1 , 470.3
7 3 8 .6
7 3 1 .7

.

226 .5
3 15 .8
667.6
254 .3
239 .6
3 16 .8
52 0 .2
1 2 3 .7
8 0 3 .1
230 .4
98.9

336.9
8 7 1 .0
3 ,8 6 8 .8
4 , 2 5 1 .3
22
10 2 .2
1 7 0 ,7
2 2 7 .2
34 3.3
12 5 .0
1 3 3 .2
16 6 .9
23
264.5
3 9 3 .1
16 5 .O
12 9 .8
9 9 -5
24
3 1 4 .8
6 4 6 .5
3 3 1 .7
2 3 9 .8
2 1 7 .5
276 .9
4 5 7 .3
4 2 4 .8
2 1 8 .9
643.7
25
13 6 .2
366.3
17 6 .6
2 3 0 .1
Total 9 . 969,4
l4 ,4 4 i, 7
24,4i i .i
1 0 ,3 4 8 .8
1 7 ,9 1 4 .1
1 2 , 470 .5
7 . 565.3
Source: Income items from returns on Form 1040 for 1940.
1/ Exclusive of net long-term capital gains and losses.
zf As presented by Secretary Morgenthau to the Ways and Means Committee, March 3 » 1942.

1 4 6 .5

3 5 0 .9
5 4 3 .0

3 16 .5

6 13 .5
1 , 3 6 3 .2
856 . I

695.6
601*8

9 7 5 .3

2 9 7 -7

672 .O

7 3 5 .7
3 5 5 -2

7 8 7 .0
4 8 7 .6

266.8
36 3.9

1 , 087.8
5 1 2 .5
4 19 .7
4 ,8 4 4 .2
2 8 8 .6

3 3 3 .4
5 6 0 .1

2 8 4 .7
2 8 2 .1

32 O.8
9 7 5 .4

15 5 .4
203.6

5 5 8 .9

2 8 3 .2
3 8 2 .3

2 1,4 4 2 .9

8 , 972.4

Table 8

Comparison of the Yields •£ High-Grade Corporate and Municipal Bonds

1 'Yield on first day of
month
High-grade High-grade Spread
Month
corporate
municipal
bonds 2 /
bonds l/
2.36
.65
3 .0 1
1939-January....
.6 l
2.9^
February...
2.33
,U8
2*38
2.86
March.....
April*.....
May*.......

September..
October....
November...
December...

19UO-January....
February...
March.....
April.....
May......
June......

'JillV......
August....
September..

Month

19 l|0-0 ctober....
November...
December...

Yield on first day of
month
High-grade High-grade
municipal
corporat#
bonds 2 /
bonds l/
2 .0 1
2.69
1.94
2.70
2 .6 l
1.82

Spread

.68
.76
•79

2*93
2.90
2.82

2*32
2.37
2.26

.6 1
•53
.56

19 ^+1 -*January....
February...
March.....

2.57
2 .6 l
2 .76

1.80
1.97
2.13

•11
,6k
.63

2 .78
2 .Ik
2.98

2 .2 6
2 .2 7
2*79

.52
.ft?
•19

April.....
May.......
June......

2 .7 2
2.75
2.7^

2 .0 2
1.9 2
1.77

.70
.8 3
•97

3*28

2 .9U

.3*

July......
August....
September..

2.6 5

I.69

.96

October....
November...
December...

2.62
2.58
2.59

1.65
1.57
1.60

•97
1.01
•99

.^6
•53
•33

19H2-January....

•5^

2*71
2.80
2.81

April.....

2.77

1.91
2.0U
2.19
2.06

•80

February...
March.....

3.00
2.90
2.83
2.83
2.80
2.73
2.jh

2.99
2.88
2.82
2.7S

2.55
2.35
2.2b
2.28
2.35
2.27
2.21
2.66
2.
2.17
2.17

•55

.59

•55
•f
t5

.65
.61

if Treasury Department average of high-grade corporate bonds.
2 / B*nd Buyer average, 1 1 first grade cities.

2.64
2.65

1.70
1.71

.9^
.9^

.76
.62
.71

Table 9

Yields of Corporate and Municipal Bonds, Spread, and Federal Individual Income Tax Rates, 1900-42
Annual

average

High-grade
corporate

Year

bonds

Tax

yield

bonds

2/

rate

Annual

Spread

immediately

Year

above

if

ave rage

High-grade

on b r a c k e t

Municipal

corporate
bonds

yield

Tax

Municipal
bonds

2J S p r e a d

if

05

ij.

3* 1 2

0.93

1901 ........
1902 .......
1903 ........

3.90

3.13

.77

3.86

3.20

4.07

3.32

.66
.69

1 9 0 4 ........

4.03

3-45

.52

1 9 0 5 ........

3.S9

3.40

1906........

3.99

1 9 0 7 ........
O ........

19 8

27
4.22

3.57
3.86

1 9 0 9 ........

4.06

1910 ........
1 9 1 1 ........
19 12 ........

4.l6

1 9 1 3 ........
1 9 1 4 ........

3.93
3.72

0

0
0
0
0

0

1 9 2 9 ........

.29

0

.28

0

.19

4.02

0

4.42

4.22

.19
.20 '

4.46

4.12

.34

4.l6

3.94

1 9 1 7 ........
1 9 1 8 ........

1919 ........
1920 ........

4.79

4.20

5.20

4.50

5-49

4.46

3/

.48

.55
.59
.70
1 .0 3 1 /

1 9 3 0 ........
1 9 3 1 ........

4.55
4.58

1 9 3 2 ........

5.01

1 9 3 3 ........
.

4.49

4.25

0.87
.87

42

4.20

.80

^3

4.09

•79

25

4.08

.65

25

3.9S
4.05

•59
.50

4.27

.46

4.07

.48

4.01

•57

4.65
4 .7 1
4.03

-.22

3-41

.19
.17

4.23

.36

56

25
25
24

25
25
56
56
56

1934

4.’0 0

1 9 3 5 ........

3.60

1936........

3.24

3.26

7

1 9 3 7 ........
........

3.07
3.10

3.19

2.91

.28

31

1 9 3 9 ........

3.01

2.7D

.25

56
62
62
62
62

1940........

2.84

2.50

•3^

66

-.03

5

J

j

4.64

4.73
4.57
4.55
4.73

.4l

4.21

4.49

4.88

1 9 2 7 ........
1 9 2 8 ........

4.17

1 9 1 5 . . .....

1 9 2 5 ........

1926 ........

0

0

5.10

5 .12
5.00

.42

0

1916 ........

1922 ..... ..
1 9 2 3 ........
1 9 2 4 ........

0

.19

3 9

$100,000

.49

3.97
. s

immediately
above

$100,000
ionn

rate

on bracket

5

1938

.16

64

60

2.10
69
.67
19 4 1 ......
1.14
60,
2.77
2
.
4
9
2
.
8
4
.88
60
1
9
4
2
4
/
---•
3
5
5.09
1921......
5.97
1J From 1900 through 1918, Standard Statistics Co. average for 15 high-grade railroad bonds; other years
Moody’s Investors Service average for high-grade corporate (Aaa) bonds.
2/ Standard Statistics Co. average.
Standard Statistics Co. average of yields of high-grade railroad bonis was 5*29 percent for 1919» and- the
spread based upon this average was Q .8 3 percent.
4/ April 1, 1942.
6.12

4.98

T a b le 10
T re a tm e n t o f i n t e r e s t fro m F e d e r a l, S t a t e and l o c a l Governm ent
o b l i g a t i o n s u n d e r S t a t e i n d i v i d u a l incom e ta x e s,
a s o f J a n u a ry 1, 19/(2

Sta te

:
;
:
:
:

Home
Sta te

:
:
:
:

I n t e r e s t f r om o b l i g a t i o n s o f the
P o lit ic a l su b :
O th e r
: d i v i s i o n s o f th e
Home
: O th e r
Sta te s
:
:
Sta te
: Sta te s

: F é d é ra l
: Governm ent
: and i t s
: a g e n c ie s

Alabam a
A r iz o n a
A rka n sa s
C a lif o r n ia
C o lo ra d o
D e la w a re

Exem pt
Exem pt 2 /
Exem pt
Exem pt U /
Taxed
Exem pt

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt
Exem pt 2/
Exem pt
Exem pt L j
Taxed
Exem pt

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt l /
Exem pt 2 /
Exem pt
Exem pt J
Exem pt 6J
Exempt

G e o r g ia
Id a h o
Iow a
K a n sa s
K e n tu c k y
L o u is ia n a

Exem pt
Taxed
Taxed
Taxed
Exem pt
Exem pt

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt
Taxed
Taxed
Taxed
Exem pt
Exem pt

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed.

Exem pt
Exem pt
Exem pt
Exem pt
Exem pt
Exem pt

M a ry la n d
Ma s s a cliu s e t t s
M in n e s o t a
M is s is s ip p i
M is s o u r i
M o n tan a

Exem pt
Exem pt 7/
Exem pt
Exem pt
Exem pt
Taxed

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt
Exem pt 2 J
Exem pt
Exem pt
Exem pt
' Taxed

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exempt
Exem pt
Exem pt 1/
Exempt
Exem pt
Exem pt 8 /

New H am p shire
New M e x ic o
New Y o r k
N o r t h C a r o lin a
N o r t h D a k o ta
Oklahom a
Ore gon
S o u t h C a r o lin a
S o u t h D a k o ta
U tah
Verm ont
V ir g in ia
W e st V i r g i n i a
W is c o n s in

' Exem pt
Exem pt
Exem pt
Exem pt
Exem pt
Taxed 8 /
Taxed
Exem pt
Taxed l l /
Exem pt
Exem pt 1 2 /
Exem pt
Exem pt
Taxed

See n e x t page f o r f o o t n o t e s

6/
6/
6/
6/

Taxed
Taxed
Taxed
'Taxed
Taxed
Taxed 8 /
Taxed

Taxed 9 /
Exem pt
Exem pt
Exem pt
Exem pt
Taxed 8 /
Taxed

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed 8 /
Taxed

Exem pt 2 /
Exem pt
Exem pt
K x crup Tj 10/
Exem pt
Exem pt 6 /
Exem pt

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt
Taxed
Taxed
Exem pt 1 2 /
Taxed
Exem pt
Taxed

Taxed
Taxed
Taxed
Taxed
Taxed
Taxed
Taxed

Exem pt
Exem pt 5 /
Exem pt ¿ J
Exem pt
Exempt
Exempt
Exem pt y

T a b le 10 (C o n t in u e d )

1/

R e c e n t l e g i s l a t i o n (1 9 3 9 t o 1 9 4 2 ) p r o v id e s t h a t i n t e r e s t from
o b l i g a t i o n s o f t h e U n it e d S t a t e s s h a l l be in c lu d e d i n g r o s s
incom e i n s o f a r a s * t h e S t a t e i s c o n s t i t u t i o n a l l y o r l e g a l l y
a u t h o r iz e d t o t a x s u c h in com e*

2/

E x e m p tio n i s

r e s t r i c t e d t o i n t e r e s t fro m b o n d s.

Exem pt b y r e g u l a t i o n ,
4/

R e s t r ic t e d to bonds is s u e d a ft e r 1902.

5/

E x c lu d e s fro m g r o s s incom e a l l incom e w h ic h th e S t a t e i s p r o ­
h i b i t e d from t a x i n g u n d e r t h e C o n s t i t u t i o n o r la w s o f th e U n it e d
Sta te s,

6/

R e c e n t l e g i s l a t i o n (1 9 3 9 to 1 94 2 ) r e p e a le d th e s e c t io n w h ic h
e x c lu d e d fro m g r o s s incom e th e i n t e r e s t upon o b l i g a t i o n s o f th e
U n it e d S t a t e s .

7/

R e s t r i c t e d t o p o s t —1 9 0 6 S t a t e and p o s t - 1 9 0 8 l o c a l i s s u e s markedta x -e x e m p t. .

8/

No s p e c i f i c e xe m p tion i n

9/

A p p l ic a b l e t o p o s t - 1 9 2 3 i s s u e s .

s ta tu t e o r r e g u la t io n .

10/

E xe m p tio n i s c o n d i t i o n a l upon i n t e r e s t upon o b l i g a t i o n s o f t h e
S t a t e o f N o r t h C a r o l i n a o r o f i t s p o l i t i c a l s u b d i v i s i o n s b e in g
exempt fro m U n it e d S t a t e s incom e t a x e s .

11/

I n t e r e s t on S o l d i e r s ’ C o m p e n sa tio n b on ds and on R u r a l C r e d i t b on ds
i s s u e d p r i o r t o J u l y 1 , 1927 i s exem pt.

12/

Exem pt when th e r a t e o f i n t e r e s t d o e s n o t e xce ed 5 p e rc e n t p e r
annum.

T a b le 11
E s t im a t e d m a t u r i t i e s o f S t a t e a n d l o c a l governm ent s e c u r i t i e s
o u t s t a n d in g June 30, 1 9 4 1 1/
(A m oun ts i n m i l l i o n s o f d o l l a r s )

D a te o f m a t u r it y ,
f is c a l ye a rs
ended June 30

:

Y e a r l y m a t u r i t i e s 2/
P e rc e n t
Amount
of to ta l
2 ,0 2 1 J/
905
904
849
725
737
651
673
682
3 ,3 9 6
2 ,7 7 9
2 ,2 6 7
1 ,1 3 3
686
1 ,2 3 5
182
29
1

1 94 2
1943
1944
1945
1 94 6
1947
1948
1949
1 95 0
1 9 5 1 -1 9 5 5
1 9 5 6 -1 9 6 0
1 9 6 1 -1 9 6 5
1 9 6 6 -1 9 7 0
1 9 7 1 -1 9 7 5
1 9 7 6 -1 9 8 0
1 9 8 1 -1 9 8 5
1 9 8 6 -1 9 9 0
1 9 9 1 -1 9 9 5

1 9 ,8 6 0

T otal

Source:

Bureau

of

the

Census,

1 0 .2
4 .6
4 *6
4.3'
3 .6
3 .7
3 .3
3 .4
3 -4
1 7 .1
1 4 .0
1 1 .4
5 .7
3 .5
6 .2
.9
.1
V

C u m u la tiv e m a t u r it ie s
P e rc e n t
Am ount
of to ta l
1 0 .2
1 4 .8
1 9 .4
2 3 .7
2 7 .3
3 1 .0
3 4 .3
3 7 .7
4 1 .1
5 8 .2
7 2 .2
8 3 .6
8 9 .3
9 2 .8
9 9 .0
9 9 .9
1 0 0 .0
1 0 0 .0

2 ,0 2 1
2 ,9 2 6
3 ,8 3 0
4 ,6 7 9
5 ,4 0 4
6 ,1 4 1
6 ,7 9 2
7 ,4 6 5
8 ,1 4 7
1 1 ,5 4 3
1 4 ,3 2 2
1 6 ,5 8 9
1 7 ,7 2 7
1 8 ,4 1 3
1 9 ,6 4 8
1 9 ,8 3 0
1 9 ,8 5 9
1 9 ,8 6 0

1 0 0 .0

Division

of

State

and

Local

Government.

1/
2/
3/
4/

E x c l u d in g s e c u r i t i e s o f T e r r i t o r i e s and i n s u l a r p o s s e s s i o n s .
B y m a t u r it y d a t e s , w it h o u t r e f e r e n c e t o o p t io n a l e a r l i e r
c a l l d a te s .
In c l u d e s - -$ 1 ,1 4 4 m i l l i o n s s h o r t - t e r m 'i n t e r e s t - b e a r i n g
s e c u r it ie s .
L e s s t h a n .05 p e r c e n t .

Chart 1

OWNERSHIP OF STATE AND LOCAL GOVERNMENT SECURITIES
Outstanding June 30,1941
n im r r r r

,1111111111'

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im i.......

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EX EM PT
INSTITUTIONS
H /0 0

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11 n im m
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..........
inni n i i '

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■l l l l i l l l l l
iiiiiiiiii
ni..
»
iim n ln
in
m
i'
i
11lllliili,il
■■
i1
iiiim

1in im il

iiiiiiiiii

■num i

m in i.......

llllllll 11•

___ • III lllllil

'iiimiiii

'IIIIIIIIII
ini 1II'<
.imniiii
lllll
innJ1n
.ill__ __' Mill

■i i i i t i III
lie
ii
nn
n ni>
. m m III
m
mm i l l ! ___ ___ ' l i l i l í III

INSURANCE
C O M PA N IES

IN D IV ID U A LS

C O M M ER CIA L
BAN KS

OTHER
C O R PO R A T IO N S

$ 3,700 Mit.

$500 MU.

S 2 J 0 0 Mil.

$7.800 MU.

^Excludes $4,800 M i l l i o n s h o l d by G overnm ents
Office of the Secretary of the Treasury
Division of Tax Research

B-293

Chart 2

PERCENTAGE OF ESTATES
IN STATE AND LOCAL SECURITIES
Estate Tax Returns Filed, 1928-1940
PERCENT—

--------------------------------------- ------------------------------------------------- PERCENT

25
20
1940

1939

1938

15

10
5
r a ff ln

1 II
0
$

«Vi

o o o
$ o o

o o
o p
Cl)

<V>l OIJ lIo

lO

1 I I

o O O

£ o o
o o o
«Vi

<b

o o

U)

<\l

lo

«Vi «5 lo

II

II

II

SO OQ oO■
«Ni ci) lo
OO1 sO' OCS Oo1I
«Vl O U)

1

1__u__II
O

«Vl
I■

§

Cl)

II

II---j—

¡5 $

sO

W)

^

0

OO <'5 01 0I
O O O §
«Ni «b U) O
O

NET ESTATE, BEFORE EXEM PT IO N , IN THO USANDS 0F DO LLA RS
Office of the Secretary of the Treasury
Division of Tax Research

0-288-A

Chart 3

PERCENTAGE DISTRIBUTION OF STATE AND CITY DEBT, BY INTEREST RATES, 1939

Source ■■ B u reau o f th e C en su s.

Office of the Secretary of the Treasury
Division of Tax R esearch

B-285-1

Chart 4

COMPARISON OF THE YIELDS OF
HIGH-GRADE CORPORATE AND MUNICIPAL BONDS
First Day of the Month Figures, 1939 to Date

officeoftheSecretary oftheTreasury

«1

PWelee Unwi* m i tu nmrn

F-226

Chart 5

COMPARISON OF THE SPREAD IN YIELD BETWEEN CORPORATE AND
MUNICIPAL BONDS WITH THE FEDERAL INDIVIDUAL INCOME TAX, l900-’42
(Yields Are Annual Averages)

Offics of ft« Secretary of the Trusury
DMab* of B— oroh

Statistic*

B - 23-4-1

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Thursday, April l 6 , 19 V .

Press Service
No. 31-20

VI 57*2------ --- -------Secretary Morgenthau today congratulated the United Auto­
mobile Workers on their completion of purchases of $50,000,000
of War Savings Bonds, pledged on the heels of the Pearl Harbor
attack to replace the U. S. S. Arizona,

on which a member of the

labor organization was killed in action*
R, J. Thomas, president of the union, in a telegram from
Detroit also pledged to the Secretary a second drive for another
$ 5 0 , 000,000 of War Bond sales to provide another battleship, and
expressed confidence of the membership that the second goal would
be reached more quickly than the first.
“We fight a two-ocean w a r , “ said Mr, Thomas in his message,
“and the UAW-CIO wants to have a ship in each ocean so that we
can carry the struggle against fascism to Tokyo and Berlin.“
In his telegram of reply to Mr, Thomas, Secretary Morgenthau
called the sale of the first $ 5^'*000,000 of bonds and the pledge
of a similar amount “renewed proofs that American labor is back
of this war effort heart and soul,“ In addition to the “splendid
work“ of the union members on the production line, the Secretary
said, "you are helping tremendously to pay for additional weapons
for the war and to secure the future of the nation,“
The Secretary congratulated President Thomas on hie leader­
ship of the drive and asked him to extend congratulations and
appreciation to every member of the organization.

oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Thursday, April 16, 19^2,

Press Service
No. 31-21

Secretary of the Treasury Morgenthau today announced the
final subscription and allotment figures with respect to the current
offering of 1/2 percent Treasury Certificates of Indebtedness of
Series A-1942.
Subscriptions and allotments were divided among the several
Federal Reserve Districts and the Treasury as follows:

Federal Reserve
District

Total Subscrip­
tions Received

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

$

TOTAL

212 ,1«.4-, 000
1,724,584,000
111.799.000
150,548,00(5
77.737.000
73.532.000
368.055.000
7 1 .103.000
50.052.000
44.835.000
47.634.000
129 .772.000
185 ,000

13 ,062,250,000

^oOo

Total Subscrip­
tions Allotted
$

104,289,000
832.804.000
55.613.000
75.334.000
39.828.000
37 .200.000
185 .568.000
37.386.000
27.037.000
23 .493.000
24.526.000
63.774.000

98,000

1 1 ,507,000,000

TREASURY DEPARTMENT
W a s h in g t o n

FOR R E L E A SE , MORNING NEWSPAPERS
F r id a y , A p r i l 17, 1942___________

The S e c r e t a r y o f th e T r e a s u r y , b y t h i s p u b l i c n o t ic e ,
t e n d e r s f o r $ 1 5 0 ,0 0 0 , 0 0 0 , o r t h e r e a b o u t s ,

o f 9 1 -d a y T re a su ry b i l l s ,

t o be i s s u e d on a d is c o u n t b a s i s u n d e r .c o m p e titiv e l^Ldding.
b ills

in v it e s

The

o f t h i s s e r i e s w i l l be d a te d A p r i l 22, 1 9 4 2 , and w i l l m ature

J u l y 2 2, 1 9 4 2 , when th e f a c e amount w i l l be. p a y a b le w it h o u t i n t e r e s t .
T h e y w i l l be i s s u e d i n b e a r e r fo rm o n ly ,

and i n d e n o m in a tio n s o f

( m a t u r it y v a l u e ) .
T e n d e rs w i l l be r e c e iv e d a t F e d e r a l R e s e r v e * B a n k s and B ra n c h e s
up t o t h e c l o s i n g h o u r, two o ’ c lo c k p. m ., E a s t e r n w a r tim e , Monday,
A p r i l 20, 1 9 4 2 .
T e n d e rs w i l l n o t be r e c e iv e d a t th e T r e a s u r y
D ep artm en t, W a s h in g t o n . E a c h te n d e r m u st be f o r an even m u lt ip le
o f $ 1 , 0 0 0 , and th e p r i c e o f f e r e d m ust be e x p r e s s e d on th e b a s i s o f
1 0 0 , w it h n o t m ore t h a n th r e e d e c im a ls , e. g . , 9 9 .9 2 5 .
F r a c t io n s
may n o t be u se d .
I t i s u rg e d t h a t t e n d e r s be made on th e p r in t e d
fo rm s and fo rw a rd e d i n th e s p e c i a l e n v e lo p e s w h ic h w i l l be s u p p lie d
b y F e d e r a l R e s e r v e B a n k s o r B ra n c h e s on a p p l i c a t i o n t h e r e f o r .
T e n d e rs w i l l be r e c e iv e d w it h o u t d e p o s it from in c o r p o r a t e d
b a n k s a n d t r u s t com p an ie s and fro m r e s p o n s i b l e and r e c o g n iz e d
d e a l e r s i n in v e s t m e n t s e c u r i t i e s .
T e n d e rs fro m o t h e r s m ust be
acco m pan ie d b y paym ent o f 1 0 p e rc e n t o f th e f a c e amount o f T r e a s u r y
b i l l s a p p lie d f o r , u n l e s s th e t e n d e r s a r e a ccom p a n ie d b y an e x p r e s s
g u a r a n t y o f paym ent b y an in c o r p o r a t e d bank o r t r u s t company.
Im m e d ia t e ly a f t e r th e c l o s i n g h o u r, t e n d e r s w i l l be opened
a t th e F e d e r a l R e s e r v e B a n k s and B ra n c h e s, f o l l o v a n g w h ic h p u b lic
announcem ent m i l be made b y th e S e c r e t a r y o f th e T r e a s u r y o f th e
amount and p r i c e ra n g e o f a c c e p te d b i d s .
T h o se s u b m it t in g te n d e rs
w i l l be a d v is e d o f t h e a c c e p ta n c e o r r e j e c t i o n t h e r e o f .
The
S e c r e t a r y o f t h e T r e a s u r y e x p r e s s l y r e s e r v e s th e r i g h t to a c c e p t
o r r e j e c t a n y o r a l l t e n d e r s , i n w h o le o r i n p a r t , and h i s a c t io n
i n a n y such re sp e c t s h a l l be f i n a l .
Paym ent o f a c c e p te d t e n d e r s a t
th e p r i c e s o f f e r e d m u st be made o r co m p le te d a t th e F e d e r a l R e s e rv e
B a n k i n c a s h o r o t h e r im m e d ia t e ly a v a i l a b l e f u n d s on A p r i l 2 2, 1 9 4 2 .
The incom e d e r i v e d fro m T r e a s u r y b i l l s , w h e th e r i n t e r e s t o r
g a in fro m th e s a le o r o t h e r d i s p o s i t i o n o f th e b i l l s , s l r n l l n o t h ave
a n y e xem p tion , a s su ch , and l o s s fro m th e s a l e o r o t h e r d i s p o s i t i o n
o f T r e a s u r y b i l l s s h a l l n o t h ave a n y s p e c i a l tre a tm e n t, a s su ch ,
u n d e r F e d e r a l t a x A c t s now o r h e r e a f t e r e n a c te d .
The b i l l s s h a l l

31-22

(o v e r)

~

2

-

be s u b j e c t to e s t a t e , in h e r it a n c e , g i f t , o r o t h e r e x c is e t a x e s ,
w h e th e r F e d e r a l o r S t a t e , b u t s h a l l be exempt fpom a l l t a x a t i o n
now o r h e r e a f t e r im p o se d on th e p r i n c i p a l o r i n t e r e s t t h e r e o f b y
a n y S t a t e , o r a n y o f th e p o s s e s s i o n s o f th e U n it e d S t a t e s , o r b y
a n y l o c a l t a x i n g a u t h o r it y .
F o r p u r p o s e s o f t a x a t i o n th e amount
o f d is c o u n t a t w h ic h T r e a s u r y b i l l s .are o r i g i n a l l y s o l d b y th e
U n it e d S t a t e s s h a l l be c o n s id e r e d to be i n t e r e s t .
U n d er S e c t i o n s
42 and 1 1 7 ( a ) ( 1 ) o f 't h e I n t e r n a l R eve n u e Code, a s amended b y
S e c t i o n 1 1$ o f th e R evenue A c t o f 1 9 4 1 , t h e amount o f d is c o u n t a t
w h ic h b i l l s i s s u e d h e re u n d e r a re s o l d s h a l l n o t be. c o n s id e r e d t o
a c c ru e u n t i l s u c h b i l l s s h a l l be s o l d , redeem ed o r o t h e rw is e
d is p o s e d o f , and su c h b i l l s a re e x c lu d e d fro m c o n s id e r a t i o n a s
c a p it a l a s s e t s *
A c c o r d in g ly , th e owner o f T r e a s u r y b i l l s ( o t h e r
t h a n l i f e in s u r a n c e co m p an ie s) i s s u e d h e re u n d e r need in c lu d e i n
h i s incom e t a x r e t u r n o n l y t h e d i f f e r e n c e between th e p r i c e p a id
f o r su c h b i l l s , w h e th e r on o r i g i n a l i s s u e o r on su b se q u e n t p u rc h a s e ,
and th e amount a c t u a l l y r e c e iv e d e i t h e r up on s a l e o r re d e m p tio n a t
m a t u r it y d u r in g th e t a x a b le y e a r f o r w h ic h th e r e t u r n i s made, a s
o r d i n a r y g a in o r l o s s .
T r e a s u r y D epartm ent C i r c u l a r No. 413, a s amended, and t h i s
n o t ic e , p r e s c r ib e th e te rm s o f th e T r e a s u r y b i l l s and g o v e rn th e
c o n d it io n s o f t h e i r i s s u e .
C o p ie s o f th e c i r c u l a r may be o b t a in e d
fro m a n y F e d e r a l R e s e rv e B an k o r B ra n c h .

—oOo-

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Friday, April 17, 19^2.

Press Service
N o - 31-23

The Treasury Department announced today that a staff
of Treasury representatives is conducting an investigation of
the operations of Sterling Products,

Inc.,

the subsidiaries of

which produce such household remedies as Bayer Aspirin,

Fletcher!s

Castoria and Dr. Lyons Tooth Powder.
In August, 19*41, Sterling Products', Inc., agreed with
the Foreign Funds Control Committee to sever completely its
relationship with I. G. Farbenindustrie and agreed to enter into
active competition with I. G, Farbenindustrie subsidiaries in
the other American Republics.
The Treasury Department has received monthly reports
from Sterling Products with regard to its activities in the
other American Republics and the present investigation has as
its object an evaluation of the extent and vigor of Sterling
P r o d u c t s participation in the war against the Axis on the
economic front.
o

Ö

o-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE, .
Friday,- April 1.7, 1942. ;

'"
‘ ^

N

o

' Press..Service
,
31-24

Treasury enforcement officers and other Yriends of;
Major Frank Frayser, veteran agent of the Intelligence Unit of
the Bureau of Internal' Revenue, will honor him at a luncheon
tomorrow, in the. Jefferson Hotel, Richmond,;Virginia, on the
occasion of his retirement after thinty--nine..year's m -tW
Federal service. Major Frayser was; one of the original six
inspectors drawn from the Postal service in 1919 to form the
Intelligence.‘Unit,
”
Associates will present the veteran agent with.a
medallion, bearing on one side the Seal of the Post Office
Department, and his service record; and on the other side the
Treasury Seal, and a record of his service in that Department,
A: delegation from Washington will attend the luncheon,
headed by Elmer L. Irey, Chief Coordinator of^the -Treasury
Enforcement' groups, and Mrs, Irey; Frank J. Wilson, Chief o.f the
Secret Service, and Mrs.-Wilson; J. R. Cox, Special Agent in
Charge of the Washington district of the Intelligence Unit, and
Mrs. Cox; and Harry Cooper, head of the Washington office of the
Secret Service, and Mrs. Cooper..
Mr. Irey, who selected Major Frayser to join him i n ­
setting up the Intelligence Unit, will read a letter from
Secretary of the Treasury Morgenthau expressing appreciation
of the agent1s Government career.
Major Frayser served with the nationfs military forces
in two wars, and maintained the vigor in his seventy-first year
to serve his country in a civilian capacity in a third. He was
born in King George county, Virginia, February 8, 1871.
He enlisted as a private in the Richmond Light Infantry
Blues in the Spanish American War, and spent a year in the
Philippines with the Army,
(over)

2
Although he had been awarded a law degree from
George Washington University, Major Frayser turned to the
Government service, and in 1903 entered the Post Office
Department as a clerk, in Washington* In 1907, he began
his investigative career, as Post Office Inspector, and
in 1917 became Inspector in Charge..
. The' Inspector entered the United States Army in
April, 1918, as a Captain in the Military Intelligence '
division, and served until June, 1919. He later attained
the rank of Major in the Reserve Corps.
#
Upon returning to civilian duties, Major Frayser
was called to the Intelligence Unit by Mr. Irey. This little
group of investigators pioneered the war against income tax
evasion which has proved one of the most potent weapons against
* crime of all types in the United States. The Unit now has a
personnel of more than 400.
Major Frayser became Special Agent in Charge of the
Richmond Division .in 1921 and continued as Senior Agent there
when the Richmond .office became a part of the Washington
District in 1936.
-oOo-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, April 21, 19*J-2,

Press Service
No. 31-25

V'S'ö/lfir

The Secretary of the Treasury announced last evening that
the tenders for $150,000,000,
bills,

or thereabouts,

of 91^&&y Treasury

tp be dated April 22 and to mature July 22, 19^2, which

were offered on April 17, were opened at the Federal Reserve Banks
on April 20,
The details of this issue are as follows.:
Total applied for - $ 332 ,677 ,000
Total accepted
- 150 ,05s,000
Range of accepted bids;
High - 99.960 Equivalent rate approximately ~
percent
h
It
ft
H
Low
- 99.91^
Average
H
h
Price - 99,920
0,317
*

(65

percent of the amount bid for at the low price was accepted).

- 0O 0

TREASURY DEPARTMENT
Washington

(The following address by RANDOLPH E. PAUL, tax
adviser and special assistant to Secretary
Morgenthau ,is scheduled to be delivered at the
morning session of the League of Women Voters *
one-day school on Taxation and Price Control in
the Washington Hotel on Tuesday, April 21, 19^2,
at 11:00 a.m., Eastern War T i m e, and is for
reiease upon dellvery at that time. )

INTRODUCTORY
Your chairman has very kindly given me great latitude in
selecting a subject for today.
At least, that is how I interpret
her suggestion that I discuss “Taxation in Wartime“. Unfortunately,
however, that is too broad a field to explore in a half hour.
Perhaps we could cover it if we traveled along at double-quick, time,
but I fear that most of the scenery would escape us.
I therefore
propose to exercise a speakerrs prerogative by selecting one parti­
cular by-path which I think may be of special interest to you.

THE TREASURY PROPOSAL
I would like to discuss the taxation of family Income in the
light of the recent proposals made by the Treasury.
These proposals
seek to attain the following objectives:
1.

Mandatory Joint returns by husband and wife of their
aggregate income.

2.

A credit for dependent children between the ages of
IS and 21 who are still in school.

3.

A deduction for extraordinary medical expenses,
ject to a specified limitation.

sub­

In discussing these proposals I Intend to devote most of my
available time to the subject of mandatory Joint returns.
This
emphasis upon one phase of the Treasury*s group of proposals should
not be construed as a Judgment upon the relative importance of the
three proposals.
The Income tax is rooted in the fundamental prin­
ciple of ability to pay.
Ability to pay cannot be determined with­
out a careful and painstaking consideration of deductions and
credits as well as income.
The Treasury has therefore proposed
some changes which would Improve the present scheme of deductions
and credits.
Others, however, have chosen to concentrate their
energies upon mandatory Joint returns, and have sought to bury the
merits of the Treasury*s recommendation beneath an avalanche of
rhetoric and invective plus the inevitable appeal to the Constitu­
tion,
I should like to clear away some of the misunderstandings
which have arisen with respect to this proposal.

31-26

-

2

-

The Treasury proposes that a husband and wife, each having an '
income, should combine that income in one tax return.
Neither
would be taxed on the income of the other.
The tax would be com­
puted on the basis of the aggregate income of husband and wife, and
each spouse would be liable only for that portion of the tax attri­
butable to his or her portion of the income.
THE FIRST INEQUITY
The Treasury proposal was framed in the light of the
inequalities and discrimination which have emerged under existing
law.
At the present time a family wherein the husband is the sole
breadwinner pays more tax than a family in which bread is earned by
both husband and wife.
For example, if the husband in the first
case earns a net income, before personal exemption,of $ 6,000 a
year the resulting tax burden is $ 521 , whereas if the husband and
wife each earns $3,000 the total tax burden is $*J42, The lower tax
derives from the fact that husband and wife are permitted to file
separate returns, thereby escaping the higher surtax brackets which
would otherwise apply if their incomes were pooled for tax purposes
as they are for other purposes.
In the two cases I have given the family incomes are the same,
and expenditures will pursue a similar pattern.
But the taxes to
be paid are different.
Under the proposal for mandatory Joint
returns both families will pay the same tax, except for a small
differential to which I shall return later.
THE SECOND INEQUITY
The present law has produced another kind of injustice which
should be legislated out of existence.
The Supreme Court has held
that a husband cannot reduce the tax on his earned income by
assigning any part of the earnings to his wife.
Investment income,
on the other hand, may be treated differently.
If a husband, for
example, transfers stocks or bonds to his wife, the income tax
burden upon the dividends or interest yielded by the securities is
shifted to the wife at the relatively low cost of a gift tax.
In
short, those who live on investment income are enabled to reduce
their total, tax burden by an assignment of the underlying property
producing the Income, although the total family income and the
economic status of the family remain the same.
The Treasury
recommendation abolishes this gross discrimination between earned
Income and investment Income.

- 3I

)

THE THIRD INEQUITY
I come now to ft third source of marked inequity:
community
property.
At the present time the system of community property is
recognized in nine States.
Under this system of property ownership
the wife, in theory, is co-owner of the wealth acquired by the husband during the marital relationship.
It has been truly said,
though, that community ownership really emerges upon the termination,
through death or divorce, of the marital status.
This appraisal of
the community property system is based upon the husband's powers of
management, control and disposition of the community assets.
As
Mr. Justice Holmes has indicated, the husband is even entitled to
a certain degree of debauchery.
Except in unusual cases, the wife,
is at most, a back-seat driver who is confined to carping and
criticizing.

I am not passing upon the proper position of the wife within
the family unit; I am merely referring to the realities of the
community property system, which formally bestows co-ownership upon
a wife who confines her activities to the home.
Despite the
superior economic position accorded the husband, one-half the
community Income is attributed to the wife as co-owner, with the
result that the total tax burden in a community property State is
less than the total burden in a common law State.
An example will
J dramatize the discriminatory operation of the present law.
If a
I husband in a community property State earns ¿10,000 a year before
personal exemption the tax is $ 966, while the same Income in a
common law State produces a tax of $ 1 ,305. I would like to empha­
size that California, in 1927 , changed its law in order to reap the
benefits of this discrimination.
Oklahoma has more recently adopted
an optional community property system.
Taxpayers are accorded the
privilege of choosing either common law ownership or community
ownership to suit their top brackets.

(

THE OBJECTIONS TO THE TREASURY PROPOSAL
I have summarized briefly the recommendation on Joint returns
and the inequalities it is intended to abolish.
I turn now to some
k
"kk© objections which have been launched at the proposal.
(1) It has been said that the proposal undermines the Constitution
in that it measures the tax on one person by the income of another.
(2) It has been said that mandatory Joint returns will encourage
divorce and discourage marriage;
in other words, they penalize
marriage and discriminate against married persons.
(3 ) Still
I another charge against the Treasury proposal, which is hurled on
all sides, is that mandatory Joint returns constitute an attack on
women's hard-won rights, returning women to their essentially
chattel status of the feudal period when husband and wife were one,
1 and that one the husband".
A prominent figure in the struggle

for women!s rights has strongly implied that if mandatory Joint
returns are approved by Congress, women will no longer be regarded
as human beings,
I could easily lengthen my talk here with a flow
of shrieks and groans from editorials and statements by religious
and political leaders.
They all reduce marriage to a computation
of taxes.
That seems to me to be a slight oversimplification of
marriage.
I oannot believe that people with income will refuse to
contract marriage because marriage may raise their taxes by a few
dollars, or that other people with income will get divorced in
order to save a few dollars in taxes.
These results have not been
observed in England where a mandatory joint return provision has
been in effect for many years.

SMALL G-ROUP AFFECTED
In evaluating the clamor against mandatory joint returns, one
should constantly remember that the Treasury's proposal affects a
comparatively small group of taxpayers.
It has been estimated that
approximately 9 couples out of 10 have been filing joint returns
although there is no requirement that they do so, The Treasury1s
recommendation will increase the tax burden of the other 10 percent
representing either those couples who derive substantial incomes
through both the husband and wife and those couples having net
incomes over $ 3»500 who reside in the community property states.
The fundamental purpose of the Treasury joint return proposal is to
prevent high income groups from passing to low income groups the
tax burden that should attach to their high family income.

WOMEN1S RIGHTS
The Treasury Joint return proposal no more affects the rights
of women than it affects those of men. Both spouses are treated
upon a plane Of equality, as they should be.
The joint return
requirement would not give a husband any more control over his
wife*s property than he might otherwise have.
His income remains
his and her income remains hers.
Each may spend it or invest it as
he or she pleases.
There is no abrogation of property rights.
The
Treasury recommendation merely bases the tax calculation upon a
fundamental reality — the economic unity of husband and wife.
There is no attempt here to** create a theory unrelated to fact. On
-a number" of occasions the Supreme- Court has determined tax liability
in the-light of the economic solidarity of husband and wife. .The
Supreme--Court, however, must work, within the framework of the
present statute, which does not sufficiently recognize the economic
unity created by marriage.

- 5 CONSTITUTIONALITY OF THE PROPOSAL
So far as the charges of unconstitutionality are concerned,
they derive from the imagination rather than the Constitution.
A
good deal has been heard of the Hoeper case wherein a majority of
the Supreme Court in 193^ held Invalid a Wisconsin statute providing
for mandatory Joint returns.
Mr. Justice Holmes wrote a dissenting
opinion which received the approval of Mr. Justice Brandels and
Mr. Justice — now Chief Justice — Stone.
Even if one were to make
the bold assumption that the majority decision in the Hoeper case is
still good law, it is nevertheless clear that the Treasury recom­
mendation would be sustained if challenged in the courts.
The Wis­
consin statute, unlike the Treasury's proposal, failed to apportion
tax liability and the entire tax was assessed against the husband.
The theme of the Treasury*s recommendation is equality of the
spouses, who compose an economic entity.
The opponents of mandatory Joint returns have even claimed
Mr. Justice Holmes as their own and have emphasized quotations from
his dissenting opinion to support their exposition of the Constitu­
tion.
I have no doubt that Mr. Justice Holmes would dissent from
their interpretation of his very able dissent in the Hoeper case,
in which he was prepared to go beyond the Treasury*s recommendation.
Quotations from his opinion seem to follow a similar pattern:
several sentences are wrested from their context and those portions
of the opinion which are clearly favorable to the Treasury's position
are conveniently omitted.
If we are to tear language from its con­
text we might include his reference to “community when two spouses
live together and when usually each would get the benefit of the
income of each without Inquiry into the source . 11 At another point
in his opinion Mr. Justice Holmes observed that the wlfe*s income
“in every probability will make his life easier and help to pay his
bills.
Taxation may consider not only command over, but actual
enjoyment, of the property taxed.“ The Justice definitely held
that the status was Justified “by its tendency to prevent tax
evasion.“
THE CREDIT WHERE THE WIFE WORKS
I return now to an »item which I mentioned previously.
The
Treasury has recommended an additional credit to families If the
wife works outside the home.
Where both husband and »wife are
employed certain household expenses may be incurred because the wife
cannot devote her full time to managing the home.
Accordingly the
Treasury has proposed that the tax of a family in which both husband
and wife are working should be reduced by an amount equal to 10
percent of the wife's earnings, but not in excess of $100.
This
recommendation reflects the Treasury's desire to Impose taxes upon
a fair and equitable basis, making allowance for the economic
realities of married’life.

-

6-

THE CREDIT FOR DEPENDENT CHILDREN
||
The Treasury has also rebommended two additional changes.
The first relates to a credit Ifor dependent children between the
ages of IS and 21 who are still In school. Under present law parents
are not entitled to the $4-00 credit for dependent children after the
children h^ve reached the age of IS.
In many cases, however, that
Is the very age at which a child becomes the greatest burden on the
family budget because his parents must pay his expenses in college
or vocational school.
We think the tax law should take this fact
into account and we have framed a proposal along such lines.
THE DEDUCTION FOR MEDICAL EXPENSES
The second of these two changes deals with medical expenses.
Many of us know from sad experience how disastrously a serious
illness or operation may upset the family budget.
A certain amount
is needed every year to meet routine medical expenses, and such
expenditures should not be deductible any more than other living
expenses.
But a taxpayer may suddenly be confronted with large
bills for doctors 1 fees, hospital expenses and other items of
medical care which far exceed his normal medical expenses.
We
believe that the tax law should give due recognition to situations
created by such sudden and unfortunate drains on the family pocketbook.
The Treasury has therefore recommended that extraordinary
medical expenses be deductible from income up to a certain limit.
CONCLUSION
All the proposals which I have so briefly discussed represent
a basic objective — fairness and equity in the distribution of the
income tax burden.
Discriminations based upon the activities of
husband and wife, the nature of the income involved, and the State
of residence have no place in a revenue measure framed in terms of
such an objective.
It cannot be emphasized too often that if any
factor in the tax calculation rtls unreal, it distorts the liability
of the particular taxpayer to the detriment or advantage of the
entire taxpaying group.’'
The Treasury recommendations are directed
to the abolition of such distortion.

-oOo

TREASURY DEPARTMENT
Washington
FOR RELEASE, AFTERNOON PAPERS,
Wednesday, April 22, 19^2.
V 2 1 7 ^ ----- iL~± ± -- 1— 2--------

Press Service
No 71-27
*
1

Without waiting for the Treasury*s new War Savings quota
campaign to get under way,

500 employees of the United States Mint

at San Francisco already are buying Bonds and Stamps at an average
rate of more than one-tenth of their earnings.
Mrs. Nellie Tayloe Ross, Director of the Mint, today reported
to Secretary Morgenthau that 97 percent of the group is participat­
ing in the voluntary payroll deduction plan, and that War Savings
purchases for the last pay period were at an average rate of $16
a month per worker.
The total monthly payroll is about $78,000, of
which about $ 8,000 is being invested in securities to help finan'ce
the war.
Most of the San Francisco employees are men with families.
Mrs. Ross said the men and women who coin the nation's money
are turning substantial portions of their own earnings back to the
Government for the duration, at all the Mint Institutions, Payroll
allotments for bonds and stamps top five percent on the average in
the other Mint establishments.
Total Mint personnel is about
2,300, and monthly payroll totals $ 375,000.
The Treasury Department soon will launch a nation-wide
intensification of its program to enlist all earners in voluntary,
systematic purchasing of War Savings Bonds and Stamps, and has
suggested that ten percent of the country's income should be
turned into these securities.

- 0O 0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
Tuesday, April 21, 19*12.

Press Service
No. 31-2S

The Treasury Department in a formal statement issued today
called attention to the fact that all unlicensed transfers of
)

blocked assets in the United States are void and unenforceable.
General Ruling No. 12, issued by the Secretary of the Treasury,
makes clear that unlicensed transfers of blocked assets in violation
of the freezing orders, and transfers designed or having the effect
of evading such orders, always have been void and unenforceable.
Secretary Morgenthau, commenting on today's general ruling,
pointed out that these unlicensed transfers of blocked assets always
have been void and unenforceable under the freezing orders and that
today's ruling serves the purpose of emphasizing this fact for the
benefit of any of the public who may have overlooked this aspect of
freezing control.
He also called attention to the provisions of the ruling,
making it possible for persons who have been parties to unlicensed
transfers of blocked assets to file applications for licenses to
validate these transfers.
"The Treasury, of course, wants to be reasonable about this
matter," he stated, "we do not propose to allow our regulations,
intended for the protection of our country and the United Nations,
to become an instrumentality for defeating their interests or pro­
ducing unconscionable advantages or unreasonable hardships.
These
matters can be dealt with by licenses without undue interference
with the purposes of freezing control,"
Treasury officials pointed out that there are more than seven
billion dollars in blocked assets in the United States.
The Govern­
ment's policy on this matter, as reflected in today's formal ruling,
has nullified attempts by the Axis to gain title to the billions of
dollars in assets belonging to nationals of the countries overrun
by the Axis.
It has defeated efforts of the Axis to wrest control
of such assets away from their lawful owners and hold them in the
hopes that in the post-war period it will be possible to realize on
such assets if freezing restrictions are lifted.
Of equal signi­
ficance is the fact that it has destroyed any possible black market
in neutral countries for blocked assets — one of the ways the Axis
would like to be able to obtain the foreign credit necessary to
finance Imports from neutral countries into Axis territory and also
one of the ways the Axis would like to be able to gain the funds
necessary to subsidize espionage, sabotage and fifth column
activities in the United Nations, Latin America and elsewhere.

2
Treasury officials explained that based on the evidence of
what the Axis was doing with assets of the overrun countries within
their physical control, Axis efforts in an operation of this char­
acter would follow no single pattern.
Rather they would run the
gamut from outright duress — assignments at the point of a gun, or
with the Gestapo as "witnesses" — through to the more subtle '‘legal”
transfers — the purchase of such blocked assets against payment in
local currency obtained as occupation costs or by forced loan from
banking institutions in the occupied areas.
In these latter cases
the point of the gun would not be levelled at the individual but
would be levelled at the central bank and “Quisling" governments who
would provide the credit for the Axis to "buy" their country's
birthright.
The net effect of such transfers would not vary however, they
would be intended to mulct the overrun countries of the very life­
blood of any post-war reconstruction, namely, the foreign exchange
needed to obtain the goods and services necessary for rebuilding
the economies of these countries.
Axis war psychology would be
benefited also — by depriving the holders of their title to these
assets the Axis would encourage a spirit of defeatism and a willing­
ness to succumb to the German "new order".
Officials also explained that based on the operation of the
neutral black market in looted assets physically in the control of
the Axis, it was easy to anticipate the type of black market the
enemy might try to foster for "blocked assets".
This neutral black
market operation would be designed to give the Axis immediate
returns on blocked assets even though the Axis could not get such
assets out from under our freezing regulations.
In this case the
assets would be assigned or otherwise transferred to neutral specu­
lators at heavy discount in order that the Axis could obtain credit
now to buy goods and services in neutral countries and thus assist
the war effort.
Of course some of these black market operations
would be for the obvious purpose of lining the pockets of Axis
officialdom as insurance against the day when the Axis is crushed.
Neutral speculators would either hold such assignments with the
Intent of salvaging on them after the war or in the hope of being
able to squeeze the blocked assets through the freezing control by
one trick or another.
As was pointed out, since freezing control makes null and void
or unenforceable all transfers with respect to blocked assets unless
licensed by the Secretary of the Treasury, Axis attempts to gain
title to these assets are frustrated and the true owner's interests
are protected and he continues to have a valuable stake in a victory
by the United NationalCommenting upon todayTs ruling, Secretary Morgenthau stated:
"This government served notice on the world when we froze the assets
of Norway and Denmark on April 10, 19^0, that we did not intend to
permit the Axis to realize any use or benefit from Norwegian and
Danish assets in the United States.
Since that time we have

~ 3consistently pursued this policy with respect to every country
falling under the Axis yoke.
The policy of this government always
has been unequivocal.
We will not allow the Axis, directly or
indirectly, to gain any interest in the seven billion dollars in
blocked assets in this country.
Neither those funds nor any interest
in them will be used against the United Nations by the Axis.
Neither
will they be used as a part of Germany’s economic *new order* in
Europe or Ja p a n !s !co-prosperity sphere* in the Pacific.w
It was emphasized that while freezing control attempted to
interfere as little as possible with normal legitimate commercial
transactions, still the Government was combatting a menace of
sweeping proportions and was compelled to block all corrosive efforts
of infiltration through loop-holes.
Freezing control and the
Government's policy is therefore comprehensive and the licensing
technique must be freely used to prevent hardship in legitimate
cases.
Thus, under the freezing orders, more than eighty general
licenses have been issued, permitting vast categories of transactions
under appropriate safe-guards without even filing an application.
In addition, more than 400,000 specific licenses also have been
issued.
Paragraph (1 ) of today's general ruling deals with unlicensed
transfers made after the effective date of the freezing orders
involving property in blocked accounts.
If any such transfer was
made after the account was actually blocked, then the transfer is
null and void unless licensed.
Thus, if a bank blocked the account
of a national of Denmark on April 10, 1940, and on June 10 , 1940,
the national attempted to assign title to the account to a German,
the transfer would be null and void unless the Treasury licensed it.
On the other hand, if a transfer vrere made before the account was
actually blocked, but attempt was made to enforce it while the
account was in fact blocked, the transfer would be unenforceable.
By way of example:
On July 15 , 1941, John Doe, resident in
Argentina, assigned his account with an American bank to Richard Roe
in the United States.
On September 1 5 , 1941, the Treasury instructed
the bank to block the account of John Doe as a national of Rumania.
After September 15 , 1941, the assignment would be unenforceable
against John D o e ’s blocked account unless the transfer were licensed
by the Treasury Department.
Paragraph (2) of the general ruling deals with transfers
alleged to have been made before the effective date of the freezing
orders but involving accounts thereafter blocked.
These transfers
are unenforceable against blocked accounts unless the person with
whom the blocked account was held or maintained had written notice
of the transfer or had recognized it in writing prior to the effec­
tive date of the Order.
Thus, if in the example above, the national
of Denmark had assigned the bank account to the German in 1937 and
the bank was not notified of the assignment -until June 10, 1940,
the assignment would be unenforceable against the blocked account
unless licensed.
If, on the other hand, the bank was notified in

- 4 ~
writing of the assignment before April 10, 1940, then the assign­
ment is enforceable against the blocked account (but, of course,
payment from the blocked account could only be made pursuant to*
Treasury license).
Treasury officials pointed out that the policy behind para­
graph (2) of the general ruling was understandable.
If the general
ruling had been merely prospective in operation, it would be easy
for Axis agents to validate transfers obtained under duress by the
subterfuge of dating them prior to the effective date of the
Executive Order.
This would, of course, defeat one of the major
purposes of freezing control.
Officials pointed out that in those
oases where notice of the transfer was given to the person main­
taining the account in this country and where the transfer had been
accepted by that person as valid, the provisions of the general
ruling are inapplicable since under those circumstances the notice
is an adequate precaution to guarantee that the transfer was made
prior to the effective date of freezing control.
Paragraph (3 ) of the ruling provides that a license issued
by the Treasury Department, either before or after a transfer,
completely validates the transfer for the purposes of freezing
control.
Of course, if an assignment would have been invalid with­
out freezing control, (e.g., because not properly executed) a
Treasury license does not purport to remedy this type of invalidity.
Paragraph (4) is but a formal statement of the position which
the Treasury Department has always taken on litigation (including
attachments) affecting blocked assets.
The Treasury has no desire
to limit the bringing of suits in courts within the United States,
provided that no greater interest is created by virtue of the
attachment, Judgment, etc., than the owner of the blocked account
could have voluntarily conferred without a license.
Thus, the
Treasury does not want to interfere with the orderly consideration
of cases by the courts provided that the results of court proceedings
are subject to the same policy consideration from the point of view
of freezing control as those arising through voluntary action of the
parties.
Paragraph (5 ) defines various terms employed in the ruling.
For example:
the term "transfer" is given a very comprehensive
leaning, excepting only certain types of transfers by operation of
the law (e.g,, transfer by intestate succession).
The term *
property" is broad but by and large dees not include mere chattels
or real property.
The term "blocked account" is in effect limited
to accounts actually treated as blocked accounts by the person with
whom such account is held or maintained.
Paragraph (6 ) is technical in character and reserves the full
bight of the (government to prosecute for violations of the freezing
orders and emphasizes that General Ruling No. 12 is not intended to
modify outstanding freezing orders, regulations, etc.

-0 O 0

- ■ ...

..

!

TREASURY DEPARTMENT
O f f i c e o f th e S e c r e t a r y
A p r i l 21, I 9I4.2

• ••
• GENERAL RULING NO.. 12
. UNDER EXEC U TIVE’ ORDER MO. '8389 , AS. AMENDED,.
SECTIONS.- 3 ( a ) AND. £ ( b ) OF THE TRADING W ITH
THE ENEMY ACT,: A S ' M E N D E D B Y THE F IR S T WAR
■ pawS U S.A C T , iQ lg / R E L A T IN G TO FOR5.IGN .FUNDS CONTROL.

(1 )
U n le s s l i c e n s e d o r o t h e r w is e •a u t h o r iz e d b y th e S e c r e t a r y o f
th e T r e a s u r y , (.a) a n y t r a n s f e r a f t e r th e e f f e c t iv e , d a t e - o f the O rd er
a s n u l l and v o id , t o th e e x t e n t t h a t i t i s ( o r w a s) a t r a n s f e r o f a n y
p r o p e r t y i n a b lo c k e d a c c o u n t a t th e tim e o f su c h t r a n s f e r ; and (b )
no t r a n s f e r a f t e r th e e f f e c t i v e d a te o f O rd e r s h a l l be th e b a s i s f o r
th e a s s e r t i o n o r r e c o g n i t i o n o f a n y r i g h t , rem edy, powrer, o r p r i v i l e g e
w it h r e s p e c t t o , o r i n t e r e s t i n , a n y p r o p e r t y w h ile i n a b lo c k e d a cco u n t
( i r r e s p e c t i v e o f w h e th e r su c h p r o p e r t y w as i n a b lo c k e d a c c o u n t a t th e
tim e o f s u c h t r a n s f e r ) .
(2 )
U n le s s l i c e n s e d o r o t h e rw is e a u t h o r iz e d b y th e S e c r e t a r y o f
th e T r e a s u r y , no t r a n s f e r before- th e e f f e c t i v e d a te o f O rd e r s h a l l be
th e b a s i s f o r th e a s s e r t i o n ^ o r r e c o g n i t i o n o f a n y r i g h t , rem edy, pow er,
o r p r i v i l e g e w it h r e s p e c t t o , o r i n t e r e s t i n , a n y p r o p e r t y w h ile i n a
b lo c k e d a c c o u n t u n l e s s th e p e r s o n w it h whom su ch b lo c k e d a c c o u n t i s
h e ld o r m a in t a in e d h ad w r it t e n n o t ic e o f th e t r a n s f e r o r b y a n y w r it t e n
e v id e n c e had r e c o g n iz e d su c h t r a n s f e r p r i o r t o th e e f f e c t i v e date o f
th e O rd e r.
(3 )
U n le s s o t h e r w is e p r o v id e d , an a p p r o p r ia t e l i c e n s e o r o th e r
a u t h o r i z a t i o n is s u e d b y t h e S e c r e t a r y o f th e T r e a s u r y b e f o r e , d u r in g o r
a f t e r a t r a n s f e r s h a l l v a l i d a t e su c h t r a n s f e r o r re n d e r i t e n f o rc e a b le
t o th e same e x t e n t a s i t "would be v a l i d o r e n f o r c e a b le b u t f o r th e p r o ­
v i s i o n s o f s e c t io n 5 ( b ) o f th e T r a d in g w it h th e enemy A c t , as amended,
and O r d e r , r e g u l a t i o n s , i n s t r u c t i o n s and r u l i n g s is s u e d th e re u n d e r.
(I4.) A n y t r a n s f e r a f f e c t e d b y th e O rd e r a n d / o r t h i s g e n e r a l r u l i n g
and in v o l v e d i n , o r a r i s i n g o u t o f , a n y a c t io n o r p ro c e e d in g i n any
C o u r t w i t h i n th e U n it e d S t a t e s s h a l l b e , so f a r a s a f f e c t e d b y th e
O rd e r a n d / o r t h i s g e n e r a l r u l i n g , v a l i d and e n fo rc e a b le - f o r th e p u rp o se
o f d e t e r m in in g f o r trie p a r t i e s t o th e a c t io n o r p r o c e e d in g th e r i g h t s
and l i a b i l i t i e s t h e r e in l i t i g a t e d ; p r o v id e d , h ow e ver, t h a t no a t t a c h ­
m ent, jud gm ent, d e c re e , l i e n , e x e c u t io n , g a rn ish m e n t, o r o th e r
j u d i c i a l p r o c e s s s h a l l c o n f e r o r c r e a t e a g r e a t e r r i g h t , power o r
p r i v i l e g e w it h r e s p e c t t o , o r i n t e r e s t i n , a n y p r o p e r t y i n a b lo c k e d
a c c o u n t th a n th e owner o f su ch p r o p e r t y c o u ld c re a t e o r c o n fe r b y
v o l u n t a r y a c t p r i o r to th e is s u a n c e o f an a p p r o p r ia t e - l i c e n s e .

-

(5 )

2

-

F o r th e p u r p o s e s o f t h i s g e n e r a l r u l i n g :
( a ) th e term " t r a n s f e r " s h a l l mean a n y a c t u a l o r p u r p o r t e d
a c t o r t r a n s a c t i o n , w h e th e r o r n o t e v id e n c e d b y w r i t i n g ,
and w h e th e r o r n o t done o r p e rfo rm e d w i t h i n th e U n it e d S t a t e s ,
th e p u r p o s e , i n t e n t , o r e f f e c t o f w h ic h i s t o c r e a t e ,
su rre n d e r, re le a se , tra n sfe r, o r a lt e r , d ir e c t ly o r in d ir e c t ly ,
a n y r i g h t , rem edy, pow er, p r i v i l e g e , o r i n t e r e s t w it h r e ­
s p e c t t o a n y p r o p e r t y and w it h o u t l i m i t a t i o n upon th e f o r e ­
g o in g s h a l l in c lu d e th e m a k in g , e x e c u t io n , o r d e l i v e r y
o f a n y a s s ig n m e n t , p o w e r, c o n v e y a n c e , c h e c k , d e c l a r a t i o n ,
d ee d , deed o f t r u s t , pow er o f a t t o r n e y , pow er o f a p p o in t ­
m ent, b i l l o f s a l e , m o rtg a g e , r e c e i p t , agre em e nt, c o n t r a c t ,
c e r t i f i c a t e , g i f t , s a l e , - a f f i d a v i t , o r sta te m e n t; th e
a p p oin tm e n t o f a n y a g e n t, t r u s t e e , o r o t h e r f i d u c i a r y ;
th e c r e a t io n o r t r a n s f e r o f a n y l i e n ; th e is s u a n c e ,
d o c k e t in g , f i l i n g , o r th e l e v y o f o r u n d e r a n y jud gm ent,
d e c re e , a tta c h m e n t, e x e c u t io n , o r o t h e r j u d i c i a l o r adm in­
i s t r a t i v e p r o c e s s o r o r d e r , o r th e s e r v i c e o f a n y g a r n i s h ­
m ent; th e a c q u i s i t i o n o f a n y i n t e r e s t o f a n y n a t u r e w h at­
s o e v e r b y r e a s o n o f a judgm ent o r d e c re e o f a n y f o r e i g n
c o u n t r y ; th e f u l f i l l m e n t o f a n y c o n d it io n , o r th e e x e r c is e
o f a n y pow er o f a p p o in tm e n t, pow er o f a t t o r n e y , o r o t h e r
pow er; p r o v id e d , h ow e ver, t h a t th e term " t r a n s f e r " s h a l l
n o t be deemed t o in c lu d e t r a n s f e r s b y o p e r a t io n o f la w *
(b )
th e term " p r o p e r t y ” in c l u d e s g o ld , s i l v e r , b u l l i o n ,
c u r r e n c y , c o in , c r e d i t , s e c u r i t i e s ( a s t h a t term i s
d e f in e d i n s e c t io n 2 ( 1 ) o f th e S e c u r i t i e s A c t o f 19 3 3 ,
a s am ended), b i l l s o f e x c h a n g e , n o t e s , d r a f t s , a c c e p t a n c e s ,
c h e c k s , l e t t e r s o f c r e d i t , b ook c r e d i t s , d e b t s , c la im s ,
c o n t r a c t s , n e g o t ia b le docum ents o f t i t l e , m o rtg a g e s, l i e n s ,
a n n u i t i e s , in s u r a n c e p o l i c i e s , o p t io n s and f u t u r e s i n
c o m m o d itie s, and e v id e n c e s o f a n y o f th e f o r e g o in g .
The
term " p r o p e r t y " s h a l l n o t , e x c e p t t o th e e x t e n t in d ic a t e d ,
be deemed t o in c lu d e c h a t t e l s o r r e a l p ro p e rty -*
(c )
th e term " b lo c k e d a c c o u n t " s h a l l r e f e r t o a b lo c k e d
a c c o u n t ( i n c l u d i n g s a f e d e p o s it b o x ) o f a p a r t y t o th e
t r a n s f e r and s h a l l have th e m e a n in g p r o s c r i b e d i n G e n e ra l
R u l i n g No. 1; e x c e p t t h a t i t s h a l l n o t be deemed t o in c lu d e
an a c c o u n t n o t t r e a t e d a s a b lo c k e d a c c o u n t b y th e p e r s o n
w it h whom su c h a c c o u n t i s h e ld o r m a in t a in e d .
(d )
th e term " e f f e c t i v e d a te o f th e O r d e r " s h a l l have
th e m ean in g p r e s c r ib e d i n G e n e ra l R u l i n g No. k e x c e p t
t h a t " t h e e f f e c t i v e d a te o f th e O rd e r" a s a p p lie d t o
a n y p e r s o n w hose name a p p e a rs on th e P r o c la im e d L i s t
o i C e r t a in B lo c k e d N a t i o n a l s s h a l l be th e d a te up on '
w h ic h th e name o f s u c h p e r s o n f i r s t a p p e a re d on su c h l i s t .

(e )
th e term " t r a n s f e r b y o p e r a t io n o f la w " s h a l l be
deemed o n ly t o mean a n y t r a n s f e r o f a n y d ow e r, c u r t e s y ,
com m unity p r o p e r t y , o r o t h e r i n t e r e s t o f any n a tu re
w h a ts o e v e r, p r o v id e d t h a t su c h t r a n s f e r a r i s e s s o l e l y
a s a con seq u e nce o f th e e x is t e n c e o r change o f m a r i t a l
s t a t u s ; a n y t r a n s f e r to a n y p e r s o n b y i n t e s t a t e s u c ­
c e s s io n ; a n y t r a n s f e r t o a n y p e r s o n a s a d m in is t r a t o r ,
e x e c u t o r, o r o t h e r f i d u c i a r y b y r e a s o n o f a n y t e s t a ­
m e n ta ry d i s p o s i t i o n ; a n y t r a n s f e r t o a n y p e rs o n a s
a d m i n i s t r a t o r , e x e c u t o r, o r f i d u c i a r y b y r e a s o n o f
j u d i c i a l a p p oin tm e n t o r a p p r o v a l i n c o n n e c t io n w it h
a n y t e s t a m e n t a r y d i s p o s i t i o n o r i n t e s t a t e s u c c e s s io n ;
and a n y t r a n s f e r p u r s u a n t ( i )
N e t h e r la n d s R o y a l
D ecree o f M ay 2 h , 19U0, and ( i i )
N o rw e g ia n P r o v i s i o n a l
D ecre e o f A p r i l 2 2, I 9I 1.O, c o n c e r n in g th e m o n e ta ry syste m ,
etc.

(6) Nothing contained in this general ruling shall be deemed to
affect in any way criminal liability for violation of the Order, or the
regulations, ruling, circulars or instructions issued thereunder, or
in connection thereYiith, or to otherwise modify any provision thereof.
B y d i r e c t i o n o f th e P r e s id e n t :

H. M o rg e n th a u , J r .

Secretary of the Treasury

TREASURY DEPARTMENT,
Washington

' FOR RELEASE, MORNING NEWSPAPERS,
Friday,•April 2 k t 19^2.__________

The Secretary of the Treasury, by. this .public riotibe.,. invites
tenders for $ 150 ,000, 000, or thereabouts, * of jjl-day Treasury bills,
to be issued on a discount basis under competitive bidding.

The

bills of this series will be dated April 29, 19*4-2', and will mature
July

29,

19^-2, when the face amount will be payable without interest.

They will be issued in bearer form only, and in denominations of
Jl, 000, | 5 ,000, | 10 ,000, $100 ,000, $ 500,000, and $1 ,000,000 (maturity
v a l u e ), Tenders will be received at Federal Reserve Banks and Branches
up to the closing hour, two o'clock p, m., Eastern War time, Monday,
April 27 , 19^2.
Tenders will not be received at the Treasury
Department, Washington.
Each tender must be for an even multiple
of $1 ,000, and the price offered must be expressed on the basis of
100, with not more than three decimals, e. g . , 99*925»
Fractions
may not be uspd.
It is urged that tenders be made on the.printed
■forms and forwarded in the special envelopes which will be supplied
by Federal Reserve Banks or Branches on application therefor.
Tenders will be received without deposit from incorporated
banks and trust companies and from responsible and recognized
dealers in Investment securities.
Tenders from others must be
accompanied by payment of 10 percent of the face amount of Treasury
bills applied for, unless the tenders are accompanied by an express
guaranty of payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Secretary of the Treasury of the
amount and price 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.
Payment of accepted tenders at the
prices offered must be made or completed at the Federal Reserve Bank
in cash or other immediately available funds on April 29, 19^2.
The income derived from Treasury bills, whether interest or
gain from the dale or other disposition of the bills, shall not have
any exemption, as such, and loss from the sale or other disposition

31-29

(Over)

~

2

~

of Treasury bills shall not have any special treatment, as such,
under Federal tax Acts now or hereafter enacted. .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 b y the United States
shall be considered to be interest*
Under Sections *4-2 and 117 (a)
(1) of the Internal Revenue Code, as amended by Section 115 of the
Revenue Act of 19*4-1, 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 riiaturlty during the taxable year
for which the return is made, as ordinary gain or loss.
Treasury Department Circular No.
as amended, and this
notice,' prescribe the tèrms of the Treasury bills and govern the
conditions of their issue.
Copies of the circular may be obtained
fronj any Federal Reserve Bank or Branch.

-oOo-

TREASURY DEPARTMENT
Washington
Press Service
No* 31-30

FOR IMMEDIATE RELEASE,
Friday, April 2H-, 19^-2,

Secretary Morgenthau announced today that proposals are
being Invited for furnishing distinctive paper required for
printing currency and public debt securities of the United States
during the fiscal year

19 ^ 3 ,

for which bids will be opened at the

Treasury Department on May 1^, 19^2*
The estimated quantity of paper required for currency is
1^5, 000,000 sheets, or about

1

1750

tons,

securities ^0,000,000 sheets, or about

- 0O 0-

and for public debt

765

tons,

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Saturday, April 25# 19^2«

Press Service
N o » 31**33-

Secretary Morgenthau today announced the appointment of
Thomas Manning as Special Assistant to the Chief Counsel of the
Bureau of Internal Revenue and of Thurman Hill as Chief Counsel
of the Procurement Division of the Treasury Department.
Mr. Manning,

who has been Chief Counsel of the Procurement

Division, will handle a number of new problems growing out of
proposed tax legislation*
in 1935*

He Joined the Treasury's legal staff

His home is in New Rochelle, New York.

Mr. Hill, a native of Wichita, Kansas,

has been Head of the

Reorganization Section in the office of the Chief Counsel of the
Bureau of Internal Revenue,
Department in 193*1-,

He entered the service of the Treasury

In his new position Mr. Hill will handle all

legal work connected with both the regular and lend^lease purchase
programs of the Procurement Division,

~o 0o~

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Monday, April 27, 1942.

Press Service
No, 31“*32

The Bureau of Customs announced today that preliminary
reports from the collectors of customs show that
gallons of crude petroleum,

J’
l/lJJ,

topped crude petroleum,

9$2

and fuel

oil the produce or manufacture of Colombia and 119,402,506
gallons the produce or manufacture of foreign countries other
than. Venezuela,

the Netherlands and its overseas territories,

and Colombia were entered,

or withdrawn from warehouse,

for

consumption during the period January 1 to April 11, 1942,
inclusive*
Under the terms of the P r e s i d e n t ^ proclamation of December
1941, not more than 94,662,490 gallons the produce or manu­
facture of Colombia and not more than 15^,$6$*343 gallons the
produce or manufacture of such other countries may be entered,
or withdrawn from warehouse, for consumption at the reduced rate
of import tax of 1/4 cent per gallon provided for in the trade
agreement with Venezuela during the calendar year 1942.
Such
imports in 1942 in excess of the quota will be dutiable at the
full rate of Import tax of 1/2 cent per gallon.

26,

In order to provide for the control of these quotas the
collectors of customs have been instructed that, during the
period April 27 to December 3 1 , 1942, entries and withdrawals
for consumption covering petroleum and fuel oil the produce or
manufacture of Colombia and such other countries may be accepted
at the reduced rate» provided the merchandise is not released
pending determination of its quota status.
If release of the
merchandise is desired before determination of the rate applicable
importers will be required to deposit estimated duties at the full
rate.
Excessive duties deposited on such merchandise found to be
within the quotas will be refunded.

-oOo-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, April 28, 1942.
^ ------- *-----------------------------

Press Service
No. 31-33

The Secretary of the Treasury announced last evening that
the tenders for |150,000,000,
bills,

to be dated April

29

or thereabouts,

and to mature July

of 91~&ay Treasury

29,

19^2, which

were offered on April 2^, were opened at the Federal Reserve
Banks on April

27 *

The details of this issue are as follows:
Total applied for ~ $375,372,000
Total accepted
-» 150 ,125 ,000
Range of accepted bids:
l 55 ,ooo)
High - 99*950
Low
~ 99.910
Average
Price - 99.915

(26

.

(Excepting two tenders totaling

Equivalent rate approximately O.I 9S percent
"
"
"
O .356
"
"

M

M

O .335

“

percent of the amount bid for at the low price was accepted)
~o 0o«

TREASURY DEPARTMENT
Washingto n
FOR IMMEDIATE RELEASE.
Tuesday, April 28, 19^-2.

Press Service
No,

The Bureau of Customs announced today that preliminary
reports from the collectors of customs show imports of

20,445

head of Canadian cattle weighing 700 pounds or more each (other
than cows imported specially for dairy purposes),
period April 1 to 15, 194-2, inclusive,
quota of

51,720

during the

under the tariff rate

head for the second quarter of the calendar

year 194-2, provided for under the trade agreement with Canada,
These reports also show that the tariff rate quota of
5,250 head for this class of cattle,
countries other than Canada,

the produce of foreign

for the second quarter of 194*2

was filled on April 1, 194-2,

-o 0o~

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday, May 1, 1 9 4 2 . ___________

The. Secretary of the Treasury,, by ..this public notice., invites
tenders fob $150,

000,000;.

or thereab.ouf's /„of

91 -day

Treasury, bills',

to be issued on a ^.eqount basis under' c ^ > ‘ét.ltiV^' bidding,
bills of this series ^111 be dated Ma y
August

5,

The

:.

6*; 19^2,;‘sind ’will, Tnatube'"

1942, when tHe face amount, w i i r be payable without interest.

They will be issued in bearer form only, and. in denominations of

1 1 ,000, $ 5 ,000, $10 ,0Q 0,. $100 ,000,' $ 500,000:,
value.)*

'.

and $1 ,000, 0.00 (maturity
.
•

TèrrÿèrB’ will be received at Federal; Re eery e'Banks and Branchés
U,P; $0 ;the; ©iP’^l.d'g hour,' two;.;o'\plpck;/jr.;* ni;/,.jÉate:$1ern; "war/'.ti.mei i'Mondâv,
May 4, 1942.' Tenders will not be received,'at the Treasury" Department
Washington.
Each tender must be for an'even multiple of $1,000, and *
the price offered must be expressed on the basis of 100 , with not
more; than three decimals, e. g,, 99*9?5*
Fractions may not be used.
It is urged that tenders be made on the printed forms and forwarded
in the special envelopes which will be supplied by Federal Reserve
Banks or Branches on application therefor.
Tenders will be received without deposit from incorporated banks
and trust companies and from responsible and recognized dealers in
Investment securities.
Tenders from others must be accompanied by
payment of 10 percent of the face amount of Treasury bills applied
for, unless the tenders are accompanied by an express guaranty of
payment by an incorporated bank or trust company.
Immediately after the closing hour, tenders will be opened at
the Federal Reserve Banks and Branches, following which public
announcement will be made by the Secretary of the Treasury of the
amount and price 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.
Payment of accepted tenders at the prices
offered must be made or completed at the Federal Reserve Bank in
cash or other immediately available funds on May 6, 1942.
The income derived from Treasury bills, whether Interest or
gain from the sale or other disposition of the bills, shall not have'
as suck> anc^ loss from the sale or other disposition
of Treasury bills shall not have any special treatment, as such, under

31-35

( Over)

—

2

—

Federal tax Acts now or hereafter enacted.
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 k-2 and 117 (a ) (1) of the
Internal Revenue Code, as amended by Section 115 of the Revenue Act
of .19 ^1 , 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,. ^-13, 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*.

-0 O 0 -

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Thursday, April 30, 19^2*

Press Service
No. 31-36

Secretary Morgenthau announced today that the Treasury*s May
financing will be in substantially the following form:
1, The Treasury will offer on Monday of next week a 2 % bond
with a medium maturity in the amount of $1 ,250,000,000, or there­
about s. The rules theretofore in effect governing the basis of
subscriptions to Government securities will not be applicable. •
All subscriptions up to $10,000 will be allotted in full.
2. The Treasury will offer at the same time a 2
registered
bond of longer term.
This bond will not be transferable for the first
sixty days and it will not be available for subscription by
commercial banks accepting demand deposits,.nor eligible for purchase
by such banks for a period of ten years.
The bonds may be pledged as
collateral for loans, including loans by commercial banks, but any
commercial bank acquiring such securities because of the failure of
such loans to be paid at maturity will be required to dispose of them
in the same manner as they dispose of other assets not eligible to be
owned by banks.
The amount of the offering of this security will not
be specifically limited.
Subscriptions will be allotted In full as
received and the offering will remain open for a period longer than
customary.
Subscriptions may be forwarded to the Federal Reserve
Banks through commercial banks and the latter may make payment for
the subscription allotted for account of their depositors through the
G o v e r n m e n t s War Loan Account with such banks.
3# Next week the Treasury will offer for payment on Wednesday,
May 13 , $850,000,000 in Treasury bills instead of the usual
$150 ,000,000.
An offering of $ 250,000,000 each week will continue
for the next several weeks# The Treasury is advised that the Federal
Open Market Committee has directed the twelve Federal Reserve Banks to
purchase for the System Open Market Account all Treasury bills that
ftay be offered to such banks, on a discount basis, at the rate of
3/o per cent per annum.

-o 0o~

/

TREASURY DEPARTMENT

Washington
FOR R E L E A S E , M O R N I N G N E W S P A P E R S ,
S u n d a y , M a y 3, 1 942.

Press Service
No. 3 1 - 3 7

5/1/4P
A
effo r t ,

flood of unrequested
received

in W a s h i n g t o n

of l a s t Tuesday,
impressive
American

was

The

T r e a s u r y ’s n e w q u o t a
War Savings

Bonds

since

to h e l p f i n a n c e

the w a r

t h e P r e s i d e n t ’s f i r e s i d e t a l k

d e s c r i b e d b y S e c r e t a r y M o r g e n t h a u t o d a y as an

demonstration

life.

cash donations

of the

virility

voluntary principle
campaign

to

sell

of the
is t h e

a billion

voluntary
basis

spirit

of t h e

in

_

d o l l a r s ’ w o r t h of

every month.

A f t e r c o n s u l t a t i o n w i t h l e a d e r s in l abor, i n d u s t r y a n d a g r i ­
c u l t u r e , T r e a s u r y o f f i c i a l s b e c a m e c o n v i n c e d t h a t t h e p e o p l e of the
n a t i o n w o u l d p r e f e r a n o p p o r t u n i t y to s u b s c r i b e v o l u n t a r i l y to th e
W a r B o n d s r a t h e r t h a n r e s o r t to l e g i s l a t i o n r e q u i r i n g s u c h p u r c h a s e s .
T h e c o n t i n u e d w a v e s o f o u t r i g h t c o n t r i b u t i o n s to p a y f o r t h e t o o l s of
wa r h a v e s t r e n g t h e n e d this conviction.
S i n c e June, 1 9 4 0 , a t o t a l o f 1 3 , 8 9 5 c a s h d o n a t i o n s h a v e b e e n
received, total l i n g $ 6 1 4 , 6 7 0 . 5 7 «
T h i s n u m b e r is e x c l u s i v e of
a p p r o x i m a t e l y 1 5 , 0 0 0 i n d i v i d u a l d o n a t i o n s g r o u p e d a n d t r e a t e d as
s i n g l e g i f t s as, f o r e x a m p l e , w a s d o n e in t h e c a s e o f an a e r o n a u t i c a l
c o r p o r a t i o n w h o s e 7 , 0 0 0 e m p l o y e e s s e n t in i n d i v i d u a l c h e c k s .
The
a m o u n t is e x c l u s i v e o f s t o c k , o l d g o l d a n d o f f e r s w h e r e t h e value,
if any, h a s n o t b e e n a s c e r t a i n e d .
E v e r y c a s h g i f t is a c k n o w l e d g e d on b e h a l f o f S e c r e t a r y
M o r g e n t h a u by a f r i e n d l y l i t t l e l e t t e r w h i c h thanks the donor
p a t r i o t i s m a n d l a u d s it as a n e x a m p l e o f t h e i n t e r e s t , e f f o r t
sacrifice of a u n i t e d people.

f o r his
and

A t the same t ime the lett e r stresses the urgent importance of
s e t t i n g a s i d e a s u b s t a n t i a l p a r t o f c u r r e n t i n c o m e to f i n a n c e the
w a r a n d to c h e c k t h e r i s i n g c o s t o f l i v i n g , a n d r e m i n d s t h e r e a d e r
t h a t W a r S a v i n g s B o n d s a n d S t a m p s w e r e d e s i g n e d for t h i s p a r t i c u l a r
purpose.
D o n o r s r e p r e s e n t a l l w a l k s o f life.
F r o m t h e m o u n t a i n s of
Colorado came r e c e n t l y a small c a s h donation f rom a self-styled
hermit.
F r o m a C h i n e s e p r o p r i e t o r o f an a r t s t o r e in M e x i c o c o m e s
r e g u l a r d o n a t i o n s of 25 p e r c e n t o f a l l p u r c h a s e s m a d e b y A m e r i c a n

2

customers.
At least four wid o w s of W o r l d W a r # l _ t u r n back their
p e n s i o n c h e c k s to U n c l e Sam, w h i l e a n A m e r i c a n oil o p e r a t o r in
V e n e z u e l a has c o n t r i b u t e d $ 100 each m o n t h since Pearl Harbor.
O c c a s i o n a l l y t h e l e t t e r s c o n t a i n m o r e t h a n a t o u c h of p a t h o s .
One s u c h was r e c e i v e d r e c e n t l y f r o m an a g e d m a r r i e d couple enclosing
10 pe r cent of t h e i r income.
The l e t t e r e x p l a i n e d the couple had no
d e p e n d e n t s a n d d i d n o t w i s h t o b u y W a r B o n d s as t h e i r l i f e e x p e c t a n c y
w a s t o o s h o r t to w i t n e s s m a t u r i t y o f t h e s e b o n d s t e n y e a r s h e nce.
In t h e t a b l e t h a t f o l l o w s the c h r o n o l o g i c a l rece i p t s of c a s h
d o n a t i o n s f o r n a t i o n a l d e f e n s e is g i v e n t h r o u g h A p r i l 30, 1942:

Humber

Donations Received:
J u n e 18,

1940 to A u g u s t

31,

September, 1941 to December
(Pearl Harbor)
December

7,

January,

1942

February,

- 31»

1941
7,

1942

April

1 - 3 0 ,

4,341

! 42,860.97

147

2,489.10

2,126

88,350.54

2,123

239,120.49

838

77,163.37

1,919

99,535.10

2,401

65,151.00

13,895

$614,670.57

1941

1941

1942

March,

Amount

1942

TOTAL

-oOo-

TREASURY DEPARTMENT
W ashington
FOR RELEASE, MORNING NEWSPAPERS,
Monday, May
19*12,____________________

Press S e r v ic e
No. 31-33

5/r2/4-<5

S e c r e ta r y o f the Treasury Morgenthau today announced an o f f e r ­
in g o f two s e r ie s o f Treasury Bonds, through the Federal Reserve
Banka, and in v it e d cash s u b s c r ip tio n s ,

at par and accrued in t e r e s t ,

fo r $ 1 ,2 5 0 ,0 0 0 ,0 0 0 , or th e re a b o u ts, o f 2 p ercen t Treasury Bonds o f
19^9-51* and fo r an u n s p e c ifie d amount o f 2-1/2 p e rcen t Treasury
Bonds o f 1962- 67.
The Treasury Bonds o f 19*4-9-51» now o ffe r e d fo r s u b s c r ip tio n ,
w i l l be dated May 15, 19*4-2, and w i l l bear In te r e s t from th a t date at *
the r a te o f 2 p e rce n t per annum p a ya b le sem iannually w ith the f i r s t
coupon due September 15, 19*4-2, fo r a f r a c t i o n a l period* The bonds
w ill mature September 15, 1951, but may be redeemed, a t the o p tio n o f
the U n ite d S t a t e s , on and a f t e r September 15» 19^9* The bonds w i l l
be is su e d in two form s; b earer bonds w ith in t e r e s t ooupons attaohed ,
and bonds r e g is t e r e d both as to p r i n c ip a l and in t e r e s t*
Both forme
w ill be is su e d in denom inations o f #100, #500, #1*000, $5* 000,
$10,000 and #100,000, For th e se bonds r e s t r i c t i o n s r e o e n tly in e ffe c t
as to th e b a s is o f s u b s c r ip tio n s to Government s e c u r i t i e s w i l l not
ap p ly. A l l s u b s c r ip tio n s fo r amounts up to #10,000 w i l l be a llo t t e d
in f u l l ; o th er s u b s c r ip tio n s w i l l be r e c e iv e d s u b je c t to a llo tm e n t,
The T reasury Bonds o f 1962- 67, a ls o o ffe r e d fo r su b s cr ip tio n at
t h is tim e, w i l l be dated May 5 , 19*4-2, and w i l l bear in t e r e s t from
that date a t the £ a te o f 2- 1/2 p e rc e n t per annum, p ayab le sem iannually
with th e f i r s t payment due December 15» 19^2, o overin g the p e rio d
from May 5, 19*4-2, The bonds w i l l mature June 15, 1967#
maF
redeemed, at the o p tio n o f th e U n ite d S t a t e s , on and a f t e r June 15»
1962, Bonds r e g is te r e d b o th as to p r i n c ip a l and In te r e s t w i l l be
Issued in denom inations o f #100, #500, #1, 000, $5*000, #10,000 and
$100,000; they w i l l not be is s u e d in ooupon form p r io r to May 5» 1952»
but coupon bonds in th ese denom inations w i l l be a v a ila b le and fr e e ly
In terch an geab le w ith the r e g is t e r e d bonds a f t e r th at d a te . These
bonds w i l l not be tr a n s fe r a b le f o r th e f i r s t s i x t y days from May 5,
and they w i l l not be a v a ila b le f o r s u b s c r ip tio n by commercial banka
a cce p tin g demand d e p o s its , nor e l i g i b l e fo r t r a n s fe r to such banks
fo r a p e rio d o f ten ye a rs from May 5,
The bonds may be pledged as
c o l l a t e r a l fo r lo a n s , in c lu d in g lo an s by commercial banks which
aooept demand d e p o s its , but any such banks a c q u irin g the bonds because
of th e f a i l u r e o f such lo an s to be p a id a t m atu rity w i l l be req u ired

2
to dispose of them in the same manner as they dispose of other assets
not eligible to be owned by banks,
As the offering is not speci­
fically limited in amount, it will remain open for a period longer
than customary.
Pursuant to the provisions of the Publio Debt Act of 19^3*»
Interest upon the bonds now offered shall not have any exemption,
as such, under Federal Tax Acts now or hereafter enacted,
The full
provisions relating to taxability are set forth in the official
circulars released today.
Subscriptions for the bonds of both series will be received at
the Federal Reserve Banks and Branches, and at the Treasury Depart­
ment. Washington,
Banking institutions generally and in addition,
for the 2-1/2 peroent Treasury Bonds of 1962-6?, security dealers
generally, may submit subscriptions for aocount of customers, but
only the Federal Reserve Banks and the Treasury Department are
authorized to act as official agencies,
For the 2 percent Treasury
Bonds of 1 9 % - 5 1 , subscriptions from banks and trust companies for
their own account will be received without deposit, but subscriptions
for these bonds from all others must be accompanied by payment of
10 percent of the amount of bonds applied for. Subscriptions for
the 2-1/2 percent Treasury Bonds of 1962-67 must be accompanied by
payment in full,
The right is reserved to close the books as to any or all sub­
scriptions or classes of subscriptions for bonds of either or both
series at any time without notice.
The basis of allotment for the
2 peroent Treasury Bonds of 19^9— 5^ will
publicly announced, and
payment for any such bonds allotted must be made or completed on or
before May 15» 19^2, or on later allotment.
Subscriptions for the
2-1/2 peroent Treasury Bonds of 1962-67 will be allotted in full as
received, and payment at par and accrued interest, if any, must ®e
made on or before May 5 » 19^2, or on later allotment.
One day 8
accrued interest is about seven cents per $ 1 ,000.
The texts of the official circulars follow:

UNITED STATES OP AMERICA
2 PERCENT TREASURY BONDS OP 1949-51
Dated and bearing interest from May 15, 1942

Due September 15, 1951

REDEEMABLE AT THE OPTION OP THE UNITED STATES AT PAR AND ACCRUED INTEREST ON AND
AFTER SEPTEMBER 15, 1949
Interest payable March 15 and September 15

1942
Department Circular No. 684

TREASURY DEPARTMENT,
Office of the Secretary,
Vlfashington, May 4,1942.

Fiscal Service
Bureau of the Public Debt
I.

OFFERING OP BONDS

1. The Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest,
from the people of the United States for bonds of the United States, designated
2 percent Treasury Bonds of 1949-51. The amount of the offering is $1,250,000,000,
or thereabouts.
II,

DESCRIPTION OP BONDS

1. The bonds will be dated May 15, 1942, and will bear interest from that
date at the rate of 2 percent per annum, payable on a semiannual basis on
September 15, 1942, and thereafter on March 15 and September 15 in each year until
the principal amount becomes payable. They will mature September 15, 1951, but may
be redeemed at the option of the United States on and after September 15, 1949, in
whole or in part, at par and accrued interest, on any interest day or days, on
4 months' notice of redemption given in such manner as the Secretary of the
Treasury shall prescribe.
In case of partial redemption the bonds to be redeemed
will be determined by such method as may be prescribed by the Secretary of the
Treasury. Prom the date of redemption designated in any such notice, interest on
the bonds called for redemption shall cease.
2. The income derived from the bonds shall be subject to all Federal taxes,
now or hereafter imposed. The bonds shall be subject to estate, inheritance, gift
or other excise taxes, whether Federal or State, but shall be exempt from all
taxation now or hereafter imposed on the principal or interest thereof by any
State, or any of the possessions of the United States, or by any local taxing
authority.
3.
The bonds will be acceptable to secure deposits of public moneys, but will
not bear the circulation privilege and will not be entitled to any privilege of
conversion.

i

it«.«

*

-

2

-

*

* *;«

4. Bearer bonds with interest coupons attached, and bonds registered as to
principal and interest, will be issued in denominations of $100, $500, $1,000,
$5,000, $10,000 and $100,000. Provision will be made for the interchange of
bonds of different denominations and of coupon and registered bonds, and for the
transfer of registered bonds, under rules and regulations prescribed by the
Secretary of the Treasury.
5. The bonds will be subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States bonds.
Ill*

SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and Branches
and at the Treasury Department, Washington,
Subscribers must agree not to sell or
otherwise dispose of their subscriptions, or of the securities which may be
allotted thereon, prior to the closing of the subscription books. Banking insti­
tutions generally may submit subscriptions for account of customers, but only the
Federal Reserve Banks and the Treasury Department are authorized to act as
official agencies.
Others than banking institutions will not be permitted to
enter subscriptions except for their own account. Subscriptions from banks and
trust companies for their own account will be received without deposit. Subscrip­
tions from all others must be accompanied by payment of 10 percent of the amount
of bonds applied for*
2, The Secretary of the Treasury reserves the right to reject any subscrip­
tion, in whole or in part, to allot less than the amount of bonds applied for,
and to close the books as to any or all subscriptions at any time without notice?
and any action he may take in these respects shall be final. Subject to these
reservations, subscriptions for amounts up to and including $10,000 will be
allotted in full. The basis of the allotment on all other subscriptions will be
publicly announced, and allotment notices will be sent out promptly upon allotment.
IV.

PAYMENT

1, Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made or completed on or before May 15, 1942, or on later allotment.
In
every case where payment is not so completed, the payment with application up to
10 percent of the amount of bonds applied for shall, upon declaration made by the
Secretary of the Treasury in his discretion, be forfeited to the United States.
Any qualified depositary will be permitted to make payment by credit for bonds
allotted to it for itself and its customers up to any amount for which it shall be
qualified in excess of existing deposits, when so notified by the Federal Reserve
Bank of its district*
V.

GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are author­
ized and requested to receive subscriptions, to make allotments on the basis and
up to the amounts indicated by the Secretary of the Treasury to the Federal
Reserve Banks of the respective districts, to issue allotment notices, to receive
payment for bonds allotted, to make delivery of bonds on full-paid subscriptions
allotted, and they may issue interim receipts pending delivery of the definitive
bonds.

- 3 ~

2. The Secretary of the Trcaeury may at any time, or from time to time,
prescribe supplemental or amendatory rules and regulations governing the
offering, which will be communicated promptly to the Federal Reserve Banks.

HENRY MORGENTHAU, JR,,
Secretary of the Treasury,

UNITED STATES OE AMERICA
2-1/2 PERCENT TREASURY BONDS OE 1962-67
Dated and bearing interest from May 5, 1942

Due June 15, 1967

REDEEMABLE AT THE OPTION OE THE UNITED STATES AT PAR AND ACCRUED INTEREST ON AND
AETER JUNE 15, 1962
Interest payable June 15 and December 15
1942
Department Circular No, 685

TREASURY DEPARTMENT,
Office of the Secretary,
Washington, May 4, 1942.

Eiscal Service
Bureau of the Public Debt
I.

OEEERING OE BONDS

Secretary of the Treasury, pursuant to the authority of the Second
Liberty Bond Act, as amended, invites subscriptions, at par and accrued interest,
from the people of the United States for bonds of the United States, designated
2-1/2 percent Treasury Bonds of 1962-67. These bonds will not be available for
subscription, for their own account, by commercial banks which accept demand
deposits. The amount of the offering is not specifically limited,
II.

DESCRIPTION OE BONDS

1. The bonds will be dated May 5, 1942, and will bear interest from that
date at the rate of 2-1/2 percent per annum, payable on a semiannual basis on
and I)ecember 15 in each Year until the principal amount becomes payable,
the first payment being made December 15, 1942, They will mature June 15, 1967,
but may be redeemed at the option of the United States on and after June 15, 1962,
in whole or in part, at par and accrued interest, on any interest day or days, on
4 months * notice of redemption given in such manner as the Secretary of the
Treasury shall prescribe.
In case of partial redemption the bonds to be redeemed
will be determined by such method as may be prescribed by the Secretary of the
Treasury. Erom the date of redemption designated in any such notice, interest on
the bonds called for redemption shall cease.
2, The income derived from the bonds shall be subject to all Eederal taxes,
now or hereafter imposed. The bonds shall be subject to estate, inheritance, gift
or other excise taxes, whether Eederal or State, but shall be exempt from all taxa
tion now or hereafter imposed on the principal or interest thereof by any State,
or any of the possessions of the United States, or by any local taxing authority.
3, The bonds will not be acceptable to secure deposits of public moneys
efore May 5, 1952, they will not bear the circulation privilege, and they will
not be entitled to any privilege of conversion.
4, Bonds registered as to principal and interest will be issued in denomi­
nations of $100, $500, $1,000, $5,000, $10,000 and $100,000,
The bonds will not
be issued in coupon form prior to May 5, 1952, but will be available in coupon
form after that date, in the same denominations as, and freely interchangeable
with, the registered bonds of this issue. Under rules and regulations prescribed

—

2

*•

by the Secretary of the Treasury, provision will be made for the transfer of the
bonds, other than to commercial banks which accept demand deposits, and for
exchanges of denominations, on and after July 6, 1942. They will not be eligible
for transfer to commercial banks which accept demand deposits before May 5, 1952.
However, the bonds may be pledged as collateral for loans, including loans by
commercial banks which accept demand deposits, but any such bank acquiring such
bonds before May 5, 1952 because of the failure of such loans to be paid at
maturity will be required to dispose of them in the same manner as they dispose
of other assets not eligible to be owned by banks.
5.
Except as provided in the preceding paragraphs, the bonds will be sub­
ject to the general regulations of the Treasury Department, now or hereafter
prescribed, governing United States bonds.
HI.

SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Banks and Branches
and at the Treasury Department, Washington. Banicing institutions and security
dealers generally may submit subscriptions for account of customers, but only the
Federal Reserve Banks and the Treasury Department are authorized to act as
official agencies. Subscriptions must be accompanied by payment in full for the
amount of bonds applied for.
2. The Secretary of the Treasury reserves the right to reject any subscrip­
tion, in whole or in part, to allot less than the amount of bonds applied for, and
to close the books as to any or all subscriptions at any time without notice!
and any action he may take in these respects shall be final. Subject to these
reservations, all subscriptions will be allotted in full. Allotment notices will
be sent out promptly upon allotment.
IV.

PAYMENT

1. Payment at par and accrued interest, if any, for bonds allotted hereunder
must be made on or before May 5, 1942, or on later allotment, One day’s accrued
interest is $0.06868 per $1,000* Any qualified depositary will be permitted to
make payment by credit for bonds allotted to its customers up to any amount for
which it shall be qualified in excess of existing deposits, when so notified by
the Federal Reserve Bank of its district,
V.

GENERAL PROVISIONS

1. As fiscal agents of the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions* to make allotments up to the
amounts indicated by the Secretary of the Treasury to the Federal Reserve Banks
of the respective districts, to issue allotment notices, to receive payment for
bonds allotted, to make delivery of bonds on full-paid subscriptions allotted,
and they may issue interim receipts pending delivery of the definitive bonds.
2. The Secretary of the Treasury may at any time, of from time to time,
prescribe supplemental or amendatory rules and regulations governing the offering,
which will be communicated promptly to the Federal Reserve Banks.
HENRY MORGENTHAU, JR,,
Secretary of the Treasury.

STATUTORY DEBIT LIMITATION
AS OP APRIL 30. 1942.

May 4, 1942.

Section 21 of the Second Liberty Bond Act, as amended, provides that the face
amount of obligations issued under authority of that Act, ’’shall not exceed in the
aggregate $125,000,000,000 outstanding atj,any one time,”
The following table shows the face amount of obligations outstanding and the
face amount which can still be issued under this limitation*
Total face amount that may be
outstanding at any one time

$125,000,000,000

Outstanding as of April 30, 1942*
Interest-bearing*
Bonds $35,909,784,700
Treasury
Savings (Maturity
10,957,211,250
value) *
76,361,000
Depositary
730.336,696
Adjusted Service
Treasury notes
Certificates of
indebtedness
Treasury bills
(maturity value)

$47,673,693,646

12,239,863,225
4.439.635.000
1.953.364.000

Matured obligations, on
which interest has ceased

18,632,862,225
$66,306,555,871
96,197,050

Pace amount of obligations
issuable under above authority

66,402,752.921

$58,597,247,079

Reconcilement with Daily Statement of the United States Treasury
1942
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act,
as amended.
Deduct, unearned discount on Savings bonds (difference
between current redemption value and maturity value)
Add other public debt obligations outstanding but not
subject to the statutory limitation*
Interest-bearing (Pre-War, etc.)
$ 195,990,180
Matured obligations on which interest
has ceased
11,306,480
Bearing no interest
357,466,376
Total gross debt outstanding as of April 30, 1942

* Approximate

$66,402,752,921
2,006,198,132
64,396,554,789

564,763,036
$64.961.317,825

maturity value. Principal amount (current redemption
value) according to preliminary public debt statement $8,951,013,118.

31-39

-oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, May k, 19^-2.

Press Service
No.

Secretary of the Treasury Morgenthau today announced that the
subscription books for the current offering of $1 ,250,000,000, or
thereabouts,

of 2 percent Treasury Bonds of 19^9-51 will close at

the close of business today, May
Subscriptions addressed to a Federal Reserve Bank or Branch,
or to the Treasury Department,

and placed in the mall before

12 o ’clock midnight, Monday, May

k,

will be considered as having

been entered before the close of the subscription books.
Announcement of the amount of subscriptions and the basis of
allotment for this issue will probably be made on Friday, May 5.
The subscription books will remain open until further notice
for the receipt of subscriptions for the 2-1/2 percent Treasury
Bonds of

1962-67 .

- 0G 0-

TREASURY DEPARTMENT
Washington
Press Service
No. 31-4*1

FOR RELEASE, MORNING* NEWSPAPERS,
Tuesday, May 5» 194-2,
5 / W ^ -----

The Secretary of the Treasury announced last evening that the
tenders for $150,000,000, or thereabouts,
to be dated May

6

of 91-day Treasury bills,

and to mature August 5* 194-2, which were offered

on May 1, were opened at the Federal Reserve Banks on May 4-,
The details of this issue are as follows:
Total applied for - $35^,590,000
Total accepted
- 150,4-00,000
Range of accepted bids:
High
Low

- 99,93& Equivalent rate approximately 0.24-5 percent
- 99.906
«
•
*
0.372
•

AV!rlfe - 99.910

(72

.

*

"

"

0.35S

"

percent of the amount bid for at the low price was accepted)

—0 O 0 —

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 5» 19^2.

Press Service
No.

As a further link in the closer relations which have
developed between the Governments of the United States and
of Iceland during the last year,

Secretary of the Treasury

Henry Morgenthau, Jr., and Icelandic Minister Thor Thors
signed an Exchange Stabilization Agreement today.
This agreement between the Government of the United
States,

the Government of Iceland and the National Bank of

Iceland, provides that up to #2,000,000 of the United States
Stabilization Fund will be used for th$ purpose of stabilizing
*
*
.%*’
the United States dollar-Icelandic krona rate of exchange.
The agreement also provides for periodic conferences
among representatives of the parties to the agreement to
discuss monetary,

financial and economic problems of mutual

interest.

oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 5» 19^2»

Press Service
No. 31-^3

The Treasury Department today cleared the way for active
participation by the women of Latin America in the war
activities of the American National Red Cross by removing
tariff barriers to importation of goods and materials designed
for use by the relief agency.
The Bureau of Customs issued the new regulations, under
Presidential authority, and with the cooperation of the State
Department.
The ruling is general, permitting free entry of
food, clothing, medical, surgioal and other supplies imported
by the Red Cross for relief work in connection with the war.
However, Red Cross officials said that the immediate
effect of the order would be to admit the handiwork of scores
of chapters of the organization in other American Republics.
The Red Cross said there were no plans for the present to
acquire food and other materials for importation.
These “Good Neighbor“ chapters are functioning similarly
to the Red Cross sewing rooms in this country, except that the
members supply their own materials.
United States women
residing in the Latin-American countries have set up units, and
the citizens of South and Central American nations are parti­
cipating eagerly, Red Cross Headquarters here said.
Mexico has chapters in a dozen cities, and other units
are functioning in Argentina, Brazil, Costa Rica, Guatemala,
El Salvador, and Uruguay,
Organizations also are being set
up in Bolivia, Chile, Cuba, Haiti, Honduras, Paraguay and
Venezuela,
The units have memberships from $ 0 to J 0 0 ,
The Tariff Act of 1930 authorizes the Secretary of the
Treasury to permit free entry of relief materials for the Red
Cross upon declaration by the President of a State of emergency.

-oOo-

TREASURY^ DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 5> 1942.

Press Service
No. 31-44

The Bureau of Customs announced today that preliminary
reports from the principal ports of entry of Canadian cattle
weighing

700

pounds or more each (other than cows imported

specially for dairy purposes ), indicate that during the
period April 1 to May 2, 1942,

inclusive,

approximately

40,500 head of this class of Canadian cattle were entered
for consumption under the tariff rate quota of

51*720

head

for the second quarter of the calendar year 1942, provided for
in the trade agreement with Canada.

-0 O 0

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday. May 5. 1942.

Press Service
No. 31-45

The Bureau of Customs announced today preliminary figures showing the
quantities of coffee authorized for entry for consumption under the quotas for
the twelve months commencing October 1, 1941, provided for in the Inter-American
Coffee Agreement, proclaimed by the President on April 15, 1941, as follows:
Q
0

Country of Production

Signatory Countriest
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-signatory Countries:
British Etapire, except
Aden and Canada
Kingdom of the Netherlands
and its possessions
Aden, Yemen, and Saudi
Arabia
Other Countries not
signatories of the InterAmerican Coffee Agreement

1/
2/

:
: Quota Quantity •
•
(Pounds) 2J
!

1,401,426,521
475,086,450
30,144, 642
12,109,603
18,098,664
22,634,408
96,657,909
80,715,477
41,436,647
3,287,588
74,966,100
32,078,385
3,767,088
38,094,430

Authorized for Entry
For Consumption
As of (Date)
:
(Pounds) -

Apr. 25, 1942
it

May 2, 1942 2/
Apr, 25, 1942
(Import quota filled)
Apr* 25 , 1942
it
n

May 2, 1942 2J
Apr. 25, 1942
tt
it

May 2, 1942 §/
Apr. 25, 1942

17,674,322

(Import quota filled)

19,669,574

Apr. 25, 1942

3,872,909

12,276,800

Quotas revised effective February 26, 1942.
Per telegraphic reports.

-oOo-

tt

(Import quota filled)

691,351,585
262,911,533
28,791,839
2,817,231
17,910,857
53,718,930
59,842,922
37,714,628
1,316,027
26,207,451
16,066,927
3,111,658
30,293,877

13,086,302
875,809

TREASURY DEPARTMENT
Comptroller of the Currency
Washington

FOR RELEASE, MORNING- NEWSPAPERS,
Thursday, May 7» 19^2.

Press Service
No. J l - k G

57571^2

During the month ended April

J>0,

19^2,

authorizations were

issued to receivers for payments of dividends to the creditors
of four insolvent national banks.

Dividends so authorized will

effect total distributions of $ 256,000 to 14,601 claimants who
have proved claims aggregating | 6,S1 5 ,SOO, or an average payment
of

3.76

percent.

The minimum and maximum percentages of dividends

authorized were I .25 percent and

8.2

percent, while the smallest

and largest payments Involved in dividend authorizations during
the month were $20,500 and

$!“
} &, 8 0 0 ,

respectively.

All four

dividends authorized during the month were final dividend payments.
Dividend payments so authorized during the month ended- April 3°»

19 ^ 2 ,

were as follows:

-

DIVIDEND PAYMENTS

TO

2

-

CREDITORS

BANKS AUTHORIZED

DURING

_________________________ A P R I L

30,

OP

INSOLVENT

NATIONAL

THE MONTH ENDED
19*4-2_________________________
Total

Number
Nature
Name

and Location

The

Grand

St.

Louis,

First
East

Union

of B a n k

National

National

Bank

Rochester,

N.

National

Bank

Scranton,

Bk .

Missouri

Dividend

Date

Percentage

Distribution
of F u n d s b y

Percentage

of D i v i d e n d

Dividend

Dividends

Number

of

Claims

Authorized

to

Claimants

Proved

Authorized Authorized

Authorized
Date

Amount

of
Pinal

4/2/42

8t h

1 . 25$

Pinal

k/xS/Uf

6t h

8.2

Pinal

4/30/42

4th

G.OTfi

Pinal

4 / 9/42

3rd

X.75$

$

1 ,637,000

20,500

90.25^

4,486

58,600

93-2$

2 ,t o g

715.300

138,800

76.07^

5,300

2 ,287,100

38,100

W.75$

2,406

2,176,400

$

of
Y.

of

Pennsylvania

1

of

and

M e r c h a n t s N a t 3, B a n k
Brownsville, Texas

of

-oOo-

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday, May g, 19^2____________

The Secretary of the Treasury, by this public notice,
invites tenders for $ 250,000,OOO, or thereabouts, of

91-day

Treasury bills, to be issued on a discount basis under competi­
tive bidding.
19^2,

The bills of this series will be dated May

13 ,

and will mature August 12, 1942, 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 v a l u e ).
Tenders will be received at Federal Reserve Banks
and Branches up to the closing hour, two o'clock p. m., Eastern
war time, Monday, May 11, 19^2.
Tenders will not be received
at the Treasury Department, Washington.
Each tender must be
for an even multiple of $ 1 ,000, and the price offered must be
expressed on the basis of 100 , with not more than three deci­
mals, e. g., 99.925.
Fractions may not be used.
It is urged
that tenders be made on the printed forms and forwarded in the
special envelopes which will be supplied by Federal Reserve
Banks or Branches on application therefor.

Tenders will be received without deposit from incor­
porated banks and trust companies and from responsible and
recognized dealers in investment securities. Tenders from
others must be accompanied by payment of 10 percent of the
face amount of Treasury bills applied for, unless the tenders
are accompanied by an express guaranty of payment by an in­
corporated 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.
Payment of accepted tenders at the prices offered
must be made or completed at the Federal Reserve Bank in
cash or other immediately available funds on May 13, 1942.
T h e i n c o m e d e r i v e d f r o m T r e a s u r y bills, w h e t h e r
i n t e r e s t or g a i n f r o m the s a l e or o t h e r d i s p o s i t i o n of t he
b i l l s , s h a l l not h a v e a n y e x e m p t i o n , as such, a n d * l o s s f r o m
t h e s a l e or o t h e r d i s p o s i t i o n of T r e a s u r y b i l l s s h a l l not
h a v e a n y s p e c i a l t r e a t m e n t , as such, u n d e r F e d e r a l t a x A c t s

31-^7

(o v e r )

2
h o w or hereafter- enacted.
T h e b i l l s s h a l l b e s u b j e c t to
estate, i n h e r i t a n c e , gift, or o t h e r e x c i s e taxes, w h e t h e r
F e d e r a l or State, but' s h a l l b e e x e m p t f r o m a ll t a x a t i o n n o w
or h e r e a f t e r i m p o s e d o n t h e p r i n c i p a l or i n t e r e s t t h e T e o f b y
a n y State, "or a n y of the p o s s e s s i o n s of t he U n i t e d S t ates, o r
by any local taxing authority.
F or purposes' of t a x a t i o n t h e
a m o u n t of d i s c o u n t at w h i c h T r e a s u r y b i l l s a r e o r i g i n a l l y s o l d
b y the U n i t e d S t a t e s s h a l l b e c o n s i d e r e d to b e i n t e r e s t .
Under
Sections' k2 a nd 1 1 7 (.a) (1) of t h e I n t e r n a l R e v e n u e Code, as
a m e n d e d b y S e c t i o n 1 1 5 of t h e R e v e n u e A c t of 19^-1, t h e a m o u n t
of d i s c o u n t at w h i c h b i l l s i s s u e d h e r e u n d e r are s o l d s h a l l not
b e c o n s i d e r e d to a c c r u e u n t i l s u c h b i l l s s h a l l b e sold, r e ­
d e e m e d or o t h e r w i s e d i s p o s e d of, a n d s u c h b i l l s a r e e x c l u d e d
f r o m c o n s i d e r a t i o n as c a p i t a l a s s e t s .
Accordingly, the owner
of T r e a s u r y b i l l s ’ ( o t h e r t h a n l i f e i n s u r a n c e c o m p a n i e s ) i s s u e d
h e r e u n d e r n e e d i n c l u d e in his i n c o m e t a x r e t u r n o n l y t h e d i f ­
f e r e n c e b e t w e e n t h e p r i c e p a i d f o r s u c h b i l l s , w h e t h e r on
o n o r i g i n a l i s s u e or on s u b s e q u e n t p u r c h a s e , and the a m o u n t
a c t u a l l y r e c e i v e d e i t h e r u p o n s a l e or r e d e m p t i o n at m a t u r i t y
d u r i n g the t a x a b l e y e a r f o r w h i c h the r e t u r n is made, as o r d i ­
n a r y g a i n or loss.
T r e a s u r y D e p a r t m e n t C i r c u l a r No. 4-12>, as a m e n d e d ,
and t his not i c e , p r e s c r i b e the t e r m s of thè T r e a s u r y b i l l s a n d
g o v e r n t h e c o n d i t i o n s of t h e i r i ssue.
C o p i e s of t h e c i r c u l a r
m a y b e o b t a i n e d f r o m a n y F e d e r a l R e s e r v e B a n k or B r a n c h .

o 0

0

TREASURY DEPARTMENT

Washington

FOR IMMEDIATE RELEASE,
Thursday, May 7» 19^2.

Press Service
No. 31-^8

The Bureau of Customs announced today that prelimi­
nary reports from the principal ports of entry of Canadian
cattle weighing

J00

pounds or more each (other than cows im­

ported specially for dairy purposes),
period April 1 to May 5, 1942,

indicate that during the

inclusive, approximately

44,rOOO head of this class of Canadian cattle were entered
for consumption under the tariff rate quota for the second
quarter of the calendar year 1942, provided for in the trade
agreement with Canada.
The P r e s i d e n t s proclamation signed December 22,
provides that not more than 51,720 head of this class
of cattler the produce of Canada, entered, or withdrawn from
warehouse, for consumption in any calendar quarter year during
1942 shall be entitled to the reduced rate of duty of 1-1/2
cents per pound provided in the trade agreement.

19 ^ 1 ,

During the period May 8 to June JO, 1942, inclu­
sive, the collectors of customs have been instructed to
collect estimated duties at 3 cents per pound, the full rate
of duty under paragraph ~f01 of the Tariff Act of 13J0, on
this class of Canadian cattle entered or withdrawn for con­
sumption.
Excessive duties deposited on Imported cattle of
this class found to be within the quarterly quota will be
refunded.
-0 O 0 -

TREASURY DEPARTMENT
Comptroller of the Currency
Washington
Press Service

FOR RELEASE, MORNING NEWSPAPERS
Saturday, May 9» 19^2.

31-49

The Comptroller of the Currency today released the following preliminary figures, showing the assets and
liabilities of all active banks in the United States and possessions on Dec* 3/1* 19^1* ani comparisons of such
figures with the assets and liabilities of all active banks on June 30 , 19*+1* and Dec. 31, 19^0.
(In thousands of dollars)
Dec* 3 1 »
1941

Number of banks............... ........................

Ï O Ü

30 »
19^1

June

14 ,9 19

Dec.

3 1»

1940

14 ,9 56

ASSETS
Loans on real estate....,...............................
Other loans, including overdrafts.......................
Total loans.......................................
U. S. Government securities;
Direct obligations................. ..... ...........
Guaranteed obligations............ ............... .
Obligations of States and political subdivisions.........
Other bonds, notes, and debentures......................
Corporate stocks, including stock of Federal Reserve banks
Total investments............. ....................
Currency and coin...... ................................
Balances with other banks, including reserve balances.....
Bank premises owned, furniture and fixtures.............
Real estate owned other than bank premises..............
Investments and other assets indirectly representing bank
premises or other real estate.................... .
Customers’ liability on acceptances outstanding..........
Interest, commissions, rent, and other income earned or
accrued but not collected............................
Other assets........... .................... ...........
Total assets............ ........... ..............

9,7 IS,024
1 7 ,120,341
26,838,365

9 .633.305
1 5 ,9 10 ,13 3
2 5 ,543,438

21,235*684
4,318,125

18,892,790
4,684,271
4,206,526
4,242,115
704,030
32,729,732
1,408,306
25,471,008
1,222,200
83^,353

4 ,19 6 ,8 6 1
4 ,16 5 ,15 3
6 73,523
34,589,346

1 ,54 5,0 18
25,9^2.377
1,209,480

706 ,4s6

9 ,436,945
14,530,531
23,967.476

1 6 ,788,834
4,239.964
4,339.983
4,4l6,238
743,555
30,528,574
1,407,36^
26,846,418
1,223,787

930,106

133.125
84,468

144,408

144,002

90,360

104,269

162,893

15 7 .9 6 15
226 ,953 )

419,906

242,136
91.453.694

87,828,719

85,571,902

...

C o m p a riso n o f n s s e t s and l i a b i l i t i e s o f a l l b a n k s ~ C o n tin u e d .

(X u th o u s a n d s o f d o l l a r s )
Dec.

31»
13kl

Page 2

June 3 0 *

Dec. 3 1 ,

19*+1

19*+0

3 5 , 5 7 1 *5 2 8
2 6 , 2 *+7 , 18 *+

3 3 , 636 , 1*43

LIABILITIES
Deposits of indiduals, partnerships, and corporations:
Demand.............. ........ .......................
Time.............. ............ ....................... *
U. S. Government and postal savings deposits................
Deposits of States and political subdivisions.............
Deposits of banks....................... ........ ...........
Other deposits (certified and cashiers* checks, etc.)........
Total deposits................................. ......
Bills payable, rediscounts, and other liabilities for
borrowed money............... ......... ..................
Acceptances executed by or for account of reporting banks....
Interest, discount, rent, and other income collected but
not earned............ ....... .....................
Interest, taxes, and other expenses accrued and unpaid.......
Other liabilities..........................................
Total liabilities....... .............................

3 7 ,8 0 5 ,^ 3 1
26 , 063 , 37 *+
1 *9 4 7 *950
4 , 30 3,^ 16
1 1 , 0 1 5 ,1 1 0
1 ,0 9 7 , 9 7 9
82 , 233,260
2 2 ,5 9 3

10 0 ,5 2 1
9 7 *8 1 1
12*+, 227
3 8 0 ,1 4 5
8 2 ,9 5 8 ,5 5 7

800,326
*+,l*+0,029
1 0 , 982 , *+31
8 0 7 ,8 3 1

78 , 5 ^ 9,329

2 6 ,0 7 2 ,0 1 5
805 , *+*+9
3 *9 3 9 * 3 1 2
1 0 , 9 7 3 «203
,9 8 1 ,7 6 3
7 6 , 1+07,885

25,060

. 2 2 ,5 5 9
10 6 , 59 *+

1 2 0 ,7 7 3

1 0 1 ,1 8 1 )

1 1 *+,899) — -----*+09 , 638 )

608,626

7 9 ,3 0 4 , 2 0 0

77,162,3*+*+

1 2 3 , 13 *+
34 7,6 13

CAPITAL ACCOUNTS
Capital notes and debentures.................. ............ .
Preferred stock............... ............... ....... .....
Common stock.............. ................................
Surplus................................ ............ ......
Undivided profits..................................... .
Reserves and retirement account for preferred stock and
capital notes and debentures............... .............
Total capital accounts. ................. ..... .........
Total liabilities and capital accounts.................

1 0 8 ,1 4 6

1 1 *+, 650

3 1 2 ,1 3 3
2 , 6 1 *1,082
3 , 70 *+, 368
1 , 2*+8 ,*+6 l

3 3 1 *8 7 3
2 ,6 0 8 ,4 8 2
3 , 6 16 ,76 3
l, 2 * + 7 , 0 4 l

50 7 , 9^7
8,1+95,137

6 0 5,710

590,960

8 ,5 2 4 ,5 1 9

91. *+57, 69*+

8 7 ,8 2 8 ,7 1 9

8 ,4 0 9 , 5 5 8
8 5 *5 7 1 ,9 0 2

2 ,5 9 9 ,7 7 2
3 * 5 o i, i5 5
1 , 18 6 , 92*+

3

Pago
A s s e t s and l i a b i l i t i e s

o f a l l a c t i v e "banks i n the U n it e d S t a t e s and p o s s e s s i o n s , b y c l a s s e s , Dec.

31, 19 4 1 .

( In . th o u sa n d s o f d o l l a r s )
*
: T o t a l a l l : N a t io n a l
:
banks
:
banks
■*... . .. -------------

Number of banks............................
ASSETS
Loans and discounts:
Commercial and industrial loans............
Agricultural loans...... ................ .
Open-market paper.... ................... .
Loans to brokers and dealers in securities.
Other loans for the purpose of purchasing
or carrying stocks, bonds, and other
securities........... ............ .....
Real estate loans:
On farm land...........................
On residential properties..... .........
On other properties....................
Loans to banks...................... ....
All other loans,.........................
Overdraft s*.................. ...........
Total loans and discounts...........
Investments:
U^ S. Government direct obligations.......
Obligations guaranteed by U. S. Government:
Reconstruction Finance Corporation.......
Home Owners * Loan Corporation............
Federal Farm Mortgage Corporation.......
Other Government corporations, and agencies.
Total U. S. Government obligations,
direct and guaranteed............ .
Obligations of States and political sub­
divisions. ............ . _

/
J1Z./

1*1,885

*
: All b a n k s
: o th e r th a n
n a t io n a l

5,123

:
B a n k s o t h e r th a n n a t i o n a l
: Sta te
\
l
M u tu a l 1 P r i v a t e
: (com m ercial')
S a v in g s ;
:
l!

9,762

9,162

548

52

8,720,952 5,184,624 3.596,328 3,572,06s
1,513.805
818,806
694,999
694,294
699.696
304,297
291,699
395,399
636,808
382,914
253.95*+
377,305

357
243
6,651
30

23.903
462
5»9*+7
5.579

679.566
576,*123
8,049,876
1,091,725
l u , 286
*+>755,084
13,084
26,838,365
21,235.684
1.476,530
1,619/163
579.014
643,418
25.553.809
4,196,861

In c l u d e s t r u s t com panies and s t o c k s a v in g s b a n k s.

332,434
336,215
490
4,427
3*+3.35l
222,813
353.610
342,719 1 0 ,4 5 8
*+33
1.551,543 6,498,333 1.738.746 ‘*.7 5 7 .2 7 3
l
,
7
l*+
481,052
610,673
566,76s **3.245
60
14,651
26,635
26,594
4l
2,484,922 2,270,162 2,176,727 8 4 ,568
8,867
7»813"
5,271
4,839
432
11,751,792 15,086,573 10,130,193 4,904,556 51,824
9,706,743 11,448,941 7,796,096 3,613,619 39.226
612,380
864,150
832.799 17,376
7,975
1,036,424
532,548 47,068
522,739
3.123
294,890
284,124
12,429
271,228
467
342,615
227,499
300,803
9,239
4,065
12,073,052 13,480,757 9,726,170 3.699.731 54,856
2,024,715 2,172,146 1,728,825 438,649 4,672

Page b

Assets and liabilities of all active banks in the United States and possessions* by classes,
Dec. 31, 19 I+I - C o n tin u e d .
(In thousands
j
i Total all
banks
♦

of dollars)
*
Î
; National : All banks
banks :other than
:
national

Investments - Continued;
Other bonds, notes, and debentures:
U.S. Government corporations and agen­
cies, not guaranteed by United States;
195,441
federal land banks. »... *«« *..........
205,204
Federal intermediate credit banks......
Other Government corporations and
202,029
agencies,
’Other domestic corporations;
1,317*025
Railroads.... .¿.............. .... . •
923,294
Public utilities. .................. *-.•
648,531
Industrials............ ¿....... ¿ ¿ ... *
466,662
All other...................i.¿...... •
206,967
Foreign— public and private.
¿
.
Total other bonds, notes, and
4,16 5 ,1 5 3
debentures..........................
Stocks of Federal Reserve banks and
666,195
other domestic corporations..............
?, 328
Stocks of foreign corporations.............
34.589,346
Total investments........... .
1 ,51+5 ,0 1 s
Currency and coin........... ......... .
Balances with other banks, including reserve
balances and cash items in process of
collection............. ........ .......
25,942,377
1,209,480
Bank premises owned, furniture and fixtures..
706,486
Real estate owned other than bank premises....
Investments and other assets indirectly repre­
senting bank premises or other real estate.
133* 12 5
Customers1 liability on acceptances outstanding
84,468
Interest, commissions, rent and other income
16 2,8 93
earned or accrued but not collected........

Banks other than national
State
1 Mutual :
(commercial): savings : Private
ft

110,840
1 1 1 ,0 6 6

84,601
94,138

76,405
89.778

3 .0 13
3,645

5.183
715

109,660

92.369

9 1 .7 1 8

137

514

459.507
280,824
353,244
73.457
89,408

857,518
642,470
295,287
393,205
117,559

401,870
276,940
284,815
99,281

455,390
364,881
9,719
290,419
36,233

258
649
753
3,505
434

1 ,588,006

2,577.147

1 ,401,699 1 ,16 3,4 37

1 2 ,0 1 1

2 0 1,2 9 3
442
15,887,508
78 6 ,50 1

464,902

287,998
1 7 1 .5 1 8
6,757
13,151,449 5,473,335
88,026
668*437

5.386
129
77.054
2,054

707 ,l40
11 7 ,8 1 1
424,146

50,254
495
921

6,886
18,701,838
758*517

80,892

14,215,429
590*579
81*697

11,726,948
624,789

10,969*554
500,595
I99.722

54,036
40,139

79,089
44,329

6 2 ,0 13
35.425

17*042

34
8,904

64,346

98.547

56,367

42,154

26

618*901

Page 5

Assets end. liabilities of* all active banks in the United States and possessions, by classes,
Dec. 31» 19^1 ~ C o n tin u e d
__________________( I n th o u s a n d s o f d o l l a r s )
: T o tal a l l
:
banks

Other assets (including securities borrowed,
insurance and other expenses prepaid, and
cash items not in process of collection)...
Total assets........ *............... . ,,
LIABILITIES
Demand deposits:
Deposits of individuals, partnerships, and
corporations................... ........
Deposits of United States Government.......
Deposits of States and political sub­
divisions, .............................
Deposits of banks in the United States.,...
Deposits of banks in foreign countries.....
Total demand deposits.............
Time deposits:
Deposits of individuals, partnerships, and
corporations:
Savings deposits............... .
Certificates of deposit............
Deposits accumulated for payment of
personal loans...... ..................
Christmas savings and similar accounts..
Open accounts........... .............
Postal savings deposits.,.... ............ .
Deposits of States and political sub­
divisions. ................ ..............
Deposits of banks in the United States......
Deposits of banks in foreign countries.......
Total time deposits.....................

: H a t io n a l
:
b anks
:

:
B a n k s o t h e r th a n n a t i o n a l
: A l l banks
, M u tu a l
: o t h e r th a n . S t a t e
* P r iv a t e
¡(com m ercial) : s a v in g s
: n a t io n a l

2 4 2 ,1 3 6
9 1 .4 5 3 .W

6 6 ,2 0 7 - T - .1 7 5 .9 2 9
4 3 ,5 3 8 ,2 3 4 4 7 ,9 1 5 ,4 6 0

1 4 1 ,5 3 1
3 3 ,8 7 6
3 5 .9 1 5 ,2 8 6 11,808,086

3 7 , 8 0 5,4 31
1 , 887,345

2 0 ,4 8 0 ,9 5 2
1 , 105,403

17,32**.*+79
7 8 1 ,9 4 2

1 7 . 221,6 6 8

3 , 72 0 ,16 8

2 ,2 4 0 , 0 8 3
8 , 359,909

1 ,5 4 0 ,0 8 5
3 ,8 3 7 . 2 9 5
4 2 3 ,8 1 7
2 3 , 707 , 6 1 s

1 .5 3 7 , 9 7 4
3 , 6 lb , 1 8 6
3 9 8 ,9 8 1
2 3 , 555.630

9 .9 9 7 . 2 0 4
7 5 4 ,9 3 0
5 4 ,2 2 5 ,0 7 8

2 4 ,0 ^ 7 ,8 3 5
1 ,1 3 2 , 9 1 1

3 3 1 ,1 1 3
3 0 ,5 1 7 .4 6 0

7 , 2 1 1 , 6 8 9 ' 1 6 ,8 3 6 ,1 4 6
468,195
6 6 4 ,7 1 6

1 5 0 ,5 8 4

6 4 ,4 4 2

63,497

20,340

6 6 8 ,5 4 7

2 0 0 ,2 4 6

60,605

3 7 ,3 3 1

5 2 3 ,2 4 8
2 5 5 ,8 0 4

3 5 0 ,8 5 7
9 3 *3 5 0
5 ,3 1 3

7 ,1 7 2
2 6 , 910,203

8 , 4 5 1,7 6 3

8 6 ,1 4 2
**3 .1 5 7
4 6 8 ,3 0 1
2 3 ,2 7 4
1 7 2 ,3 9 1
1 6 2 ,4 5 4
1 ,8 5 9
1 8 ,4 5 8 ,4 4 0

7 8 0 ,8 2 1

3,760
1.119
514

4 6 5 ,1 2 5
2 3 .2 7 4

9 9 ,0 5 1
2
1 *5 9 7

94

2 1 ,0 1 5
24,836

5 ,4 8 7

1 4 6 ,5 0 1

6 , 326,362 1 0 , 5 0 2 ,5 17
660,947
280
85,262
20,765

522
1 9 2 ,0 8 8

876
2 2 ,3 6 4
409

1 7 1 ,4 4 9
732
1 6 2 ,1 8 8
165
1 ,8 5 9
7 ,9 1 7 ,2 3 1 1 0 , 527,343

7,26 7
3 .4 8 9
4
28
2 ,7 6 7

210
101
1 3 ,8 6 6

Page 6
Assets and liabilities of all active banks in the United States and possessions, by classes,
Dec, 31, 19^1 ~ Continued
B a n k s o t h e r th a n n a t i o n a l
T otal a l l
banks
O th e r d e p o s it s ( c e r t i f i e d and c a s h i e r s ’
c h e c k s ( i n c l u d i n g d iv id e n d c h e c k s, l e t t e r s
o f c r e d i t and t r a v e l e r s ’ c h e c k s s o l d f o r
c a s h , and am ounts due to r e s e r v e a g e n t s
( t r a n s i t a c c o u n t ) ) . * . . ............ .....................
T o t a l d e p o s i t s . . . . . . ............ . . . ...............
B i l l s p a y a b le , r e d i s c o u n t s , and o t h e r l i a ­
b i l i t i e s f o r b o rrow e d money....... . .......... .
A c c e p ta n c e s e x e c u te d b y o r f o r a c c o u n t o f r e p o r t i n g b a n k s and o u t s t a n d in g .......................
I n t e r e s t , d is c o u n t , r e n t , and o t h e r incom e
c o l l e c t e d b u t n o t e a rn e d ................................
I n t e r e s t , t a x e s , and o t h e r e x p e n se s a c c ru e d
and u n p a id ....... ................................................
O th e r l i a b i l i t i e s ( i n c l u d i n g s e c u r i t i e s b o r ­
rowed and d iv id e n d s d e c la r e d b u t n o t
p a y a b le ) « « « . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
T o t a l l i a b i l i t i e s . . . . . . . . .........................
C A PITA L ACCOUNTS
C a p ita l sto c k :
C a p i t a l n o t e s and d e b e n t u r e s . . . . . . . . . .........
P r e f e r r e d s t o c k . ....................... .....................
Common s t o c k . ...................................................
S u r p l u s . .................. ............................................
U n d iv id e d p r o f i t s ....... ......... .......................... .
R e s e r v e s and r e t ir e m e n t a c c o u n t f o r p r e f e r r e d
s t o c k and c a p i t a l n o t e s and d e b e n t u r e s . . . . .
T o t a l c a p i t a l a c c o u n t s ..............................
T o t a l l i a b i l i t i e s and c a p i t a l a c c o u n t s . .

: N a t io n a l
banks
:

: A l l banks
: o th e r th a n
n a ti onal

Sta te
: M u tu a l : P r i v a t e
(com m ercial) : s a v in g s :

5 1 0 *6 4 8

1 ,0 9 7 ,9 7 9
8 2 ,2 3 3 , 2 6 0

5 8 5 .5 4 9
3 9 .5 5 4 , 7 7 2

5 1 2 ,4 3 0
4 2 ,6 7 8 ,4 8 8

2 2 ,5 9 3

3 ,7 7 8

1 8 ,8 1 5

1 8 ,5 4 1

125

10 0 ,5 2 1

4 7 ,5 5 8

52,963

4 3 ,1 1 2

—

9 7 ,8 1 1

5 2 .6 13

45,19 8

4 4 ,7 8 7

358

53

1 2 4 ,2 2 7

6 2 ,5 7 0

6 1,6 5 7

5 1 ,9 1 5

9 .6 7 7

65

3 S O ,145
S 2 , 9 5 S , 557

1 6 7 ,8 4 4
3 9 ,8 8 9 ,1 3 5

2 1 2 ,3 0 1
4 3,0 6 9 ,4 2 2

1 9 1 ,3 3 2

2 0 *6 6 6

303

3 2 , 3 33.19 6 1 0 ,5 6 3 8 8 7

1 7 2 *3 3 9

lO S , l4 6

1 0 8 ,1 4 6

3 1 2 ,1 3 3
2 ,6 l4 ,0 S 2
3 . 704,368

143,60 3
1 , 266,818

i ,24s

,46i

5 0 7 ,9 4 7
8 ,4 9 5 , 1 3 7

91.453.694

16 8 ,530
1 .3 U 7 , 2 6 4
1 , 388,672
4 9 9 ,0 8 1
2 4 5 ,5 5 2
3 ,6 4 9 ,0 9 9
4 3 .5 3 8 .2 3 4

2,315,696
749,380
262,395
4 ,8 4 6 , 0 3 8

47,915,460

231

3 1 . 983.509 10,5331061

1 0 1 ,3 4 6
1 4 3 ,6 0 3

6 ,8 0 0
—
—

1 .5 5 1
1 6 1 ,9 1 8
149
9 ,2 5 1

—

870,209
3 13 ,0 3 5

6,298
1 1 ,9 5 6
374

5 4 ,15 5
2 0 7 ,1 1 9
3 .5 8 2 ,0 9 0 1 ,2 4 4 ,1 9 9
3 5 , 9 1 5 ,2 8 6 1 1,8 0 8 ,0 8 6

19 ,74 9
192,088

1 , 260,520
1 . 4 3 3 .5 3 1
4 3 5 .9 7 1

1,121

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
F r id a y , May S , 19^-2,

P ress S e r v ic e
No. 3^-50

S e c r e ta r y o f the Treasury Morgenthau today announced the
s u b s c r ip tio n fig u r e s and the b a s is o f allotm ent fo r the cash
o f f e r i n g o f 2 p ercent Treasury Bonds o f 19^9-5^*
R eports r e c e iv e d from the Fed eral Reserve Banks show th at
s u b s c r ip tio n s aggregate $3»287»000,000.

S u b s cr ip tio n s in amounts

up to and in c lu d in g $10, 000, t o t a l i n g about $69»000, 000, were
a l l o t t e d in f u l l .

S u b s c r ip tio n s in amounts over $10,000 were

a l l o t t e d J S p e rc e n t, on a s t r a ig h t percen tage b a s is , but not
le s s than $10,000 on any one s u b s c r ip tio n , w ith adjustm ents,
where n ecessary* to the $100 denom ination.
D e t a ils as t o su b s c r ip tio n s and a llo tm e n ts w i l l be announced
when f i n a l re p o rts are r e c e iv e d from the Federal Reserve Banks.

-oOo

TREASURY DEPARTMENT
Comptroller of the Currency
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, May 12, 19^2.___________ _

Press Service
No,. J l - 5 1

During the month of April, 19^2,

the liquidation of

eleven insolvent national banks was completed and the affairs
of such receiverships finally closed.
Total disbursements,

including offsets allowed, to

depositors and other creditors of these eleven receiverships,
amounted to $30,633,557, while dividends paid to unsecured
creditors amounted to an average of
claims.

55 *3&

percent of their

Total costs of liquidation of these receiverships

averaged 9.M4 percent of total collections from all sources
including offsets allowed.
Dividend distributions to all creditors of all active
receiverships during the month of April, amounted to

$1,7°5>279*

Data as to results of liquidation of the receiverships finally
closed during the month are as follows:

2

INSOLVENT NATIONAL BANKS LIQ U ID A T E D AND E IN A L L Y CLOSED
DÜRING- THE MONTH OE A P R IL , 1 9 * 1 2 ________

C ash , A s s e t s ,
U n c o lle c t e d S t o c k
A s s e s s m e n t s , e tc .
R e tu rn e d to
S h a r e h o ld e r s

P e rc e n t
D iv id e n d s
D e c la r e d
to A l l
C la im a n t s

C a p it a l
Sto c k at
D a te o f
E a ilu r e

2 , 26 l , b l 3

36 . 68$

$ 100,000

- 0 -

100,000

- 0 -

Name and L o c a t io n o f B a n k

D a te o f
E a ilu re

T otal
D is b u r s e m e n t s
to C r e d i t o r s
In c lu d in g
O f f s e t s A llo w e d

P a r k S a v in g s B a n k
W a sh in g to n , D. C.

7 -1 3 - 3 3

$

S e v e n th S t . S a v in g s B a n k
W a sh in g to n , D. C.

1 2 -2 1 -3 3

1 .5 8 ^ .3 3 7

B o w m a n v ille N a t '1 B a n k o f
C h ic a g o , I l l i n o i s

6- 2 1 -3 2

1 ,6 & 7 ,1 9 3

1+7-25^

300,000

- 0 -

T h ir d N a t ’ l B a n k
M ount V e rn o n , I l l i n o i s

1 -3 -3 3

2 , 2 11,6 5 8

8 5 .5 6 $

150,000

- 0 -

E i r s t N a t i o n a l B an k
W ilm e tte , I l l i n o i s

6 - 2 5 -3 2

9 0 0 ,5 ^ 7

7 7 .0 0 $

150,000

- 0 -

N a t i o n a l B a n k o f A m e ric a a t
G-ary, I n d ia n a

2 - 10 -3 2

1 . 035,065

9 8 .5 $

150,000

- 0 -

T ic o n ic N a t io n a l Bank
W a t e r v i l l e , M a in e
2J

6- 28- 3 U

39 0 .16 7

I 6 . 736$

200,000

- 0 -

1/

,

^

lOb.gfc

if

100 p e rc e n t and p a r t i a l i n t e r e s t p a id to c r e d i t o r s .

2j

R e c e iv e r a p p o in t e d to le v y and c o l l e c t s t o c k a sse ssm e n t c o v e r in g d e f ic ie n c y i n v a lu e
o f a s s e t s s o ld , o r to com plete u n f i n i s h e d l i q u i d a t i o n .

jjjfftM
INSOLVENT NATIONAL BANKS LIQ U ID A T E D AND F IN A L L Y CLOSED
DURING THE MONTH OF A P R IL , 19^2______________

lam e and L o c a t io n o f B a n k

D a te o f
F a ilu r e

T o tal
D is b u r s e m e n t s
to C r e d i t o r s
In c lu d in g
O f f s e t s A llo w e d

F e d e ra l N a tio n a l Bank
B osto n , M a ssa c h u se tts

1 2-1 5 -3 1

$ 1 5 . 9 5 9 .6 12

F i r s t N a t io n a l Bank
B irm in g h a m , M ic h ig a n

10 - 1^ -3 3

2 , 203,326

N a t io n a l Bank o f
I o n i a , M ic h ig a n

6- 26 - 3 I+

F i r s t N a t i o n a l B an k
M asontow n, P e n n s y lv a n ia

U -1 S- 3 1

P e rc e n t
D iv id e n d s
D e c la r e d
to A l l
C la im a n t s

C a p ita l
Sto ck at
D a te o f
F a ilu r e

C a sh , A s s e t s ,
U n c o lle c t e d S t o c k
A s s e s s m e n t s , e tc.
R e t u rn e d to
S h a r e h o ld e r s

$ 2 ,0 0 5 , 5 2 5

- 0 -

7 1 .^ 2 5 #

2 0 0 ,0 0 0

- 0 -

1 , 3 16 ,2 5 3

96 . 3 S^

150,000

- 0 -

1 , 13 3 .7 2 6

3 5 .7 ^

1 0 0 ,0 0 0

- 0 -

-o O o -

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING- NEWSPAPERS,
Tuesday, May 12, 19^2.

Press Service
No.

5/117^2
The Secretary of the Treasury announced last evening that the
tenders for $250,000,000, or thereabouts,

of 91-day Treasury bills,

to be dated May 13 and to mature August 12, 19^2, which were
offered on May £, were opened at the Federal Reserve Banks on
May 11.
The details of this issue are as follows:
Total applied for - $5^6»35^»000
Total accepted
- 250,692,000
Ran^e of accepted bids:

°
High
Low
Average
Price

(Excepting two tenders totaling

$15, 000)

99.93g

Equivalent rate approximately 0.2^5 percent

99.905

»

«

“

0.376

*

99.907

n

“

"

0.36s

11

(15 percent of the amount bid for at the low price was accepted)

- 0O 0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 12, 19^2-

Press S e r v ic e
No.

The Bureau o f Customs announced today p relim in ary fig u r e s
showing the q u a n titie s o f c o ffe e au th o rize d fo r entry fo r consump*
tio n under the quotas fo r the tw elve months commencing October 1,
19^1, p ro vid ed fo r in th e In ter-A m erican C o ffe e Agreement, pro­
claim ed by the P re sid e n t on A p r il 15, 19^1» a9 fo llo w s :
s
Country of Production
: Quota Quantity
___ _________________________ :
(Pounds)
Signatory Countries?
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela
Non-signatory Countries;
British Snpire, except
Aden and Canada
Kingdom of the Netherlands
and its possessions
Aden, Yemen, and Saudi
Arabia
Other Countries not sig­
natories of the InterAmerican Coffee Agreement

1/
2/

1,401,426,521
475,086,450
30,144,642
12,109,603
18,098,664
22,634,408
96,657,909
80,715,477
41,436,647
3,287,588
74,966,100
32,078,385
3,767,088
38,094,430

:
Authorized for Entry
:
for Consumption
; As of (Date)
t
(Pounds)

May 2, 1942
it

May 9, 1942 2/
May 2, 1942
(Import quota filled)
17,913,253
May 2 , 1942
n
64,917,808
n
63,257,062
38,238,077
May 9, 1942 2/
1,839,674
May 2 , 1942
n
26,838,869
H
17,258,831
3,111,658
May 9, 1942 2 /
31,844,325
"
3/

17,674,322

(Import quota filled)

19,669,574

May 2, 1942

3,872,909

12,276,800

Quotas revised effective February 26, 1942.
Per telegraphic reports.
oOo

707,842,934
279,900,095
28,968,172
2,916,695

n

(Import quota filled)

13,086,296
875,809

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 12, 19^2.

Press S e r v ic e
No. 31-5^

S e cr e ta r y o f the Treasury Morgenthau today announced th a t
the s u b s c r ip tio n books fo r the cu rre n t o ffe r in g o f 2-1/2 percent
Treasury Bonds o f 1962^67 w i l l c lo s e a t the c lo s e o f business
Thursday, May 14-*
S u b s c r ip tio n s addressed to a F ed eral Reserve Bank or Branch,
or to the Treasury Department, and p la c e d in the m ail before
12 o ’ c lo c k m idnight Thursday, May 1^, w i l l be considered as having
been entered b e fo r e the c lo s e o f the s u b s c r ip tio n booksk
Announcement o f the amount o f su b s c r ip tio n s and allo tm e n ts
and t h e ir d iv is io n among the se v e r a l Federal Reserve D i s t r i c t s
w i l l be made when f i n a l re p o rts are r e c e iv e d from the Federal
Reserve Banks,

0O0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Wednesday, May 13> 19^2.

P ress S e r v ic e
No. 31-55

The Bureau of Customs announced today that preliminary reports from the
collectors of customs show imports of cotton and cotton waste chargeable to the
import quotas established by the President’s proclamations of September 5, 1939,
and December 19, 1940, as follows, during the period September 20 , 1941, to
May 2, 1942, inclusive*
COTTON HAVING A STAPLE OP LESS THAN 1-11/16 INCHES (OTHER THAN HARSH OR ROUGH
COTTON OP LESS THAN 3/4 INCH IN STAPLE LENGTH AND CHIEFLY USED IN THE MANUFAC­
TURE OP BLANKETS AND BLANKETING, AND OTHER THAN LINTERS). Annual quotas
commencing September 20, by Countries of Origin*
(In Pounds)
Staple length lees
than 1 - 1 /8"
t Imports Septi
t 20, 1941, to
* Established •
|
* May 2,1942..
Quota

Country of
Origin
Egypt and the Anglo**
Egyptian S u d a n .... . •
Peru *..... ............
British I n d i a .........
China •.... ............
Mexico .................
Brazil ................
Union of Soviet
Socialist Republics ..
Argentina ............ ..
Haiti .................
Ecuador........ .......
Honduras ...............
Paraguay ...............
Colombia..............
Iraq ...................
British East Africa ....
Netherlands East
Indies ...............
Barbados .......
Other British West
Indies U ...........
Nigeria..... .
Other British West
Africa 2 / ............
Algeria and Tunisia ....
Other French Africa 2/ •

783,816
247,952
2,003,483
1,370,791
8,883,259
618,723

«
247,952
69,452
8,883,259
618,723

43,451,566
2,056,299
64,942
2,626
3,808

475,124
5,203
237
9,333
752
871
124
195
2,240

203
9,333
A
-

435
506
29,909

—
—
170

71,388
-

-

12,554

*»
—

21,321
5,377

30

30,139
-

—

16,004

«

2,002

2

689

9.828.954
.JFptfcl -------- - 14-516,882..
---------------3/ Other than Gold Coast and Nigeria*
21 Other than Algeria, Tunisia, and Madagascar.
.

------------------

—

—

—

*

---------------

*Staple length l-l/8n or
imore but lesB than 1-11/16M
•
•
* Imports Sept,
I Established t 20, 1941, to
t Mav 2. 1942
*
Quota

— »

— *

1,634

45.686.420

29,786,314
2,056,299
e»

8
—

2
6

—

**
31.842.799

-

2

-

COTTON CARD STRIPS 2/, COMBER WASTE« LAP WASTE, SLIVER WASTE, AND ROVING WASTE,
WHETHER OR NOT MANUFACTURED OR OTHERWISE ADVANCED IN VALUE. Annual quotas
commencing September 20, by Countries of Origin:
Total quota provided, however, that not more than 33-1/3 percent
the
quotas shall be filled by cotton wastes other than card strips 2/ and comber
wastes made from cottons of 1-3/16 inches or more in staple length in the
case of the following countries: United Kingdom, France, Netherlands,
Switzerland, Belgium, Germany and Italy:

Country of
Origin
United Kingdom «..
Canada......... .
Trance ..........
British India ....
Netherlands .....
Switzerland .....
Belgium ..........
Japan ...........
C h i n a ...........
Egypt ...........
C u b a ............
Germany .........
Italy...........

Total

: Established
: TOTAL QUOTA
#

239,690
227,420
69,627
68,240
38,559
341,535
17,322
8,135
6,544
76,329
21,263

5.482.509

(In Pounds)
TOTAL IMPORTS
Sept. 20, 1941
to Mav 2. 1942
434
231,615
69,627
—
—
—
—
mm

301.676

i!

Established
!i 33-l/3$ of
i; Total Quota
1,441,152
—
75,807
—
22,747
14,796
12,853
**
—
—

Imports Sept.
20, 1941, to
Mav 2.1942 I/
434
—
—
—
**
—
mm
mm

**

25,443
7,088

mm

1.599.886

434

1/ Included in total imports, column 2 «
2/ The President's proclamation, signed March 31, 1942, exempts from import quota
restrictions card strips made from cottons having a staple 1-3/16 inches or
more in length.

-oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE.
Wednesday, May 13, 19^2«

Press S e r v ic e
No.

The Bureau of Customs announced today preliminary figures for imports of
commodities within quota limitations provided for under trade agreements, from
the beginning of the quota periods to May 2, 1942, inclusive, as follows:

Commodity

:
Established Quota
* Unit of : Imports as of
:Period & Country : Quantity : Quantity : Mav 2 . 1942

Cattle less than 200
pounds each

Calendar year

Cattle, 700 pounds or
more each (other than
daily cows)

Quarter year from
April 1, 1942
Canada
Other countries

100,000

Head

28,960
«

51,720

if

40,276

8,280

it

(Tariff rate
quota filled)

Whole milk, fresh or sour Calendar year

3 ,000,000

Gallon

1,664

Calendar year

1,500,000

Gallon

356

Fish, fresh or frozen
filleted, etc., cod,
haddock, hake, pollock,
cusk and rosefish
Calendar year

15,000,000

Pound

3,309,651

90,000,000

Pound

32,542,754

60,000,000

Pound

1,199,813

Pound
(Unstemmed
equivalent)7,836,172

Cream, fresh or sour

White or Irish potatoes
Certified seed
Other

12 months from
Sept. 15, 1941
12 months from
Sept. 15, 1941

Cuban filler tobacco,
unstemmed or stemmed
(other than cigarette
leaf tobacco), and
scrap tobacco

Calendar year

2 2 ,000,000

Red Cedar Shingles

Calendar year

2,617,111

Square

17,500
6,395

Number

Silver or black foxes,
furs, and articles:
Foxes valued under
$250 ea. and whole
furs and skins

Tails

Month of
April 1942
Canada
Other than Canada

12 months from
December 1, 1941

5,000

it

Piece

1,181,347

5,083 1/
None

(Import quota
filled)

-

2

~

:
Established Quota
*
• Unit of
iPeriod & Country i Quantity i Quantity

Commodity

i Imports

as of

1 May 2, 1942

Silver or black foxes,
fu^s, and articles!
Paws, heads, or other
separated parts

12 months from
December 1, 1941

Piece plates
Articles, other than
Piece plates
Crude petroleum, topped
crude petroleum, and
fuel oil

.500

Pound

tt

550

Pound

ii

800

Unit

Calendar year
Venezuela

2 ,082,574,771
630,097,196

Netherlands

94,662,490

Colombia

150,868,343

Other Countries
Molasses and sugar
sirups containing
soluble nonsugar
solids equal to
more than 6$ of
total soluble solids

I/

Calendar year

Covers month of April only.

-oOo-

1,500,000

Gallon
ii

n
it

Gallon

(Import quota
filled)
None

22
272,280,641
211,615,355
81,767,338
138,388,942

665,594

TREASURY DEPARTMENT
Washington
Press S e r v ic e
No. 31-57

FOR IMMEDIATE RELEASE
Wednesday, May 13» 19^-2«

The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour entered, or withdrawn from warehouse, for
consumption under the import quotas established in the Presidents Proclamation
of May 28, 1941, as modified by the Presidents proclamation of April 13, 1942,
for the twelve months commencing May 29, 1941, as follows J

Country of
Origin

Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
Hew Zealand
Chile
Netherlands
Argent ina
Italy
Cuba
France
Greece
Mexico
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
Guatemala
Brazil
Union of Soviet
Socialist Republic«
Belgium

: Wheat flour, semolina,
: crushed or cracked wheat,
; and similar wheat oroducts
Wheat
•
•
Import s
:
Imports
ïMay
29, 1941
to*
Established
:
May'29,
1941,
Established
ito
Mav
2.1943
i
Quota
i
Mav
2.
1942
Quota
(Pounds)
(Pounds)
(Bushals)
(Bushels)
795,000
-

-

100

795,000
—

w

-

100
100

-

-

-

-

100
2,000

-

100

-

1,000
100
-

-

. -

-

-

-

—

-

—

-

-

—

—

-

-

1,000
100
100
100
100
8*60,000 "

•

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000

1,000
1,000
1,000
1,000
1,000

-

—

—

—

3,806,840
5,836
—
6,116

**
—
—

**
—

—
—
97
—
—

—
—
—
Mr

mm

*"*

-

-

-

—

—

**

795,000

4,000,000

3,818,889

- 0O0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE
Wednesday, May 13, 19^2«

Press S e r v ic e
No* 31-5®

The Bureau of Customs announced today preliminary figures for imports of
commodities within the quota limitations provided for under the Philippine
Independence Act, as amended by the Act of August 7, 1939, from January 1 to
May 2, 1942, inclusive, as followsi
Products of
Philippine Islands

i
i

Established Quota
quantity
Period
:

*
•
•

Unit of :Imports as <
Quantity :Mav 2. 1942

Coconut oil

Calendar year

448,000,000

Pound

31,141,490

Refined sugars

Calendar year

112,000,000)

Pound

2,346,712

Sugars other than
refined

Calendar year

)
)
1,792,000,000)

Pound

43,232,544

Cordage

Calendar year

6,000,000

Pound

323,826

Buttons of Pearl or
shell

Calendar year

850,000

Cross

72,057

Cigars

Calendar year

200,000,000

Scrap tobacco and
stemmed and unstemmed
filler tobacco

Calendar year

4,500,000

Number

521,366

Pound

210,617

1/ The duty-free quota on Philippine Sugars applies to 850,000 long tons, of which
not more than 50,000 long tens may he refined sugars.

oOo*

\

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING* NEWSPAPERS,
Thursday, May 1^, 19^2*

P ress S e r v ic e
No. 31-59

3/137*2

S e c r e ta r y Morgenthau today announced plans fo r the o rg a n iza ­
tio n throughout the country o f V ic to r y Fund Committees to be set
up In each Fed eral Reserve d i s t r i c t and to be made up o f bankers
and members o f the s e c u r it ie s in d u stry to a id the T re a su ry ^
fin a n c in g program.

T h is o rg a n iz a tio n w i l l work c h ie fly w ith the

la r g e r in v e sto rs and w i l l in no way d u p lic a te the work o f the War
Savin gs S t a f f .
Because the n a t io n ^ war needs have in creased tremendously
the m on ey-raisin g r e s p o n s i b ili t i e s o f the T reasury, the Se cre ta ry
o f the Treasury has accepted the o f f e r o f the banking and s e c u r itie s
in d u stry to c o -o r d in a te t h e ir e f f o r t s in h e lp in g to d is tr ib u te
Government s e c u r i t i e s .
The o r g a n iz a tio n announced tod ay, in which committees headed
by p r e s id e n ts o f the Fed eral Reserve Banks w i l l be set up in each
Federal Reserve d i s t r i c t , developed through a s s is ta n c e given the
Treasury by the banking and s e c u r it ie s in d u s t r ie s .
The c o lla b o r a tio n o f th ese o rg a n iz a tio n s w i l l be fo rm alized
w ith the estab lish m en t o f the new V ic to r y Fund Committees, t ie d
to g eth e r n a t io n a lly by a committee o f Fed eral Reserve bank p r e s i­
den ts, o f which the S e cr e ta r y o f the Treasury w i l l be chairman.
The Chairman o f the Board o f Governors o f the Federal Reserve
System w i l l p ro vid e the l i a i s o n between the Reserve banks and the
T reasury.
In some d i s t r i c t s e x e cu tiv e committees may be se t up fo r
o p era tin g pu rp oses, and d i s t r i c t com m ittees, w ith approval o f the
S e cre ta ry o f the T reasu ry, may se t up r e g io n a l subcommittees.
oOo-

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday, May 15» 19^-2,____________ _____

The S e c r e ta r y o f the T reasu ry, by t h is p u b lic n o tic e ,
in v it é s ten ders fo r $ 250, 000, 000, or th erea b o u ts, o f 91-day
Treasury b i l l s ,
t i v e b id d in g .

to be issu e d on a d isco u n t b a s is under com peti­
The b i l l s o f V h is s e r ie s w i l l be dated May 20,

19^2, and w i l l mature August 19, 19^2, when the fa c e amount w i l l
be p ayab le w ithout i n t e r e s t .

They w i l l be issu e d in b earer form

o n ly , and in denom inations o f $1 , 000, $5»000, $10, 000, $100, 000,
$500, 000, and $1 , 000,000 (m atu rity v a lu e ) .
Tenders w i l l be r e c e iv e d a t Federal Reserve Banks and
Branches up to th e c lo s in g hour, two o *c lo c k p .m ,, Eastern war
tim e*; Monday, May 16>19^2* Tenders w i l l not be receiv ed a t
the Treasury Department, W ashington, Each tender must be fo r
an even m u ltip le o f $1, 000, and th e p r ic e o ffe r e d must be ex­
p ressed on the b a s is o f 100, w ith not more than three deolm als,
e . g , , 99. 925.
F r a c tio n s may not be u sed . I t i s urged th a t
ten ders be made on the p r in te d forms and forwarded In the
s p e c ia l envelopes which w i l l be su p p lie d by Federal Reserve
Banks or Branches on a p p lic a t io n t h e r e fo r .
Tenders w i l l be re c e iv e d w ithout d e p o sit from incorp orated
banks and t r u s t companies and from r e sp o n sib le and recognized
d e a le rs in investm ent s e c u r i t i e s .
Tenders from oth ers must be
accompanied by payment o f 10 p ercen t o f the f a c t amount o f
Treasury b i l l s a p p lie d f o r , u n le ss the tenders are accompanied
by an express guaranty o f payment by an in corp orated bank or
t r u s t oompany.
Im m ediately a f t e r the c lo s in g hour, tenders w ill be opened
at the Fed era l Reserve Banks and Branches, fo llo w in g which p u b lic
announcement w i l l be made by the S e cre ta ry o f the Treasury o f
the amount and p r ic e range o f accepted b id s . Those subm itting
tenders w i l l be ad vised o f the acceptance or r e je c tio n th e r e o f.
The S e c r e ta r y o f th e Treasury e x p r e ssly rese rv es the r ig h t to
accep t o r r e j e c t any or a l l ten d e rs, in whole or in p a r t, and
h is a c tio n in any such re sp e ct s h a ll be f i n a l , payment o f
accepted tenders a t the p r ic e s o ffe r e d must be made or com pleted
a t the Fed eral Reserve Bank in cash or oth er im m ediately a v a i l ­
ab le funds on May 20, 19^2.
(Over)

31^60

~

2

-

The Income d e rive d from Treasury b i l l s , whether in t e r e s t
or gain from th e s a le or o th er d is p o s itio n o f the b i l l s , s h a ll
not have any exemption, as such, and lo s s from th e s a le or
oth er d is p o s it io n o f Treasury b i l l s s h a l l not have any s p e c ia l
treatm en t, as su ch , under Fed eral t a x A c ts now or h e r e a fte r
en a cted . The b i l l s s h a ll be s u b je c t to e s t a t e , in h e r ita n c e ,
g i f t ., or o th er e x c is e ta x e s , whether Fed era l or S t a t e , but s h a ll be exempt from a l l ta x a tio n now or h e r e a fte r imposed bn
the p r in c ip a l or in t e r e s t th e r e o f by any S t a t e , o r any o f the
p o sse ssio n s o f th e U n ite d S t a t e s , or by any l o c a l ta x in g
a u th o r it y . For purposes o f ta x a tio n th e amount o f d isco u n t a t
which Treasury b i l l s are o r i g i n a l l y s o ld by the U n ite d S t a t e s
s h a l l be co n sid ered to be I n t e r e s t . Under S e c t io n s 4 2 .and*117
(a ) (1) o f the In te r n a l Revenue Code, as amended by S e c tio n 13*5
o f the Revenue A c t o f 19^1, the amount o f d isco u n t a t which b i l l s
is su e d hereunder are s o ld s h a ll not be con sid ered to accrue u n t il
such b i l l s s h a ll be s o ld , redeemed or oth erw ise d isp o sed 0f>
and such b i l l s are excluded from c o n s id e r a tio n as c a p i t a l a s s e t s .
;A c c o r d in g ly , the owner o f Treasury b i l l s (o th e r than l i f e
Insurance com panies) issu e d hereunder need In clu d e in h ie
income t a x re tu rn o n ly th e d iffe r e n c e between the p r ic e p a id
fo r such b i l l s , whether on o r i g in a l Issu e or on subsequent
.p u rch ase, and th e amount a c t u a lly r e c e iv e d e it h e r upon s a le
o r redemption a t m atu rity during th e ta x a b le year fo r w h ich ,
the retu rn i s made, as o rd in ary g a in or l o s s .
. Treasury Department C ir c u la r No. Ul-S, as amended, and
t h i s n o tic e ,, p r e s c r ib e the terms o f th e Treasury b i l l s and Si
govern the c o n d itio n s o f t h e i r is s u e .
Copies o f the c ir c u la r
may be o b ta in ed from any F e d e ra l R eserve Bank or Branch.

' -0 O 0 -

4

* - •»

v

i v

■■

*

; '■

.i'

h /■

- N; M .

y

*♦

TREASURY DEPARTMENT
Washington 4
FOR IMMEDIATE RELEASE,
Thursdayf May 1*K 19*2*

Press Service
No. 31-61

The Treasury Department today made public a ruling
which permits actors,

athletes, lecturers and others to

donate their services “directly and gratuitously“ to char­
itable oauses without reporting the value of such services
for income tax purposes.
A flood of recent inquiries, resulting from talent
donations to war-time charities by “big-name“ performers
caused the Treasury to issue the ruling, which a££®°ts
ous organizations sponsoring entertainments for the purpose
of augmenting their Incomes.
An example in which the donor of his or her talents to a
charity need not Include the proceeds from suoh perfqrjanoe
In gross income, Internal Revenue officials said, would be the
case of an actor or athlete vfaose services were
by
the charitable organization actually s p onsoringthe ©vent,
and the income from the event, whatever it might be, would
belong solely to the organization.
However, when the services of the entertainer are
to a person other than a charitable organization and that per­
son makes payment for the entertainer's services to the
charitable organization, the amount so ,p
tw i l d e r a l t a ^ ^ *
in the return of the performer and subject to Federal tax*
Tvnical of these cases would be a radio sponsor or a
m o t l o n p l c t u r e producer who engaged the services of ^ e enter­
tainer and by agreement with the actor or athlete, turned
£e piWSt
his services over to a ^ r l t a h l e organisation.
This would be treated by the Treasury as an assignment of
income by the entertainer and taxable to him.
The text of the new ruling, whloh amends^section ^9.22
(a)-2 of Regulations 103 relative to compensation for personal
services, is as follows;

-

2

-

«The value of services need not be
included In gross Income when rendered directly
and gratuitously to an organization described
in section 23(0 ). Where, however, pursuant to
an agreement or understanding services are
rendered to a person for the benefit of an
organization described in section 23 (0 ) and an
amount for such services is paid to such organi­
zation by the person to idiom the services are
rendered, the amount so paid constitutes income
to the person performing the services even though
at the time of the agreement or understanding
the person making the payment acknowledges his
liability to make payment to such organization.
The second sentence of this paragraph shall not
apply where such an agreement or understanding
has been entered into prior to May 1^, 19*2,
(the date of the approval of Treasury Decision
5 1 5 D . rt

- 0O 0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Friday, May 15» 19^2«

Press Service
N o * 31 “&2

Market transactions In Government securities for Treasury
Investment and other accounts In April,

19^2, resulted In net

purchases of $300,000, Secretary Morgenthau announced today.

oOo-

/

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Sunday, May 17, 19^2.
.------5/167*2------ —

Press Service
No, 31-&3

Secretary Morgenthau today ashed all employees of the
Treasury Department in Washington and throughout the country more than

67,000

persons - to set an example for* all other

Government workers by putting aside at least 10 percent of
their pay every pay day for the buying of War Savings Bonds.
The Secretary announced that an **All-out for Victory”
campaign would be conducted during the two week period beginning
June 1 to enroll every Treasury employee in the Governments
Payroll Allotment Plan for systematic War Bond purchase. The
sale of bonds and stamps for cash through so-called group agents
will be discontinued in Government departments July 1, and a
Payroll Allotment campaign similar to the Treasury*s will soon
be begun in all other departments and agencies of the Government.
This action follows closely the President*s order of last
April l 6 , establishing an Interdepartmental Committee for the
promotion of voluntary savings by Government employees through
the payroll allotment system.
In line with his recent.announcement of a 10 percent goal
for the nation, Mr. Morgenthau *s goal for his own Department is
10 percent of the gross payroll.
Translated into dollars and
cents, complete participation on the part of Treasury employees
would mean the allotment of $ 600,000 twice each month by more
than 67,000 Treasury employees, or almost $14, 5OO 1 OOO a year.
With the slogan **Everybody - Every Pay Day - At Least 10#**
the campaign will be directed by E. F. Bartelt, Commissioner of
Accounts, acting as departmental chairman.
Mr. Bartelt will be
assisted by representatives of the various bureaus and offices
of the Treasury Department.
Mr, Bartelt said that the Treasury was seeking not only
to enroll as many of its employees as possible, in the field
as well as in Washington, but also to have each employee set
aside on every pay day the maximum amount which his Income will
permit.
The Department expects a total of at least 10 percent
of the gross amount of each semi-monthly payroll to be allottea
by employees for the purchase of bonds, and quotas will be
established for the several bureaus and divisions on this basis,
he declared.

-

2

-

To achieve this purpose specially selected ‘’Minute Me n “
will be assigned to call on designated employees with a view
to enrolling them in the Plan.
Each employee will be supplied
with a payroll pledge card already approved by the Comptroller
General, on which the employee authorizes the Treasury to
deduct a percentage of the semi-monthly pay.
The authorization
will remain in effect until cancelled by the employee in writing.
Other Government departments are expected to employ a
similar plan, while several have Indicated their program will
be along identical lines.
“Our plans for financing the war are based on the belief
that the American people will, of their own free will, want to
assume a big share of the cost,“ Mr. Morgenthau wrote recently
in a letter to Treasury employees.
“In this effort no group
should be more active than the employees of the Government
itself.
They should be in the front ranks of that vast army of
wage-earners throughout the country who are so generously
supplying fighting dollars for fighting men.
In every community
pay days are fast becoming ’bond days 1 for everyone receiving
regular current income,
“This is a pe o p l e ’s war,“ the Secretary continued, “and
I am depending' on you to do your part by supplying your Just
share of the funds necessary to finance this war.
It will be
the responsibility of each one of us to determine the very
most that we can set aside from our wages each pay day to buy
War Bonds for our own good and for our country’s good*“

0O 0-

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Saturday, May 16, 1 9 ^ 2 ,

Press Service
No.

Bids for furnishing distinctive paper for printing the
currency and public debt securities of the United States during
the fiscal year 19^3 were received and opened at the Department
on May 1^.

Only one bid was received,

Inc,, Dalton, Massachusetts,

from Crane and Company,

the present contractor.

The price offered was 40i^ per pound for the currency
paper and 3 2 ^ per pound for the bond paper.

The currency

paper was" bid at the price we are now paying for that paper,
and the bid for the bond paper is

^

present price.

~o 0o~

per pound less than the

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, May 18, 19^2-

Press Service
No, 31-65

Secretary of the Treasury Morgenthau today announced
the final subscription and'allotment figures with respect
to the current offering of 2-1/2 percent Treasury Bonds of

1962- 67.
Subscriptions and allotments were divided among the
several Federal Reserve Districts and the Treasury as follows:
Total Subscriptions
Received and Allotted

Federal Reserve
District
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St, Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTAL

27,27^,900

,

28 918,100
14-, 881,800
6,740,700
48,525,600
6 ,826,100

8,575,200

5,187,400
19,339,700
18 ,055,300
55,166,400

§882,078,700

-oOo-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
M o n d a y , M a y 18, 1942.

Secretary
the final
the

of t h e T r e a s u r y M o r g e n t h a u t o d a y a n n o u n c e d

subscription

current

Press Service
Ko. 3 1 -6 6

offering

Subscriptions

and allotment

f i g u r 'es w i t h r e s p e c t to

of 2 p e r cent Treasury• Bonds

and allotments

several Federal Re serve Districts

were

of 1949-51.

divided among the

a n d t h e T r e a s u r y as follows:

Federal Reserve
District

Total Subscriptions Received

T o t a l Subscrip'
tions Allotted

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. L o u i s
Minneapolis
Kansas City
Dallas
San Francisco
Treasury

$

$

TOTAL

174,935,000
136,489,900
170,332,400
1 1 8 , 4 7 0 ,9 0 0
1 6 3 , 8 5 8 ,8 0 0
. 719,358,500
83,653,400
53,172,900
66,997,200
8 4 ,6 6 8 ,6 0 0
2 1 6 , 3 2 9 ,5 0 0
5,750,000

67,734,500
493,606,700
53,614,700
67,555,600
47,175,700
72,399,400
2 8 0 , 2 2 8 ,4 0 0
3 7 ,0 0 2 ,9 0 0
2 3 ,1 8 9 ,0 0 0
2 8 ,9 8 2 ,9 0 0
35,329,800
83,439,500
2 ,1 8 5 ,0 0 0

13,283,343,400

$1,292,444,100

1 , 2 8 9 , 3 2 6 ,3 0 0

- 0O 0-

TREASURY DEPARTMÈN'■nr
Washington
FOR IMMEDIATE RELEASE,
Tuesday, May 19, 19^2.

Press Service
No. 31-67

The Treasury Department today extended Its controls over
importation of securities so as to cover,the importation of
currency.

Prior to today*s action, controls over the Impor­

tation of currency have been limited to importations from
blocked countries and Proclaimed List nationals.
new ruling,

Under the

currency upon importation Into this country will

be forwarded immediately to a Federal Reserve Bank as fiscal
agent of the United States.

The Federal Reserve Bank will

thereafter hold such currency or deliver it to a domestic bank
to be held until such time as the Treasury Department has
authorized Its release.
It was pointed out that just as in the case of the pro­
visions applicable to securities which are subject to similar
control,

the provisions of the amended general ruling appli­

cable to currency imported from Latin America will be so admin­
istered, as to prevent interference with legitimate importations
of currency from that area,

including the bringing in by

travelers of reasonable amounts of currency for traveling
expenses.

Treasury officials suggested that the fact that an

importation of currency from Latin America was bona fide could
be more easily established if such currency were sent into the
United States by and for the account of the central banks (or
the equivalent or analogous institutions) of any of the Ameri­
can Republics under appropriate assurances from such banks or
Institutions,
(Over )

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, May 19» 19^2,
57Wti

Press Service
No, 31-62

The Secretary of the Treasury announced last evening that
the tenders for $ 250,000,000, or thereabouts, of 91-day Treasury
bills to be dated May 20 and to mature August 19, 19^2, which
were offered on May

15 ,

were opened at the Federal Reserve Banks

on May IS,
The details of this issue are as follows;
Total applied for - $ 567,19°» 000
Total accepted
- 251 ,726,000
Range of accepted bids;

(Excepting several tenders
totaling 49^, 000)

High - 99,9^0 Equivalent rate
Low
- 99*906
«*
*
Average
Price * 99.90S
“ .
”

(73

percent of the amount bid for

0O0-

approximately

at the

11
"

0,237

percent

0,372
.
0.365

low price was accepted)

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE,
Tuesday, May 19, 1942.

Press Service
No. 31-69

The Bureau of Customs announced today that preliminary
reports from the collectors of customs show imports of 1+6 ,77^
head of Canadian cattle weighing 7^0 pounds or more each
(other than cows imported specially for dairy purposes),
the period April 1 to May 9> 19^2,

1,720

rate quota of

$

calendar year

19 ^ 2 ,

during

Inclusive, under the tariff

head for the second quarter of the
provided for under the trade agreement

with Canada.

-0 O 0

TREASURY DEPARTMENT
Washington
POR RELEASE, MORNING- NEWSPAPERS,
Thursday, May 21, 194-2,
5 / 2 0 / 4 2 ---

Press Service
No. 31-70

The American people have poured more than $15,000,000,000
into their Treasury since the beginning of the calendar year,
the Department*s ledgers showed today,
Prom January 1 to May I 5 Government receipts from taxes,
borrowings and all other sources amounted to $ 15 ;797,.000, 000,
a sum, Treasury officials said, far in excess of any amount
ever collected in a comparable period of time.
Contributing largely to the heavy Influx was the voluntary
purchase of $3,117,000,000 of War Savings Bonds and Stamps during
the period, which indicated the widespread popularity of this
class of security, particularly in the light of the" limit on
maximum purchases permitted in any one year.
Income tax payers, making their first returns under the
higher levies enacted last year, contributed a total of
$3 ,90$, 000,000, principally during the first installment period
on March 1 5 , This rate, of course, is not expected to be
maintained during the remainder of the year because many small
taxpayers waived the privilege of installment payments and
remitted in full, officials said.

O f the remainder, a total of $4-, 2OS, 000,000 has been
realized through the purchase of Treasury bonds, including the
issue of 2i percent 20-25 year bonds which remained open for
subscription for a period of 10 days and which was closed on
May 14-j $ 1 ,506,000,000 through the sale of Certificates of
Indebtedness, and $343,000,000 through the net sale of Tax
Sayings notes purchased in anticipation of future Income tax
assessments.
The cost of the War is expected to Increase progressively
from the present rate of about $ 3 ,5 ^ 0,000,000 a month to more
than $ 5 ,000,000,000 a month by the end of the calendar year
194-2, Nevertheless, Treasury officials said that it was a
proof of the financial soundness and the patriotism of the
country that the vast amount of $ 15 ,797*000,000 could be collected
without dislocating the national economy or without any wide­
spread public awareness of the total amount of money involved.
In the table that follows is a summary for the first four
and a half months of the year of receipts and expenditures,
taken from official Treasury records;

-

2

-

RECEIPTS

( In m illio n s )

G eneral revenue:
Income Tax
M isce lla n e o u s
O ther, e x clu d in g tr a n s fe r to
F ed eral o ld Age and Su rv iv o rs
In su ran ce T ru st Fund
Net r e c e ip ts

« 3,905
1,553
^02
5,860

T ru st Fund R e c e ip ts , e t c . (n e t):
Fed eral O ld-A ge and Su rv iv o rs
In su ran ce Trust Fund
Unemployment T rust Fund
Other
T o ta l t r u s t fund r e c e ip ts

402
3^7
-12
— 737

P u b lic debt r e c e ip t s , cash (n e t):
M arketable Is s u e s :
C e r t i f i c a t e s o f Indebtedness
T reasury bonds
Treasury n otes ( t a x s e r ie s )
U n ited S t a t e s sa vin gs bonds
Other
T o ta l p u b lic debt r e c e ip ts

1,506
4,208
3^3
3 ,H 7
2b
“97200

T o ta l g e n e r a l, t r u s t and p u b lic
debt r e c e ip ts

#15,797

EXPENDITURES
General
War a c t i v i t i e s
Governmental co rp o ra tio n s and c r e d it
ag e n cie s (n e t)
T o ta l expenditures
E xcess o f r e c e ip ts over expenditures

2,142
12,192
1,19.3
$15,527.
&270

GENERAL FUND BALANCE
December y i t 19k l

3,560

May 15, 19^2

3,830
270

Net in cre a se

—oOo-*

INCOME TAX COLLECTION AT THE SOURCE
Statem ent o f Randolph E . P a u l,
Tax A d v ise r to the S e cr e ta r y o f the Treasury,
B efore the Ways and Means Committee
o f the House o f R e p re se n ta tiv e s
on the reasons fo r recommending
c o lle c t io n at source
May 20, 19*4-2

In h is statem ent o f March 3, 19*1-2, S e cr e ta r y Morgenthau
suggested th a t p a r t o f the lncpme ta x be c o lle c t e d at source
fo r th o se typ e s o f income fo r which t h is method o f c o lle c t io n
i s p r a c t ic a b le . B e fo re p r e s e n tin g an o u tlin e o f the method by
which c o l l e c t i o n a t source could be put in to o p eration , we
should l i k e to in d ic a te the advantages o f t h is method, p a r t i ­
c u la r ly under presen t circu m sta n ces. These advantages are
p r im a r ily :
(1) L ig h te n in g the burden on the taxp ayer; (2)
g r e a te r speed and f l e x i b i l i t y in m eeting th e th re a t o f
I n f l a t i o n ; and (3 ) g r e a te r assurance o f c o lle c t io n fo r
c e r ta in groups o f ta x p a y e rs.
1,
The convenience o f the ta x p a y e r . — At present
exemption l e v e l s , approxim ately 20 m illio n taxpayers are
expected to pay a ta x on t h e ir 19*4-2 incomes. At the lower
exemption le v e ls t e n t a t iv e ly approved by the House Ways and
Means Committee, the number o f taxp ayers would be increased
by about 3 m illio n , making a t o t a l o f about 23 m illio n ta x ­
payers in a l l .
Under the r a te s proposed by the Treasury, the
t a x would b egin a t s ix te e n percent on the f i r s t d o lla r o f
income above the exemption. The r a te s are r a p id ly p r o g re ssiv e ,
as they must be, to r a is e in an e q u ita b le way the amount o f
revenue th a t needs to come from the income ta x .
The r e s u lt
i s a t a x burden th a t many persons w i l l fin d very d i f f i c u l t to
meet under the p resen t method o f payment.

At p r e s e n t, in d iv id u a ls pay t h e ir ta x in the year fo llo w ­
in g the r e c e ip t o f the income on which the ta x is le v ie d .
Most p e rso n s, e s p e c ia lly in the middle and lower income
b r a c k e ts, make l i t t l e i f any advance p r o v is io n fo r t h e ir ta x
l i a b i l i t i e s by b u ild in g up re se rv e s during the year when the
income is b e in g earned.
They are th e r e fo r e o b lig e d to pay
the ta x in , at most, fo u r q u a r te r ly in s ta llm e n ts , out o f the
income o f the fo llo w in g y e a r. These in s ta llm e n ts are in many
cases very hard to meet because they have not been b u i l t up
b i t by b i t , week by week, or month by month. Furthermore, in
numerous cases the income o f the fo llo w in g year is le s s than
the income o f the ta x a b le year and, a c c o r d in g ly , the ta x
l i a b i l i t y must be met out o f a sm aller income. This problem
th reaten s to be p a r t i c u la r ly acute at the end o f the war.
Many w i l l s u f fe r la r g e d e c lin e s in income and yet be o b lig a te d
to pay heavy wartime ta xe s on the h igh incomes o f the
p reced in g y e a r,
31-71

2

The burden on the taxpayer would be considerably
lightened If the tax were taken from his Income week by week
or month by month as he receives it.
Collection at the source
provides a convenient method of accomplishing this objective,
of enabling the taxpayer to pay his tax currently in a large
number of small installments rather than in a few large
installments in the succeeding year.
While no method of
paying taxes can make them painless, collection at source is
the most nearly painless of any method because the tax is
paid in small amounts before the taxpayer receives his income
and spends it.
Furthermore, it is very much to the taxpayer’s advantage
to have a substantial part of his tax liability liquidated
while he is receiving his income.
Under the present system
he ends each year in debt to the Government. This debt for
his income tax is as burdensome as any other debt and can have
just as serious effects on the taxpayer’s budget if his income
falls off or his expenses greatly increase. *
The first reason for urging the adoption of a system of
collecting the income tax at source on such portions of income
as are adapted to this method is, therefore, that the con«
venience of the taxpayer is thereby served and the weight of
the tax burden is reduced.
2.
The control of inflation. — The introduction of
collection at the source is essential not only because it would
be a permanent improvement in the income tax, but also becau.se
it would make the income tax a more effective fiscal instrument
for the control of Inflation.
In order that increases in taxes
contribute most effectively to the control of inflation, they
must begin to withdraw income at once.
Under present methods
of payment, an increase in income taxes enacted now will not
affect tax payments until March 19^3»
By the time the higher
collections become effective, the inflationary damage may be
done.
Collection at source would largely eliminate this lag.
Income taxes can be Increased and the collections under the
increased rates can begin almost immediately instead of many
months or even a year later.
Collection of income taxes simultaneously with the pro­
duction of the income will make the income tax better adjusted
to the needs of the economy at all times, and not only at times
like the present, when inflation threatens.
In periods when
incomes are falling and unemployment is increasing, it will
contribute to economic stability if the taxpayers are out of

- 3 debt
to the Government, so that their purchases of goods and
their other economic activities are not unduly hampered by
the necessity of paying income taxes on income received in a
more prosperous year.
Accordingly, to get the maximum effect in restraining
inflation, and to make the income tax better suited to the
needs of the economy, it is important that as much of the
income tax as possible be collected currently while the income
is being earned.
The most practical method of doing this is
through collection at source for those parts of the income to
which this method is applicable.
If collection at source were introduced July 1, 19*4-2,
at a 10 -percent rate, there would be withheld from consumers
during the last 6 months of this year alone about a billion
and a quarter dollars under the lowered exemptions tentatively
adopted by the House Ways and Means Committee.
This is at an
annual rate of 2-g- billion dollars.
If the present system of
collection is retained, there will be no increase in the
amounts collected from consumers until March 19*4-3«
3« The Improvement of collections from small taxpayers.—
As the number of taxpayers increases the problem of getting a
full reporting of income likewise Increases.
The American
system of income taxation is one of self-assessment.
The tax­
payer files his return, lists his income, and computes his tax.
To a considerable extent, of course, he is assisted in these
operations by representatives of the G-overnment, but the
initiative is his.
By and large, this system has worked well,
although, as we all know it has not worked perfectly.
That
non-reporting and underreporting have not been greater is
attributable in considerable measure to the reporting of
information at source.
The employer, for example, is required
to submit to the Government a slip for every person receiving
more than $$Q 0 of wages or salary showing his name, address,
and the amount of wages or salaries paid to him.
Ordinarily,
a copy of this slip is sent also to the employee.
This report­
ing system, on the one hand, gives the employee notice that
the Government has been informed of his income and, on the
other hand gives the Government a source of information against
which to check the income-tax return.
While the appropriations
made available to the Bureau of Internal Revenue have not
permitted a complete check of the information returns against
the income-tax returns, a great deal of checking has been
done with the result that the reporting by workers has been
found to be very high and the loss of revenue due to lack of
reporting relatively low.

Nevertheless, the lowering of exemptions and increase
in number of returns subjects to the income tax groups that
are less well informed about tax matters and are less likely
to file a return at the same time that it increases the task
of checking the returns.
Further, when the checking reveals
a delinquency, the delinquency must be treated taxpayer by
taxpayer.
The collectlon-at-source method not only gives the
Government information about the e m p l o y e e ^ compensation but
also gives the Government a large part of the tax, the part
it receives depending on how much of the tax is collected at
source.
With the income tax extending more and more into the
masses of the population, collection is thereby assured in
areas where there would be an increasing likelihood of its
breaking down.
The Importance of this problem is illustrated by the
experience of England and Australia.
In both countries taxa­
tion at the source Was introduced primarily for the purpose
of easing the payment problem and of facilitating the collection
of the income tax, rather than for anti-inflationary purposes.
The third reason for adopting collection at source is
therefore the more complete tax collection that should result
therefrom.
Against these advantages of collection at source must
be set the disadvantage arising from the administrative diffi­
culty inherent in this type of collection.
Collection of an
income tax at source involves the same type of administrative
difficulty of matohing returns as in the administration of
the Social Security pay-roll taxes.
It Involves some addi­
tional difficulty, notably in checking the tax return at the
end of the year against the payments which have been made from
time to time by the employer on account of his employees and
in making refunds in those cases where too large an amount
has been collected because of irregularity of employment.
These administrative problems are revealed in more detail by
the description that follows of the plan that has been
developed for the collection of the individual income tax at
source.
While this plan can doubtless be improved in some
of its details, I believe we have succeeded in working out
an entirely practicable plan.
It is our conviction that if proper provisions are
made for its adminiatration, collection at source is a highly
desirable method of collecting the Income tax and that its
very great advantages far outweigh the administrative diffi­
culties which would arise.
Accordingly, we recommend to the
committee that it provide for collection of the income tax

- 5 at source on salaries, wages, bond interest, and dividends.
The income tax is no longer a tax on the fortunate few; it
has beoome a p e o p l e ’s tax.
This change in coverage demands
a change in methods of collection.
Self-assessment and
quarterly installments are no longer adequate.
They should
be supplemented by collection at source, the only method that
is suited to the needs of a multitude of new taxpayers.
The
enactment of collection at source will prove a boon to these
taxpayers, will convert the income tax into an effective
fiscal instrument for the control of inflation, and will insure
the collection of the taxes levied.
An income tax which covers as many as 20 or 30 million
people cannot function effectively without collection at
source.
In my opinion the very existence of the income tax
of the scope proposed depends upon the adoption of this new
collection device.

SUMMARY OF PLAN FOR COLLECTION OF INDIVIDUAL INCOME TAX AT
SOURCE
Collection at source will apply to three types of income:
(1) Wages and salaries, (2) bond interest, and (3 ) dividends.
A.

CURRENT WITHHOLDINO

1. Wages and salaries -— (a) Each employee will fill
out and give to his employer an exemption certificate, indi­
cating marital and dependency status, and, if married, whether
the spouse is also employed.
( b ) On the basis of the exemption certificate, the
employer will classify the employee according to the exemption
to which he is entitled.
(c) Each pay period the employer will withhold from the
employee’s wage or salary an amount determined by applying the
withholding rate to the excess of the wage or salary over the
exemption to which the employee is entitled.
(d) The employer will determine the exemption to which
the employee is entitled by reference to a table to be fur­
nished by the Bureau of Internal Revenue.
(See attached exhibit.)
This table will show the exemption for different marital status
and dependent groups and for different pay periods (weekly,
semimonthly, monthly).

-

6

-

(e) This table will be computed by adding an arbitrary
allowance for deductions to the annual personal exemption and
credit for dependents, and prorating the sum over the number
of pay periods.
(f) At the end of each quarter, the employer will remit
to the Bureau of Internal Revenue the amounts withheld during
that quarter.
(g)
the Bureau
filled out
wages paid

At the end of the year the employer will send to
of Internal Revenue the exemption certificates
by the employees, entering on each the amount of
during the year and the amount of tax withheld.

(h) At the end of the year, or at the termination of
employment, the employer will give the employee a duplicate of
his exemption certificate, entering on this duplicate the
amount of wages paid during the year and the amount of tax
withheld.
This duplicate will serve as a receipt for the taxes
withheld.
In addition, small employers will be required to
give the employee each pay period a receipt for the amount of
tax withheld.
2,
Bond interest and dividends. — (a) Corporations
and other institutions'exempt from the individual income tax
will file exemption certificates with the payors of interest
or dividends certifying to their exempt status.
(b) Individuals who
be less than the exemption
are entitled may also file
payor,s, certifying to that

expect their total annual income to
and dependent credit to which they
exemption certificates with the
effect.

(c) Payors of bond interest and dividends will withhold
the tax on payments to all recipients who have not filed ex­
emption certificates.
The amount withheld will be computed
by applying the withholding rate to the total amount of
interest or dividends paid.
By not withholding on payments
to persons who have filed exemption certificates, relief is
given to persons with small incomes derived largely from
interest and dividends.
(d) All payments of dividends and interest on which the
tax has been withheld will be accompanied by a receipt for the
amount withheld.
(e) At the end of each quarter, payors of dividends or
bond interest will remit to the Bureau of Internal Revenue
the amounts withheld during that quarter.
(f) At the end of the year, the employer will send to
the Bureau of Internal Revenue a list of all payments made
during the year, the amount of tax withheld from each recipient,
and the exemption certificates for recipients not subject to
withholding.

- 7 -

B.

YEAR-END ADJUSTMENT

(a) All persons from whom any tax has been withheld
will be required to file an individual income-tax return by
March 15 of the following year, along with all other persons
required to file returns.
(b)

The tax liability will be computed as at present.

(c) The tax form will carry space for entering the
amount of tax withheld at source.
(d) If the tax liability exceeds the amount withheld,
the difference represents the amount the taxpayer must pay to
satisfy his liability.
(e) If the amount withheld exceeds the tax liability,
the difference represents the refund to which the taxpayer is
entitled.
( f ) If the refund claimed is less than $50 an& ^
taxpayer submits with his tax return receipts for all amounts
withheld at source, the refund will be made promptly without
further evidence.
(g) The information given by employers and by payers
of interest or dividends will be matched with the individual
income-tax returns.
This will furnish a check on the addi­
tional tax liability of individuals whose liability exceeds
the amount withheld at source and a validation of the claims
for refunds.
(h) Refunds not made promptly (as described in (f) above)
will be made as soon as the tax returns have been compared with
the reports of employers and of payers of interest and dividends.

Exhibit

1.

A m o u n t o f w a g e or s a l a r y t o b e e x e m p t f r o m c o l l e c t i o n
at source u n d e r p e r s o n a l e xemptions an d credit for
dependents tentatively adopted by House Ways and Means
Committee:
S i n g l e p e r s o n (not h e a d of f a m i l y ) , m a r r i e d
p e r s o n or h e a d of f a m i l y , a n d e a c h d e p e n d e n t , b y p a y r o l l
period

Payroll
period

:
:
:

Weekly

Single person
(not h e a d of
family)

i ii

:
:
:

Married person
or h e a d of
family

26

$>

:
:

Each
dependent

:

8 .5 0

$

17 .0 0

Bi-weekly

22

J *—

Semi-monthly

23

55

18.00

Monthly

46

110

36.00

Q u a r t er 'ly

133

330

108.00

Semi-annually

276

660

216.00

May

O
O

CM

C \J
to y

Treasury Department,
D i v i s i o n of T a x Research.

—

" 5 32

1 !

Annually

20,

1942

3''7 '

[CONFIDENTIAL COMMITTEE PRINT— UNREVISED J

DATA ON PROPOSED
• R E V E N U E BIL L OF 1942
S u b m it t e d to t h e

COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
BY THE

TREASURY DEPARTMENT

No. 14
M AY

20, 1942

D. Individual Income Tax—Continued
Section 6. Collection at source

UNITED STATES
71730-42

GOVERNMENT PRINTING OFFICE
WASHINGTON î 1942

CONTENTS
D. Individual income tax—Continued:
Page
Exhibit 97. Amount of individual income taxes and effective
rates under schedule N and modified and original staff of Joint
Committee rates, with Ways and Means tax base....... ..............
249
Exhibit 98. Revenue effect under various schedules of rates,
both with and without mandatory joint return provision, a t
calendar year 1942 estimated levels of income, assuming th at
corporation taxes and individual income-tax bases are those
tentatively adopted by the Committee on Ways and Means
through May 15, 1942______ __________ __________________
252
Exhibit 99. Corporation taxes and individual income tax with
joint returns mandatory—Estimated revenue effect at levels of
income estimated for calendar year 1942 of various proposed
changes in law______ ______________________________ _____
253
Section 6. Collection a t source:
Exhibit 100. Statem ent of Randolph E. Paul, Tax Adviser to the
Secretary of the Treasury, before the Ways and Means Com­
mittee of the House of Representatives on the reasons for recom­
mending collection a t source_________________ _____________
254
Exhibit 101. Estim ated revenue effects for a full year of opera­
tion, a t levels of income estimated for calendar year 1942, of
collecting a t source (a) 10 percent of wages and salaries in excess
of 110 percent of personal exemptions and dependent credit and
(6) 10 percent of the gross amount of dividends and bond interest,
by net income classes____ J_______________________________
257
Exhibit 102. Summary of plan for collection of individual income
tax a t source________________________________ ___________
258
Exhibit 103. Withholding of the national defense tax in Canada__
260
Exhibit 104. Collection a t source in Great Britain_____________
262
Exhibit 105. Tax collection at source in Australia_____________
264

(m )

D. INDIVIDUAL INCOME TAX—Continued
Exhibit 97. A m o u n t o f individual incom e taxes and effective rates under
schedule N and m odified and original staff of Joint C o m m ittee rates,
w ith Ways and M eans tax base
S IN G L E P E R S O N — NO D E P E N D E N T S

PERSONAL EXEMPTION: PRESENT LAW, $750; WAYS AND MEANS BASE, $500

Effective rates

Amount of tax

Net income before
personal exemption 1 Schedule
N

Raised
by 1 per­
centage
point

$500
$13
$600 ____________
29
$700______________
44
$800_____________
60
$900_____________
75
$ 1 ,0 0 0 - .- ____ __
106
$1,200____________
153
$1,500 ___ _____
245
$2'000____________
338
$2,500_______ _ -445
$3'000_____ ____
675
$4,000_______ _____
935
$5'000_ __________
1, 210
$6'000_______ - - .
1, 805
$8'000 _____ ______
2, 460
$10,000______ __ __
4, 395
$15,000____ _______
6,845
$20'000 - _____
9, 750
$25,000 __________
26, 665
$50'000___________
66, 510
$100,000_____ __
$500'000_ _________ 410, 500
840, 500
$1,000,000_______
$5^000,000__ __ __ 4, 280, 500 4,
Normal tax rates
(percent) _ _____

Staff of Joint
Committee rate

Staff of Joint
Committee rates

Original

Sched­
ule N Raised
by 1 per­ Origi­
nal
centage
point
Pet.

Pet.

Pet.

$14
$13
32
30
46
49
63
67
84
79
112
119
161
171
243
258
325
345
422
447
616
651
830
875
1, 064
1, 119
1, 592
1, 667
2, 200
2, 295
4, 076
4, 221
6, 426
. 6, 621
9, 136
9, 381
24, 821
25, 316
62, 651
63, 646
404, 626
409; 621
834, 626
844', 621
324, 621 4, 274, 626

2. 2
4. 1
5. 5
6. 7
7. 5
8. 8
10. 2
12. 3
13. 5
14. 8
16. 9
18. 7
20. 2
22. 6
24. 6
29. 3
34. 2
39. 0
53. 3
66. 5
82. 1
84. 1
85. 6

2. 3
4. 6
6. 1
7. 4
8. 4
9. 9
11. 4
12. 9
13. 8
14. 9
16. 3
17. 5
18. 7
20. 8
23. 0
28. 1
33. 1
37. 5
50, 6
63. 6
81. 9
84. 5
86. 5

2. 2
4. 3
5. 8
7. 0
7. 9
9. 3
10. 7
12. 2
13. 0
14. 1
15. 4
16. 6
17. 7
19. 9
22. 0
27. 2
32. 1
36. 5
49. 6
62. 7
80. 9
83. 5
85. 5

6

5

6

6

5

1 Maximum earned income assumed.
(249)

6

.

250

Exhibit 97.—A m o u n t o f individual incom e taxes and effective rates under
schedule N and m odified and original staff of Join t C om m ittee rates,
w ith Ways and M eans tax base—Continued
M A R R IE D ---- N O D E P E N D E N T S

PERSONAL EXEMPTION:

PRESENT LAW, $1,500; WAYS AND MEANS BASE, $1,200

Amount of tax

Net income before
personal exemption 1 Schedule
N

Effective rates

Staff of Joint
Committee rates
Raised
by 1 per­
centage
point

Staff of Joint
Committee rates

Original

$1,200____________
$11
$12
$11
$i;300_________ _
$1,400____________
25
28
26
$1,500____________
41
42
45
$1,700____________
72
80
75
$2,000____________
118
132
124
$2,500____________
205
206
219
$3,000____________
306
297
288
$4,000____________
506
504
476
$5,000____________
745
708
670
$6,000____________
944
896
1, 014
$8,000____________
1, 588
1, 464
1, 396
$10,000___________
2, 222
2, 064
1,976
$15,000___________
3, 776
4, 088
3, 914
$20,000___________
6, 474
6, 264
6, 076
$25,000___________
9,330
8, 982
8, 744
$50,000___________
26, 154
24, 840
24, 352
$100,000________ _
62, 084
65, 922
63, 072
$500,000_____ _____ 409, 898
404, 024
409, 012
$1,000,000________
844, 012
834, 024
839, 898
$5,000,000________ 4, 279, 898 4, 324, 012 4, 274, 024
Normal tax rates
(percent)________

5

1 Maximum earned income assumed.

6

6

Sched­
ule N Raised
by 1 per­ Origi­
centage
nal
point
Per­
cent

Per­
cent

Per­
cent

0. 8
1. 8
2. 7
4. 2
5. 9
8. 2
9. 9
12. 7
14. 9
16. 9
19. 9
22. 2
27. 3
32. 4
37. 3
52. 3
65. 9
82. 0
84. 0
85. 6

0. 9
2. 0
3. 0
4. 7
6. 6
8. 8
10. 2
12. 6
14. 2
15.7
18. 3
20. 6
26. 1
31. 3
35. 9
49. 7
63. 1
81. 8
84. 4
86. 5

0. 8
1. 8
2. 8
4. 4
6.2
8. 2
9. 6
11. 9
13. 4
14. 9
17. 5
19. 8
25. 2
30. 4
35. 0
48. 7
62. 1
80. 8
83. 4
85. 5

5

6

6

251
Exhibit 97. A m o u n t o f individu al incom e taxes and effective rates under
schedule N and m odified and original staff o f Joint C o m m ittee rates,
w ith Ways and M eans tax base—Continued
MARRIED PERSON— TWO DEPENDENTS
PERSONAL EXEMPTION*. PRESENT LAW, $1,500; WAYS AND MEANS BASE, $1,200
DEPENDENT CREDIT: PRESENT LAW, $400; WAYS AND MEANS BASE, $400

Effective rates

Amount of tax
Net income before
personal exemption
and dependent
c re d it1

Staff of Joint
Committee rate

Staff of Joint
Committee rates
Schedule
N

Raised
by 1 per­
centage
point

Original

Sched­
ule N Raised
by 1 per­ Origi­
centage nal
point
Per­
cent

$2,000
$2,100____________
$2,200____________
$2,300____________
$2,400____________
$2,500____________
$3,000____________
$4,000____________
$5,000____________
$6;ooo____________
$8,000____________
$10,000___________
$15,000___________
$20,000___________
$25,000___________
$50,000___________
$100,000 _________
$500,000__________
$1,000,000________
$5^000,000________ 4,
Normal tax rates
(percent)_______

Per­
cent

Per­
cent

$ ii
$12
$11
22
24
22
37
40
37
54
52
58
70
75
68
152
162
145
316
336
330
510
540
545
704
744
790
1, 172
1, 232
1, 340
1, 720
1, 800
1, 950
3, 456
3, 586
3, 760
5, 676
5, 856
6, 050
8, 296
8, 526
8, 850
23, 816
24, 296
25, 570
61, 436
62, 416
65, 250
403, 336
408, 316
409, 210
833, 336
843, 316
839, 210
279, 210 4, 323, 316 4, 273, 336

0. 5
1. 0
1. 6
2. 2
2. 7
4. 8
8. 3
10. 9
13. 2
16. 8
19. 5
25. 1
30. 3
35. 4
51. 1
65. 3
81. 8
83. 9
85. 6

0. 6
i 1
h 7
2. 4
3. 0
5. 4
8. 4
10. 8
12. 4
15. 4
18. 0
23. 9
29. 3
34. 1
48. 6
62. 4
81. 7
84. 3
86. 5

6

5

6

5

1 Maximum earned income assumed.

6

0.
1.
1.
2.
2.
5.
7.
10.
11.
14.
17.
23.
28.
33.
47.
61.
80.
83.
85.

5
0
6
2
8
1
9
2
7
7
2
0
4
2
6
4
7
3
5
6

252
Exhibit 98. R evenue effect under various schedules of rates, both w ith and
w ith o u t m a n datory jo in t retu rn provision ,1 a t calendar year 1942
estim a te d levels o f incom e, assum ing th a t corporation taxes and
individual incom e tax bases are those te n ta tiv e ly adopted by th e
C o m m itte e on Ways and M eans th rou gh M ay 15, 1942
[In millions of dollars]

Total tax lia­
bilities
Surtax schedule

Treasury schedule_____
Schedule L __ ________
Schedule M_ ______ __
Schedule of staff of
Joint Committee on
In te r n a l R evenue
Taxation______ —

Nor­
mal
tax Without
rate manda­
tory
joint
returns

With
manda­
tory
joint
returns

Pet.
4
4
5
5

8, 523. 3
8, 286. 1
8, 055. 4
7, 746. 9

8, 974.
8, 696.
8, 457.
8, 141.

6

7, 483. 8

7, 841. 7

7
8
2
9

Increase over yield
of present law 2
Yield of
manda­
tory
With
Without
joint
manda­ manda­
return
tory
tory
provi­
joint
joint
sion
returns returns

451.
410.
401.
395.

4
7
8
0

357. 9

3, 478.
3, 241.
3, 010.
2, 702.

5
3
6
1

2, 439. 0

3, 929.
3, 652.
3, 412.
3, 097.

9
0
4
1

2, 796. 9

1 W ithout provision for special relief in connection with provision for mandatory
joint returns.
2 The present law is without mandatory joint returns.
Source: Treasury Department, Division of Research and Statistics, May 19,
1942.

-

Exhibit 99. Corporation taxes 1 and individual incom e tax w ith jo in t returns m a n d a to ry 2 E stim a ted revenue effect a t levels .
o f incom e e stim a te d for calendar year 1942 3 of various proposed changes in law
[In millions of dollars]

71730— 42— No. 14-

I n c r e a s e ( + ) , d ec r e a se ( —)
T o t a l lia b ilitie s
O v e r y ie ld o f p r e s e n t la w

T a x p la n
C o rp o ra ­
tio n

I n d i v id ­
ual

T o ta l

7 ,9 3 7 .1
5
T r e a s u r y p r o p o sa l. M a y 6, 1942---------------------------------- * I f , 133. 5
W a y s a n d M e a n s C o m m itte e co r p o r a tio n p ro p o sa ls
a n d in d iv id u a l in c o m e -ta x b a se , w it h in d iv id u a l

5 ,0 4 4 .8
» 7,737. 2
« 9 ,0 1 4 .5

1 2 ,9 8 1 .9
1 8 ,8 7 0 .7
2 0 ,1 4 8 .0

* 11,133

C o rp o ra ­
t io n

I n d i v id ­
ual

T o ta l

O v e r y ie ld o f T r e a s u r y p ro ­
p o sa l o f M a r 3 ,1 9 4 2
C o rp o ra ­
t io n

- 3 ,1 9 6 .4
+ 3 196.4

+ 2 ,6 9 2 .4

+ 3 ,1 9 6 .4

+ 3 ,9 6 9 .7

+ 5 ,8 8 8 .8
+ 7 ,1 6 6 .1

I n d i v id ­
ual

T o ta l

- 2 ,6 9 2 .4

- 5 ,8 8 8 .8

+ 1 ,2 7 7 .3

+ 1 ,2 7 7 .3

O v e r y ie ld o f T r e a s u r y p ro ­
p o sa l o f M a y 6 ,1 9 4 2
C orp ora­
t io n

- 3 ,1 9 6 .4

I n d i v id ­
ual

T o ta l

- 3 ,9 6 9 .7
- 1 ,2 7 7 .3

-7 ,1 6 6 .1
- 1 ,2 7 7 .3

to
o*

in c o m e -ta x r a te s a s fo llo w s:

Surtax schedule

N orm al tax rate
4 p e r c e n t .............
5 p e r c e n t_______
5 p e r c e n t- - ...- .

P r o p o s e d b y s ta ff o f J o in t C o m ­
m it t e e o n I n te r n a l R e v e n u e
T a x a tio n .

CO
1 0 .4 4 2 .3
1 0 .4 4 2 .3
1 0 ,4 4 2 .3
1 0 ,4 4 2 .3
1 0 ,4 4 2 .3

8 .9 7 4 .7
8 .6 9 6 .8
8 ,4 5 7 .2
8 ,1 4 1 .9
7 ,8 4 1 .7

1 9 ,4 1 7 .0
1 9 ,1 3 9 .1
1 8 ,8 9 9 .5
1 8 ,5 8 4 .2
1 8 ,2 8 4 .0

+ 2 ,5 0 5 .2
+ 2 ,5 0 5 .2
+ 2 ,5 0 5 .2
+ 2 ,5 0 5 .2
+ 2 ,5 0 5 .2

+ 3 ,9 2 9 .9
+ 3 ,6 5 2 .0
+ 3 ,4 1 2 .4
+ 3 ,0 9 7 .1
+ 2 ,7 9 6 .9

+ 6 ,4 3 5 .1
+ 6 ,1 5 7 . 2
-f-5 ,9 1 7 .6
+ 5 ,6 0 2 .3
+ 5 ,3 0 2 .1

- 6 9 1 .2
-6 9 1 . 2
-6 9 1 . 2
-6 9 1 .2
-6 9 1 .2

+ 1 ,2 3 7 . 5
+ 9 5 9 .6
+ 7 2 0 .0
+ 4 0 4 .7
+104. 5

+ 5 4 6 .3
+ 2 6 8 .4
+ 2 8 .8
-2 8 6 .5
-5 8 6 .7

-3 9 .8
- 6 9 1 .2
- 3 1 7 .7
-6 9 1 . 2
—557. 3
—6 91.2
-8 7 2 . 6
- 6 9 1 .2
-6 9 1 . 2 - 1 ,1 7 2 .8

- 7 3 1 .0
- 1 ,0 0 8 .9
- 1 ,2 4 8 .5
- 1 ,5 6 3 .8
- 1 ,8 6 4 ,0

1 Corporation income and excess-profits taxes and capital-stock tax.
•
r
2 Figures representing tax liabilities under present law are without joint returns mandatory. All other figures (including those under the Treasury proposals of Mar. 3 and M ay
6,1942) are with joint returns mandatory but are w ithout provision for special relief in connection with the mandatory joint-return provision.
«•Adjusted for effect on dividends of increased corporation taxes proposed.
. . ,.
. . . ,.
, i.
4 Excluding the revenue effect of special provisions relating to (o) changed treatment of capital gains and losses, (6) taxation of interest on outstanding obligations of State and
local governments, (c) depletion, (d) consolidated returns, and (e) revised method of taxation of insurance companies.
~
* 's;
s Excluding the revenue effect of special provisions relating to (a) changed treatment of capital gains and losses, (6) taxation of interest on outstanding obligations of State and
local governments, (c) allowance of medical expenses as a deduction, and (d) allowance of dependent credit for dependent school children between the ages oi 18 to 20, inclusive. The
special provisions relating to mandatory joint returns, as treated in this table, are described in footnote 2.
Source: Treasury Department, Division of Research and Statistics, M ay 19, 1942.

y

' i I

iOLLECTION A'EASQURCE

'

f r ^

S ta te m e n t o f R andolph E. Paul, Tax Adviser to th e Secretary
o f tK e r r e a s u r y , before th e Ways and M eans C o m m ittee o f th e House
o f R epresen tatives on th e reasons for recom m ending collection a t source
7 - 0 , i 7 lC-

In liis statement of March 3, 1942, Secretary Morgenth.au suggested
that part of the income tax be collected at source for those types of
income for which this method of collection is practicable. Before
presenting an outline of the method by which collection at source
could be put into operation, we should like to indicate the advantages
of this method, particularly under present circumstances. These ad­
vantages are primarily: (1) Lightening the burden on the taxpayer;
(2) greater speed and flexibility in meeting the threat of inflation; and
(3) greater assurance of collection for certain groups of taxpayers.
1.
The convenience of the taxpayer.—At present exemption levels, ap­
proximately 20 million taxpayers are expected to pay a tax on their
1942 incomes. At the lower exemption levels tentatively approved
by the House Ways and Means Committee, the number of taxpayers
would be increased by about 8 million, making a total of about 28
million taxpayers in all. Under the rates proposed by the Treasury,
the tax would begin at sixteen percent on the first dollar of income
above the exemption. The rates are rapidly progressive, as they must
be, to raise in an equitable way the amount of revenue that needs to
come from the income tax. The result is a tax burden that many
persons will find very difficult to meet under the present method of
payment.
At present, individuals pay their tax in the year following the
receipt of the income on which the tax is levied. Most persons,
especially in the middle and lower income brackets, make little if
any advance provision for their tax liabilities by building up reserves
during the year when the income is being earned. They are therefore
obliged to pay the tax in, at most, four quarterly installments, out of
the income of the following year. These installments are in many
cases very hard to meet because they have not been built up bit by bit,
week by week, or month by month. Furthermore, in numerous
cases the income of the following year is less than the income of the
taxable year and, accordingly, the tax liability must be met out of a
smaller income. This problem threatens to be particularly acute at
the end of the war. Many will suffer large declines in income and
yet be obligated to pay heavy wartime taxes on the high incomes of
the preceding year.
The burden on the taxpayer would be considerably lightened if the
tax were taken from his income week by week or month by month as
he receives it. Collection at the source provides a convenient method
of accomplishing this objective, of enabling the taxpayer to pay his
tax currently in a large number of small installments rather than in a
few large installments in the succeeding year. While no method of
paying taxes can make them painless, collection at source is the most
nearly painless of any method because the tax is paid in small amounts
before the taxpayer receives his income and spends it.
Furthermore, it is very much to the taxpayer’s advantage to have
a substantial part of his tax liability liquidated while he is receiving
his income. Under the present system he ends each year in debt to
the Government. This debt for his income tax is as burdensome as

255

any other debt and can have just as serious effects on the taxpayer’s
budget if his income falls off or his expenses greatly increase.
The first reason for urging the adoption of a system of collecting the
income tax at source on such portions of income as are adapted to this
method is, therefore, that the convenience of the taxpayer is thereby
served and the weight of the tax burden is reduced.
2. The control of inflation.—The introduction of collection at the
source is essential not only because it would be a permanent improve­
ment in the income tax, but also because it would make the income
tax a more effective fiscal instrument for the control of inflation. In
order that increases in taxes contribute most effectively to the control
of inflation, they must begin to withdraw income at once. Under
present methods of payment, an increase in income taxes enacted now
will not affect tax payments until March 1943. By the time the
higher collections become effective, the inflationary damage may be
done.
Collection at source would largely eliminate this lag. Income taxes
can be increased and the collections under the increased rates can begin
almost immediately instead of many months or even a year later.
Collection of income taxes simultaneously with the production of
the income will make the income tax better adjusted to the needs of
the economy at all times, and not only at times like the present, when
inflation threatens. In periods when incomes are falling and unem­
ployment is increasing, it will contribute to economic stability if the
taxpayers are out of debt to the Government, so that their purchases
of goods and their other economic activities are not unduly hampered
by the necessity of paying income taxes on income received in a more
prosperous year.
Accordingly, to get the maximum effect in restraining inflation, and
to make the income tax better suited to the needs of the economy, it is
important that as much of the income tax as possible be collected
currently while the income is being earned. The most practical
method of doing this is through collection at source for those parts
of the income to which this method is applicable.
If collection at source were introduced July 1, 1942, at a 10-percent
rate, there would be withheld from consumers during the last 6 months
of this year alone about a billion and a quarter dollars under the
lowered exemptions tentatively adopted by the House Ways and
.M eans Committee. This is at an annual rate of 2}{ billion dollars.
MPottri1
itjpinífirinlmr^i I'T'irlTf 11n iiil liiTTiAd'T^IJ^b If the present
system of collection is retained, there will be no increase in the amounts
collected from consumers until March 1943.
3. The improvement of collections from small taxpayers.—As the
number of taxpayers increases the problem of getting a full reporting
of income likewise increases. The American system of income
taxation is one of self-assessment. The taxpayer files his return, lists
his income, and computes his tax. To a considerable extent, of course,
he is assisted in these operations by representatives of the Government,
but the initiative is his. By and large, this system has worked well,
although, as we all know it has not worked perfectly. That non­
reporting and underreporting have not been greater is attributable in
considerable measure to the reporting of information at source. The
employer, for example, is required to submit to the Government a slip

for every person receiving more than $800 of wages or salary showing
his name, address, and the amount of wages or salaries paid to him.
Ordinarily, a copy of this slip is sent also to the employee. This
reporting system, on the one hand, gives the employee notice that the
Government has been informed of his income and, on the other hand,
gives the Government a source of information against which to check
the income-tax return. While the appropriations made available to
the Bureau of Internal Revenue have not permitted a complete check
of the information returns against the income-tax returns, a great
deal of checking has been done with the result that the reporting by
workers has been found to be very high and the loss of revenue due to
lack of reporting relatively low.
M
Nevertheless, the lowering of exemptions and increase in number of
returns subjects to the income tax groups that are less well informed
about tax matters and are less likely to file a return at the same time
that it increases the task of checking the returns. Further, when the
checking reveals a delinquency, the delinquency must be treated
taxpayer by taxpayer.
;, _
!i
The collection-at-source method not only gives the Government
information about the employee’s compensation but also gives the
Government a large part of the tax, the part it receives depending on
how much of the tax is collected at source. With the income tax
extending more and more into the masses of the population, collection
is thereby assured in areas where there would be an increasing likeli­
hood of its breaking down.
The importance of this problem is illustrated by the experience of
England and Australia. In both countries taxation at the source was
introduced primarily for the purpose of easing the payment problem
and of facilitating the collection of the income tax, rather than for
anti-inflationary purposes.
The third reason for adopting collection at source is therefore the
more complete tax collection that should result therefrom.
Against these advantages of collection at source must be set the dis­
advantage arising from the administrative difficulty inherent in this
type of collection. Collection of an income tax at source involves
the same type of administrative difficulty of matching returns as
fin the administration of the Social Security pay-roll taxes. It in­
volves some additional difficulty, notably in checking the tax return
at the end of the year against the payments which have been made
from time to time by the employer on account ofc his employees,
and in making refunds in those cases where too large an amount
has been collected because of irregularity of employment. These
administrative problems are revealed in more detail by the description
that follows of the plan that has been developed for the collection of
the individual income tax at source. While this plan can doubtless
be improved in some of its details, I believe we have succeeded in
working out ah entirely practicable plan.
It is our conviction that if proper provisions are made for its
administration, collection at source is a highly desirable method of
collecting the income tax and that its very great advantages far out­
weigh the administrative difficulties which would arise. Accordingly,
we recommend to the committee that it provide for collection of the

y

'257

income tax at source on salaries, wages, bond interest, and dividends.
The income tax is no longer a tax on the fortunate few; it has become
a people’s tax. This change in coverage demands a change in methods
of collection. Self-assessment and quarterly installments are no
longer adequate. They should be supplemented by collection at
source, the only method that is suited to the needs of a multitude of
new taxpayers. The enactment of collection at source will prove a
boon to these taxpayers, will convert the income tax into an effective
fiscal instrument for the control of inflation, and will insure the col­
lection of the taxes levied.
An income tax which covers as many as 20 or 30 million people
cannot function effectively without collection at source. In my opin­
ion the very existence of the income tax of the scope proposed
depends upon the adoption of this new collection device 1
/^T n^H dM dnT d^Sqm m ary^a~^ST or cojjActfon'«Tfssource
/ attachihgfbdef summaries o f t h \ collfecb^^yt s^rc</ systems'mu
y qperatiominQana|da, Britain, ands^jistraha.

U

yTyhihit iu {^ K stim a.ted revenue effects, for a full year of operatjrfn, a t level
in com e e stim a te d for calendar year 1942 1 of collecting a t source:
(a)\10 p ercen t o f wages and salaries in excess of 110 p ercen t of personal
exem ption s and dep en d en t c r e d it2 and (6) 10 percen t of th e gross
a m o u n t o f dividen ds and bond in terest, by n et incom e classes 3

\
Net incomesplass

Amount collated at source, by type
/ of income
■yf-----------Wages /
Bond
Total
a n d / ' Dividends interest
salaries
/

/
Returns made taxable by low­
ered exemptions:
\ y Millions
$48. 7
Under $1,000___ - - - - - - A .
$1,000 to $2,000______
\
70' 3
$2,000 to $3,000
— dV
$3,000 to $4,000___
\
$4,000 to $5,000.
Total .
Returns taxable binder exemp­
tions of 1941 suit:
Under $1,000_______ 1____
$1,000 t</$2,000___ - _____
$2,000,to $3,000____
$3,000 to $4,000__________
$4^000 to $5,000. _— ____
„,$5,000 to $10,000___ _____
Jkrf- Over $10,000— --------------Total_________________

118\
. . = —= x y
51. 8
490. 2
474. 9
223. 4
135. 0
231. 1
308. 5
1, 914. 9

Millions
$17. 2
17. 3
1. 7
.1

Millions
$3. 6
3. 7
.4

Millions
$69. 5
91. 2
2.1
.1

36. 3
1 '

7. 7

162; 9

1. 7
10. 6
17. 3
7. 0
3. 9
9.4
\ f
15
7^5

62. 1
534. 8
551. 7
253k ?
153. 1
277. 6
553. 7

X. 8. 6
34. 0
59^5
2 2 .X
14. 1 V
37. 1 \
224,5
400. 7

2, 386. 1

\

258
ExhibiM.01. E stim a ted revenue effects for a full year o f operation a t levels
o f inkom e e stim a te d for calendar year 1942 of collecting a t source?
(a) 10 p ercen t o f wages and salaries in excess o f 110 p ercen t o f personal
exem ption s and d ep en d en t credit; and (b) 10 p ercen t o f th e gross
am o u n t ondividends and bond in terest, by n et incom e classes—Con.
.

\
Net income clasaS y ^^^

Amount collected a t source, by type /
of income
/
/
Wages
and
salaries

Dividends

/
Bond
interest/ ■. Total

Millions
Millions
All returns taxable under low­ \M illio n s
ered exemptions:
$25. 8 /
$5.3
"€100. 4
Under $1,000_________ __
14. 3
560. 5
5i. 3 /
$1,000 to $2,000_________
61/2
17. 7
474. 9
$2,000 to $3,000__________
22&v4
7. 0
2^9
$3,000 to $4,000__________
À4. 1
3. 9
135. &
$4,000 to $5,000__________
2. 6
74. 8^ L /
$5,000 to $6,000__________
9. 5
2. 2
57. 8 X
$6,000 to $7,000__________
8. 7
1. 8
41. 3 / \
$7,000 to $8,000__________
7.2
31/0
\ 6. 2
1.4
$8,000 to $9,000__________
1. 3
M. 1
V 6
$9,000 to $10,000_________
20. 6
S308. 5
224. 5
Over $10,000_____________
T o tal._____ ________-y /1

2, 033. 8

437. 0^ y

78.2

Millions
$131. 6
626. 0
553. 8
253. 3
153. 1
86. 0
68. 7
50. 2
38. 6
33. 1
553. 7
2, 549. O'

----------------------------- --------1 Adjusted for the ©fleet of increased corporation taxes rè^uiting from the
tentative decision Q^'Che Committee on Ways and Means, May o}\H)42.
2 Personal exepafmons of $1,200 for married couples and single heads of families
and $500 for skigle individuals not heads of families, and dependent credit of $400.
3 With ipint returns mandatory.
Sourée: Treasury Department, Division of Research and Statistics, MayNtS.

1942:

S u m m a ry o f p la n for collection o f individual incom e tax a t
source

Collection at source will apply to three types of income: (1) Wages,
and salaries, (2) bond interest, and (3) dividends.
A. C U R R E N T W I T H H O L D I N G

1. Wages and salaries.— (a) Each employee will fill out and give to*
his employer an exemption certificate, indicating marital and dependency status, and, if married, whether the spouse is also employed.
(b) On the basis of the exemption certificate, the employer will
classify the employee according to the exemption to which he is entitled.
(c) Each pay period the employer will withhold from the employee’s
wage or salary an amount determined by applying the withholding
rate to the excess of the wage or salary over the exemption to which the
employee is entitled.
(d) The employer will determine the exemption to which the em­
ployee is entitled by reference to a table to be furnished by the Bureau
of Internal Revenue, i This table will show the exemption for different
r

\

259
marital status and dependent groups and for different pay periods
(weekly, semimonthly, monthly).
(e) This table will be computed by adding an arbitrary allowance
for deductions to the annual personal exemption and credit for
dependents, and prorating the sum over the number of pay periods.
(f) At the end of each quarter, the employer will remit to the
Bureau of Internal Revenue the amounts withheld during that
quarter.
(g) At the end of the year the employer will send to the Bureau of
Internal Revenue the exemption certificates filled out by the em­
ployees, entering on each the amount of wages paid during the year
and the amount of tax withheld.^
T(ft) At the end of the year, or at the termination of employment,
tiro employer will give the employee a duplicate of his exemption
certificate, entering on this duplicate the amount of wages paid during
the year and the amount of tax withhelJJj This duplicate will serve
as a receipt for the taxes withheld. In addition, small employers will
be required to give the employee each pay period a receipt for the
amount of tax withheld.
2. Bond interest and dividends.-—(a) Corporations and other insti­
tutions exempt from the individual income tax will file exemption
certificates with the payors of interest or dividends certifying to their
exempt status.
(b) Individuals who expect their total annual income to be less than
the exemption and dependent credit to which they are entitled may
also file exemption certificates with the payors, certifying to that
effect.
(c) Payors of bond interest and dividends will withhold the tax
on payments to all recipients who have not filed exemption certificates.
The amount withheld will be computed by applying the withholding
rate to the total amount of interest or dividends paid. By not with­
holding on payments to persons iwho have filed exemption certificates,
relief is given to persons with small incomes derived largely from
interest and dividends.
(id) All payments of dividends and interest on which the tax has
been withheld will be accompanied by a receipt for the amount
withheld.
(e) At the end of each quarter, payors of dividends or bond interest
will remit to the Bureau of Internal Revenue the amounts withheld
during that quarter.
(f) At the end of the year, the employer will send to the Bureau of
Internal Revenue a list of all payments made during the year, the
¡amount of tax withheld from each recipient, and the exemption
certificates for recipients not subject to withhold!—
B. YEAR-END A D J U S T M E N T

(a) All persons from whom any tax has been withheld will be re­
quired to file an individual income-tax return by March 15 of the
following year, along with all other persons required to file returns.
(b) The tax liability will be computed as at present.
(c) The tax form will carry space for entering the amount of tax
withheld at source.

260
(d)
If the tax liability exceeds the amount withheld, the differ­
ence represents the amount the taxpayer must pay to satisfy his
liability.
’
(g)
If the amount withheld exceeds the tax liability, the difference
represents the refund to which the taxpayer is entitled.
(/) If the refund claimed is less than $50 and if the taxpayer sub­
mits with his tax return receipts for all amounts withheld at source,
the refund will be made promptly without further evidence.
(g) The information given by employers and by payers of interest
or dividends will be matched with the individual income-tax returns.
This will furnish a check on the additional tax liability of individuals
whose liability exceeds the amount withheld at source and a valida­
tion of the claims for refunds.
Ih) Refunds not made promptly (as described in (J) aboye) will
be made as soon as the tax returns have been compared with the re­
ports of employers and of payers of interest and dividends.
Exhibit 103. W ithholding o f th e n ational defense tax in Canada /
/

Collection at source is used by the Dominion of Canada m connec­
tion with the national defense tax which became effective July/L, 1940.
It is not used in connection with the general income tax. /
As amended effective July 1, 1941, the national defense/ax is based
on total \ e t income 1 before personal exemption. It i / payable by
all single persons receiving income of more than $6p0 and married
persons amrdieads of families receiving income of more than $1,200.
It applies to ^husband and wife separately, each being liable if the
separate incomesexceeds $660. Officers and men in the active military
services are n general exempt to the extent of/iheir service pay and
allowances.
X;
/
.
The rate of tax is p e r c e n t except for single persons with an income
of more than $1,200, fdk whom the rate is Jp percent. If the taxpayer
receives income from sources not subject to withholding, or if the
amount withheld is less than the tax liability, the tax is slightly in­
creased.2 The tax, however^is subject to the limitation that it must
not reduce the individual’s incbtne alter tax below the limits stated
above ($660 and $1,200).
/v
,
A tax credit of $20 a year, or approximately $0.38 a week, is allowed
for each dependent.^
/
x
J
Basis of withholding.—Whil/ef the tax issbased on total net income
from all sources, withholding applies only unspecified sources ol in­
come, namely earnings 4 prfid by an employel\to an employee and
interest or dividends paidyto persons registered asX^e holders ol bonds,
debentures, or like obligations or shares. For salaries and wages,
the marital and dependent status is taken into consideration m order
to determine the applicable tax rate and the amounkol tlie tax
1 Total income less, deductions except the allowance for donations^
2 If the amount of tax not withheld a t source is $25 but not more thanNtUOU, tne
extra tax is $1. If this amount is more than $100, the extra tax is 3 percent.
(Income War T a f f Act, sec. 91 (3).)
,,
,, \
2 Except the first dependent th a t qualifies the taxpayer f o r h e a d of family status.
4
Not including commissions and professional fees, but including pensions tq
superannuated employees.

261
credit, for interest and dividends, 5 percent is withheld without regard
to marital status and dependents. If husband and wife each earn at a
rate in excess of $660 per year each may claim married status and thus
be exempt from deduction at the source unless their respective earnings
are at a rate in excess of $1,200 per year.
The taxability of wages and salaries.—The taxability of wages and
salaries is determined by the rate of pay. If the amount paid (in
cash or in kind 5) daily, weekly, monthly, or for some other pay period
is such that if continued for 12 months it would cause the annual
earnings of the employee to exceed the specified $660 or $1,200, the
amount so paid is subject to tax deduction at source. At present
exemption levels the smallest payment subject to withholding is
$1.82 on a daily basis and $12.70 on a weekly basis.
The method used to determine the amount subject to withholding
is the same whether the employee is engaged on a permanent, tem­
porary, seasonal, or casual basis. The employer need not be con­
cerned with how much income from all sources the employee will in
fact receive during the year. His obligation is simply to deduct the
tax if the rate of pay indicates that such wages and salaries may be
taxable.
Obligations imposed on employers and payers.—The responsibility
both for deducting the tax and remitting it to the Crown rests on the
employer or payer and a severe penalty is provided by statute for
failure to comply with the requirements. Remittances are to be
made on or before the 15th day of the month next following that in
which the wages, interest, or dividends were paid. Information with
regard to names, addresses, salaries, wages, etc., and the amounts of
tax deducted is required to be filed annually.
There is no obligation upon employers to verify exemptions or
allowances claimed by employees, though they are urged to exercise
“ reasonable care.”
Taxpayers’forms and returns.—Employees who are married or who
have dependents file in duplicate with their employers a form showing
marital and dependent status. The employers in turn forward one
copy to the inspector of income tax for the district. An employee not
filing such form is regarded for tax purposes as a single person without
dependents. If during the year any change occurs in the status of an
employee, he must file with his employer an amended form in duplicate.
Persons liable to the national defense tax whose tax has not been
fully paid by deduction at the source must file an annual return of
total income on or before March 31 of each year, and make payment
at that time.
Refunds.—Amounts of national defense tax deducted at the source
are regarded as payments on account of each individual’s total lia­
bility for both national defense tax and income tax. Hence refunds
of national defense tax deducted at the source are paid only in the
following cases:
(1)
Where the taxpayer has not earned or received sufficient income
to render him liable to national defense tax, or is exempt from such
tax by law.
8 In calculating the amount paid, personal and living expenses or the value of
subsistence, if any, furnished to the employee are included, it being incumbent
on the employer to place a “reasonable value” thereon.

262
(2) Where the taxpayer is liable only to national defense tax and
the deductions at source are greater than his liability for national
defense tax.
In each of these two cases the taxpayer must complete and file an
application for refund with the inspector of income tax for the district
in which he resides, within 12 months from the close of the calendar
year in which the deductions at source were made.
(3) Where the taxpayer is liable to income tax and national defense
tax and the total amount of his liability for both taxes has been
overpaid.
As each taxpayer in this category is required to file an annual in­
come tax return, any refund due to such taxpayer is automatically
taken care of when the income tax return is assessed. It is, therefore,
unnecessary for any taxpayer in this class to file an application for
refund.
Source: Treasury Department, Division of Tax Research, May 19, 1942.

Exhibit 104. Collection a t source in Great Britian

Collection at source is the keystone of the British income tax system.
It is used to collect current liabilities on interest, dividends, and
ground rents; it is used to collect liabilities for the preceding period
on wages and salaries. For wages and salaries it amounts in practice
to a method for the installment payment of taxes.
I. INTEREST, DIVIDENDS, A N D G R O U N D RENTS

Collection at source has been used for well over a century to collect
the normal tax, at present at a rate of 50 percent, on the great bulk of
the payments of interest, dividends, and ground rents. Except for
interest paid by banks and on some types of Government securities,
payors of interest and ground rents are required to deduct 50 percent
of the payment and remit it to the collector of taxes. Corporations
are required to pay 50 percent of their net profits after payment of
interest, whether or not all profits are in fact distributed. Dividends
paid are then treated as having had the normal tax collected at source.
When the individual’s normal tax liability is computed, interest,
dividends, and ground rents on which tax was deducted at source are
not included in the base to which the normal tax rate is applied.
When his surtax is computed, the tax paid at source to the Govern­
ment as well as the amount actually received is included in the base
to allow for the taxes deducted at source.
II. W A G E S A N D SALARIES

From 1931 to 1940, collection at source on wages and salaries was
voluntary. Employees could request employers to withhold the tax
from their salaries and wages so that the tax could be spread evenly
throughout the year. The Finance (No. 2) Act of 1940 made de­
duction at source from wages and salaries compulsory. Further
changes in the collection-at-source system were proposed in the budget
submitted in April 1942. The following description of the collectionat-source method takes these changes into account.

263

Collection at source is used to collect the liabilities for a preceding
period of 6 months. The work of determining the tax is done by the
Board of Inland Revenue which informs the employer of the amount
to be deducted. The employer deducts this amount in weekly in­
stallments, paying the tax to the tax authorities once a month.
In September or October of each year, wage earners file a return
showing their income from all sources and the allowances which they
claim. Employers report the wages paid during the 6 months
ending October 5. On the basis of the wages reported by the em­
ployer and the allowances reported by the -employee, the Board of
Inland Revenue computes the taxes due on the wages for the 6 months
ending October 5. If an employee does not file a return, he is regarded
as a single person for purposes of computing his tax. The tax is, in
general, computed on the assumption that the rate of pay during the
next 6 months will be the same as during the preceding 6 months.1 In
order to maximize the part of the total tax collected from wages and
salaries, income from sources other than wages and salaries is com­
monly deducted from the allowances and exemptions before these are
applied to the wages. Notice of the assessment is sent to the em­
ployee who is given an opportunity to protest the assessment. When
this has been done, the employer is notified of the amount due from
the employee and he is required to deduct this amount in 24 weekly
installments beginning February 1.
The amount of weekly deduction is recomputed for income earned
in the 6 months from October 5 to April 5 on the basis of changes
in wages, allowances, and amount of unpaid tax if any. The revised
deductions are collected by the employer in 24 installments beginning
August 1.
Since the amount of the deduction depends upon income earned in
a preceding period, the strict application of this procedure might
involve undue hardship if wages declined severely. Special relief is
granted in these cases by providing that the weekly wage, after the
deduction of tax, may not be less than $8 for a single person, $12 for
a married person with no dependents, $16 for a married person with
one child, and $20 for a married person with two or more children.2
If the 24 installments are not sufficient to pay all of the tax due
because deduction of the full installment would make the weekly
wage after tax less than the minimum limits, the additional tax is
collected in the twenty-fifth and twenty-sixth weeks. Any unpaid
tax remaining is added to the next 6-months’ deduction.
III. R E F U N D S

A decline in earnings during the second half year may make the total
tax due for the year less than the tax collected for the first 6 months.
If this occurs, refunds are made by the Board of Inland Revenue
without application by the worker.
1 To allow for seasonally high earnings of summer months, this procedure is
modified for certain groups of workers. For these workers, the wages of the 5
months ending September 5 are treated as the income of the first half year, and
the wages of the next 7 months as the income of the second half-year. In both
cases, a full half-year's allowances are offset against the wages, thereby equalizing
the deductions in the 2 half-years.
2 Pound converted at $4.

264

Taxpayers may also be entitled to refunds of taxes withheld on
interest, dividends, and ground rents. These taxes are withheld at
the standard normal tax rate although if the recipient’s income is
sufficiently low he may be entirely exempt from tax or he may be
subject to the reduced rate. Since the introduction of collection at
source on wages and salaries, such overpayments are allowed against
.the wage assessment for persons who are employed. For other
persons, the refunds are made upon application by the taxpayer.
Source: Treasury Department, Division of Tax Research, May 19, 1942.

Exhibit 105. Tax collection a t source in A ustralia

The Income Tax Assessment Act (No. 2), 1940, introduced a system
of collection at source for the Commonwealth income tax. The law
provides for compulsory collection at source from salaries and wages.
The amounts so collected are applied against the employee’s total in­
come-tax liabilities for the preceding taxable year. Collection at
source is therefore used for the installment payment of the preceding
year’s liabilities, not for the collection of current liabilities. The law
also provides for the purchase of tax-installment stamps from author­
ized sources by persons other than employees as a means of assisting
taxpayers who desire to set aside a certain amount of tax from time to
time, in anticipation of the receipt of a notice of assessment; for such
taxpayers, however, the use of stamps is wholly voluntary.
Deductions begin on the 1st of August of each year and continue
for a maximum of 40 weeks or until the taxpayer has sufficient credits
to meet the tax liability on his income for the year ended June 30.
The amounts deducted at source depend on the size of salaries or wages
and the marital and dependency status at the time the installments
are deducted. They are determined by the employer from tables,
rather than by applying a tax rate to the salaries and wages. The
rates of deduction where there are no dependents begin at $0.32 on
weekly wages 1 exceeding $9.69 but not in excess of $11.31, and reach
a maximum of 20 percent of weekly wages exceeding $59.76.2 The
amount of the weekly tax deduction is reduced by $0.65 for each de­
pendent other than children (including the husband or wife of the em­
ployee), and for the first child, and by $0.16 for each additional child»
If the foregoing deductions appear insufficient to meet the tax or will
impose hardship, the Commissioner is empowered to adjust them.
Obligations imposed on employers and employees.—Employers are
required to make the prescribed deductions from each payment of
wages and to hand the employees stamps equal in denomination to
the deduction made.3
The employee is required to affix the stamp in a book and to cancel
it by writing thereon his name or initials and the date. He is responsi­
ble for the safe condition of his stamps until he presents them to the
Commissioner in payment of his tax.
1 Including $2.42 for board and $0.81 for quarters if received in consideration
for services,
2 Pound converted at $3.23.
3 Where large numbers of employees are concerned, arrangements may be made
with the Commissioner for cash deductions to be made by the employers and paid
by them to the Commissioner. In such cases, tax installment stamps are hot used
and installments are dealt with under what is termed a “group scheme.”

265
Taxpayers’ forms and returns— In order to authorize the employer
to make weekly deductions lower than the basic deductions prescribed
for a person without dependents, the employee must furnish a declara­
tion in duplicate to his employer setting out particulars regarding his
dependent». On the basis of this information, the employer reduces
the basic deduction according to* the number of dependents. The
employer retains one copy of this declaration and forwards the dupli­
cate to the Commissioner.
*
When the taxpayer receives his notice of assessment, he forwards
the book of stamps representing tax withheld during the year and his
notice of assessment to the Commissioner who applies the face value
of the stamps in payment of the tax. If the value of the stamps is
insufficient to pay the whole of the tax, the balance must be paid in
cash; if the value of the stamps exceeds the amount of the tax payable
the excess will be refunded immediately.
X

TREASURY DEPARTMENT
Washington

*’

,FOR RELEASE, MORNING NEWSPAPERS,
Friday., May 22, 19^-2,____________

The Secretary of ;tfo$: Treasury,.’ ^ , ‘yilâi public; notice,
irivltbs tenders fo:r # 250,rQQO,000, or thereabouts,l o f

91 ^day

Treasury- bills,, to be Issued on a discount basis under/compe'■titive bidding,

.The .bills of this sériés W I l i b e dated'

May 27, 19¿2, and will mature August .‘Si?;', ;,f9ft>. ."When'-'tba'.'^àcè
amount will be payable ¿without/intérest.,..r.--Tbèÿ;"wï'|i:I?©';;-;'-7
issued in bearer form only,

and in denominations of $ 1 ,00Ô,

^ 5 ,000, # 10 ,000, #100 ,00pv # 50.
0,000r and ll^pOO,
value••¿dBy.

:

000

L £ J/ïffîr

(maturity
'

• ' Tenders will be received at Federal Reserve Banks and '
^Branches up to'the closing hour,...two o fclock P*m.,, Eastern'T
war-'time, Monday, May 25# 19^2*
Tenders will not be received
at the Treasury Department., Washington. Each tender must be
for an even multiple, of .#1 , 000, and the. price, offered must be
- expressed on the basis, of\ 100 , -with no.t more than three
decimals, e. g., 99*925*
Fractions may 'n6t be USed. . I t l s
urged that tenders be made on the printed forms and forwarded
in the special envelop e.s: :which will be supplied by Federal
Reserve Banks or Branches :on application therefor, ,;
• Tenders: will be received.without depps.it from incorpo^
rated banks and trust companies and from responsible and
recognized dealers in investment securities.
Tenders from
others must be accompanied by payment of 10 percent of the
face amount of Treasury bills applied for, unless the tenders
are accompanied by an express guaranty of payment by an incor­
porated 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. Payment of accepted tenders at the prices offered
must be made or completed at the Federal Reserve Bank in cash
or other immediately available funds on May 27, 19^2.

31-72

(O v e r )

2
The i n c o r n a . derived from Treasury hills, whether Interest
, o r - g a i n
"from thè ‘sale or other disposition ■? f *h S
sale
s h a l l . not
have any exemption,, as such, ' ^ ^ ^ / i a v e any
or other disposition of Treasury billL Ì l ax Ac t s now or
treatment, as such, under Federal tax Acts now or
hLpflftpr enacted
The hills shall he subject to estate,
inheritance gift, or other excise taxes, Whether Federal or
Stated hut shall-be exempt from all taxation
imposed.on the principal o h Interest thereof by ^
& l l loca.l
a n v :of the possessions of the United States, or d j .
taxing authority.
For purposes of taxation the amount of
discSSntUta t ° ^ l c h Treasury hills are

i ^ t e M t a t e ^ s h a i l be co h si

J

e

a8

amended 8hy^3ectlon7115 of the Revenue Act of 19*1. the amount
of ‘discount at which hills issued
not he considered to accrue until such »*116 snail oe s o ì u ,

« Ssss; iszvvTnssess s«.
¡S t S ìtr S S « ! i w i i S t “ w r ”?“ S iV ia r t S u m i . «.a.,
as ordinary gain or loss.
Treasury Department Circular NO. ^1S, as amended, and
tvii« notice' or escribe the terms of the Treasury bills and
S v e r n the conditions of their Issue.
Copies of £ e circular
lay he obtained from any Federal Reserve Bank op Branch.

-0 O 0 -

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Friday, May 22, 19^2.____________
5/21A 2

Press 3ervl.ce
No. 31-73

Comptroller of the Currency Preston Delano announced today
that the total deposits of the 5 > H 5 active national banks In the
United States and possessions on April 4-, 1942, amounted to
i39> ^77» % 3 # 000.
This was a decrease of 177» 279# 000
t*1® amount
reported, by national banks on December y i t 1941, the date of the
previous call, but an increase of $ 3 #190 ,012,000 over the amount
reported on April 4, 1941.
Deposits on April 4, 1942, consisted
of demand and time deposits of individuals, partnerships, and cor­
porations of # 20,287,746,000 and # 7 ,721 ,120 ,000, respectively,
United States Government deposits of #1,479#53$»000, deposits of
States and political subdivisions of #2,735#°59,000, postal savings
of #14,320,000, certified and cashiers* checks, cash letters of
credit and travelers* checks outstanding of # 396.668,000, and de­
posits of domestic and foreign banks of #6,84-5# 042,0 0 0 •
Loans and discounts were #11, 569»3 H # 000, a decrease of
$182,481,000 in the quarter, but an increase of #1,141,845,000 in
the year*
Investments in United States Government obligations, direct
and fully guaranteed, aggregating #12 ,782,079,000, were $ 709,027,000
more than in December, and $2,186, 089,000 more than the amount held
a year ago.
The direct and indirect obligations held on April 4,
1942, were # 10 ,665,769,000 and #2,116,310,000, respectively.
Other
bonds, stocks and securities totaling $3#^43,5^9# 000, which in­
cluded obligations of States and political subdivisions of
#2.082,182,000, increased #29,133,000 since December but decreased
#148,057,000 in the year.
Cash of #635,312,000, balances with other banks, including
cash items in process of collection, of #6,022,393»000, and re­
serves with Federal Reserve banks of $7#753# 030,000, a total of
#14,410,735,000, decreased #591,195,000 since .December, but showed
an increase of #166,927»000 over the amount reported in April of
last year.
The total assets on April 4, 1942, were #43,496, 537#000, in
comparison with #43,53&# 234,000 on December
1941, and
#40,193,021,000 on April 4, 1941.
Bills payable, rediscounts, and other liabilities for bor­
rowed money amounting to # 12 ,270,000 increased # 8,492 ,000 and
#9 ,840,000 in the three and twelve month periods, respectively.

2

The unimpaired capital stock on April li, 19^2, was
#1 ,5 11 ,895,000, comprising # 159 ,999,000 of preferred stock and
#1,351,896,000 of common stock.
Surplus of #1,596,118,000, undi­
vided profits of # 515 ,127 ,000, and reserves of # 2^ 9, ^ 2 ,000, a
total of #2,l60, 687,000, increased #27,382,000 since December and
#115,260,000 since April last year.
The percentage of loans and discounts to total deposits on
April 4, 19^2, was 29,31 , in comparison with 29.71 on December 3 1 ,
19*WLt and 28,7^ on April
19^1,

-0O0-

*

I

1

C o m p a riso n o f p r i n c i p a l ite m s o f a s s e t s and. l i a b i l i t i e s
( In
:
;

A p r i l 4,
1942

o f n a t i o n a l b a n k s — c o n tin u e d .

th o u sa n d s o f d o l i a r s )
Dec. 3 1 »
19^1

:
;
:

A p r i l 1+, ; In c r e a s e o i d e c re a se ; In c r e a s e or d e c re a se
19 I+I
î
s in c e Dec. 3 1, 19^1 ; s in c e A p r i l4 , 1941
P e rc e n t
: Amount :
; Amount
: P e rc e n t

L IA B IL IT IE S
D e p o s it s o f i n d i v i d u a l s , p a r t n e r s h i p s , and c o r p o r a t i o n s i
$ 20 , 1+80,952
7 , 9 6 ^ .9 12
1 5 , 06 l
1 , 12 7 .6 7 3

2 ,7 3 5 *0 5 9
6,81+3,0^2

2 , 590,940

396,668

$ 1 8 , 070,367 - $ 193,20 6
8 , 0 5 0 ,12 5 - 243,792

-7 4 1
3 5 1 *8 6 5

6 .7 8 9 . 6 8 5

2 .5 3 0 ,3 1 9
6 ,7 5 1 . 1 2 1

1 4 4 ,1 1 9
5 3 .3 5 7

585,51+9
3 9 ,5 5 4 , 7 7 2

4 0 7 ,1 3 7
3 6,2 8 7 ,4 8 1

-1 8 8 ,8 8 1
-7 7 ,2 7 9

2,1+30
3 3 0 ,7 4 4

8,1+92

3 3 4 ,1 9 2

3 .7 7 8
^ 3 0 ,5 8 5

3 9 ,8 2 3 ,9 5 5

3 9 ,8 8 9 ,1 3 5

36 , 620,655

3 9 .^ 7 7 . ^ 9 3

12 ,2 7 0

$ 2 ,2 1 7 ,3 7 9
-3 2 9 ,0 0 5
-1 ,8 7 7
1 , 0 17 ,3 2 3

5 .5 0

2 0 4 ,7 4 0
9 1 ,9 2 1
.„
-1 0 ,4 6 9

12 .2 7
-4 .0 9
-1 1 .5 9
2 2 0 .1 0

8 .O 9
I .3 6

3 , 19 0 ,0 12

-2 .5 7
8 .7 9

3.607

2 2 4 .7 8
1 .0 9

9 ,8 4 0
3 ,4 4 8

. . .
4 0 4 .9 4
1 .0 4

- 6 5,18 0

-.1 6

8 .7 5

OJ

i* S

0

*7 9
,
- 32 . 2 b
-.2 0

O
O
1^ 1

16 ,1 9 7
1+62,215

-.9 4
- 3.06
-4 .9 2
3 I . 2O

f 'n

T im e .................................
P o s t a l s a v i n g s d e p o s i t s . ................
D e p o s it s o f U. S. G o v e r n m e n t . . . .. .
D e p o s it s o f S t a t e s and p o l i t i c a l
s u b d i v i s i o n s . ..............................
D e p o s it s o f b a n k s ......... .............
O th e r d e p o s i t s ( c e r t i f i e d and
c a s h i e r s ' c h e c k s, e t c . ) . . . .......
T o t a l d e p o s i t s ....... ................
B i l l s p a y a b le , r e d i s c o u n t s , and
o th e r L i a b i l i t i e s f o r
b o rro w e d money................... .
O th e r l i a b i l i t i e s . . . . . . ..................
T o t a l l i a b i l i t i e s * e x c lu d in g
c a p i t a l a c c o u n t s . »»•••»••#••»

$ 20 , 28 7 , 7^6
7 , 7 2 1 ,1 2 0
1 4 ,3 2 0
1 , 479 . 5 3 s

C A P IT A L ACCOUNTS
C a p ita l sto ck;
P r e f e r r e d s t o c k . . . . . . . ....... . . . .
1 5 9 *9 9 9
l6 S , 5 3 0
1 8 9 ,0 2 5
“ 8*531.
“ 5 -0 6
-2 9 *0 2 6
-1 5 *3 °
Common s t o c k . ..............................
1 *3 5 1 *8 9 6 _____ 1 , 3 4 7 «2 64 __1 * 337 * 9 14______ 4 ,6 3 2 ________ * 3^__________1 3 *9 8 2 _______1»P5T o t a l ..............
1 ,5 1 1 , 8 9 5
1 *'5 1 5 »79^
l * "5267939
“ 3 *8 9 9
-.2 6
-1 5 ,0 4 4
-.9 9
S u r p l u s ....... ......................
1 ,3 9 6 ,1 1 8
1 , 388,672
1 ,3 1 9 » 3 2 1
7 *^ 6
.5 ^
76»797
5 *8 2
U n d iv id e d p r o f i t s and r e s e r v e s . . . . ______ 7 6 4 ,5 6 9 _______ 7 4 4 ,6 3 3 ________ 7 2 6 ,1 0 6
1 9 ,9 3 6 _______ 2 .6 8 __________ 3.ff.».I4?-3--------- 5*-3P
T o t a l c a p i t a l a c c o u n ts . . . . .
3 *6 7 2 , 5 8 2
3 ,6 4 9 * 0 9 9 ______ 3 * 572,366
2 3 ,4 8 3
* 6 4 ________ l.Q.Q».21g--------- 2 .8 1
T o t a l l i a b i l i t i e s and
c a p i t a l a c c o u n t s ..............
4 3 ,4 9 6 ,5 3 7
4 3 ,5 3 8 ,2 3 4
4c,1 9 3 ,0 2 1 - 4 1 , 6 9 7 _______ “»10 . 3*393*5,l6------ ----8 *2 2
P a t i o o f lo a n s to t o t a l d e p o s it s
NOTE; M in u s s i g g d e n o te s d e c re a se

2 9 .3 1 ^

29* 11%

2 8 .7 W ~

Statement showing comparison of principal items of assets and liabilities of active national banks as of
April 4, 1942, December 31» 194-1» and April 4, 1941.
(In thousands of dollars)
f
* April 4,
f
#
19^2
»
•
Humber of banks «...... »..... *..
5.115

:
;
♦
•

Dec. 3 1 *
19 ^ 1
.5*123

• April 4,
:
1941
5.144

: Increase or decrease : Increase or decrease
, since Dec. 31. 1941 : since Apr* 4, 194l
: Amount : Percent
: Amount '• Percent
-8
-.16
-29
-.56

ASSETS
Loans and discounts, including
rediscounts and overdrafts*.... $11,569,311
U. S. Government securities:
Direct obligations ............ 1 0 ,665*769
Obligations fully guaranteed....
2 ,1 1 6 ,3 1 0
Obligations of States and
political subdivisions.... ....
2,082,182
Other bonds, notes, and
debentures..... ..... .........
1 .5 6 3 .7 19
Corporate stocks, including stock
of federal Deserve banks ....... —
iHiggg...
Total investments...... .
1 6 ,625*668
Total loans and investments.. 28,194,979
Currency and coin................
6 3 5 .3 12
Deserve with federal Deserve banks
7.753,030
Balances with other banks ........
6,022.393
Total cash, balances with
other banks, including reserve
r>bAlances, and cash items in
process of collection........ llt.ltl0.735
Other assets ....................
890,823
-To
Total assets............ .
ÿ3. *196,537

$1 1 .7 5 1.7 9 2

$10,427*466

-$182,481

-1*55

$i #i 4 i ,845

10.95

9 .786.7113
2,286,309

8,482,114
2 ,113 ,8 7 6

879,026
- 169,999

8.98
-7.44

2 .13 3 ,6 5 5
2,434

2 5 .7 4
.12

2,024,715

2 .14 7 .5 7 4

57.467

2.84

-65,392

-3.04

1,588,006

1,634,616

-24,287

-1*53

-70.89Î

-4.34

- 4,04?
738 .16 0
555.679
-151.189
353,792
-791,798

-2 .0 1
4765
2*01
-19*22
4*78
-1 1 .6 5

- 11,7 6 8
2,038,032
3.179,877
24,726
13 2 ,9 4 1
9*260

-5 .6 2
13.97
12.71
4.05
1*74
*15

-591,195
-6,181
-4 1,6 9 7

- 3.9 4
- .69
- .10

209,456
201,735
15.887.508
1 4 ,58 ?,"636“
2 7 .639.300 ~ 25,015,102
786,501
610,586
7,620,089
7 .399.238
6 ,8 1 6 ,1 9 1
__ 6,013,133

15,002,930
897.004
43,538,234

14,243,808
934,111
40,193.021

166,927
1.17
-43.288 “ 4 * 6 3
8.22
3,303,516

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Friday, May 22, 19^2.

Press Service
No. 31-7^

•

The Treasury Department in a formal statement Issued
today called attention to the fact that any interested party
is entitled to file an application for the unblocking of
accounts or other property on the grounds that no blocked
national has an interest in the property, .and is entitled
to be heard on such application*

General Ruling No» 13, issued

today, makes this clear and sets forth the procedure for filing
applications.
The Treasury Department noted that in this situation,

as

in all other situations arising under the freesing control,
full opportunity will continue to be afforded to anyone desiring
a hearing on an application*

*

)

~o 0o~

TREA3URY DEPARTMENT
Office of the Secretary
May 22, 1942
GENERAL RULING NO* 13
UNDER EXECUTIVE ORDER NO. 8389, AS AMENDED, SECTIONS
3(a) AND 5(b) OF THE TRADING WITH THE ENEMY ACT, AS
AMENDED BY THE FIRST WAR POWERS ACT, 1941, RELATING
__ ____________TO FOREIGN FUNDS CONTROL

(1) Thl 8 general ruling relates to the procedure to be fol­
lowed In connection with the filing of applications for the un­
blocking of accounts or other property in which applications it
is alleged that no person having an Interest in the property
involved is a national of a blocked country*
(2) Any interested party is entitled to file such an appli­
cation.
Such application shall be filed in the manner provided
in section 130*3 of the Regulations, and shall contain full in­
formation in support of the administrative action requested*
The application for administrative action may be filed on
Form TFU - 1 or on Form TFE-l (even though the request for adminis­
trative action is not a request for a license), and any documents
or other data as may be relevant to the application should be
attached to and made a part of the application.
(3) The applicant.is entitled to be heard on the application.
If the applicant desires to be heard on the application, either
before or after the Treasury Department has taken action on such
application, he should so notify the Treasury Department*
Such
notice should contain an appropriate reference to the application
involved and the names of the parties desiring to be heard with
respect to the application.

E. H. Foley, Jr.,
Acting Secretary of the Treasury.

(over)

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Monday, May 25, 19*4-2.

Press Service
No. 31-75

57237^2---------------------------------Comptroller of the Currency Preston Delano announced today
that the 5*123 active national hanks in the United States and
possessions on December

3 1»

19*4-1, reported gross earnings of

|925,663»000 for the calendar year 19*4-1.

This represents an

increase of $ 60,91*4-, 000 over the gross earnings for 19*1-0 of the
5,150 national banks that were in active operation on December

31

of that year.
Operating expenses for the year 19*4-1 were $6*4-1,6*1-$, 000 as
against $599» **-4*]-, 000 for the year 19*4-0. Net operating earnings
for 19*4-1 were $26*4-, 015 ,000, which was $ 16 ,710,000 more than
the amount reported for the preceding year.
Adding to the net operating earnings profits on securities
sold of $ 79,963,000 and recoveries on loans and investments, etc.,
previously charged off of $ 106 ,779»000, and deducting losses and
depreciation of $201, *4-62, 000, the net profits before dividends
for the year 19*4-1 amounted to $ 269,295» 000, which was 17*70 per­
cent of the par value of common and preferred stock and 7*37
percent of capital funds.
This figure of net profits before
dividends for 19*4-1 was $ 27 ,830,000 more than the amount reported
for 19*40*
The principal items of current gross operating earnings
for 19*4-1 were $*4-57» *4*66, 000 from Interest and discount on loans,
an increase of $45,622,000; and $ 291 ,93*4-, 000 from Interest and
dividends on bonds and securities, an Increase of $ 7 ,891,000
in the year.
The principal operating expenses were $272,057*000
for salaries and wages of officers and employees, an increase
of $16 ,753 »000 over 19*4-0; $99» 199» 000 expended in the form of
interest on time and savings deposits, a decrease of $ 6,371 *000,
and $ 65,13 *KOOO paid in taxes, an increase of $19 ,030,000.
Profits on securities sold during 19*4-1 aggregating
179,983, 000 were $ 25 ,066,000 less than in the preceding year,
and losses and depreciation on bonds and securities for 19*4-1
totaling $ 92,13*4-, 000 were $15,826,000 less than in the year
before.
Dividends declared on common and preferred stock in 19*4-1
totaled $1*4-7,970,000, in comparison with $1*4-5, 273,000 in 19*4-0.

The dividends were 9*73 percent of common and preferred
capital and *4-^05 percent of capital funds.

- 2 EARNINGS, EXPENSES, AND DIVIDENDS OP NATIONAL BANKS POR YEARS
ENDED DECEMBER 31, 1940 AND 1941
(Amounts in thousands of dollars)
:
Six months ended
: Dec. 31, : June 30,
:
1941
:
1941
Cauital stock oar value: 1/
Preferred..................
Common.....r1............... ....
TOTAL CAPITAL STOCK......
Capital funds 1/..............

184,441
1.340.705
1.525.146
3,598,141

169,303
1.351.981
1.521.284
3,656,300

195,657
1.333.816
1.529.473
3,536,398

237,084

220,382

- 457,466

411,644

150,212
18,087
22,485
26,442
24.603
478.913

141,772
15,235
21,726
26,046
21.589
446.750

291,984
33,322
44,211
52,488
46.192
925.663

284,093
32,681
40,745
51,792
43.794
864.749

1.351.981

Cross operating earnings?
Interest and discount on loans...
Interest and dividends on bonds
and securities...............
Trust department............ .
Service charges on deposit accounl s
Rent received...................
Other earnings.............. .
TOTAL GROSS OPERATING EARNINGS

♦
Year ended
: Dec. 31, : Dec. 31,
1940
:
1941
:

Cross operating expenses:
Salaries and wages—
Officers.....................
Employees other than officers.
Interest on time and savings
deposits...... ...............
Real estate taxes...............
Other taxes....................
Other expenses.............. .
TOTAL GROSS OPERATING EXPENSES

56,196
85,877

52,548
77,436

108,744
163,313

104,102
151,197

48,715
10,452
37,265
94.366
332.871

50,484
10,111
27,306
90.892
308.777

99,199
20,563
64,571
185.258
641.648

105,570
21,815
44,289
172.471
599.444

NET OPERATING EARNINGS..... ........

146.042

137.973

284.015

265.305

Recoveries:
On loans........................
On bonds and securities.........
All other................ .......
TOTAL RECOVERIES.............

25,323
25,649
8.510
59,482

18,335
22,508
6.454
47,297

43,658
48,157
14.964
106,779

36,751
40,993
15.355
93,099

41.335

38.648

79.983

105.051

100.817

85.945

186.762

198.150

Profits on securities sold....... .
TOTAL RECOVERIES AND PROFITS
ON SECURITIES SOLD....... .
losses and depreciation:
On loans........................
On bonds and securities..... .
On banking house, furniture and
fixtures.....................
All other................... .
TOTAL LOSSES AND DEPRECIATION.
NET PROFITS BEPORE DIVIDENDS.......

28,754
48,061

23,235
44,073

51,989
92,134

58,249
107,960

19,334
14.199
110.348
136.511

14,528
9.298
91.134
132.784

33,862
23.497
201.482
269.295

28,346
27.435
221.990
241.465

Dividends declared:
On preferred stock........ ......
On common stock.................
TOTAL DIVIDENDS DECLARED.....

3,821
74.760
78.581

4,379
65.010
69.389

8,200
139.770
147.970

8,114
137.159
145.273

5.123
Percent
17.95
7.47

5.136
Percent
17.41
7.38

5.123
Percent
17.70
7.37

5.150
Percent
15.79
6.83

9.10
3.86

9.73
4.05

Annual rate of net profits:
On common and preferred stock l/.,
On capital funds 1/.............
Annual rate of. dividends:
On common and preferred stock 1/.,
__ On capital funds 1/.....
1/

10.33
4.30

At end of period.

-oOo<

9.50
4.11

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
M onday May 25, 19^-2.__________________

Press S e rv ic e
No. 31-76

Secretary of the Treasury Morgenthau today announced the
*
•
plan for refinancing the outstanding Series G 19^2-44 bonds of
the Home Owners* Loan Corporation, called for redemption on
July 1, 19^2, and the Series S notes of the Reconstruction Finance
Corporation, maturing July 1, 19*12.

Holders of these securities

may exchange them on a par for par basis, with an" adjustment of
accrued interest to June 5» 19*12, for 1-1/2 percent Treasury
Notes of Series B-19*l6».
The Treasury notes now offered will be dated June 5 » 19*12,
and will bear interest from that date at the rate of 1-1/2 percent
per annum, payable on a semiannual basis on December 15, 19*12 and
thereafter on June 15 and December 15 in each year until they
mature on December 15 , 19*16* They will not be subject to call
for redemption prior to maturity.
They will be issued only in
bearer form with interest coupons attached, in denominations of
$100, $ 500, $1,000, $5,000, $10,000 and $100,000.

Pursuant to the p r o v is io n s o f the P u b lic Debt A ct o f 19*11,
in t e r e s t upon the notes now o ffe r e d s h a ll not have any exemption,
as such, under F e d era l t a x A cts now or h e r e a fte r enacted . The
f u l l p r o v is io n s r e la t i n g to t a x a b i l i t y are se t fo r th in the
o f f i c i a l c ir c u la r r e le a s e d to d ay.
Subscriptions will be received at the Federal Reserve Banks
and Branches, and at the Treasury Department, Washington.
Banking
institutions generally may submit subscriptions for account of
customers, but only the Federal Reserve Banks and the Treasury
Department are authorized to act as official agencies.
Subscrip­
tions must be accompanied by a like face amount of Home Owners*
Loan Corporation bonds of Series G 19*12-^1, or of Reconstruction #
Finance Corporation notes of Series S. Coupon bonds should have
July 1, 19*12 and all subsequent coupons attached.
Registered
bonds should be assigned to the Secretary of the Treasury for ex­
change as provided in the official circular.
The Series S notes
should have final coupon due July 1, 19*12 attached,
Following
acceptance of the securities, accrued Interest from January 1 to
June 5 , 1942. about $ 9,63 per $1,000 in the case of Series G
bonds, and $4,28 per $1,000 in the case of Series S notes, will
be paid to the owners of the securities surrendered,

The right is reserved to close the books as to any or all
subscriptions at any time without notice«
Subject to the reserva­
tions set forth in the official circular, all subscriptions will
be allotted in full.
There are now outstanding $ 875,^ 38,625 of the Series G
bonds and $275,368,000 of the Series S notes.
The text of the official circular follows.;

UNITED STATES 02* AMERICA
1-1/2 PERCENT TREASURY NOTES OF SERIES B-1946
Dated and bearing interest from June 5, 1942

Due December 15, 1946

Interest payable June 15 and December 15

1942
Department Circular No. 686

TREASURY DEPARTMENT,
Office of the Secretary,
Washington, May 25, 1942.

Fiscal Service
Bureau of the Public Debt
I.

OFFERING OF NOTES

1. The Secretary of the Treasury, pursuant to the authority of the
Second Liberty Bond Act, as amended, invites subscriptions, at par, from the
people of the United States for notes of the United States, designated 1—1/2
percent Treasury Notes of Series B-1946, in payment of which only Home Owners*
Loan Corporation 2-1/4 percent bonds, Series G 1942-44, called for redemption on
July 1, 1942, or Reconstruction Finance Corporation 1 percent notes of Series S,
maturing July 1, 1942, may be tendered. The amount of the offering under this
circular will be limited to the amount of such Series G bonds and Series S notes
tendered and accepted.
II.

DESCRIPTION OF NOTES

1* The notes will be dated June 5, 1942, and will bear interest from that
date at the rate of 1-1/2 percent per annum, payable on a semiannual basis on
December 15, 1942, and thereafter on June 15 and December 15 in each year until
the principal amount becomes payable. They will mature December 15, 1946, and
will not be subject to call for redemption prior to maturity.
2, The income derived from the notes shall be subject to all Federal taxes,
now or hereafter imposed. The notes shall be subject to estate, inheritance,
gift or other excise taxes, whether Federal or State, but shall be exempt from
all taxation now or hereafter imposed on the principal or interest thereof by
any State, or any of the possessions of the United States, or by any local taxing
authority.
3.
The notes will be accepted at par during such time and under such rules
and regulations as shall be prescribed or approved by the Secretary of the
Treasury in payment of income and profits taxes payable at the maturity of the
notes.
will be acceptable to secure deposits of public moneys, but
will not bear the circulation privilege.
tidn«* nj
interest coupons attached will be Issued in denominar
he0iasued^in°registèrld'forni $5,000, $10-000$ 10 0 ,000 . The notes will not

-

2

-

6.
The notes will he subject to the general regulations of the Treasury
Department, now or hereafter prescribed, governing United States notes.
III.

SUBSCRIPTION AND ALLOTMENT

1. Subscriptions will be received at the Federal Reserve Saaks and Branches
and at the Treasury Department, Washington. Banking institutions generally may
submit subscriptions for account of customers, but only the Federal Reserve Banks
arid the Treasury Department are authorized to act as official agencies.
2. The Secretary of the Treasury reserves the right to reject any subscription, in whole or in part, to allot less than the amount of notes applied
for, and to close the books as to any or all subscriptions at any time without
notice; and any action he may take in these respects shall be final. Subject to
these reservations, all subscriptions will be allotted in full. Allotment
notices will be sent out promptly upon allotment.

.;"i

IV, PAYMENT

1. Payment at par for notes allotted hereunder must be made on or before
June 5, 1942, or on later allotment, and may be made only in Home Owners* i-nnn
Corporation bonds of Series G 1942-44, called for redemption on July 1, 1942, or
in Reconstruction Finance Corporation notes of Series S, maturing July 1, 1942,
which will be accepted at par, and should accompany the subscription. Coupons
dated July 1, 1942, must be attached to bearer securities of either issue when
surrendered, and accrued interest from January 1, 1942, to June 5, 1942 ($9.63398
per $1,000 in the case of Series G bonds and $4.28177 per $1,000 in the case of
Series S notes) will be paid following acceptance of the securities.
In the
case of the Series G registered bonds, checks in payment of accrued interest will
be drawn in accordance with the assignments on the bonds surrendered.
VY

SURRENDER OF CALLED BONDS

Coupon bonds.- Home Owners* Loan Corporation bonds of Series G 1942-44
in coupon form tendered hereunder should be presented and surrendered with the
subscription to a Federal Reserve Bank or Branch or to the Treasurer of the United
States, Washington, D. C. Coupons dated July 1, 1942, and all coupons bearing
subsequent dates, should be attached to such bonds when surrendered, and if any
such coupons are missing, the subscription must be accompanied by cash payment
equal to the face amount of the missing coupons. The bonds must be delivered at
the expense and risk of the holder. Facilities for transportation of bonds by
registered mail insured may be arranged between incorporated banks and trust
companies and the Federal Reserve Banks, and holders may take advantage of such
arrangements when available, utilizing such incorporated banks and trust companies
as their agents.
2» Registered bonds.- Home Owners* Lean Corporation bonds of Series G
1942-44 in registered form tendered hereunder should be assigned by the registered
payees or assignees thereof to MThe Secretary of the Treasury for exchange for
Treasury Notes of Series B-1946 to be delivered to _________________________

- 3 -

and thereafter should he presented and surrendered with the subscription to a
Federal Reserve Bank or Branch or to the Treasury Department, Division of Loans
and Currency, Washington, D. C. The bo nds must be delivered at the expense and
risk of the holder.
71.

GENERAL PROVISIONS

fiscal agents of the United States, Federal Reserve Banks are
authorized and requested to receive subscriptions, to make allotments on the
basis and up to the amounts indicated by.the Secretary of the Treasury to the
Federal Reserve Banks of the respective districts, to issue allotment notices,
to receive payment for notes allotted, to make delivery of notes on full-paid
subscriptions allotted, and they may issue interim receipts pending delivery of
the definitive notes.
2. The Secretary of the Treasury may at any time, or from time to time,
prescribe supplemental or amendatory rules and regulations governing the
offering, which will be communicated promptly to the Federal Reserve Banks.

HENRY MORGENTHAU, JR.,
Secretary of the Treasury.

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, May 25i 19^2.

P ress S e rv ic e
No. 31-77

The Bureau o f Customs announced today th a t p r o v isio n w i ll
he made a t customs p o rts o f entry to enable importers to f i l e
e n tr ie s and w ithdraw als co v erin g wheat, wheat flo u r and s im ila r
wheat products s u b je c t to the quota p r o v isio n s o f the P r e s id e n t’ s
p roclam ation o f May 2 8 ,

19^1, as m od ified by the proclam ation o f

A p r il 13, 19^2, a t the same In s ta n t o f time at the openlhg o f the
new quota year on May 29, 19^2, a t 12 noon Eastern War Time,
11 A. M ., C e n tr a l War Time, 10 A. M ., Mountain War Time, and
9 A. M*, P a c i f i c War Time.
The acceptan ce o f e n tr ie s and withdraw als fo r consumption
co v erin g th ese commodities w i l l be a u th o rize d w ith in the quota
lim it a t io n s in the order o f the time o f t h e ir p re se n ta tio n in
proper form at the customhouse in the p o rt where the merchandise
has a r r iv e d .

I f e n tr ie s and w ithdraw als fo r consumption

presented at the hours

s p e c ifie d above on May 29, 19^2, cover

a t o t a l q u a n tity in excess o f the quota provided fo r any
coun try, the q u a n tity which may be adm itted to entry w ith in the
quota w i l l be p ro ra ted on the b a s is o f the q u a n tity presented
fo r e n tr y .

-oO o-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING- NEWSPAPERS,
Tuesday, May 26, 19^2.
'57Z5742--- —
------------------

Press 3 e ry ice
No. 31-7S

S e cre ta ry o f the Treasury Morgenthau announced l a s t n igh t
th at the s u b s c r ip tio n books fo r the current o ffe r in g o f 1- 1/2
percent Treasury Notes o f S e r ie s B-19^6, open to the holders o f
Home Owners1 Loan Corporation 2-1/^ percent bonds, S e r ie s 0
1 9 ^ 2 -^ , c a lle d fo r redemption on J u ly 1, 19^2, and R econstruc­
tio n Finance C orp o ratio n 1 p e rcen t notes o f S e r ie s S, maturing
J u l y 1, 19^2, w i l l c lo s e at the c lo s e o f b u sin ess Tuesday,
May 26, except fo r the r e c e ip t o f su b s c r ip tio n s Srom holders o f
|2 5 ,0 0 0 or le s s o f the Home Owners* Loan Corporation bonds.
The s u b s c r ip tio n books w ill c lo s e at the c lo s e o f b u sin ess
Wednesday, May 27, fo r the r e c e ip t o f su b s cr ip tio n s o f the
la t t e r c la s s .
Many sm aller hold ers o f th e bonds do not have as Immediate
a cce ss to t h e ir s e c u r i t i e s , and are not as conversant w ith the
manner o f e n te rin g s u b s c r ip tio n s , as the la r g e r h o ld ers, and fo r
th ese reasons they are given an e x tr a day in which to take
advantage o f the o f f e r i n g .
S u b s c r ip tio n s o f e ith e r c la s s addressed to a Federal
Reserve Bank o r Branch, or to the Treasury Department, and
p la ce d In th e m ail b efo re 12 o *c lo c k m idnight o f the r e s p e c tiv e
c lo s in g d ays, w i l l be co n sid ered as having been entered b efore
the c lo s e o f the s u b s c r ip tio n books.
Announcement o f the amount o f su b s c r ip tio n s and th e ir
d iv is io n among th e se v e ra l Fed eral Reserve D i s t r i c t s w i l l be
made l a t e r .

- 0O 0-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, May 26, 1942.
5/25/42-----1

P ress S e rv ic e
No. 31w79

The S e cre ta ry o f the Treasury announced l a s t evening th a t
the tenders fo r $250,000,000, or th e re a b o u ts, o f 91~day Treasury
b i l l s to be dated May 27 and to mature August 26, 1942, which were
o ffe r e d oft May 22, were opened a t the F ed eral Reserve Banks on
May 25.
The d e t a i ls o f t h is issu e are as fo llo w s :
T o ta l a p p lie d fo r - $46l,2&3>000
T o ta l accep ted
250,965,000
Range o f accep ted b id s :

(E x ce p tin g one tender o f $300,000)

High - 99*94-0 E q u iv a le n t r a te approxim ately 0.237 percent
Low
- 99.906
»
"
M
O.372
«
Average
P r ic e - 99.90S
“
«
"
0.365
"
(80 percent o f the amount b id fo r at the low p r ic e was accepted )

- o 0o~

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
May 27, 19^2.__________

Press Service
No. Jl-gO

The Bureau o f Customs announced today th at prelim inary
rep o rts from the c o lle c t o r s o f customs show imports o f ^8,029
head o f Canadian c a t t l e w eighing TOO pounds or more each
(o th er than cows imported s p e c i a lly fo r d a iry purposes), daring
the p e rio d A p r il 1 to May 16, 19^2, in c lu s iv e , under the t a r i f f
ra te quota o f 51*720 head fo r the second q uarter o f the calendar
year 19^2, p ro vid ed fo r under the trade agreement w ith Canada.
- o 0o~

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING- NEWSPAPERS,
F r id a y , May 29» 19^2.__________________

Thé' S e cr e ta r y o f the T reasury, by t h i s .p u b li c n o tic e ,; in v it e s
tenâers'fô'i* ,:|250,'Ô00y'Ô00, ôr th ërea b o u ts, of. .•91r*day •.Treasury ‘" b i l l s ,
to he iéôU ed ”6n ; a d isco u n t b à s ls -u n à e r co m p etitive b id d in g ,

. Jhe^

b i l l s o f rt h is s e r ie s w i l l be dated June . 3-, .19^2, end w i l l ^mature
Sept embbr 2, i9^2, when the face 'amount w i l l .be. payable without
interest.

They will be ’Is'Sded in bearer; form only; and in -

dehbmi.natidhB of $1, 000-, #5» O’OQ, $10,000, ,$10.0; 000, -:.$5p0,000, and

$1, 000, 000; ( m a tu r ity ; v a lu e ),'

•;

-

-

r :*

; .

V'. Tenders!viill be-received at Federal Reserve Banks and
Branches' up to the closing- hour, ’t-woo 'clock p. .m . ; Eastern war«
time, .MbhdaY, .‘June 1, 19^2*, Tenders will. not be received* at the
Trea^uhy;departmenti Washington.
Each tender must; be for: an, even
multipl 6*J6T ;|1,boo,.;and thf
e price Offered must be 1 expressed orv
the' basis
with not; mo he than three decimals, e. g.?, v 9$U 9?5 «
Fractions may not b k u s e d . ’ It' is urged that tenders be made on
the printed forms and forwarded i n ;the special envelopes which ..
will. be. supplied by Federal Reserve Banks or Branches on appli­
cation ’t h e r e f o r J ;; •:■**ri § '"|n:|
n v
\••v
-

Tenders w i l l be r e c e iv e d w ithout d e p o sit from incorp orated
banks and t r u s t companies and fro m -re sp o n sib le and recogn ized
d e a le rs in investm ent s e c u r i t i e s .
Tenders from oth ers must be
accompanied by payment o f 10 p e rcen t o f the fa c e amount o f
Treasury b i l l s a p p lie d f o r , u n less the tenders are accompanied by
an express guaranty o f payment by an in corp orated bank or tr u s t
company.
Im m ediately a f t e r th e c lo s in g hour, tenders w i l l be opened
at the Fed eral Reserve Banks and Branches, fo llo w in g which p u b lic
announcement w i l l be made by the S e c r e ta r y o f the Treasury o f the
amount and p r ic e range o f accep ted b id s . Those su b m ittin g tenders
w i l l be ad vised o f the acceptan ce or r e je c t io n th e r e o f. The
S e cre ta ry o f the Treasury esqpressly rese rv es the r ig h t to accept
or r e je c t any or a l l ten d e rs, in whole or in p a r t, and h is a c tio n
in any such re sp e ct s h a ll be f i n a l . Payment o f accepted tenders
a t the p r ic e s o ffe r e d must be made or completed at the Federal
Reserve Bank In cash or o th er im m ediately a v a ila b le funds on
June 3, 19^2,

31-fil

(O v e r)

The income d e rive d from Treasury b i l l s , whether In te r e s t
or gain from the s a le or o th er, d is p o s it io n O f-'the b i l l s , s h a ll not
have a n y exemption, as *su ch ;’ and lo s s from the s a le or. ,othe.rr d i s ­
p o s itio n o f Treasury b i l l s s h a ll n o t vhave any s p e c ia l treatm en t,
as such, under Fed eral t a x A cts now or h e r e a fte r enacted .
The
b i l l s s h a ll be su b je c t to e s t a t e , [in h e r ita n c e , • g i f t , or o th er
e x c is e ta x e s , whether Federal or S t a t e , but s h a ll be. exempt-from
a l l ta x a tio n now or h e r e a fte r imposed on the p r in c ip a l or in t e r e s t
th e r e o f by any S t a t e , or any o f the p o sse ssio n s o f the U n ited
S t a t e s , or by any lo p a l ta x in g a u th o r ity *
For purposes o f ta x a ­
t io n the am ount'of discoun t a t which Treasury b i l l s are o r i g i n a l l y
so ld by the U n ite d S ta te s s h a ll be co n sid ered to be in t e r e s t .
Under Se-ctlons ^2 and 117 (a) (1) of the Internal Revenue Code,
as amended by Section 115 of the/Revenue Act of' 19^1 i 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 considera­
tion, as oapital assets.
Aco.ordin.gly, the owner of Treasury bills
(other than life insurance companies ) issued hereunder need include
in his Income ta x feburn only the difference between the price
paid for such: bill’
s,-' whether on original issue of on subsequent
purchase, and the 'amount actually, received either upon pale olf.
redemption at maturity during the taxable year, for which; tpe ,
return is made,:’a‘
s ordinary gain or loss..;
. . .//V!

Treasury -Department C ir c u la r N o .- ^ lS , as amended,1, and t h is
n o t ic e , p r e s c r ib e the terms o f the Treasury b illS - a n d goveriV the
c o n d itio n s o f t h e ir is s u e .
Copies o f the c ir c u la r may be
o b ta in ed from any Fed eral Reserve Bank o r Branch/

FOR RELEASE ON DELIVERY

Statem ent o f S e cr e ta r y Morgenthau
b efo re the
J o i n t Committee on In te r n a l Revenue Taxation
Thursday, May 2g, 19*4-2.

The very h e lp fu l In te r e s t in ta x c o lle c t io n problems shown
by the members o f the J o i n t Committee on In te r n a l Revenue Taxa­
t io n , under the ab le le a d e rsh ip o f your Chairman, Mr. Doughton,
encourages me to appear b e fo re you to d is c u s s an a d m in istra tiv e
m atter.
I know th a t t h is Committee and th e Congress are determined
th a t no man and no co rp o ratio n s h a ll be p erm itted to make exor­
b it a n t p r o f i t s out o f the war e f f o r t .
I t is the r e s p o n s ib ilit y o f
the Congress to d r a ft l e g i s l a t i o n to ach ieve th a t purpose.
I t is
our r e s p o n s i b ili t y at the Treasury to use a l l the powers the
Congress has g iv en us to see th a t a l l ta x e s are f u l l y , h o n estly
and J u s t l y c o lle c t e d .
I t is our r e s p o n s i b ili t y to see th a t by
no form o f t r i c k or ch ican ery i s any one taxpayer perm itted to
escape h is Ju s t share and thus to throw u n ju st burdens on o th e r s .
I have come b e fo r e t h i s Committee to n ig h t to t e l l you o f
some In sta n ce s o f what seem to me to be p a r t i c u la r ly unpardonable
attem pts to escape wartime t a x a tio n , and I should li k e to report
what the Treasury is doing and Intends to do to stop these
p r a c t ic e s .
In every In sta n ce the method used by the taxp ayer was
to I n f l a t e expenses w ith the evid en t purpose o f av o id in g normal
and excess p r o f i t s ta x e s on co rp o ratio n e a rn in g s. The d evices
UBed in clu d e d the payment o f e x c e s siv e s a la r ie s , the d is t r ib u t io n
o f unearned bonuses and the payment o f unreasonable sums fo r pur­
p o rted s e r v ic e s to persons c lo s e ly connected w ith the management
o f the companies in v o lv e d .
I t w i l l be obvious to members o f t h is Committee th a t th ese
p r a c t ic e s , i f s u c c e s s fu l, would reduce the revenue o f the Govern­
ment, the revenue we need so u r g e n tly fo r f i g h t i n g and winning
the war.
We do not In ten d th a t t h is s h a ll happen. We do not intend
th a t any o f th e se p r a c t ic e s s h a ll su cceed . The Congress has
alread y given power to the Treasury to d e al w ith cases o f t h is
k in d , and th a t power I s b ein g e x e r c is e d .
The in s ta n c e s I s h a ll mention to you were discovered as a
r e s u lt o f speeding up our in v e s t ig a tio n o f 19*4-1 retu rn s o f
co rp o ratio n s h o ld in g war c o n tr a c ts . Reports o f the exam ination
31-82

-

2

-

o f J 1 returns fo r 19^1 are now a v a ila b le . Let me mention b r i e f l y
seven cases I l l u s t r a t i n g th e p r a c t ic e s w ith which we have to d e a l.
Company A makes an im portant a ir p la n e p a r t. T h is corpora­
tio n i s owned by one man who h ire d h im se lf as i t s sa le s represen­
ta tiv e .
His compensation in 19^1 was $1, 656, 000. By c o n s o lid a tin g
th ese earnings w ith th o se o f th e c o rp o ra tio n , we have blocked t h i s
obvious attem pt to d iv e r t p r o f i t s and we have increased the co r­
p o r a t io n ^ income t a x by $1, 117, 000.
Company B makes s t e e l . A l l stock in t h is corp o ratio n is
held by th ree f a m i l i e s . E x ce ssiv e s a la r ie s were p a id to o f f i c e r s
who were a ls o s to c k h o ld e r s. The Revenue Agent has recommended
d isallo w an ce o f $32,000 in s a la r ie s , and th e company has alread y
agreed to a d isa llo w a n ce o f $5*5,000.
Company C makes v i t a l equipment fo r a irp la n e p i l o t s .
This
co rp o ratio n p a id $ 31, 10^ in rent in one year to th e w ife o f the
p re sid e n t fo r u sin g p ro p erty which had c o st her $^5,^12. A
b ro th e r o f the p r in c ip a l sto ck h o ld e r, w ithout s p e c ia l tr a in in g
or a b i l i t y , drew a s a la r y o f $15,000 a year and a son and daughter,
Ju s t out o f sc h o o l, got $7»5°° a year each.
Company D makes t o o ls and d ie s . T h is company i s owned by
two b ro th e rs and t h e ir w iv e s.
I t p a id dividends o f $40,000 in
19^0 and $100,000 in 19^1 , w hile s a la r ie s t o t a l i n g $123,000 were
p a id in 19^1 to th e p r e s id e n t, h is w ife and h is b ro th e r.
Company E makes fo r g in g s . The stock is owned by three
f a m i lie s . From 193*5 to 19^1 the s a la r ie s o f employees who were
sto ck h o ld ers and r e la t i v e s o f sto ck h o ld e rs in creased 523 p e rc e n t.
E x ce ssiv e s a la r ie s fo r 19^1 have been d isallo w ed to the amount
o f $563,000.
Company F makes equipment fo r a ir p la n e s . Three p r in c ip a l
o f f i c e r s o f t h is co rp o ra tio n took s a la r ie s o f | 1 0 0 ,000 each and
the co rp o ra tio n claim ed i t had set asid e over $575*000 in bonuses.
S a la r y and bonus payments t o t a l l i n g $516,000 were found to be
e x c e s s iv e .
Other d isa llo w e d deductions in clu d ed $16,000 p a id
fo r watches g iv e n to employees, $1^,000 fo r banquets and p i c n i c s ,
$^,000 fo r photographs taken a t banquets and p i c n i c s , and $1,900
fo r t ic k e t s to f o o t b a l l games. Other important d e fic ie n c ie s were
found in th e t a x r e tu r n .
Company G- makes a d e v ice im portant to a v ia tio n . T h is co r­
p o ra tio n i s owned alm ost e n t ir e ly by one man, h is w ife and h is
b r o th e r. The two men in creased t h e ir s a la r ie s from $12,000 and
$15,000 in 1939 to $72,000 and $90,000 in 19^1. The r o y a lty r a te
on the p aten t J o i n t l y h eld by them was in cre a se d , w ith the r e s u lt
th a t w ith expanded s a le s fo r war purposes, th e r o y a lt ie s p a id to
them in cre a se d from $37,000 in 1939 to $1 , 179*000 in 19^1*

~ 3You w i l l note th a t X have not named any o f the corp o ratio n s
or the in d iv id u a ls concerned. I le a v e i t to t h is Committee to
decide whether th a t should he done.
P e r s o n a lly I am in c lin e d to
b e lie v e i t would have a very wholesome e f f e c t .
A s s is t a n t S e cr e ta r y S u lliv a n and Commissioner H e lverin g are
here to n ig h t to g iv e you fu r th e r d e t a i l s o f th e r e s u lt s o f some
o f th ese in v e s t ig a t io n s . They stand ready to come b efore you
from tim e to tim e and to rep o rt the r e s u lt s o f fu rth e r in v e s tig a ­
tio n s now in p r o g r e s s .
I t should be noted th a t th e se cases a l l deal w ith returns
fo r 19^1. I t i s o f course tru e th a t a l l o f the c o n tr a c ts fo r
war work covered by th ese 19^1 retu rn s were signed b efore the
U n ited S t a t e s entered the war and th a t n e a rly a l l the earnings
represen ted in th e ta x -d o d g in g d e v ice s attem pted were pre-w ar
e a rn in g s. But I th in k th a t changes the s itu a t io n very l i t t l e .
An attem pt to escape la w fu l ta x e s w h ile we were a c t u a lly a t war
would be o n ly a s l i g h t degree b la ck e r than an attempt to escape
ta x e s which would pay fo r arming and equipping our Army and Navy
when we stood in imminent danger o f a t t a c k .
I t may be th a t th e se in s ta n c e s are an is o la t e d few and th a t
not many more o f th e same kind w i l l be found,
I s in c e r e ly hope
th a t w i l l be the c a s e .
I am w holly c o n fid e n t th a t the g re a t and
overwhelming p ro p o rtio n o f American co rp o ratio n s are too p a t r i o t i c
even to o on sld er such p r a c t ic e s .
We are ta k in g two step s to d e te c t and deal w ith the e v ils
I have mentioned.
In the f i r s t p la c e , we are e x p e d itin g examina­
t io n o f the t a x retu rn s and record s o f a l l c o rp o ra tio n s, b eginn in g
w ith those who have war c o n tr a c ts , to determine whether e x c e ssiv e
expenses are b e in g cla im e d . O r d in a r ily our in v e s t ig a tio n o f
retu rn s f i l e d fo r th e year 19^1 would not begin u n t i l J u ly 1, 19^2,
and t h i s work would continue through the f i s c a l year ending
June 30» 19^3* Under presen t circu m stan ces we cannot a ffo r d to
w ait so lo n g b e fo re a c t in g . By speeding up our in v e s tig a tio n s
we expect to check unlaw fu l p r a c t ic e s o f t h is so rt at an e a r lie r
s ta g e .
In th e second p la c e , we are d is a llo w in g e x ce ssiv e expendi­
tu re s which have the e f f e c t o f redu cing corporate ta x l i a b i l i t i e s .
We are com p ellin g th e co rp o ra tio n s to in clu d e such amounts In
ea rn in g s, and at the same time we are r e q u ir in g the r e c ip ie n t to
pay f u l l p e rso n a l income ta x e s on the amounts r e c e iv e d .
The d isa llo w a n ce o f e x c e s s iv e expenditures does not
represen t a new procedure. The law and r e g u la tio n s permit the
deduction o n ly o f ordinary and necessary b u sin ess expenses fo r
the purpose o f determ ining p r o f i t s . In ap p lyin g the law and

r e g u la tio n s , the Bureau o f In te r n a l Revenue has o fte n d isa llo w ed
expenditures which seemed to la c k sound b u sin ess J u s t i f i c a t i o n
and which were, in e f f e c t , d is t r ib u t io n s o f p r o f i t s . Today,
however, the problem has assumed major importance in view o f the
huge In cre a se s in Income o f a g re a t number o f corporations
r e s u lt in g from th e war e f f o r t .
In p r e s e n tin g t h is problem to you, I am anxious to be as
c o n s tr u c tiv e as p o s s i b le . I t seems to me th a t the businessmen
o f t h i s country are e n t it le d to know not only the extent o f our
l e g a l powers but a ls o the standards th a t we have adopted in
a p p ly in g them. A c c o r d in g ly , i t may be h e lp fu l i f I o u tlin e the
fo llo w in g gen era l c o n sid e ra tio n s th a t w i l l guide us in examining
expenses claim ed in ta x r e tu r n s .
1.

S a la r ie s and Bonuses R aid to O f f i c e r s and Employees.

Deductions claim ed fo r g r e a t ly in cre a se d s a la r ie s and e x tra ­
ord in ary bonuses p a id to o f f i c e r s o r employees w i l l be d isallo w ed
u n le ss the taxp ayer proves th a t the payments are, in f a c t , fo r
s e r v ic e s a c t u a lly rendered and are re a so n a b le .
In determ ining whether th e payments are reason ab le, i t w i l l
be assumed th a t reason ab le compensation i s only as much as would
o r d in a r ily be p a id fo r l i k e s e r v ic e s by l i k e e n te rp rise s under
l i k e c ircu m sta n ce s. The fa c t o r s th a t w i l l be considered in d eter­
mining the reason ab len ess o f such payments are the d u tie s p e r­
formed by the r e c ip ie n t , the c h a r a c te r and amount o f r e s p o n s ib ilit y ,
the tim e devoted to the e n te r p r is e , and the p e c u lia r a b i l i t y or
s p e c ia l t a le n t o f the p a r t ic u la r o f f i c e r or employee. Where the
payments are to r e l a t i v e s or to sh a reh o ld ers, the taxp ayer must
show th a t fa m ily c o n sid e r a tio n s have not In flu e n ce d the amount
p a id and th a t the payments are not d is t r ib u t io n s o f p r o f i t s In
d is g u is e . Large p r o f i t s a t t r ib u t a b le to causes e n t ir e ly u n rela te d
to the a c t i v i t i e s o f the o f f i c e r s or employees, which are not
unusual in th ese abnormal tim es, do not o f them selves J u s t i f y or
warrant la r g e s a la r y payments.
2.

R en ts, R o y a lt ie s and Other Payments to Shareh old ers.

D e d u c t ib ilit y o f r e n ts , r o y a lt ie s pr other payments to share­
hold ers depends upon whether such charges are in f a c t f a i r and
reasonable payments fo r the use o f p ro p erty and are not merely a
d e vice fo r d is t r ib u t io n o f p r o f i t s . Any shareholder should be.
e n t it le d o n ly to a f a i r return on h is investm ent in the p ro p erty
which he perm its the co rp o ratio n to u se .

- 5~
3*

payments to p r o f i t Sh arin g or Pension T r u s ts ,

T h e d e d u c t i b i l i t y o f payments to pension t r u s t s i s governed
by s e c tio n 23(p)
the In te r n a l Revenue Code. I f payments to
such t r u s t s are rea so n a b le, t h e ir deduction w i l l be allo w ed . I f
the payments are unreasonable in amount, or i f the tr u s t is not
cre ated fo r the e x c lu s iv e b e n e fit o f employees, or i f i t i s a
d evice to d i s t r ib u t e p r o f i t s to sh a reh o ld ers, the deductions w i l l
be d isa llo w e d .
I t i s a ls o our purpose to se t up a b a r r ie r to
s a la r ie s , bonuses, or insurance premiums fo r
o f f i c e r s under the g u is e o f payments to a pension t r u s t .

Payments fo r R e p a ir s .
The d e d u c t i b i l i t y fo r Income t a x purposes o f c o s ts o f
r e p a ir s depends upon whether the expenditure is a c t u a lly fo r
r e p a ir s , or i s in f a c t a c a p i t a l expenditure which should be
added to o a p it a l investm ent or charged a g a in s t reserve fo r depre­
c ia t i o n , s in c e th e c o s ts o f r e p a ir s are d e d u ctib le w hile c a p it a l
expenditures are n o t. We must guard a g a in s t the tendency during
h igh p r o f i t years to maJte e x te n siv e improvements and to charge the
c o s t o f such Improvements a g a in s t p r o f i t s under the ca p tio n o f
r e p a ir s .
I t w i l l be our p o lic y to s c r u t in iz e c a r e fu lly the items
claim ed as d ed u ctio ns fo r exp enditu res fo r r e p a ir s . We s h a ll
d is a llo w such deductions where i t is not shown th a t the expendi­
tu re s are in f a c t fo r r e p a ir s In ste a d o f fo r Improvements or
betterm ents which should be c a p i t a l i z e d .
»5*

Expenses or Allow ances P a id to O btain Government B u sin e ss,
In c lu d in g Fees P a id to Washington R ep re sen tativ es or f or
Other P r o fe s s io n a l S e r v ic e s .

Whether deductions fo r item s o f t h i s c la s s w i ll be allow ed
depends upon whether th ey meet th e t e s t la i d down in the In te r n a l
Revenue Code, th a t i s , whether th ey are necessary and ordinary and
rea so n a b le.
I f such items are co n sid ered e x o rb ita n t or unreason­
a b le , they w i l l be d isa llo w e d as d e d u ctio n s. Many o f the fa c to r s
th a t apply In determ ining the d e d u c t ib ili t y o f s a la r ie s and bonuses
w i l l apply a ls o in determ ining the d e d u c t ib ilit y o f items o f t h is
c l a s s . P a r t ic u la r a tte n tio n w i l l be given to deductions fo r pay­
ments which a re a g a in s t p u b lic p o li c y , and a l l such deductions
w i l l be d is a llo w e d .

-

6.

6

-

Amounts P a id fo r A d v e r tis in g .

The t e s t o f whether expenditures fo r a d v e r tis in g are
d e d u c tib le i s whether they are ord inary and necessary and bear a
reasonable r e la t io n to the b u sin e ss a c t i v i t i e s in which the enter­
p r is e is engaged» This i s not intended to exclude in s t i t u t i o n a l
a d v e r tis in g in reasonable amounts or good w i l l a d v e r tis in g
c a lc u la t e d to In flu e n c e the buying h a b its o f the p u b lic . I f such
expenditures are extrav agan t and out o f pro p o rtion -to the s iz e o f
the company or to the amount o f i t s a d v e r tis in g budget in the p a s t,
or i f they are not d ir e c te d to p u b lic patronage which might
reasonably be expected in the fu tu r e , such payments w i l l be d is ­
allow ed as d e d u ctio n s.
With th e se standards as our g u id e p o sts, we are p ro g re ssin g
as f a s t as p r a c t ic a b le w ith our In v e s tig a t io n o f the 19^1 r e tu r n s.
Those who are engaged in t h is work must, o f course, th in k not
o n ly o f the b e s t in t e r e s t s o f the Government but a ls o o f the need
o f b ein g com p letely f a i r to the tajqDayers, The Committee, the
Congress and the country are e n t i t le d to know th a t the unscrupu­
lo u s and s e l f i s h few are not b e in g allow ed to d is t o r t t h e ir ta x
retu rn s so as to escape t h e i r f a i r share o f the c o s ts o f the war.
I can assure the Committee o f t h i s :
th a t nothing is being l e f t
undone which w i l l exp ed ite our work. I f we fin d th a t our e x is t in g
powers are not adequate to deal w ith the e v il I have been d is ­
c u s s in g , I s h a ll not h e s it a t e to come b efo re the ap prop riate
committee to ask fo r any a d d itio n a l a u th o r ity th a t may be needed.

-oO o-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
S u n d a y May 31» 19*1-2.__________________

P re ss S e r v ic e
No. 31*33

Frank Burke, one o f the Governm ent's ace sp y -ch a sers in
the F i r s t World War and fo r fo r t y -t h r e e years a to p -n o tch agent
in va rio u s Federal in v e s t ig a t iv e a c t i v i t i e s ,

w i ll r e t ir e Sunday

as a member o f the U n ite d S t a t e s S e c r e t S e r v ic e , C h ie f Frank J .
W ilson announced tod ay.
I t was Burke who walked o f f a New York e le v a te d t r a in in
J u l y , 1915# w ith the b r i e f case he se iz e d from D r. H e in rich F .
A lb e r t , key man o f the German su b v ersive o rg a n iz a tio n in the
U n ited S t a t e s , and thus exposed the system o f propaganda,
sab otage, and espionage th a t was fu n c tio n in g lo n g b efo re t h is
n atio n en tered th e c o n f l i c t .
Burke s ta r te d h is co u n ter-esp io n age work in 12>9S, when as
c h ie f o f p o lic e a t Tampa, F lo r id a , he helped p r o te c t U nited
S t a t e s troops en rou te to Cuba during the Spanish-Am erican War.
As a S e c r e t S e r v ic e agent during the F i r s t World War he made a
d is tin g u is h e d reco rd ; and he has been kept in the S e rv ice , three
years p a st the u su a l retirem en t age, to a s s is t in p r o te c t iv e work
in the p resen t c o n f l i c t .
C h ie f W ilson, by way o f t r ib u t e to the work o f th e 73~year
o ld agen t, quoted t h i s paragraph from the u s u a lly p r o sa ic f i l e s
o f thé S e c r e t S e r v ic e :
"Frank Burke: A ft e r re a ch in g retirem en t age, h is s e r v ic e
was extended by E x e c u tiv e Order sign ed by F ra n k lin D. R o o se v e lt,
because o f th e g re a t need fo r h is counsel and ad vice in the
n a tio n a l em ergency.“
The s e iz u r e o f the A lb e r t b r i e f ca se , w ith i t s fa r -r e a c h in g
in te r n a tio n a l a s p e c ts , was one o f the se n satio n s o f i t s day.
Because o f the n e c e s s it y o f se cre cy b ein g thrown about the
a c t i v i t i e s o f the agent a t th a t tim e, f a n t a s t i c s t o r ie s arose
about the in c id e n t . But the la t e W illiam Gibbs McAdoo, who was
S e cr e ta r y o f the Treasury at the tim e, in h is memoirs “The
Crowded Y e a r s ,“ g iv e s a l l th e c r e d it to Burke.
When, in 19 15 , evidence began to p i l e up o f dangerous a lie n
a c t i v i t i e s in t h is co u n try, P r e s id e n t W ilson d ir e c te d Mr. McAdoo
to use th e S e c r e t S e r v ic e fo r running down v io la t io n s o f
n e u t r a l i t y . The i n t r i c a t e German propaganda system in th e U n ite d
S t a t e s appeared to r a d ia te from D r. A lb e r t , who had a r r iv e d in

the U n ited S t a t e s In the e a r ly days o f the war and had se t up an
o f f i c e in New York, where i t was lea rn e d he was r e c e iv in g la r g e
sums o f money.
On J u l y
1915, Frank Burke and another Se cre t S e r v ic e
agent were t r a i l i n g A lb e rt and a companion, George S y lv e s te r
V ie r e c k , the l a t t e r now under c o n v ic tio n fo r p ro -N a zi a c t i v i t i e s
in the p resen t c o n f l i c t . The Treasury Agents had se a ts near the
two men on an e le v a te d tr a in *
F i n a l l y , V iereck got o f f , and one
agent fo llo w e d him, Burke rode on, keeping Doctor A lb e rt under
o b se r v a tio n .
He had h is chance when the German, ap p arently about to miss
h is s t a t io n sto p , rushed from the c a r , le a v in g h is b r i e f c a se .
Burke, in one o f those s p lit -s e c o n d d e c is io n s , took i t , and
s ta r te d fo r the o p p o site e x i t .
D octor A lb e rt m issed h is b r i e f
case alm ost im m ediately, and t r i e d to rush back in to the c a r .
A p o r tly woman wedged in the door o f the c a r , seeking inform ation
from the guard, d etain ed the f r a n t i c German agent long enough to
g iv e the S e c r e t S e r v ic e agent a s t a r t , and a f t e r a ' story-book
ch ase, Burke leap ed in to a p a s s in g bus, and escaped.
He d e liv e r e d the b r i e f case to W illiam J . Flynn, then C h ie f
o f the S e cr e t S e r v ic e . Exam ination showed the documents th e re in
were "d ip lo m a tic dynam ite. 11 The U n ite d S t a t e s was s t i l l at
peace w ith Germany. I t was determ ined, f i n a l l y , to keep se cre t
the Government * s r o le in the d is c lo s u r e s th a t were to fo llo w .
A New York newspaper was e n lis t e d to g iv e p u b lic i t y to th e
r a m ific a tio n s o f the German p l o t t i n g , w ith the e d ito r co n ce a lin g
the source o f h is in fo rm a tio n . The p u b lic a tio n o f the co rre s­
pondence l a i d bare the inner workings o f the German propaganda
machine and threw co n ste rn a tio n in to the German d ip lo m atic ranks.
They ap p arently c r e d ite d the B r i t i s h S e cr e t S e r v ic e w ith the coup.
Burke fig u r e d in many oth er im portant in v e s t ig a tio n s , lnclud,
in g scores o f c o u n t e r fe it in g c a s e s .
He had a p a rt in what is
b e lie v e d one o f the la r g e s t n a r c o tic s s e iz u r e s ever made, a ton
o f the contraband, at S e a t t le , some years ago.
The v e te ran agent Join ed the S e cre t S e r v ic e in 1899> &nd
has remained in the Government s in c e .
He has had assignm ents o f v a ry in g duration w ith the U n ited
S t a t e s Sh ip p in g Board and the Bureau o f In te r n a l Revenue, but
always came back to h is f i r s t lo v e , the S e cr e t S e r v ic e .
His
cu rren t tenure w ith the S e r v ic e began in 1928.
A s s o c ia te s in the S e r v ic e , headed by C h ie f W ilson, w i l l Hold
an inform al r e ce p tio n next week f o r H r. Burke, to w ish him good
f i s h i n g in h is F lo r id a r e tire m e n t. The veteran agent w i l l Jo in
h is fa m ily a t Miami.
0 O 0 -*

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, Jun e 1, 19^2*

•

P ress S e r v ic e
No. 31- g i

The S e c r e ta r y o f the Treasury today announced the f i n a l
s u b s c r ip tio n and allo tm e n t fig u r e s w ith re sp e ct to the current
o f f e r i n g o f 1-1/2 p e rcen t Treasury Notes o f S e r ie s B-19^6, open
to the h o ld ers o f Home Owners1 Loan C orp o ratio n bonds o f S e r ie s
O 19*1-2-4*1-, c a lle d fo r redemption on J u l y 1, 1942, and R econstruc­
t io n Finance Corp o ratio n notes o f S e r ie s S , m aturing J u l y 1, 19*1-2*
S u b s c r ip tio n s and a llo tm e n ts were d iv id e d among the se v e ra l
Fed eral Reserve D i s t r i c t s and the Treasury as fo llo w s :
Fed eral Reserve
D is tr ic t
Boston
New York
P h ila d e lp h ia
C le v e la n d
Richmond
A t la n t a
Chicago
S t . Louis
M inn eapolis
Kansas C it y
D a lla s
San F ra n cisco
Treasury
TOTAL

HOLC Bonds
Exchanged
$

18 ,139,100

551, 616,500
44.378.100
20,697,300
38,399,600
10. 679.100
75,573, 800
13,3 3 3 ,'WO
10, 205, 200
17,277,700

5 ,79^,700

36,451,100
4,1189.700

035,300

-0 O 0 -

RFC Notes
Exchanged
# 7, 839,000
198, 042,000
6, 398,000
5 ,803,000
5.8 1 3 .000
3. 608.000
29, 521,000
2. 458.000
4.799.000
2. 665.000
995.000
4, 196,000
165.000
#272, 302,000

T o ta l
Exchanges
25, 978,100
749, 658,900
50. 776.100
26, 500,300
4 4 ,212,600
14.287.100
105,094, 800
15,791,400
15, 004,200
19,942,700
6.789.700
40.647.100
4.654.700
11^119,337,300
$

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Monday, Ju n e 1, 19*12«

•

Press S e r v ic e
No. 31-3*1-

The S e c r e ta r y o f the Treasury today announced the f i n a l
s u b s c r ip tio n and allo tm en t fig u r e s w ith re sp e ct to the current
o f f e r i n g o f 1-1/2 p e rcen t Treasury Notes o f S e r ie s B-19*J-6, open
to the h o ld ers o f Home Owners* Loan C orp o ratio n bonds o f S e r ie s
G- 19*l-2-4*J-, c a lle d fo r redemption on J u l y 1, 19*1-2, and R econstruc­
t io n Finance C orp o ratio n notes o f S e r ie s S f m aturing J u ly 1, 19*1-2*
S u b s c r ip tio n s and a llo tm e n ts were d iv id e d among the se v e ra l
Fed eral Reserve D i s t r i c t s and the Treasury as fo llo w s :
Fed eral Reserve
D is tr ic t
Boston
New York
Philadelphia
Cleveland

Richmond
A tla n ta
Chicago

S t . Louis
M inn eapolis
Kansas C it y
D a lla s
Sah F ra n cisco
Treasury
TOTAL

HOLC Bonds
Exchanged

,

8 18 139,100
5 5 1 ,616,500

44.378.100
20,697,300

38,399,600
10. 679.100
75,573,800
13,3 33,400
10, 205,200
17,277.700
5,
p7
00
36, 451,100
4,489:700

P47, ¿35,300

- 0O 0-

RFC Notes
Exchanged
8 7, 839,000
198, 042,000
6. 398.000

5 .803.000

5. 8 1 3 .000
3. 6 0 8 .000
29, 521,000
2, 458*000
4 ,7 9 9 ,000
2, 665, 000
995,000
4 ,196,000
165,000

8272,302,000

Total

Exchanges
8

25, 978,100
749. 658.500
50. 776.100
26, 500,300
4 4 ,212, 600
14.287.100

1051094.500
1 5 ,7 9 f, 400
15, 004,200
19,948,700
6.7 8 9 .700
40.647.100
4.654.700
81,4.19,337,300

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Tuesday, June 2, 1942.
571752--------- —

2--------------

P ress S e r v ic e
No. 31-85

The S e c r e ta r y o f the Treasury announced l a s t evening th a t
the tenders fo r $250,000,000, or th erea b o u ts, o f 91~^ay Treasury
b i l l s to be dated June 3 &Rd to mature September 2, 19^2, which
were o ffe r e d on May 29, were opened at the Fed eral Reserve Banks
on Jun e 1.
The d e t a i l s o f t h is issu e are as fo llo w s :
T o ta l a p p lie d fo r - $^96,57^-, 000
T o ta l acce p ted
- 251, 301,000
Range o f acce p ted b id s :

(E x ce p tin g 2 tenders t o t a l i n g
| 12 , 000 )

High - 99.925 E q u iv a le n t r a te approxim ately 0.297 percent
Low
- 99.906
rt
tt
«
O .372
M
Average
P r ic e - 99.908
•'
w
«
O .365
n
(20 percent o f the amount b id fo r at th e low p r ic e was accepted )

- 0O0-

TREASURY DEPARTMENT
Washington
FOR RELEASE, AFTERNOON NEWSPAPERS,
Wsdr?i3S.day' ^une 3. 19^2.________ _

b/ 2/4-2

Milwaukee, Wis., June 3 —

Press Service
No. 31-86

John L. Huntington,

Deputy Commissioner of Internal Revenue,

assistant

today asked- the States

to follow the lead of the Federal Government in divorcing
patriotic appeals from liquor advertisements and labels*
Mr. Huntington, who is in charge of the Basic Permit Division
of the B u r e a u 1s Alcohol Tax Unit, addressed the National Conference
of State Liquor Administrators, meeting here.
In urging adoption of uniform standards for the advertising
and labeling of liquor products, the Revenue official called atten­
tion to the Department's view that the current interest in the war
and modern Implements of war should not be capitalized in selling
Industry products.
He said few of the States have, as yet, embodied this new regu­
lation in their codes.
The Alcohol Tax Unit decision prohibits any
reference to, or pictorial representation, of the American flag, of
the American armed forces, or of military planes, naval vessels or
guns, on any label, or in any advertisement of alcoholic beverages
coming under federal jurisdiction,
Mr, Huntington said that many states previously had adopted in
their entirety the standards developed painstakingly by the Federal
Government through the years; and he urged those states that have
not taken such action to do so.
He said that many intrastate label­
ing and advertising activities cannot be controlled by the Federal
authorities, and that attainment of the objectives of the federal
Alcohol Administration Act depends upon complete cooperation between
the Federal and State Governments.
Mr. Huntington listed the objectives of the labeling and ad­
vertising regulations promulgated by the Alcohol Tax Unit, as:
"To assure that the consumer is furnished with the complete
truth about the products; that, through safeguards against use of
improper or indecent copy, or «gainst disparagement of competitive
products, he will gain Increased confidence in legitimate industry
products and respect for their vepdo^s; that unfair competitive
tactics in these fields will be minimized; and that improper sales
appeals will be eliminated,"

-

2

-

Since the Federal Government began its work of approving
labels in 1936, the Alcohol Tax Unit has acted upon nearly 600,000
individual sets of labels, and about 1200 applications a week
continue to pour in from bottlers. Hr. Huntington said that in
19^1, the Division passed in advance upon some 10,000 advertise­
ments submitted voluntarily by the industry, and prevented publica­
tion of a great many advertisements which would have not been in
harmony with the regulations.
Moreover, some 75,000 newspaper, magazine, radio, and pointof-sale promotions are reviewed annually, and prompt action taken
when irregularities are discovered,
State officials are asked to
step in where questionable advertisements are found to have no
interstate aspects.
Mr, Huntington said serious violations of the Federal labeling
standards are no longer frequent, due to harsh penalties Imposed
upon violators in the past, and to the i n d u s t r y ^ Improved knowl­
edge of requirements.
The most frequent violations in recent
months have been in the wine labeling field, where there are large
numbers of small bottling concerns operating.
The war brought new problems in the field of advertising and
labeling, the State Administrators were told.
The demand for
munitions alcohol caused changes in established production pro­
cedures, particularly in the gin and blended whiskey fields.
To afford some relief in this situation, the Bureau of Internal
Revenue amended its definition of 'neutral spirits so as to make
additional sources of supply available to manufacturers.
- 0O0-

June 3, 1942.
STATUTORY DEBT LIMITATION
AS OF MAY 3 1 1 9 4 2
Section 21 of the Second Liberty Bond Act, as amended, provides that the
face amount of obligations issued under authority of that Act, 11shall not exceed
in the aggregate $125,000,000,000 outstanding at any one time*11
The following table shows the face amount of obligations outstanding and the
face amount which can still be issued under this limitation:
Total face amount that may be
outstanding at any one time

$125,000,000,000

Outstanding as of May 31, 1942:
Interest-bearing:
Bonds $38,084,566,300
Treasury
Savings (Maturity
11,719,073,675
value)*
77,491,000
Depositary
729.867.807
Adjusted Service
Treasury notes
Certificates of
indebtedness
Treasury bills
(maturity value)

$50,610,998,782

12,588,353,800
4.606.583.000
2.256.576.000

Matured obligations, on
which interest has ceased

19.451.512.800
$70,062,511,582
93.871.250

Pace amount of obligations
issuable under above authority

70.156.382.832

$ 54.843.617.168

Reconcilement with Daily Statement of the United States Treasury
May 31. 1942
Total face amount of outstanding public debt obligations
issued under authority of the Second Liberty Bond Act,
as amended
Deduct, unearned discount on Savings bonds (difference
between current redemption value and maturity value)
Add other public debt obligations outstanding but not
subject to the statutory limitation;
Interest-bearing (Pre-War, etc.)
$
195,990,180
Matured obligations on which interest
has ceased
11,231,630
Bearing no interest
357,041,300
Total gross debt outstanding as of May 31, 1942

$70,156,382,832
2.150.038.361
68,006,344,471

564.263,110
$68.570.607,581

•Approximate maturity value. Principal amount (current redemption value)
according to preliminary public debt statement $9,569,035,314.
31-87

-oOo-

TREASURY DEPARTMENT
Washington

FOR IMMEDIATE RELEASE.
Wednesday, June 3» 19^2,

Press Service
No, 31 -gg

Secretary Morgenthau today made public the following
summary of the Treasuryfs financing operations during the month
of May:
(In millions
of dollars)
1,

Cash Financing (Market Issues)
Sold a 2-1/2# registered non-banking bond
of 1962-67 . . . . . . . . . . . ................... SS 2
Sold regular 2# 19^9~51 Treasury bonds,...1 ,292
Additional Treasury Bills ...... *........
Treasury Tax Notes (net)

...............

303

355

U. 3. Savings Bonds (net) ...............

6lS

Total c a s h ..... ......... .....................
2,

3,^50

Refundings (Market Issues)
2-1/4# HOLC bonds (S75 outstanding)...___

847

1#

272

RFC note

(276

outstanding) ...........

Refunded into a 1-1/2# 4|-year
Treasury note (December 15, 19^6) .............
(Note:
While this financial operation
was carried out in May the new
securities are dated June 5)

Total financial operations in M a y ...............

-0 O 0 -

1,119

4,569

TREASURY DEPARTMENT
Comptroller of the Currency
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Thursday, June
19^2.
G / J / % 2 ----------

Press Service
No. 31-^9

During the month ended May 31» 19^2, authorizations were
issued to receivers for payments of dividends to the creditors
of eight insolvent national hanks.

Dividends so authorized

will effect total distributions of $1 ,31 ^, 5^5 to ^ 0,^27 claimants
who have proved claims aggregating $ 17 ,239*369,
payment of

7.63

percent.

dividends authorized were

or an average

The minimum and maximum percentages of

^.25

percent and

65.0

percent, while

the smallest and largest payments involved in dividend authori­
zations during the month were $ 35 »5^2 and $ 27^, 3^ 3 » respectively.
Of the eight dividends authorized during the month, one was for
a regular dividend payment and seven were for final dividend
payments.
ended May

Dividend payments so authorized during the month

3 1»

19^2, were as follows:

DIVIDEND PAYMENTS TO CREDITORS OF INSOLVENT NATIONAL
BANKS AUTHORIZED DURING THE MONTH ENDED
_________________MAY 51, igl+2_____________________

Name and Location of Bank

Nature of
Dividend

Number and
Percentage
of Dividend
Date
Authorized Authorized

Distribution
of Funds by
Dividend
Authorized

First American Nat’l Bank
Co.
Berwyn, Illinois

Final

5/27/U2

2nd

7.7# $ 35,522

The Joliet Nat*l Bank
Joliet, Illinois

Final

5/18/1+2

5 th

7.33#

First Nat’l Bank
Rochester, Michigan

Final

5 /2 1 /U2

6 th

First Nat!l Bank
Forestville, New York

Regular

5/29/U2

1 st

First Na.t'l Bank
Hempstead, New York

Final

5/2S/U2 5th

The Commercial Nat11 Bank
High Point, North Carolina

Final

5 /16 /H2

The First Nat'l Bank
Grand Forks, North Dakota

Final

The Monongahela Nat11 Bank
Brownsville, Pennsylvania

Final

& Trust

Total
Percentage
Authorized
Dividends
to Date

Number of
Claimants

Amount
Claims
Proved

20 .2$

11,368

$ U6l,320

208,001

72.33$

7,205

2.837.667

7.63#

107,919

80 .13 $

2,135

i,i+iU,Uoi

65.00$

160,oHs

65.00$
97-9$

5,1116

2,829,073

887

2H6,228

•
1
—

cr%

223,U97

10 th

6,68$

192,750

99.68$

6,763

2 ,885 ,1+78

5/19/U2

5 th

U.25$

112,1*95

8U.25$

6,373

2 ,6H 6 ,9U8

5/13/U2

6 th

7.056

27i!,3i3

53.0$

7,280

3,918,75!*

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Wednesday, June 3, 1942,

Press Service
No. Jl-90

The Treasury announced today that heavy amounts of currency
were taken up by Customs officials on the arrival here Monday of
the S. S. DROTTINGHOLM.

The DROTTINGHOLM carried many American

and Latin American diplomats and other citizens returning from
Axis areas.
One incoming passenger had declared that he had only #2h9
in his possession but, upon being searched, was found to have
concealed over $9#000 in a sock*

The currency discovered was

taken into special custody.
Treasury officials said that as a whole they considered
the results of the search for currency most gratifying.

No

announcement was made as to the disposition of any of the cur­
rency which was taken other than the statement made by Customs
officials that it would be turned over to the Federal Reserve
Bank of New York for further action by the Treasury Department.

-oOo-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Thursday, June 4, 1942._____________

Press Service
No. 31-91

(The follow ing address by SECRETARY MORGENTHAU
is scheduled to be broadcast over the
f a c i l i t i e s o f the Mutual Broadcasting System
at 8:15 p .m ., Eastern War Time, Wednesday,
June 3, 1943, and is fo r release upon delivery
at that time. )
Five weeks have gone by since President Roosevelt
outlined a national economic p o lic y fo r fig h tin g the
war on the home fr o n t. He ca lle d for heavier taxation,
for fix in g prices and ren ts, for rationing scarce commodi­
t ie s , for s ta b iliz in g wages and farm p ric e s , fo r checking
installm ent buying, and f in a lly , for r ig id s e lf-d e n ia l
and saving and the investment o f b illio n s more in War Bonds.
Those were America’ s marching orders from the
Commander-In-Chief. They ca lle d for p a tr io tic e ffo r t
and rea l s a c r ific e to meet a c r is is that is without
precedent in our country’ s h isto ry . "We cannot fig h t
th is war, " the President said , T,we cannot exert our
maximum e ffo r t on a spend-as-usual b a s is . A ll of us are
used to spending money fo r things we want but which are
not absolu tely e s s e n tia l. We w ill a l l have to forego
that spending. We cannot have a l l we want i f our soldiers
and sa ilo rs are to have a l l they n eed .,r
In the weeks since the President spoke, the American
people have shown that they are ready to back up the men
at the fro n t by e ffo r t and s a c r ific e a t home. I t has been
immensely encouraging to us in Washington to see the vo l­
untary cooperation that has come from a l l parts of the
country and from a l l sections of the people, e sp e c ia lly in
the fie ld s of price fix in g , ration in g and saving. That
voluntary cooperation w ill be more and more necessary in
the months ahead. A great change in national economic
habits cannot be accomplished merely by saying "pass a
law” or "write an Executive Order". The President’ s pro­
gram can be carried through to success only i f there is

-

2

-

active and constant cooperation from each and every one
of us.
E s s e n tia lly , the President’ s program is a c a ll for
s e lf-r e s t r a in t — not ju st by a few of us, but by a l l of
us; not ju st o ccasio n ally , but every day as long as the
war may l a s t . Our war industries need a l l the m aterials
and a l l the labor they can ge t. Our fig h tin g men and our
a llie s in a l l parts of the world need those m aterials to
win the war. I f we spend our money extravagantly, care­
le s s ly , or even to s a tis fy what would have been our normal
wants in normal times, we handicap our war production
program. We take away from our fig h tin g forces the
supplies they need for v icto ry . At the same time we
create pressure on prices which w ill be a menace both to
our war e ffo r t and to our economic futu re.
The p a tr io tic conscience of every American should
extend to every American pocketbook. Every time you are
about to spend your money, that conscience should ask you
MDo you r e a lly need what you are going to buy? Can’ t you
do without i t ? Why not wait u n til a fte r the war? Why
not build up a nest egg for your fam ily in the fu tu re,
and put your money at your country’ s service now?”
I am in dead earnest when I say that any man or woman
who chooses th is time to go on a buying spree is committing
an act of sabotage against our war e ffo r t . The p a tr io tic
thing to do, and the in te llig e n t thing as w e ll, is to make
old clothes la s t longer, to eat simpler meals, to patch
up old household appliances instead of buying new ones,
and to do everything else that is possible to cut down on
personal spending. In th is b a ttle on the home front the
wage-earners and consumers of America hold the key posi­
tio n s.
I t i s our job at the Treasury to finance th is greatest
and c o s tlie s t of a l l wars, a war that is already costing
130 m illio n d o llars every day - - a d o llar a day for every
man, woman and ch ild in the country. I t is also our job
to finance the war so as to avoid, as far as p ossib le,
upward pressure on prices and interference with war produc­
tio n . To accomplish these purposes we at the Treasury
have two ch ie f instruments at our disp osal: the f i r s t is

- 3 taxatio n , and the second, which depends upon voluntary
e ffo r t , is the sale of War Bonds and other Government
s e c u r itie s . Each o f them is a v i t a lly important part of
the President’ s seven-point program.
The Adm inistration has already recommended new taxes
that should y ie ld $8,700,000,000 of addition al revenue.
That is a co lo ssal sum; yet war expenditures alone are
many times that amount even now, and i t seems to me that
$8,700,000,000 is the very le a s t that we can afford to
ask o f the American people at this c r i t i c a l time.
In lin e with the basic p rin cip le of the a b ilit y to
pay, we have proposed sharply increased taxes on corpora­
tions and on higher individual incomes. In the same way,
we have urged Congress to abolish a number of sp ecial
p riv ile g e s by which a comparatively few wealthy taxpayers
have been able in past years to escape th eir fa ir share
of the burden. We have also recommended the taxation o f
m illions o f people with small incomes who have never had
to pay d ire ct taxes before, but we recommended th is only
as part of a program which would include taxing the higher
incomes more heavily and at the same time closing the
loopholes.
I know that the American people are determined that
no one sh a ll be allowed to amass riches out o f th is war,
and we have recommended a tax program to give e ffe c t to
the people’ s determination. We have, for example, recom­
mended a basic tax rate of 90 cents on every d o lla r of
excess p r o fit beyond a reasonable rate o f return.
I have been shocked at evidence that some companies
p ro fitin g from war contracts are d istrib u tin g extravagant
amounts in s a la r ie s , bonuses and other corporate expenses,
so that they might escape paying f u l l and f a i r taxes on
their p r o fits . We'have made i t our f i r s t concern to
examine promptly the tax returns of every company engaged
in war production, not only to protect the in terests of
the Government but to do ju stice to the great m ajority of
American corporations which are reporting th e ir earnings
f a i r l y and honestly. We are determined to make the
offending companies pay.

- 4 The Ways and Means Committee is now hard at work
w riting a new tax b i l l . I t is not for me to discuss the
d e ta ils of what they are about to recommend. I should
lik e to make only th is comment: I hope i t cannot be said
of the new tax b i l l that i t was too l i t t l e and too la t e .
The people of th is country have shown in a thousand ways
that they are not in a mood fo r h a lf measures, either
fin a n c ia l or m ilita r y .- They w ill be c r i t i c a l only i f the v
burdens are u n fa irly d istrib u te d . They w ill be disappointed
in th eir leaders only i f those leaders f a i l to .ask them for
a ll-o u t e ffo r t .
#The same w illin gness has been shown by m illions of
Americans in the past year, e sp e c ia lly in the past few
months, in the buying of War Bonds and Stamps. I am very
happy that we went over our national quota for the month
of May and that our to ta l sales for that month reached
$634,000,000. But we sh a ll have to do much better in June
and in the follow ing months. The quota fo r June has been
fixed at $800,000,000, and in Ju ly and every month there­
a fte r we expect a b illio n d o lla rs . I f we are to reach
those quotas and carry out a v it a l part of the Presid en t’ s
program, a l l who get a regular income w ill have to cut
down on personal spending and put an average of at le a s t
ten percent of current earnings into War Bonds.
The steady fu lfilm e n t of War Bond quotas, month a fte r
month, is an indispensable part of the fin an cin g of the
war. But i t means even more than th a t. I t means that we
are building the kind of future we want fo r ourselves and
our children.
We^can do a great deal to shape our future - - now.
Our actions — now - - w ill determine the kind of world we
s h a ll have a fte r the war. Whatever success we achieve by
voluntary cooperation w ill help to set the pattern of the
post-xrar world.
I fe e l strongly that every War Bond bought today w ill
play^an e sse n tia l part in the building o f a free and demo­
c r a tic ^world. M illio n s in th is country today are qu ietly
estab lish in g a reserve of spending power for themselves in
the years a fte r the war, and in th at way they are fo r tify in g
themselves against unemployment and want.

- 5 There is nothing dramatic in saving your money, b it
by b i t , to buy War Bonds. There are no medals for s e lf denial in th is war, no matter how much courage or s a c r ific e
i t may in volve. Yet the combined e f f o r t , of 130,000,000
people can achieve the great drama of the people's v icto ry .
We have a great opportunity, rig h t now. We are going to
rise to that opportunity. In the Presid en t's words, "We can,
we w ill, we m ust."

- 0O0-

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE.
Wednesday, June 3» 19^2.

Press Service
No. 31-92

The Bureau of Customs announced today that preliminary
reports from the collectors of customs show imports of *!■*§,S 50
head of Canadian cattle weighing

700

pounds, or more each (other

than cows imported specially for dairy purposes),, during the
period April 1 to May 2 3 ,
rate quota of
year

19 *12,

51,720

19*1-2, inclusive, under the tariff

head for the second quarter of the calendar

provided for under the trade agreement with Canada.

'r

“ OOo-

TREASURY DEPARTMENT
Washington

FOR RELEASE, MORNING NEWSPAPERS,
Friday« June 5, 19^2.______________ ___

The S e cr e ta r y o f the T r e a s u r y / b y , t^hls p W lic .. n o t.ic ,e ,...in v ite s
tenders fo r #500, 000, 000;,;; or thereabout¿V; !?i f31<-day. Treasury b i l l s ,
to be issu ed :6:n a d isco u n t b a s is under co m p etitive b id d in g . ' ,;The
■:I " y -

¡£S

* \

,

b i l l s o f t h is s e r ie s w i l l be dated June! 10, 19^2, and w i l l mature
■ •S

.

*

t

t

.

,

September 9, 1942, when the fa c e amount w ill, be, payable w ithout
in t e r e s t .
. **

They w i l l be ,i ssu e d in b earer fofm o n ly , and in denomi'

* ■ -.y

.V

V * '■ : '

n atio n s o f #1, 000/ $5, 000, * 10, 000, *100, 000, * 500, 000, and
* 1, 000,000 (.m aturity v a lu e ) .

v,

Tenders w i l l be r e c e iv e d at Fed eral Reserve B acks',and
Branches up to the c lo s in g hour, two o 1c lo c k p . m ., E astern war
tim e, Monday, June ig, 1942. Tenders w i l l not be r e c e iv e d a t the
Treasury Department, W ashington. Each tender must be fo r an even
m u ltip le o f #1, 000, and the p r ic e o ffe r e d must be exp ressed on
the b a s is o f 100, w ith not more than th ree decim al^, e . g . , 99«925*
F r a c tio n s may not be u sed , i t is urged th a t tenders be made on
the p r in te d forms and, forwarded in, the s p e c ia l, envelopes which
w i l l be su p p lie d b y Federal Reserve Banks or Branches on a p p lic a ­
t io n t h e r e fo r . ■
' //’/
• *
Tenders w i l l be r e c e iv e d w ithout d e p o sit from in corp orated
banks and t r u s t companies and from re sp o n sib le and reco gn ize d
d e a le rs in Investm ent s e c u r i t i e s .
Tenders from o th ers must be
accompanied by payment o f 10 percent o f the fa c e amount o f Treasury
b i l l s a p p lie d f o r , u n le ss the ten d ers are accompanied by an express
guaranty o f payment by an In co rp o rated bank or t r u s t company.
Im m ediately a f t e r the c lo s in g hour, tenders w i l l be opened
a t the Federal Reserve Banks and Branches, fo llo w in g which p u b lic
announcement w i l l be made by the S e cr e ta r y o f the Treasury o f the
amount and p r ic e range o f acce p ted b id s .
Those sub m ittin g tenders
w i l l be ad vised o f the acceptance or r e je c t io n th e r e o f. The
S e cre ta ry o f the Treasury e x p re ssly rese rv es the r ig h t to accep t
or r e je c t any or a l l ten d e rs, in whole or in p a r t, and h is a c tio n
in any such r e sp e ct s h a ll be f i n a l . Payment o f accepted tenders a t
the p r ic e s o ffe r e d must be made or com pleted a t the Federal Reserve
Bank in cash or o th er Im mediately a v a ila b le funds on June 10, 1942.

31-93

(Over)

2

The income d erived from Treasury h i l l s , whether in t e r e s t
or g a in from the s a le or other d is p o s itio n o f the h i l l s , s h a ll
not have any exemption, as such, and lo s s from ,the s a le or o th er
d is p o s itio n o f Treasury h i l l s s h a ll not have any s p e c ia l treatm en t,
as such, under F ed eral ta x A c ts now or h e r e a fte r enacted.. The
h i l l s s h a ll he su b je c t to e s t a t e , in h e r ita n c e , g i f t , or o t h e r e x c is e ta x e s , whether Fed eral or S t a t e , hut s h a ll he exempt from
a l l ta x a tio n now or h e r e a fte r imposed on th e p r in c ip a l or in t e r e s t
th e r e o f hy any S t a t e , o r any o f the p o sse ssio n s o f th e U n ite d
S t a t e s , or hy any l o c a l ta x in g a u th o r it y . For purposes o f ta x a ­
tio n the amount o f d isco u n t a t which Treasury h i l l s are o r i g i n a l l y
so ld hy the U n ite d S t a t e s s h a ll he con sid ered to he in t e r e s t .
Under S e c tio n s 42 arid 117 (a ) U > o f the In te r n a l Revenue Code,
as amended hy 3 e c tio n 115 o f the Revenue A ct o f 19^1* th e amount
o f d isco u n t a t which h i l l s is su e d hereunder are so ld s h a ll not he
con sid ered to accrue u n t i l such h i l l s s h a ll he s o ld , redeemed or
otherw ise d isp o sed o f , and such h i l l s are excluded from co n sid e ra ­
t io n as c a p it a l a s s e t s .
A c c o r d in g ly , the owner o f Treasury h i l l s
(o th er than l i f e insu rance com panies) issu e d hereunder need
In clu d e in h is Income t a x return o n ly the d iffe r e n c e between the
p r ic e p a id fo r such h i l l s , whether on o r ig in a l is su e or on
subsequent p u rch ase, and the amount a c t u a lly r e c e iv e d e ith e r upon
s a le or redemption at m atu rity during the ta x a b le year fo r which
the retu rn i s made, as ord in ary gain or l o s s .
Treasury Department C ir c u la r No, 4*18, as amended, and t h is
•n o tice, p r e s c r ib e the terms o f the Treasury h i l l s and govern the
c o n d itio n s o f t h e i r is s u e .
Copies o f the c ir c u la r may he o b tain ed
from any Federal Reserve Bank or Branch.

-oOo-

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Sa tu rd a y, June 6 , 19*2.

Press S e r v ic e
No. 31-9*1

6/5 7 * 2 -----

During the month o f Max 19^2, the liq u id a t io n o f ten
In so lv e n t n a tio n a l hanks was completed and the a f f a i r s o f such
r e c e iv e r s h ip s f i n a l l y c lo s e d .
T o ta l disbursem ents,

In clu d in g o f f s e t s allow ed, to

d e p o sito rs and o th er c r e d ito r s o f th ese ten r e c e iv e r s h ip s , amounted
to #3^ , 072, 761, w h ile d ividend s p aid to unsecured c r e d ito r s
amounted to an average o f 79*22 p ercen t o f t h e ir c la im s .

T o ta l

c o s ts o f liq u id a t io n o f these r e c e iv e r s h ip s averaged 7*^6 p ercent
o f t o t a l c o lle c t io n s from a l l sources in c lu d in g o f f s e t s allowed#
D ividend d is t r ib u t io n s to a l l c r e d ito r s o f a l l a c t iv e
r e c e iv e r s h ip s during the month o f May, amounted to #1,768,391*
Data as to r e s u lt s o f liq u id a t io n o f the r e c e iv e r s h ip s f i n a l l y
c lo s e d during the month are as fo llo w s :

INSOLVENT NATIONAL

BANKS

LIQUIDATED AND FINALLY CLOSED
OE MAI, 1 9 4 2 ____________

________________D U R I N O T H E M O N T H

Name and Location of Bank

Date of
Failure

Total
Disbursements
to Creditors
Including
Offsets Allowed

National Bank of
Pontiac* Illinois

9-26-34

1 ,1 4 1 ,1 9 9

72 .6 5

50,000

-0-

Rockford Nat’l Bank
Rockford, Illinois

2 -1 2 -3 2

4,4g4,967

84.6 9

750,000

-0-

• 12 -2 9 -3 1

2 ,17 7 » 218

200,000

-0-

Union & Peoples Nat’l Bank
Jackson, Michigan

8-24-33

7.331,633

57.62

700,000

-0-

Grand National Bank
St. Louis, Missouri

3 -19 -3 4

2 ,092,363

9O .2 5

700,000

- 0-

Duquesne Nat’l Bank
Pittsburgh, Pennra*.

1 1 -1 5 -3 2

6 ,219 ,76 8

94.45

500,000

-0-

First Nat’l Bank
Verona, Penna.

2 -2 3 -3 3

1 ,6 56 ,12 2

69 .O

200,000

-0 ?

Central Nat’l Bank
Spartanburg, South Carolina

2-2-33

3*699.5^4

IO2 .3 8

400,000

-0-

First Nat’l Bank
Spartanburg, South Carolina

6-30 -32

2 ,623,026

74.0

500,000

-0-

First Nat’l Bank
Logan, West Virginia

2-I-3 4

2,646,321

79* 24

150,000

-0-

American NB & Tr. Co*,
Benton Harbor, Michigan

¿/

-r

100 percent principal and partial interest paid to creditors.
-0O0-

Percent
Dividends
Declared
to All
Claimants

Capital
Stock at
Date of
Failure

Cash, Assets,
Uncollected Stock
Assessments, etc.,
Returned to
Shareholders

$

10 1.

\

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING NEWSPAPERS,
Sjunday, June 7» 19^2._______________ _

P re ss S e r v ic e
'' No. 31*“k95

Commissioner o f In te r n a l Revenue Guy T. H e lv e rin g announced
today th a t auto use ta x stamps in the denomination o f $5*00 w i l l
be p la ce d on s a le In a l l p o s t o f f i c e s and o f f i c e s o f C o lle c t o r s o f
In te r n a l Revenue on Wednesday, June 10. The stamps w i l l evidence
payment o f the ta x fo r the f i s c a l year b e g in n in g J u l y 1, 19^2,
and must be purchased on or b e fo re th a t d a te . The stamps w i l l be
s e r i a l l y numbered, w i l l be gummed on the fa c e , and w i l l have
p r o v is io n on the back fo r entry o f the make, model, s e r i a l number
and S t a t e lic e n s e number o f the v e h ic le .
The Commissioner sa id he had been ad vised by the O f f i c e o f
P r ic e A d m in istra tio n t h a t , in the issu a n ce and use o f g a s o lin e
r a tio n in g books, an Important i d e n t i f i c a t i o n w i l l be the s e r i a l
number p r in te d on th e use t a x stamp.
In th o se areas where
g a s o lin e i s b e in g r a tio n e d and"in those areas where g a s o lin e W ill
be r a tio n e d , p o sse ssio n o f the stamp ev id e n cin g payment o f the
use t a x on motor v e h ic le s w i l l p ro vid e one o f the necessary means
o f id e n t ify in g th e coupon book w ith the v e h ic le in the se cu rin g
o f g a s o lin e .
Mr. H e lv e r in g s a id t h a t , to guard a g a in st lo s s or t h e f t , i t
has been su ggested t h a t , when a f f i x i n g the stamps, the v e h ic le
owner should dampen the w in d sh ield rath er than the adhesive sid e
o f the stamp. T h is method has been recommended to keep the stamp
in t a c t upon the w in d sh ie ld . As an a d d itio n a l p r e c a u tio n , i t has
a ls o been su ggested th a t each motor v e h ic le owner should make a
record o f the s e r i a l number which appears on the use ta x stamp In
order th a t th ere may be some means o f i d e n t i f i c a t i o n in connection
w ith g a s o lin e r a tio n in g in the event the stamp should become l o s t .
Every owner o f a motor v e h ic le which i s used upon the h igh ­
ways should c a l l a t h is lo c a l p o s t o f f i c e or a t the o f f i c e o f the
In te r n a l Revenue C o lle c t o r and secure a $5*^0 U8e t a x stamp and
a f f i x I t to h is v e h ic le on or b efo re J u l y 1, 19^2, the Commissioner
s a id . The vario u s p o s t o f f ic e s w i l l s e l l the stamps over the
counter fo r cash o n ly and no m ail order b u sin e ss w ith resp eo t
th e re to w i l l be conducted by the p o s t o f f i c e s .
C o lle c t o r s o f
In te r n a l Revenue are a u th o rize d to accep t cash , p o s t o f f ic e money
o rd ers, and c e r t i f i e d checks in payment o f the use t a x stamp.
However, as revenue stamps have an i n t r i n s i c v a lu e , u n c e r t ifie d
checks w i l l not be a cce p ta b le in payment th e r e fo r .
I t I s the d e sire o f the Bureau o f In te r n a l Revenue th a t the
use t a x stamp, s h a ll be p la c e d on the w in d sh ield in a lo c a tio n th a t
w i l l not be in c o n f l i c t w ith S t a t e requirem ents. However, because
o f requirem ents o f the S ta te o f New Je r s e y , the stamp should be
p la c e d on the re a r window*of v e h ic le s r e g is te r e d in th a t S t a t e .
-0 O 0 -

I

TREASURY DEPARTMENT
Washington
FOR RELEASE, MORNING- NEWSPAPERS,
Tuesday, June 9» 19^2.
6/S/42

P re ss S e r v ic e
No. 31-96

The S e c r e ta r y o f the Treasury announced l a s t evening th a t
the tenders fo r $300,000,000, or th erea b o u ts, o f 91-^ay Treasury
b i l l s to be dated June 10 and to mature September 9» 19^2, which
were o ffe r e d on June 5» were opened a t the Fed eral Reserve Banks
on Ju n e S ,
The d e t a i l s o f t h i s is s u e are as fo llo w s :
T o ta l a p p lie d fo r - $689*653>000
T o ta l acce p ted
300,330,000
Range o f acce p ted b id s :
High
Low

99*925 E q u iv alen t r a te approxim ately 0.297 p e rcen t
*
»»
“
0.372
«

- 99.906

Average
Price - 99.907

0

"

*

O .366

(27 p ercen t o f the amount b id fo r a t the low p r ic e was a cce p te d )

-0O0-

#

TREASURY DEPARTMENT
Washington
POR IMMEDIATE RELEASE,
Tuesday, June 9, 19^2.

P re ss S e r v ic e
No. 31-97

S e cr e ta r y Morgenthau today gave the T r e a su ry 's approval to
a p roposal by which in d iv id u a ls who o b je c t c o n s c ie n tio u s ly to war
w i l l be a b le to in v e s t in s e c u r it ie s issu e d as general o b lig a t io n s
o f the Government and not s p e c i f i c a l l y d e sig n ated as “ war bonds“
o r “ defense b o n d s .“
In a l e t t e r to P aul Comly French, e x e c u tiv e s e c r e ta r y o f the
N a tio n a l S e r v ic e Board fo r R e lig io u s O b je c to r s , the S e c r e ta r y s a id
th a t Treasury b i l l s , Treasury c e r t i f i c a t e s o f indebtedness, T reas­
ury n otes and T reasury bonds would be a v a ila b le fo r s u b s c r ip tio n
by members o f the o r g a n iz a tio n s rep resen ted by the Board.
The members o f th ese groups, Mr. French had ex p la in e d , have
f e l t com pelled to remain a lo o f from t h e ir community campaigns fo r
the s a le o f War S a v in g s Bonds and y e t are eager to dem onstrate to
t h e i r neighbors th a t they are h e lp in g to fin a n c e the Government
in ways th a t t h e ir co n scien ces p e rm it.
In order to a llo w a l l c o n s c ie n tio u s o b je c to r s to take p a r t
in the program in denom inations to f i t t h e ir In d iv id u a l p u rs e s,
such as are p ro vid ed by War S a v in g s Stamps and Bonds, the N a tio n a l
S e r v ic e Board p la n s to s e t up a n o n -p r o fit co rp o ra tio n to buy the
s e c u r it ie s and d i s t r ib u t e them to th e members through c e r t i f i c a t e s
o f p a r t i c i p a t io n .
The t e x t s o f Mr, F r e n c h 's l e t t e r to S e c r e ta r y Morgenthau and
th e S e c r e t a r y 's r e p ly are as fo llo w s :
Ju n e 1, 19^2.
Mr. Henry Morgenthau, J r .
S e c r e ta r y o f th e Treasury
W ashington, D., C .
Dear Mr. Morgenthau:
T h is w i l l confirm our co n ve rsatio n s regard in g th e problem con
fr o n tin g th e members o f th e r e li g i o u s groups represented by the
N a tio n a l S e r v ic e Board fo r R e lig io u s O b je cto rs who f e e l c o n s c i­
e n tio u s ly unable to purchase War Bonds. They understand th a t
th ere are c o n tin u in g expenses fo r the r e g u la r fu n c tio n s o f the
Government, t o t a l l i n g some s i x b i l l i o n d o lla r s a n n u a lly . Would
i t be p o s s ib le fo r us to purchase r e g u la r is s u e s o f Treasury bonds
and notes and then r e d is t r ib u t e them to our p#ople in sm alle r
denom inations through a n o n -p r o fit co rp o ratio n we are o rg a n iz in g ?

-

2

-

Any r a te o f In te r e s t e s ta b lis h e d by the Treasury i s a g ree a b le
to u s , but we would p r e fe r a r a te lower than th a t p a id on War
Bonds. We are w i l l i n g to accep t n otes w ith any m atu rity d a te
which seems r ig h t to you. We would handle a l l s u b s c r ip tio n s ,
and the Treasury would not be req u ired to assume any a d d itio n a l
c l e r i c a l burden on our b e h a lf.
I f t h is p la n i s s a t i s f a c t o r y to you, would i t be p o s s ib le
fo r us to e x p la in to our neighbors th a t we are a id in g in the
fin a n c in g o f the Government in ways th a t our co n scien ces perm it
and th a t the U n ite d S t a t e s Treasury has approved our plan?
C o r d ia lly yours,
P a u l Comly French ( s ig n e d ) .

June 2, 19^2.
Dear Mr. French:
T h is w i l l acknowledge your l e t t e r o f Ju n e 1, 19*12.
In l i n e w ith our recen t c o n v e rsa tio n , I th in k you understand
th a t the Treasury needs some s i x b i l l i o n d o lla r s an n u a lly to main­
t a in c i v i l i a n s e r v ic e s o f th e Government which are e s s e n t ia l to
the b a s ic needs o f human l i f e , to conserve our n a tu r a l re so u rce s,
and to keep in r e p a ir our n a tio n a l p la n t . The Treasury would be
w i l l i n g to have the funds which you propose to c o l l e c t from your
people in v e ste d in Treasury b i l l s , Treasury c e r t i f i c a t e s o f in ­
debtedness, T reasury n o te s, and Treasury bonds which the T reas­
ury o f f e r s p u b lic ly to the people o f th e U n ited S t a t e s from time
to tim e, and which are not d e sig n ated by t h e i r terms as ’’war
i s s u e s .” I s h a ll be g la d to see th a t you are n o t i f ie d each tim e
an o f f e r i n g o f t h i s kind i s made.
I t i s our understanding th a t you w i l l buy such s e c u r i t i e s as
are is su e d , in amounts in l in e w ith the f i n a n c i a l reso u rce s o f
your p e o p le, and then d is t r ib u t e c e r t i f i c a t e s o f p a r t ic ip a t io n in
sm aller denom inations through a n o n -p r o fit co rp o ratio n you are
o r g a n iz in g . T h is p la n i s agreeab le to us and w i l l , we b e lie v e ,
s a t i s f y the American people th a t the groups you rep resen t are
c o n tr ib u tin g to th e support o f the Government in ways t h e ir con­
sc ie n c e s w i l l p e rm it.
We understand th a t th e groups you represent are making con­
t r ib u tio n s to the support o f the C i v i l i a n P u b lic S e r v ic e camps
fo r c o n s c ie n tio u s o b je c to r s au th o rize d by the Congress and the
S e le c t i v e S e r v ic e System which would oth erw ise have been a charge
on th e Treasury o f the U n ite d S t a t e s .
We are a l l seekin g the same o b je c t iv e s and are g la d th a t our
American democracy i s a b le to re c o g n ize the c o n sc ie n tio u s c o n v ic t
tlo n s o f a m in o rity o f our c i t i z e n s .
S in c e r e ly yours,

TREASURY DEPARTMENT
Washington
FOR IMMEDIATE RELEASE,
Tuesday, June 9, 19*4-2«

P re ss S e r v ic e
No* 31-9*$

The Bureau o f Customs announced today p relim in ary fig u r e s
showing the q u a n titie s o f c o ffe e au th o rize d fo r entry fo r con­
sumption under the quotas fo r the tw elve months commencing
O ctober 1, 19*4-1, provided f o r in the In ter-A m erican C o ffe e
Agreement, proclaim ed by the P re sid e n t on A p r il 15, 19^1, as
fo llo w s :

Country of Production

•
•
Authorized for Entry
: Quota Quantity i
f (Pounds) 1/
:
for consumntion
X
: As of (Date)
:
(Pounds)

Signatory Countries:
Brazil
Colombia
Costa Rica
Cuba
Dominican Republic
Ecuador
El Salvador
Guatemala
Haiti
Honduras
Mexico
Nicaragua
Peru
Venezuela

Non-signatory Countries:
British Empire, except
Aden and Canada
Kingdom of the Netherlands
and its possessions
Aden, Yemen, and Saudi
Arabia
Other countries not signatories
of the Inter^American Coffee
Agreement

1/
2/

1,401,426,521
475,086,450
30*144,642
12,109,603
18,098,664
22,634,408
96,657,909
80,715,477
41,436,647^
3,287,588
74,966,100
32,078,385
3,767,088
38,094,430

17,674,322

May 30, 1942
N
June 6,
May 30,
(Import
June 6,
May 30,
(Import
June 6,
June 6,
May 30,
it
June 6,
it

744,783,143
327,321,579
1942 2/
30,114,626
1942
3,534,828
quota filled)
1942 2/
18,340,667
1942
75,191,611
quota filled)
39,425,888
1942 2/
1942 2/
2,339,137
1942
31,796,023
20,760,476
3,110,901
1942 2/
36,282,572
§/

(Import quota filled)

. 19,669,574

May 30, 1942

. 3,872,909

tt

12,276,800

Quotas revised effective February 26, 1942*
Per telegraphic reports.
-0 O 0 -

13,109,769

( Import quota filled)

875,809

TREASURY DEPARTMENT
Washington
Press Service

FOR IMMEDIATE RELEASE,

Wednesday, June 10,

No* 31-99

19^2.

The Bureau of Customs announced today preliminary figures showing the
quantities of wheat and wheat flour entered, or withdrawn from warehouse, for
consumption under the import quotas established in the President^ Proclamation
of May 28, 1941, as modified by the Presidents proclamation of April 13, 1942,
for the twelve months commencing May 29, 1941, as follows?
Wheat flour, semolina,
crushed or cracked wheat,
and similar wheat products
Wheat
Country of
Imports
*
s
Imports
Origin
May 29, 1941, toiBstablishediMay 29, 1941 to
Established
May 28. 1942
8
Quota
t May 28, 1942
Quota
(Pounds)
(Pounds)
(Bushels)
(Bushels)
Canada
China
Hungary
Hong Kong
Japan
United Kingdom
Australia
Germany
Syria
Hew Zealand
Chile
Netherlands
Argentina
Italy
Cuba
Prance
Greece
Mexico
Panama
Uruguay
Poland and Danzig
Sweden
Yugoslavia
Norway
Canary Islands
Rumania
Guatemala
Brazil
Union of Soviet
Socialist Republics
Belgium

795,000
—
—

795,000
mm

**

im
mm

*■*
100
—
100
100
—
—
100
2,000
100
*•
1,000
—
100
—

_
mm
mm
mm
mm
mm
mm
m .
mm
mm
■ mm
mm
mm
mm
mm
mm
mm

—
—

mm
m•

—
1,000
100
100

-

100
100
800,000

3,807,456
5,836
-

6,116
-

—
—
-

—
—

167
—
-

—
—
-

»

•

-

—

*•

mm

mm

«m

mm

795,000
-oOo-

3,815,000
24,000
13,000
13,000
8,000
75,000
1,000
5,000
5,000
1,000
1,000
1,000
14,000
2,000
12,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

-

4,000,000

___
3,819,575